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Technology & Innovation

Delaware Starts to Feel the Anti-Corporate Glare

In the midst of all the news on ailing financial institutions and Fortune 500 companies, much of the media attention has focused on wealthy states like New York and California. But little Delaware, home to over half the companies on the New York Stock Exchange, has received narry a mention.

The reasons behind Delaware’s popularity among corporations lies primarily in its generous treatment of limited liability corporations, which has brought significant tax revenue to the tiny state.

With incorporation costs significantly lower in Delaware, companies need not list the names and addresses of directors in the public record and there is no minimum capital or even a state bank account required to incorporate. It’s made the state such a haven for corporations that one strip in Wilmington boasts addresses for more than 6,500 companies

Internal disputes are settled quietly in Delaware’s Court of Chancery where cases are heard not by a jury but by chancellors who specialize in commercial litigation.

With public opinion and Congress facing down corporate culture, Delaware has suddenly become a topic of conversation. Last month in The New York Times, Lynnley Browning spotlighted the state’s critics, who refer to it and its tax loopholes as an “onshore Cayman Islands.”

No one has proposed any sort of restructuring of Delaware’s corporate tax structure, but the anonymity associated with the state is no longer a thing of secrecy.


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