The Court of Chancery, a Reason to choose Delaware

Before we begin to explain the benefits of The Court of Chancery and why it makes Delaware the best place to incorporate your business, let us take a look at the history of the Court. The Court of Chancery originated in Medieval England as a distinct court of equity, named after the Lord Chancellor, a political position appointed by the Monarch on the advice of the Prime Minister. In its earliest form, those who couldn’t obtain a reasonable common law remedy would have the right to petition the King of England, who would refer the case to the Lord Chancellor, who would then preside over the case.  

The first Court of Chancery was part of the Delaware Constitution of 1792. This year, 2022, marks the 230th anniversary of the Court of Chancery in the State of Delaware. The Court’s longevity is a testament to its success and ability to apply principles of equity to our ever-changing economy and legal system. Delaware’s Court of Chancery has never lost its primary purpose, which is to provide relief in situations when there is no adequate legal remedy available.  

Over the course of the 19th century, Delaware emerged as the premier state for incorporation when the legislature designated the Court of Chancery as the exclusive forum for corporate matters. This concept took root in the 1980s during the takeover era [reference ‘Barbarians at the Gate: The Fall of RJR Nabisco” by Byran Burrough & John Helyar] when the Court of Chancery was cemented as the Court of choice for all equitable matters as is the case today. The reason? The Court could make rulings within a few days regarding the most complex of legal issues that typically arose from complicated transactions. The Court of Chancery has repeatedly proven that it can decide swiftly whatever corporate America could throw at it.

As it stands today, there are only three states within the U.S. that have a Court of Chancery: Tennessee, Mississippi, and Delaware. The Court of Chancery is unique since every decision is decided by a single judge rather than a jury or a panel of judges. One Chancellor will hear your case and make a ruling binding to both parties. Another unique feature of this Court is they are not limited to awarding strictly monetary damages. They can order equitable relief such as specific performance or injunctions, something no other court can do. This Court’s competence in deciding issues of business law has remained unmatched since its inception.

Delaware is the incorporation capital of the world, primarily due to the ruling Court, the Court of Chancery. However, there are additional reasons new businesses incorporate there: 

• Start-up costs for Delaware corporate entities are amongst the lowest worldwide. 
• It is the preferred state of incorporation for angel investors and venture capitalists because they can make corporate decisions without the approval of common shareholders, and transactions are simpler to implement.  
• 65% of all Fortune 500 companies are incorporated in Delaware. 
• Over 50% of all publicly traded companies are incorporated in Delaware. 
• For the past ten years, Delaware has been ranked the most corporate-friendly state in America.
• Delaware’s Court of Chancery has the most up-to-date case law on all equity-related matters. 
• Owners of Delaware LLCs & Corporations do not have to list owners’ or managers’ identities publicly. This is a notable fact when privacy is scarce yet highly valued.

Now that the benefits of a Delaware entity are laid out for you, the next step is filing your paperwork with the state. Before you do that, you need to have a registered agent in the state as well as a business address. The easiest way to satisfy this requirement is through a virtual office. At Opus Virtual Offices, our Delaware location boasts a full suite of services, including but not limited to live reception, inbound and outbound call transfer, meeting rooms, digital mail sorting, and a prestigious mailing address for your corporate letterhead. When you’re ready to join the ranks of some of the most lucrative and well-known companies out there, come to Opus VO, where your success matters!