-1

I may start working for a US company operating in state X but incorporated in Delaware. I've heard companies do it because Delaware corporate law is somehow convenient to companies, but I don't know the details.

Should this matter to me as a potential consultant or potential employee?

closed as off-topic by paparazzo, scaaahu, Masked Man, gnat, Mister Positive Sep 25 '17 at 11:43

This question appears to be off-topic. The users who voted to close gave this specific reason:

  • "Questions seeking advice on company-specific regulations, agreements, or policies should be directed to your manager or HR department. Questions that address only a specific company or position are of limited use to future visitors. Questions seeking legal advice should be directed to legal professionals. For more information, click here." – paparazzo, scaaahu, Masked Man, gnat, Mister Positive
If this question can be reworded to fit the rules in the help center, please edit the question.

  • 1
    No. It is very common. – acpilot Sep 24 '17 at 22:45
  • @acpilot: The fact that it's common does not mean that it doesn't matter... – einpoklum - reinstate Monica Sep 24 '17 at 23:09
  • 1
    Ok. The answer to your question is "talk to a lawyer." Maybe try the law stack. – acpilot Sep 24 '17 at 23:28
  • Is there something specific you're worried about? – Kent A. Sep 25 '17 at 0:06
  • @KentA.: I'd rather not spell out my own concerns; I'd like to hear if there are commonly-known issues with this case. – einpoklum - reinstate Monica Sep 25 '17 at 0:15
4

Google has the answer here. I just searched for 'Why do companies incorporate in Delaware" and scanned through the results.

One good link is here: The Top 10 Reasons Companies Incorporate in Delaware

There are many reasons why more companies are incorporated in Delaware than any other state. This article highlights a few of the reasons why half a million businesses, including more than half of all U.S. publicly-traded companies and 60% of Fortune 500 companies, have incorporated in Delaware. It then outlines the biggest drawbacks to incorporating in Delaware and explains why it is not a one-size-fits-all solution.

The top reason being:

  1. The Corporate Law Expertise Of The Delaware Court of Chancery

Delaware has a highly respected court that focuses on corporate issues – the Court of Chancery. Because of this specialization, the Court of Chancery has a great deal of expertise and familiarity in resolving complex corporate disputes.

There's also a few drawbacks listed.

Read the article, and Google some more, then make your own decision.

Bottom line answer: No, it doesn't matter. If it did matter, then an awful lot of employees/companies are doing the wrong thing.

0

Should this matter to me as a potential consultant or potential employee?

Where a company is incorporated should not directly matter to a consultant or employee.

Delaware is the most popular choice outside of the state where a business operates. This is primarily because established precedents in the Delaware jurisdiction go back to 1792, giving a more predictable and independent legal environment.

A company still has to qualify for taxes, employment regulations etc in every state of operations.

  • 1
    Nobody selects a state for incorporation based on the age of the precedents... there are actual reasons for the preference, and I would like to understand whether some of them may affect me. – einpoklum - reinstate Monica Sep 25 '17 at 6:50
  • I have been through this myself, establishing a Delaware corp for our US operations in connection with a round of VC investment. Delaware was seen as the most reliable option because of the legal predictability and familiarity. The way their legal system is put together really does make a difference, with trial by judge based on precedent seen as favourable to trial by jury. – JonathanS Sep 25 '17 at 14:20
  • Ok, precendent over jury. I understand. My question is, though, would these precedents, say, give employers rights or powers vis-a-vis employees which they may not be able to uphold in other states? E.g. issues like information privacy, intellectual property disputes, liability disputes w.r.t. damage to third parties etc. – einpoklum - reinstate Monica Sep 25 '17 at 14:24

Not the answer you're looking for? Browse other questions tagged or ask your own question.