More than 65 percent of Fortune 500 companies are incorporated in Delaware.
Since the 1900s, Delaware has been the premier state for incorporation. Today, more than one million entities have made Delaware their legal home. Several key reasons make Delaware the choice for entity formation, for both U.S. and international companies.
Delaware is considered the preeminent authority on corporate law, a reputation earned through the development of more than a century of jurisprudence. Most of the relevant Delaware statutes affecting corporate affairs have been litigated thoroughly, resulting in a predictable and detailed body of law that increases certainty in corporate decision-making.
Established in 1792, the Delaware Court of Chancery is the oldest business court in the United States, and is widely recognized as the nation’s leading forum for the resolution of corporate disputes. All cases that come before the Court of Chancery are heard by experienced jurists, rather than by potentially inexpert judges or unpredictable juries.
Plaintiff and defense attorneys alike prefer Delaware because the State enjoys a reputation as a neutral forum for litigation. Each year since 2002, the U.S. Chamber of Commerce has ranked Delaware first in the category of “Judges’ Impartiality.”
Speedy resolution of lawsuits is standard in Delaware — most judges issue opinions in 90 days or less. The Court of Chancery does not hear criminal cases or routine civil cases that seek money damages, enabling it to focus on corporate law disputes and significant business cases.
The Delaware Rapid Arbitration Act (DRAA) provides Delaware companies around the world with a fast-track arbitration option to resolve business disputes. The DRAA sets time limits on the arbitration process in order to help reduce the time and money spent on litigation or traditional arbitration. The Act offers the ability to have disputes resolved promptly and cost-effectively, with the parties foregoing costly and time-consuming pre-hearing evidence gathering in exchange for a prompt resolution of their dispute.
Delaware has become the corporate model for countries around the world. When considering legal issues involving mergers, acquisitions, corporate governance and public or private finance, courts around the world rely on Delaware’s well-established precedents:
“The law developed by Delaware courts over the last three decades has provided Japan with a developed model to use in advancing Japanese corporate takeover law. For many well-known Taiwanese companies, their overseas subsidiaries are also registered in Delaware.” Delaware Supreme Court Justice Randy Holland, Delaware’s Business Courts: Litigation Leadership
“With Delaware as a preeminent model, case law arising from shareholder and corporate debate here cannot help but shape international corporate governance. In the twenty-first century, Delaware will clearly play a role in governance expectations to minimize the risk of future financial crises — not just for U.S. companies and shareholders but for global companies and their increasingly transnational shareholders as well.” Dr. Carolyn Brancato and Michael Price, The Institutional Investor’s Goals for Corporate Law in the Twenty-First Century
“Delaware is consistently ranked first overall (every year from 2002 through the most recent survey) and first for Judicial Competence, demonstrating the State’s well-deserved reputation for its outstanding jurists.”
U.S. Chamber of Commerce Lawsuit Climate Ranking of States
Delaware’s Rapid Arbitration Act provides sophisticated parties with speedy and private resolution of their disputes.
A new survey by the U.S. Chamber of Commerce ranked Delaware first for the fairness and reasonableness of the State’s legal system. The State held the number one spot for the tenth consecutive time since the surveys began in 2002.
Delaware’s reputation as the preeminent authority on corporate law is the result of its well-established body of case law, enabling statutes, experienced jurists, and neutral and efficient court system. The white paper at this link explains the benefits of selecting Delaware as a forum for resolving business disputes.
Several years ago, Delaware’s judiciary recognized the need for an additional venue to provide its corporate citizens with a more flexible and cost-effective solution for litigating disputes claiming monetary damages on a speedy timeline, if needed. The discussion ultimately led to the creation of the Complex Commercial Litigation Division (CCLD).