A century ago, New Jersey was the state in which to incorporate.  Long before former Iraqi President popularized the expression “Mother of Battles” (“Um El-Ma’arek“), the famed legal scholar Adolph A. Berle, Jr. bestowed the title of “mother of all corporations” on the State of New Jersey.  Berle, Historical Inheritance of American Corporations, Lecture given before The Conference on Social Meaning of Legal Concepts of the Law School of New York University (April 3, 1950).  For more about Adolph Berle, Jr., seeWho Is Adolf Berle, Jr. And Why Is Vice Chancellor Laster Quoting Him?  According to a 1920 article on New Jersey, the reason that “the capital of the world came to New Jersey for their charters was that New Jersey had a plain, brief and liberal statute.” Corporations in New Jersey, The Corporation Journal 143 (1920).

Delaware, Respice Post Te!

The election of Governor Woodrow Wilson in 1910 resulted in New Jersey’s enactment of several anti-corporate laws informally known as the “seven sisters” (Chapters 13-19 of the laws of 1913).    Although these laws were repealed less than five years later, the damage had been done.  New Jersey never recovered.  Corporations fled to nearby Delaware.  This was a comfortable move because Delaware in 1899 had copied New Jersey’s corporation law.  Having stolen New Jersey’s maternal crown, Delaware has held on to it ever since.

Yesterday, Broc Romanek reported that Delaware’s Senate has passed SB 75, a bill that would ban (anti) fee-shifting bylaw provisions.  The Senate took this action over the vehement objections of the U.S. Chamber of Commerce which noted that the bill “calls into question Delaware’s commitment to maintaining the balanced legal system that until now has been the hallmark of its corporate franchise”.  Delaware should understand that its primacy is not guaranteed and can be quickly lost.  Will SB 75 reprise the role of New Jersey’s seven sisters for the benefit of the next Delaware?