Hacker News Reader

Comment by jawns | Hacker News Reader

> 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.

View on HN

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.

Reply on news.ycombinator.com