There are many reasons to form your corporation or LLC in Delaware. It's why almost 60% of Fortune 500 companies have made Delaware their business organizations' state of choice.
Delaware's business laws, its Chancery Court with nationally recognized expertise and governmental services make Delaware a corporate haven. Delaware's business entity laws are among the most advanced and flexible in the United States. There are so many reasons why some of the biggest corporations choose Delaware as their business home.
One of the biggest draws for companies to incorporate in Delaware? The Court of Chancery.
History of the Delaware Court of Chancery
The Court of Chancery has English origins, dating back to feudal times. Originally, the Court of Chancery was a way to resolve issues that could not be addressed directly by the law or for which the law was not up-to-date enough to manage. As it evolved, the Court of Chancery dealt with the law of equity, as it was more flexible and fluid than common law.
Delaware created its Court of Chancery in 1792, functioning as a traditional court of equity. By the mid-1800's, England and the state of New York abolished the Court of Chancery and many U.S. states followed suit.
Delaware has kept its Court of Chancery throughout its history but has undergone several constitutional changes regarding how Chancellors and Vice-Chancellors are appointed and how long their terms are.
Delaware Court of Chancery Today
Today the Court of Chancery consists of one chancellor and six vice-chancellors, all of whom are nominated by the Governor of Delaware and confirmed by the Senate for 12 year terms.
The Current Judicial Officers include:
- Chancellor Andre G. Bouchard
- Vice Chancellor J. Travis Laster
- Vice Chancellor Sam Glasscock III
- Vice Chancellor Joseph R. Slights III
- Vice Chancellor Kathaleen St. J. McCormick
- Vice Chancellor Tamika Montgomery-Reeves
- Vice Chancellor Morgan T. Zurn
The Role of Delaware Court of Chancery
The Court of Chancery continues to be a draw for businesses to incorporate in Delaware. Its non-jury trial and swift decisions combined with the favorable corporate law in Delaware allow issues to be resolved without the hassle of typical litigation.
Delaware describes the Jurisdiction of the Court of Chancery as follows:
The Court of Chancery has jurisdiction to hear and determine all matters and causes in equity....In today's practice, the litigation in the Court of Chancery consists largely of corporate matters, trusts, estates, and other fiduciary matters, disputes involving the purchase and sale of land, questions of title to real estate, and commercial and contractual matters in general. When issues of fact to be tried by a jury arise, the Court of Chancery may order such facts to trial by issues at the Bar of the Superior Court (10 Del. C., 369).
Delaware Court of Chancery in the News
The Delaware Court of Chancery frequently makes national news, as many recognizable companies choose Delaware as their business home and later wind up with litigation in the Court of Chancery.
Most recently, Facebook was ordered by the Court of Chancery to turn over data privacy records related to the Cambridge Analytica breach. Other notable cases that have been before the Delaware Chancery Court include In re Walt Disney Co. Derivative Litigation in which the Chancery Court ruled that Disney board members had not violated their fiduciary duties by approving the firing of Michale Ovitz, and In re Citigroup Inc. Shareholder Derivative Litigation, in which shareholders claimed that Citigroup directors had failed to monitor and control the bank's risk profile prior to the financial crisis in 2007/2008. As you can see, the Delaware Court of Chancery is more than adept at handling complex litigation from America's biggest corporations.
To learn more about the Delaware Court of Chancery, visit their website.