64% of Fortune 500 firms are Delaware incorporations: here's why - Technical.ly Delaware

Business

Sep. 23, 2014 10:11 am

64% of Fortune 500 firms are Delaware incorporations: here’s why

There are three big reasons: an established and business-friendly legal framework, a widely respected and specialized court system and pro-business priorities from state government. But how many Delaware corporations actually care about Delaware?

Delaware Gov. Jack Markell addresses leaders from the state's first public benefit corporations after legislation legalized the practice in 2013.

(Photo courtesy of the Delaware Department of State)

Last spring, Gov. Jack Markell celebrated news that more than a million active legal entities were then incorporated in Delaware, a state with fewer than 900,000 residents. It was the latest in a long string of First State boasts of its business friendliness.

More than half of U.S. publicly-traded companies and fully 64 percent of the Fortune 500 were among that number, according to the state’s Division of Corporations. In 2012, more than 90 percent of IPOs were from Delaware legal entities, including Facebook and Yelp. That same year, the tiny 1209 North Orange Street in Wilmington was the legal home to 285,000 businesses.

During that time, the state saw more than 10 percent growth in the year-over-year formation of LLCs, the incorporation of choice for many of today’s young, early stage tech firms.

Here’s why:

incorporations-delaware

(Source: Delaware Department of Corporations)

Among those flexible and pro-business statutes are the rules that allow the corporation to be operated anywhere in the world, provided there is a Delaware registered agent — someone to represent the firm locally. Delaware businesses also benefit from there being no state sales tax, nor state corporate tax for those firms that operate out of the state — including big brands like Apple and Coca-Cola.

Advertisement

Delaware remains the standard, but others, like Connecticut, are in hot pursuit. With leadership comes criticism. What is a boon for Delaware is often argued as costing other states billions of dollars in lost tax revenue.

It also prompts that secondary challenge: If so many businesses are legally incorporated in Delaware strictly for the tax benefits, how many are based here because they give a damn about Delaware?

Want more richly researched and deeply sourced community reporting?  Become a Technical.ly member for $12 per month -30-
JOIN THE COMMUNITY, BECOME A MEMBER
Already a member? Sign in here

Advertisement

1on1: Devs Steph Staub and Briana West on coding and career trajectories

Delaware tech jobs by the numbers: How small is the pond?

Fintech, mergers and HQ2: Delaware’s biggest tech stories of the last 10 years

SPONSORED

Delaware

Hear from the privacy pros at Security by the Schuylkill

Philadelphia, PA

Orthly

Full-Stack Javascript Engineer

Apply Now
Philadelphia

Technically Media

Technical.ly Editorial Intern (Summer 2019)

Apply Now
Philadelphia

KickUp

Software Engineer

Apply Now

How the Residences at Mid-Town Park are part of civil rights history

The Delaware Chancery Court case that was like ‘TMZ on steroids’

We need to talk about why Jocelyn Harper left Girl Develop It

SPONSORED

Delaware

Learn to lead digital transformation at Phorum 2019

Malvern, PA

Vanguard

Senior Front End Engineer – CX Journey Lab

Apply Now
Baltimore, MD 21201

14 West

Senior Software Engineer (Java + Apache Spark)

Apply Now

Sign-up for daily news updates from Technical.ly Delaware

Do NOT follow this link or you will be banned from the site!