Definition
A Delaware Corporation is a business entity that is legally registered in the state of Delaware, United States, but may conduct business anywhere domestically or internationally. Often preferred due to Delaware’s flexible corporate laws, tax benefits, and well-developed body of legal precedent, these corporations don’t have to be physically present in the state. Any business from any state or country can incorporate in Delaware.
Key Takeaways
- A Delaware Corporation refers to a corporation that is registered in the state of Delaware, U.S.A. It provides the advantages of Delaware’s business-friendly laws and legal system, encouraging many businesses to choose it for incorporation.
- The Delaware General Corporation Law not only provides strong protections for shareholder rights but also gives board of directors’ significant freedom to manage the corporation as they see fit. This provides Delaware corporations with more flexibility in managing their internal affairs compared to corporations in other states.
- Despite the business might not be physically located in Delaware, choosing to incorporate a Delaware Corporation takes advantage of the Chancery Court. This court specifically deals with corporate affairs and has a unique legal structure and an extensive body of case law, making it a favorable forum for investors and businesses to resolve disputes.
Importance
A Delaware Corporation is an important term in finance due to the favorable and flexible business laws of the state of Delaware in the United States.
This has made it a popular choice for many Fortune 500 companies and start-ups to incorporate in Delaware, irrespective of the physical location of their business operations.
Incorporating in Delaware provides key benefits such as robust corporate laws that provide greater protection to directors and shareholders, a reputable Chancery Court that specializes in corporate issues, lower franchise taxes, and the ability to maintain privacy.
Moreover, potential investors often perceive a Delaware corporation as more professional, thereby enhancing the company’s image.
Therefore, understanding the term “Delaware Corporation” is key for individuals and businesses considering incorporation.
Explanation
A Delaware Corporation is a business entity that is legally registered in the state of Delaware, but can operate anywhere. The purpose of incorporating a business in Delaware is to take advantage of the favorable business laws and the well-established court systems specialized in corporate issues that the state offers. Delaware’s General Corporation Law is one of the most advanced and flexible corporation statutes in the nation.
Also, the Delaware Court of Chancery focuses solely on business law and uses judges instead of juries, which may result in less unpredictable jury verdicts. Delaware Corporations are often used by businesses aiming to go public or seeking venture capital investment. This is because many investors prefer or even require companies to be formed there due to the beneficial legal and tax framework.
Furthermore, a Delaware corporation provides the benefit of legal and corporate anonymity, which can protect the interests of business owners. Despite its operations may be physically located in any state or worldwide, being a Delaware Corporation can bring potential benefits related to corporate governance, shareholder rights, and favorable legal proceedings.
Examples of Delaware Corporation
Google, LLC. – Registered in Delaware since its establishment in 1998 by Larry Page and Sergei Brin, it’s considered a Delaware corporation. Even though Google is headquartered in Mountain View, California, their initial registration in Delaware provided them with benefits that allowed for initial growth and expansion.
Coca-Cola Company – Although the company’s headquarters are in Atlanta, Georgia, Coca-Cola is a Delaware corporation. This is because Delaware’s flexible and business-friendly laws allow the company to conduct business in a globalized manner. Delaware’s statues also provide maximum legal security to the directors and senior officers of the company.
Apple, Inc. – The tech giant, Apple, is also a Delaware Corporation, despite their headquarters being in Cupertino, California. Base incorporation in Delaware provides the company with advantages like a well-established body of corporate law and a court system that specializes in corporate litigation. Thus, these organizations choose to incorporate in Delaware, though their main operations might be elsewhere.
FAQs on Delaware Corporation
What is a Delaware Corporation?
A Delaware Corporation is a business entity that is registered and conducts its operation in the state of Delaware. It is popular due to the state’s business-friendly laws and tax codes.
What are the benefits of a Delaware Corporation?
Delaware Corporation offers numerous benefits like robust legal system, tax advantages, and business-friendly laws. Also, Delaware’s Court of Chancery focuses solely on business law and uses judges instead of juries, providing quick and expert decisions.
Who can start a Delaware Corporation?
Any U.S. citizen can start a Delaware Corporation. Even non-U.S. residents can form a Delaware Corporation, making it an attractive option for international business owners.
What is the process to form a Delaware Corporation?
The process to form a Delaware Corporation includes selecting a unique business name, appointing a registered agent in Delaware, filing a Certificate of Incorporation with the Delaware Division of Corporations, and paying the appropriate fees.
Does a Delaware Corporation need to operate in Delaware?
No, a Delaware Corporation does not need to have a physical presence or conduct business operations in Delaware. It just needs a registered agent with a physical address in Delaware to meet the legal requirements.
Related Entrepreneurship Terms
- Delaware General Corporation Law
- Incorporation Process
- Franchise Tax
- Registered Agent
- Corporate Governance
Sources for More Information
- Investopedia: An extensive resource for finance and investment terms with reliable articles covering a wide range of topics.
- U.S. Securities and Exchange Commission (SEC): An official government agency website providing regulatory financial information.
- Corporate Finance Institute (CFI): A website providing online financial education and training services.
- Harvard Business Services, Inc: A specialized website with information about setting up and operating Delaware corporations.
