Question

Business Law 19

1. What were some of the key components of early US corporate laws? What was the rationale behind these laws?

2. In your opinion, what are some of the liberal laws that attract corporations to Delaware?

Answer 1

1. A company is a legal entity formed under State law, typically for business purposes. The law views a company as a individual capable of suing or being sued. A company is independent from its members, or shareholders, who own shares in the company.

Corporate law includes all of the legal problems facing corporations. In order to reap the tax and other benefits companies receive, companies are subject to various regulations which they must obey. Many states allow companies to have regular meetings with their shareholders, and others allow more frequent meetings between the board of directors and the officers of the corporation. To addition to these particular problems related to corporate law, companies often face all the legal concerns facing all businesses. This may include problems relating to employment law, contract disputes, product liability, intellectual property rights, among others. Smaller companies can be able to employ a single lawyer with broad experience to deal with all the legal issues facing the corporation. However, larger companies may need a team of lawyers with various specialties to deal with day-to-day contract, jobs and business problems.

2. There is no need to integrate businesses in their home territory. Many companies want to enter Delaware State because Delaware offers several tax advantages and low cost of incorporation that other states don't. Out-of-state corporations must however also register their companies in every country in which they conduct business

There are two key reasons for the domination of the company incorporation market by Delaware. One explanation is Delaware's bipartisan political consensus to keep the Delaware corporate legislation updated and up-to-date, and rely on Delaware's corporate law experts for guidance on how to do that. As a result, law students at every law school in the United States are researching the legislation of the Delaware company and Delaware court rulings interpreting the rule.

Corporations want to operate under modern laws which clearly state what they can and can not do. But other states may pass these rules, or just copy the Delaware's. And the legislation of the Delaware company alone can not compensate for the success of Delaware in attracting corporate constituencies.

The other big reason companies want to bring into Delaware is the consistency of the courts and judges in Delaware. Delaware has a special court, the Chancery Court, to rule on disputes relating to corporate law without juries. Company cases don't get caught behind the plethora of non-corporate cases on dockets. Instead, Delaware corporations should trust Judges specialized in corporate law to handle their legal disputes promptly and expertly.