The Case Against Delaware (2002) • Hacker News Board

Re: The Case Against Delaware (2002)

#41

Post by joe_the_user » Sat, Sep 08, 2018, 5:19 AM UTC

lisper wrote: post #34

joe_the_user wrote: post #32

Earlier quoted context omitted.

Well, That's certainly nice for corporations. However, I would argue that situation runs directly against the broad tenants of American Democracy. Specifically, that states should regulate their internal commerce to some extent and the Federal government should regulate the rest. Here, you have one state that allows an end-run around both institutions (except for the minute number of people actually living in Delawar…

> tenants Tenets. > states should regulate their internal commerce That idea was invented at a time when the fastest way to travel or communicate was by horse. In the age of the automobile, the airplane, and the internet, there is barely any such thing as "internal commerce" any more.

* In the age of the automobile, the airplane, and the internet, there is barely any such thing as "internal commerce" any more. *

In that case, the government elected by the population of all fifty states seems a more appropriate regulatory body than that elected by just one of the smallest state populations in the union.

Re: The Case Against Delaware (2002)

#42

Post by nitwit005 » Sat, Sep 08, 2018, 6:36 AM UTC

poultron wrote: post #14

Most of you focused on iteration and entrepreneurship should appreciate Delaware simply for its incorporation status alone. Why does everyone incorporate in Delaware do you ask? Is it some tax break or something purely financial, as most people guess? Nope. It's because Delaware put a stake in the ground a LONG time ago and said that they want to be the experts at dealing with business law. So much so that they have…

While some like the local laws, CEOs have openly stated they've incorporated there for tax reasons, and there's research suggesting the tax benefits matter more than the legal benefits: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1737937

I'd also note they seem to have given in to some federal demands to make the incorporation rules stricter: https://www.marketwatch.com/story/delaware-backs-overhaul-of...

Re: The Case Against Delaware (2002)

#43

Post by wyclif » Sat, Sep 08, 2018, 7:12 AM UTC

HaHa31 wrote: post #33

I was born and raised in Delaware, so I will give my quick take on it. > The State of Delaware had turned the East Coast’s main traffic artery into a sweltering parking lot merely so it could exact a tribute from each driver crossing its miserable little stretch of concrete. Wow, the author has a lot of emotion for a supposedly one-time problem. Delaware pays for a little over 69% of its state and local road maintena…

Delaware also has quite high property tax

Which is relative. Most Delawareans, as you no doubt know, regard DE state property tax as low when compared to PA or NJ.

Re: The Case Against Delaware (2002)

#44

Post by chris_mc » Sat, Sep 08, 2018, 8:12 PM UTC

mirashii wrote: post #12

chris_mc wrote: post #10

Earlier quoted context omitted.

>This is inaccurate How so? I'm curious, as I don't know much about corporate law.

https://news.ycombinator.com/item?id=12320377 An old thread, but the discussion covers a bit on how Delaware actually has extremely pro-shareholder laws relative to other states, including requiring disclosure of the cap table. If we want to also talk about misleading, I think choosing a subset of the reasons that businesses choose to incorporate in Delaware and selling them as the sole or even primary reasons is pre…

Thanks

Re: The Case Against Delaware (2002)

#45

Post by SllX » Sun, Sep 09, 2018, 5:43 AM UTC

nine_k wrote: post #23

froindt wrote: post #6

If you're not from the northeast, the fact that Delaware is the state of incorporation for so many companies is a huge pain point when bankruptcy is involved. For example, why should a company who exclusively does business within 200 miles of their headquarters be able to file bankruptcy thousands of miles away? Is that the justice intended by our court system? Any parties involved (suppliers, employees who are still…

Would you suggest that a company must operate close to where it's registered? How is it going to work with companies that operate across several states, and gradually focus on more on other states than the place of the original incorporation? Can they even close a branch in the state of the incorporation? How important the convenience of the bankruptcy process is compared to other processes related to a company?

Expensively.

This came to mind while I was reading your comment and this is not a position I am actually advocating, but the law is malleable and reflects human will, it doesn't confine it. If you wanted to make such a scheme work, you could require a corporation incorporate in each and every State/Nation that they conduct their business in. You could slice this down to what it means exactly to do business in a State so every charge on a corporate credit card across State lines doesn't have to mean you suddenly do business in that State.

If you wanted to close all the branches in the state of incorporation, you (as in the many legislatures, not you specifically) could setup a process of disincorporation and transfer of control to one of the subsidiaries.

The law is not a stone tablet handed down from on high, it is, in a literal sense, whatever humans wish to make of it, and there are always processes for changing the laws to fit whatever position you're advocating.

Now effective enforcement is another matter entirely, and without care and consideration, there will always be knock on effects. In this case, requiring incorporation in multiple jurisdictions would make the cost of doing business more expensive, and liable to expose corporations to increased liability.