Delaware has more corporations than people! 60% of the Fortune 500 is legally based in tiny Delaware

More businesses are incorporated in Delaware than people who live in the state. The reason why 1.8 million entities (including basically every publicly traded US company) chose Delaware is because it’s extremely business friendly.

For one, Delaware allows for a large degree of “corporate anonymity” — to incorporate an entity, you don’t need to provide any ID, you just need to pay a nominal fee. It’s literally easier to create a Delaware LLC than it is to get a Delaware library card.

They are also expeditious. Paper work is returned within days, you can even pay up for faster service, and some offices are even open until midnight—tell that to your DMV.

Lastly, predictability is a huge differentiator. Corporate disputes are settled in the Delaware Court of Chancery, which is presided by judges who are experts in business and corporate law, and outcomes are informed by decades of legal precedent. In other states, cases may be decided by jury and the judge may have little or no relevant background.

I’d like to end by repeating a snippet I heard on the Freakonomics podcast about this topic. It goes, “In a given year, the Delaware franchise generates roughly $2 billion for the state. For a big state like New York or California, that would be a rounding error. But for tiny Delaware, that represents about one-third of government revenues. That’s one reason that Delaware levies no state or local sales taxes.”

And “It was Upton Sinclair who once said, “It is difficult to get a man to understand something when his salary depends upon his not understanding it.””

#Delaware #BusinessFriendly #CorporateAnonymity #BusinessIncorporation #LegalFramework #CorporateDisputes #CourtOfChancery #LegalPrecedent #Predictability #CorporateLaw #UptonSinclair #Freakonomics #BusinessInDelaware #StateRevenue #TaxPolicy #LegalSystem #SmallState #CorporateGovernance #EconomicImpact #FranchiseRevenue #GovernmentFinances #BusinessEnvironment #LegalEfficiency #StateTaxation #DelawareFranchise #BusinessIncorporation #BusinessIncentives #CorporateJurisdiction #EconomicPolicy

This content is for educational purposes and is not financial advice. I do not provide recommendations and am not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results. Explanations are not guaranteed to be error-free.

Hope you enjoyed this #FinanceFunFact!

[stevenbraun]

Elon is going to get Tesla out of Delaware because the court denied his compensation ruling.

[finance-fun-facts]

Extra finance fun fact: “In 2012, The New York Times reported that a single building in Wilmington was the legal address of over 285, 000 separate businesses…. The New York Times says incorporating in Delaware “has enabled corporations to reduce the taxes paid to other states by an estimated $9.5 billion.” - Sunlight Foundation

[finance-fun-facts]

Extra finance fun fact: “[I]n 2020, nearly 68% of Fortune 500 companies were registered in Delaware and approximately 93% of new U.S. IPOs were conducted by Delaware-registered entities.” - George S. Georgiev, Emory University School of Law

My hunch is that the discrepancy between 68% and 93% comes from the fact that a good portion of the Fortune 500 is headquartered internationally. For example, Accenture moved its headquarters and reincorporated to Ireland in 2009.

[finance-fun-facts]

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[justjo]

Hmmm, finance, fun and facts, don't seem to belong in the same sentence!!