For over five years, the United States Chamber of Commerce has consistently recognized Delaware as having the nation’s fairest legal system. This distinction is further supported by surveys of U.S. businesses, which rank Delaware as the leading state in providing a fair and reasonable legal environment. This consistent recognition explains why so many top businesses, as well as a growing number of small and medium-sized enterprises, choose Delaware as their incorporation haven.
The Harris Poll, conducting the 2006 study for the United States Chamber Institute for Legal Reform, surveyed in-house general counsel and senior corporate litigators nationwide. The survey aimed to gauge perceptions of fairness and reasonableness within each state’s legal system. To maintain data integrity, respondents were screened for familiarity with specific states before being asked to provide evaluations.
When choosing a state for incorporation, businesses must consider numerous factors. The legal environment is paramount. While some states have attempted to create more business-friendly climates, Delaware consistently stands out. It boasts the fairest and most competent judges, efficient litigation proceedings, and juries known for their competence, fairness, and predictability. Moreover, Delaware offers the most flexible and business-friendly incorporation laws, characterized by minimal regulation and streamlined annual filing requirements.
Nevada formation companies have launched advertising campaigns touting minimal regulation to attract businesses. However, Nevada lacks Delaware’s fair, competent, and predictable legal environment. In 2006, Nevada ranked among the worst states for creating a fair legal environment and 37th overall. Consequently, venture capitalists and angel investors often dismiss business plans from companies incorporated in Nevada, potentially associating them with unsavory activities.
Furthermore, many Nevada formation companies emphasize the anonymity afforded to LLC owners. While appealing, this promise is often misleading. Nevada law requires LLCs to disclose the names and addresses of all managers or managing members to the Secretary of State. Therefore, true anonymity remains elusive.
Delaware offers a genuine solution for those seeking privacy. Unlike Nevada, Delaware permits the creation of anonymous LLCs. Delaware law does not mandate the disclosure of manager or member identities in any filings. Delaware law specifically states that including the names of managers or members is optional, not required. Therefore, Delaware is the superior choice for businesses prioritizing anonymity.
Incorporating in Delaware grants businesses of all sizes access to the most developed business laws in the United States. The Delaware Chancery Court is nationally renowned for its expertise in complex business matters. Other states seeking to emulate Delaware’s success often defer to the Delaware Chancery Court and its rulings, acknowledging the state’s superior business climate.
Delaware simplifies the incorporation decision for businesses of all sizes. Whether you’re a start-up, family business, small business, large corporation, or subsidiary, Delaware offers unparalleled advantages. From LLCs to partnerships and C-corporations, incorporating in Delaware provides access to the nation’s premier legal system.