Delaware has long been the go-to state for businesses to incorporate, but competition is heating up. Lawmakers in the First State are voting on a controversial bill that would give companies more leeway — and maintain the state’s competitive edge as a business-friendly haven. Let’s do the numbers. 

2.2 million

That’s the number of registered companies in Delaware, with nearly 300,000 new entities incorporated in 2023. There are nearly 43 million incorporated entities nationwide, but Delaware is home to many of the richest, including about two-thirds of the Fortune 500.

$2.2 billion

Delaware’s corporate franchise tax generates $2.2 billion in annual revenue, more than a third of the state budget. Corporate tax revenue offsets the state’s lack of a sales tax and low property taxes.

1792

Delaware established the Court of Chancery in 1792 to rule on corporate law disputes. The court has no jury; judges with corporate expertise hear cases. The special court is just one of the reasons Delaware has been a popular place to set up shop since the early 20th century.

2004

That’s when Meta, then Facebook, first incorporated in Delaware. CEO Mark Zuckerberg has reportedly been talking with officials in Texas and other states about picking up sticks, at least on paper.

SB 21

That’s the bill a bipartisan group of Delaware lawmakers are considering  to make their state more business-friendly. The bill would limit investors’ ability to file lawsuits and information requests when they suspect controlling stockholders or executives of insider deals or conflicts of interest.

Supporters, including Delaware Gov. Matt Meyer, a Democrat, say the change would preserve Delaware’s tax base. Opponents argue the law “helps billionaires and corporate insiders avoid accountability” and could lead to abuses of power.

$55 billion

Tesla CEO Elon Musk left Delaware last year, reincorporating in Texas after a Chancery Court judge rejected his multibillion-dollar pay package. In December, a Delaware judge rejected Musk’s compensation plan again, on the grounds of conflict of interest between Musk and his company’s board.

Tesla is appealing the latest ruling, and Musk has encouraged more companies to leave Delaware. The kind of shareholder lawsuit that prompted Tesla’s flight would become more difficult if SB 21 becomes law.

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