It’s no surprise that 2015 was another record year for Delaware’s incorporations industry.
Here’s what you need to know:
- More than 1,181,000 legal entities are incorporated in Delaware – a 34%increase since 2008.
- Over 178,000 entities were formed under Delaware’s corporate and alternative entities laws, representing a 5% improvement over the record of 169,000 set last year.
- Dating back to November 2009, the Division of Corporations has seen improved formation activity in 56 of the last 62 months.
- 66% of all Fortune 500 companies are incorporated in Delaware, up from 58% in 2000.
- 86% of U.S. based Initial Public Offerings in 2015 chose Delaware as their corporate home, including Box, Etsy, Go Daddy, Shake Shack, and Square.
- General fund revenue collections by the Delaware Division of Corporations grew by 11% from 2015, and topped $1 billion for the first time.
- Delaware Division of Corporations revenue accounts for 26% of the State of Delaware’s general fund revenues.
Changes to Delaware Business Entity Laws
Prohibits Delaware corporations from including provisions in their certificates of incorporation or bylaws that would require stockholder claimants to bear the costs of unsuccessful internal corporate claims (“fee-shifting provisions”).
Amends Title 8 Section 102
- Provide boards with greater flexibility in delegating authority for issuance of stock, stock rights and stock options.
Amends Title 8 Section 204
- Confirms that the resolutions adopted by the board of directors to ratify a defective corporate act may include one or more other defective corporate act.
- Specifies several requirements for ratifying a defective corporate act, including when the initial board of directors was not named in the incorporation and has not been established by the corporation.
- Deletes the requirement that the board’s resolutions ratifying the defective corporate act be attached to the certificate of validation.
Amends Title 8 Section 362(c)
Promotes potential IPOs of Public Benefit Corporations by:
- Allowing a PBC to forego use of the PBC identifier.
Adds Title 10 Chapter 58
- Delaware Rapid Arbitration Act gives business entities formed in Delaware greater capacity to resolve business disputes in a rapid and efficient manner through voluntary arbitration conducted by expert arbitrators under strict timelines (“exclusive forum clauses).
- Confirm that statutory provisions addressing the irrevocability of powers of attorney apply also to proxies.
- Confirm a member’s or manager’s default class or group voting requirements.
This is an election year that will bring a new administration to Dover in 2017. It’s likely that this will be the final report from Delaware Secretary of State Jeffrey W. Bullock on Delaware’s ISO 9001 accredited Division of Corporation. During his tenure, the Division of Corporations has added 302,000 active legal entities, and revenue has grown by 42% ($330 million). Not too shabby.
- State of Delaware Business Employment Dynamics data reported in the 2015 Delaware Economic Report
- The World Bank Report – Doing Business 2017