Corporate Governance in Delaware
The Delaware General Corporation Law establishes that the business and affairs of every corporation in Delaware are managed by a board of directors. Every corporation in Delaware must have Bylaws, although they do not need to be publicly filed.
Formation and Operation of a Delaware Corporation
Formation of a Delaware corporation occurs through the filing of Articles of Incorporation with the State of Delaware. This allows a Delaware corporation to operate anywhere. The state adopted the general incorporation act in 1899 to attract more business.
Taxation and Corporate Structure in Delaware
Delaware does not tax corporations doing business from another state. Shareholders outside Delaware are also exempt from paying tax on shares. Unlike most states, Delaware does not have specific requirements for the number of directors and officers within a for-profit corporation.
Key Considerations for Directors and Officers
Directors in Delaware must be at least 18 years old and are not required to be state residents. It is crucial to appoint individuals with knowledge, trustworthiness, and sound decision-making skills.
Every Delaware corporation must appoint a registered agent for legal document purposes.
Simplified Rules for Delaware Corporations
A Delaware corporation can have a sole shareholder who is also the director and officer. This flexibility in corporate structure reduces restrictions on the number of directors and officers a corporation must have.
Access to Corporate Records in Delaware
Section 220 of Delaware law grants shareholders access to corporate records for investigating potential wrongdoing such as fiduciary breaches. Access to records requires a valid purpose.