Multistate Associates Blog Delaware Races to Retain Its Corporate Crown

Delaware's business-friendly legal environment has attracted 1.6 million companies to incorporate in the state, including two-thirds of the Fortune 500. Particularly enticing for these companies is Delaware's well-established corporate law and the Delaware Court of Chancery, the oldest business court in America, which specializes in corporate legal matters. The Court uses experienced judges (instead of juries) to efficiently sort through corporate legal disputes. But this predictability was disrupted recently after a Delaware Chancery judge invalidated Elon Musk's $55 billion compensation package from Tesla. As a result, other states are salivating at the potential to poach Delaware's status as the corporate world's favorite state. Last week, Delaware Gov. Matt Meyer (D) signed a bill giving controlling shareholders more protections under Delaware corporate law. The bill is a direct response to the Chancery Court's ruling and Delaware policymakers hope it's enough to stem the talk of a corporate exodus.