They are often trying to dodge their local state’s regulations, though.
The charitable take is that most corporations want to comply with a state's regulations because unintentional compliance violations are painful and expensive, and it is relatively easy to be confident that you are compliant as a Delaware corp.
* it's easy and well-documented - the main thing you have to remember is to check the boxes that say this is an actual company, and not a holding company for a boat (where the real tax dodging is)
* it was reported to make acquisitions easier (as the company acquiring you would either also be a Delaware corp or it would be more straightforward even if they weren't.)
If you run into some legal question somewhere down the line, investors and their lawyers will be much more comfortable with Delaware law than some other state who may not have clear language on the books and/or have never tested that particular situation in court before.
Given that, would you rather have a case tried in a court that has only tried a handful of other cases, or would you rather be in a court that has handled a mountain of cases, with lots of information as to what the law really means, as it has played out in real-life scenarios?
Being tried under a legal regime where there is a ton of past history seems a lot easier to reason about than one where there isn't much.
> It's as if one is joining a club that has rules of business conduct clearly documented.
Well, yes. The law is the law, sure, but the "documentation" is much more than just the law, as written.
Many people in this thread cite most court systems are the same yet some people choose to incorporate in Delaware. I happen to be incorporated in Massachusetts because that is where I live.
However, we were strongly told that for early stage startups, some (CA) VCs would only bother looking at CA or DE companies.
(It also doesn't hurt that most businesses also find Delaware's business law to be reasonably fair and advantageous. Musk notwithstanding, of course.)
This is somewhat confused. Most common law jurisdictions merged their courts of law and courts of equity into a single unified court system long-ago; Delaware is unusual in not having done so
But if you bring an equitable cause of action, courts in other jurisdictions will apply equity to decide it. And Delaware’s Court of Chancery applies common law as well.
There are real advantages to Delaware’s judicial system from a corporate perspective-a specialised court system can be more responsive because it isn’t weighed down with other types of cases, doesn’t have juries, offers judges with deep experience in that specific area of law, etc. But it isn’t purely due to keeping separate equity courts; other jurisdictions could get similar results by establishing specialised courts for particular types of cases, without necessarily having to rely on the old law-vs-equity jurisdiction to draw the line.
(Obligatory disclaimer that these are ~30-year-old memories of some dumb 20-something’s understanding of the law at the time.)