by Justin Tollefsen | Sep 17, 2013 | Business Law, Company Formation, Entities WA, Washingon State
Introduction Delaware has long been considered the jurisdiction of choice for startups pondering incorporation. Reasons frequently given for this include a well developed body of corporate law and experienced court of chancery to hear business cases, efficient procedures for filing and reporting and, importantly, institutional investor familiarity with Delaware law. But should these factors necessarily preclude an early stage company from organizing as a corporation in their home state? In this post, I provide a basic outline of key distinctions between Delaware and Washington startup incorporation, allowing the reader to evaluate where they align and diverge and educate themselves as to which might provide the best fit for their new company. As always, it is advised that you consult with legal counsel when forming a company to provide advice relevant to your specific needs. DE Advantages WA Advantages DE Disadvantages WA Disdvantages Investors may demand it. Because most funders are simply more familiar with Delaware companies and the Delaware General Corporation Law (DGCL), they may insist that your company reincorporate before they consider an investment, though this may not be as common with Washington companies as it is with companies domiciled in states such as California. Developed and predictable case law. The Delaware Court of Chancery, a trial-level state court from which appeals are sent directly to the Delaware Supreme Court, has jurisdiction over corporate law matters concerning Delaware companies. Because of the high degree of specialization in this court, there is a much more developed body of case law for attorneys to consult for guidance in the event of a conflict. The Court of Chancery also makes a...
