Are Foreign Countries Delaware's Real Competition?
I have often written about the State of Nevada's efforts to compete with Delaware for corporate charters. Recently, I came across a draft study that suggests that when Delaware looks over its shoulder in the race for corporate charters, it will see a foreign country rather than Nevada:
"While Delaware continues to dominate the market, foreign nations now account for more than double the number of companies incorporated in Nevada, which has been identified as the only other state besides Delaware actively vying to draw corporations that physically operate outside of its borders."
William Moon, Delaware's New Competition (May 28, 2019). Northwestern University Law Review, Forthcoming; U of Maryland Legal Studies Research Paper No. 2019-09. Available here (footnote omitted). Professor Moon reaches this conclusion after surveying all publicly traded companies during a 30 year span from 1985 until 2015. In 2015, he found that in 2015, the percentages of publicly traded companies listed in U.S. securities markets for Delaware, Nevada and foreign countries were 48.1%, 5.5% and 13.4%, respectively.
Professor Moon warns that a "new revolution is quietly emerging in corporate law" and that small number of foreign nations "have built sophisticated legal infrastructures to commercialize their lawmaking authority into a staple revenue stream". Imitation may be the sincerest form of flattery but it may not be the most welcome.