The United States (“US”) has always been an attractive place to conduct business with many choosing to do so through Delaware company incorporation. As of December 2018, nearly 1.4 million legal entities were incorporated in the state of Delaware with 67.2% of all Fortune 500 companies having done so. Given the number of companies having chosen to incorporate in Delaware, it is clear that the state is a popular destination, but what makes it so? In this article, we look to explain why you should consider Delaware company incorporation.
1. Ease of Incorporation
Delaware is arguably the easiest state in the US to incorporate a company as the processes are designed and structured to allow companies to complete the process as simple and as efficiently as possible. Delaware offers a level of flexibility in this process that many countries do not provide, for example:
- Delaware allows one individual to hold the position of a company’s director, shareholder, and officer, making the incorporation process easier to complete as compared to other US states
- Parties do not have to be physically present in Delaware to incorporate a company as long as they utilize a Registered Agent in Delaware
- Delaware incorporated companies are not required to utilise a local Delaware bank account
- Companies are not required to have a physical business address within Delaware
- No minimum capital requirements
- The Delaware company register cost is cheaper than other US states
2. Delaware Business Law
One of Delaware’s most notable traits that have contributed to its reputation as a friendly business environment is the strength of their business law. Delaware business law is renowned for being incredibly favourable towards companies and has helped set a precedent for many other states to follow.
- The Delaware General Corporation Law offers predictability and stability as it is shaped by corporate-law experts and is protected by the influence of special-interest groups
- The Delaware Legislature reviews the Delaware General Corporation Law annually to ensure that it is able to address current issues and developments
- The Delaware Court of Chancery focuses solely on business law and uses judges instead of juries
- Judges on the Court of Chancery all possess expertise in complex corporate law matters, are selected through a bipartisan, merit-based selection process and are well equipped to oversee challenging legal disputes
- Delaware has a long history or precedents that Delaware courts can utilise to help settle disputes, demonstrating a robust legal system designed to protect businesses
3. Privacy Protection
Data privacy protection relates to the handling of sensitive information and has increasingly become a topic of discussion among companies of all sizes and industries. As companies hold key pieces of information related to not only their staff, but also shareholders, companies must ensure that this information is protected to prevent it from being misused by third parties.
Delaware company register has the following advantages in privacy protection:
- Delaware companies are not required to publicly disclose shareholder names and addresses in their company filings, nor are they required to disclose their directors or officers on a public record
- Shareholders and managers of a company are only specified in the company’s operating agreement, which is private by nature
4. Tax Benefits
The US utilizes a multi-tiered tax system whereby taxes are imposed on a federal, state, and sometimes local government level. Delaware’s tax systems are unique in that it is more business friendly to companies, specifically:
- Delaware does not impose taxes on companies that operate outside of its borders
- Companies that do not have a physical office, or does not conduct business directly within Delaware will not be liable to Delaware state taxes
5. Flexibility
Delaware incorporated companies can operate with a level of flexibility that companies incorporated elsewhere often cannot enjoy. Apart from the flexibility offered during the company incorporation process, business owners can enjoy the following benefits when running their company:
- Delaware’s corporate statutes offer a great deal of flexibility in how a company structures the rights and duties of their shareholders and board members
- Shareholders, officers and directors of a Delaware company do not need to be United States residents and are not required to normally reside in Delaware
- A company’s bank accounts can be located anywhere and does not need to be maintained in Delaware
- Shareholder meetings can be conducted anywhere in the world, including via remote communication
Conclusion
Looking at the advantages that Delaware offers companies, it is clear why so many have chosen to utilize this state for their company incorporation purposes. As FastLane is committed to helping SMEs, we have extensive experience helping our clients incorporate their companies in jurisdictions around the world. Please contact the FastLane Group for assistance!
