DEFINITION of 'Delaware Corporation'

A corporation that is legally registered in the state of Delaware, but may conduct business in any state. Delaware first began to adapt its laws in the late 19th century, making changes that would attract businesses away from neighboring New York State. Over time, Delaware became a respected state in which to incorporate, even if the majority of a company's business was conducted outside the state.

BREAKING DOWN 'Delaware Corporation'

Incorporating in Delaware has become widespread among large U.S. companies; about half of the S&P 500 members are incorporate, especially those in the financial sector. Delaware has business-friendly usury laws, which allow banks and credit card companies to have much more freedom to charge high interest rates on loans. These laws can be imported to other states, giving the companies what is essentially a nationwide blanket.

Delaware's Court of Chancery is a well-respected court of equity that resolves disputes between Delaware corporations and has an extensive set of precedents, statutes and case studies from their 200-plus years of operation. Decisions from the Court of Chancery have routinely set the benchmark for U.S. corporate law; the court's experience can be very beneficial to Delaware-incorporated companies that are seeking guidance on a particular issue.

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