Thinking about where to incorporate your company? While Delaware has long been the go-to choice for startups formed as corporations in the US, we’ve observed that recent changes in the legal landscape and statements by public figures have led founders to take a look at other states – especially Nevada and Texas. Each state offers its own approach to corporate governance, director and officer liability, stockholder rights, and how business disputes are resolved, and the best choice depends on your company’s specific needs and priorities.
The chart below highlights some of the key differences in corporate law among Delaware, Nevada and Texas to help you better understand what’s at stake when choosing your company’s legal home.
Keep in mind, this chart only covers certain legal differences, but practical factors also matter and are worth considering with your legal counsel. For example, your current or prospective investors may prefer or just be more familiar with a certain state’s laws, filing corporate documents with the secretary of state may be easier in some states than others (which can affect how quickly you can consummate certain transactions, like a financing), and corporate tax requirements and liabilities differ among the states as well. Some companies may find these practical differences more important than legal ones, which may be less relevant on a day-to-day basis. In addition, the existing market-standard financing documents have primarily been designed for Delaware corporations, and negotiations of these documents may play out in different ways across different state laws.
* A proposed constitutional amendment in Nevada, if adopted, would establish a distinct business court with appointed judges and exclusive jurisdiction over certain business matters, similar to Delaware in structure.
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