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Company formation
Company formation
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Company formation
The state of Delaware on the Atlantic coast has extremely liberal corporate law. The highest commercial court, the Delaware Court of Chancery, also works very efficiently and has a long tradition and experience in international business transactions. The special thing about incorporating in Delaware is that the company only has to have its legal headquarters there. The physical location may be in any other state or outside the United States. Delaware is the US state with by far the highest number of registered corporations. The main reason for this is that Delaware has the most favorable corporate law for companies of all US states. The commercial registry in Delaware also offers an even higher level of discretion and confidentiality than other US states.
Setting up a company in Delaware is also particularly popular because of the comparatively low tax burden on companies that is levied in this US state. So it's no wonder that around 1,300,000 companies, including 66.8% of the world's 500 top-selling companies, including Google, Facebook, Apple and Coca Cola, have their legal headquarters in the small state. A whopping 80% of IPOs in 2017 were Delaware companies!
In contrast to Germany, there is no uniform corporate law in the United States. The legislation and rules for setting up a company in the USA are determined by the individual 50 states themselves. This means that different legal regulations sometimes apply in the individual states.
The state of Delaware occupies an absolutely special position within the USA, a mini-state on the east coast with almost 900,000 inhabitants, located about 200 km southwest of New York, which has subjected its entire legislation and in particular its tax policy to the goal of attracting business people and companies from all over the country and abroad - and which has done exactly that with flying colors: More than a million companies are registered here, even though the capital Wilmington has just 70,000 inhabitants.
The reasons for the run on Delaware are complex and are by no means due to a recent development, because even before the turn of the 1900s, several states within the USA tried to poach businessmen from each other in order to boost the state budget with the corresponding tax revenue. Delaware won the race primarily because of its aggressive tax policy and the ability to set up anonymous companies there.
Neither the owners nor the managing directors necessarily have to be published in the commercial register. Only a so-called registered agent must be present, so that both the owner and the managing director cannot be publicly viewed and no information about this is provided to American or foreign authorities.
The second reason is the tax policy, which allows American and international companies to save billions in taxes every year.
Due to the extremely high proportion of companies - and the corresponding legal disputes that they have carried out locally - Delaware has also achieved undisputed expert status in the field of American corporate and commercial law in recent decades, which is why the courts - especially the Court of Chancery – taking a leading position within the USA, well ahead of cities like New York or Chicago.