The State of Delaware represents the ideal residence for large listed companies and for those that intend to become soon, but not for small companies or those in the start-up phase, which cannot benefit from the advantages and facilities provided for by the regulations.
Whenever an entrepreneur decides to open a company abroad, he must choose the type of company that best suits the pursuit of the economic and financial objectives identified in the business plan and the most convenient place to establish the company headquarters.
Let’s analyze the case in which it is decided to start a business in the United States of America, where there are 50 different fiscal and corporate regulations, which can play a more or less significant role in achieving the identified business objectives.
As a rule, the main attention is paid to the choice of the corporate structure, which is able to combine costs and productivity, leaving out further complex assessments related to the geographical positioning of the company’s headquarters. We therefore opt for the more logical solution, which provides for the establishment of the company in the State in which the production activity will be carried out.
Why establishing a company in Delaware?
Very often, especially in the United States of America, a company may find itself in the position of wanting or having to expand its commercial presence even outside the borders of the State in which it has established its headquarters. The need to evaluate, with extreme care, in which State it is more appropriate and convenient to legally reside, therefore, is clearly evident.
Perhaps, also in this perspective, the choice made by numerous foreign investors to establish the headquarters of their companies in the State of Delaware is explained (a solution, well “touted” by lawyers and accountants, which for years has gained considerable popularity not only in United States, but also in India).
Delaware’s commercial law is the most advanced and most flexible in the United States:
- it allows both, LLC and incorporate company in Delaware to take advantage of extremely simple and rapid procedures for the establishment of the corporate structure
- it provides maximum versatility in defining and regulating the rights and duties attributed to each shareholder and their directors.
Delaware: ideal destination for all business projects?
Despite the undeniable advantages provided by these commercial regulations, I consider it appropriate to underline how the State of Delaware does not necessarily have to represent the ideal solution for any business reality, above all, if it concerns companies in the start-up phase, not interested in joining Bag.
The great popularity enjoyed by Delaware has its origins in the phenomenon of the so-called New Economy, which developed in the United States in the late 90s and early years of the new millennium. In that period, the spasmodic search by many companies of a way that allowed to get to the promotion of an IPO in the fastest way, became so rooted that numerous start-ups decided to register a company in USA directly in Delaware, instead of State of residence, in order to accelerate the path towards the placement of its shares on the stock exchange.
Pooja is a digital nomad and founder of https://hotmaillog.in She travels the world while freelancing & blogging. She has over 5 years of experience in the field with multiple awards. She enjoys pie, as should all right-thinking people.