Joseph W. Bartlett
The appropriate legal domicile for the company’s organization and filings. In almost every case, Delaware is the appropriate choice. Despite media insinuations, Delaware is not a tax haven. State income taxes are levied on the basis of factors which are not influenced by a Delaware domicile. The reasons for Delaware are practical: The Delaware Secretary of State’s office is better organized and staffed so that the initial organization of a corporation or limited liability company is a matter of a few minutes. Copies of the organizational documents for due diligence purposes during the capital raising process are ready on demand. The Delaware Corporate and LLC statutes are better drafted and more thoroughly thought through than those in any other State … the legislature advised by expert lawyers and accountants who are in close touch with developments, contingencies and ambiguities as the same arise.
Most importantly, again focused on the inevitable capital raising process, law firms in this country (and, indeed, around the world) are confident of their competence to handle basic questions of Delaware law governing corporations and LLCs. Therefore, the incremental costs of local counsel in, say, California, Texas or indeed New York is avoided except in arcane situations. The literature on Delaware law, including interpretations by theChancery and Supreme Courts, is abundant. Indeed, law firms in, for example, Israel frequently employ lawyers who have served their time on the payroll of U.S. law firms and have kept themselves up to date on Delaware law. The emerging growth company domiciled in Delaware saves time and money … both in short supply … in raising its capital from investors all over the globe.