Why Are So Many Companies Incorporated in Delaware?

Why Are So Many Companies Incorporated in Delaware?

You can find the words "A Delaware Company" on the first page of SEC filings from many companies. Perhaps you skip over the boring format pages in the beginning. Maybe you just accept it because it's always been that way. But after noticing that a company I follow closely was listed as a Delaware company -- despite being headquartered 3,000 miles away in San Francisco -- I had to ask, "Why are so many companies incorporated in Delaware?"

One reason is obvious. Companies from all sectors of the economy -- Halliburton , Wal-Mart, Google , and Coca-Cola -- have flocked to the state for the coveted Delaware Loophole, which allows companies to shift royalties and revenues to holding companies in the state to avoid paying taxes in other states. It may sound like a good time, but there is a growing chorus of international governments speaking out about the shadowy tax-haven of Delaware. It is certainly a big problem -- almost 1 million corporations call Delaware "home" -- but it actually isn't the only reason to incorporate in the state.

Find out more in the following video.

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The article Why Are So Many Companies Incorporated in Delaware? originally appeared on Fool.com.

Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio or his CAPS page, or follow him on Twitter, @BlacknGoldFool, to keep up with his writing on energy, bioprocessing, and biotechnology.The Motley Fool recommends Coca-Cola, Google, and Halliburton and owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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