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Because of the extensive
experience of the Delaware courts, Delaware has a more
well-developed body of case law than other states, which
serves to give corporations and their counsel greater
guidance on matters of corporate governance and
transaction liability issues. Disputes over the internal
affairs of Delaware corporations are usually filed in
the Delaware Court of Chancery, which is a separate
court of equity (as opposed to a court of law). Because
it is a court of equity, there are no juries, and its
cases are heard by the judges, called chancellors. There
is currently one Chancellor and four Vice Chancellors.
The court is a trial court, with one chancellor hearing
each case. Litigants may appeal final decisions of the
Court of Chancery to the Delaware Supreme Court.
The status of Delaware as a
corporate haven is not recent: following the example of
New Jersey who enacted corporate-friendly laws at the
end of the 19th century, Delaware played the game of
fiscal competition by adopting in 1899 a general
incorporation act aimed at attracting more businesses.
More broadly, many U.S.
states have usury laws limiting the amount of interest a
lender can charge, but Federal law allows corporations
to 'import' these laws from their home state. Delaware
(amongst others) has relatively lax interest laws, in
effect allowing banks to charge as much as they want,
hence the preponderance of credit card companies and
other lenders in the state.
However, other states such
as Nevada are more friendly to corporations in certain
respects, especially in offering protection from hostile
takeovers.
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