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Comment by pdshrader | Hacker News Reader

Startup/Venture Capital lawyer here (but not your lawyer). The foreign qualification requirement is fairly universal - California has it, too. There are occasions when incorporating in a different state can be beneficial, but generally if you're raising VC $$, VCs are going to want to invest in a Delaware C-corp.

Delaware is NOT the cheapest, but it is extremely flexible (both legally speaking and administratively speaking - there are very few states where you can pay a premium and find someone to come in on a holiday/weekend to file your restated charter to close a big deal), and it has a very well-established body of law. That means everyone knows what to expect. Think of it like a really great WYSIWYG editor, whereas other states' laws can be like coding a site in a brand new alpha release programming language.

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> it has a very well-established body of law. That means everyone knows what to expect

Delawarean here! Having spent some time as a writer/reporter learning about the Delaware incorporation process, I've found that this is one of the biggest reasons why companies/investors continue to prefer Delaware.

Wyoming and Nevada are also known as business-friendly states in which to incorporate, but no other state has the wealth of case law that Delaware has.

True, but most people don't actually know the practical effects of having an established body of law. Mostly because it's difficult to compare Delaware with 49 other different sets of rules in a digestible format.

Here's one example of the difference between CA and DE: California, as a baseline, generally requires class votes on amendments to charters. Delaware, as a baseline, generally requires only a majority of all capital stock to vote in favor of an amendment to the charter. This means that in California, the holders of common stock (or the holders of a prior venture round stock) could potentially block a future round of financing, which most VCs would say is not a great result.

This gets murkier though because California law declares corporations to be 'quasi-California corporations' if they meet certain requirements such as having principle offices in the state, and then declares that some California corporate law rules apply. Case law isn't clear, so often class votes are held even if not required.

Ehh, since VantagePoint (DE Supreme Court affirming Chancery Court, 2005) and Lidow (CA appellate court in dicta, 2012) there hasn't been anything saying that Section 2115 should apply that I've come across. It's not perfectly settled, but it's not unreasonable to rely upon.

* note also that there's the oft-quoted "60% of Fortune 500 companies are Delaware C-corps," but most people forget about the contrapositive - that 40% of the Fortune 500 are NOT Delaware C-corps. It's the most common way to go, but not the only way to go.

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