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Delaware General Corporation Law

DelawareGeneral Corporation Law

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Itis a provision of the both the federal and the statute law thatanyone in the United States can start up a company or business inthe United States of America. However, they are required to abide bythe laws that regulate the particular businesses that they intend toventure into. The United States corporate law is the main regulatorof governance, power of corporations and finance in the US.Nonetheless, the individual States are allowed to have their ownbasic codes that regulate the corporations that exist in theirrespective jurisdictions. The federal law therefore, creates whatwould be referred to as the minimum standards for trade in theorganizations it also provides a legal framework on governance andshare rights. As interpreted by the US Supreme Court the CorporateLaw is flexible enough to allow organizations to corporate in anyState regardless of where the headquarters of the organization are.This paper will discuss the DelawareGeneral Corporation Lawit aims at explaining what the law is, who impacted the law and forhow long the law has been effective. The paper will also trace anychanges that have been to law over time.

Accordingto Zeberkiewicz&amp Rohrbacher (2011), could be working well with thecorporations. Some of the basic provisions of this law are that anyperson or an individual as long as their business is lawful areallowed to form a corporation in this State. The law also defines thecontent of the certificate of incorporation which otherwise acts asthe license to operate a corporation in the region if and when it isfiled with the secretary of State.

Historyof the law

DelawareStatefollowed New Jersey in the adoption of laws that attracted investmenttheir respective States economies. In March 1899, Delaware adopted ageneral incorporation act with the sole aim of promoting business(Gorder,2014).Important to note is that prior to the adoption of this act, forminga corporation in Delaware required a special act of the Statelegislature. That is one had to appeal to the legislature to debateand pass an act that would allow them to form a corporation in theState. That process was time consuming due to the views of thevarious legislatures who either differ with the products that onewould want to deal with or would have an issue with the mannerthrough which the business would be conducted. Additionally,self-interest of the legislature would also come in the way of makingsound and sober acts that would help a corporation start and grow inthe region. Other Legislatures would want to fight off competition oftheir own corporations therefore, making it difficult for investorsto form corporations in the State since there was lack of fairness inthe acts that would permit them to operate in Delaware. The act wastherefore, adopted with an aim of achieving uniformity in the mannerthrough which the corporations established and treated. It alsotargeted at establishing a law that would see to it that acorporation that would sell services to the other existentcorporations was formed. DelawareGeneral Corporation Law has impacted various players in the economicsector of the State. This section intends to discuss the peopleaffected by the law individually.

Investors

Taxcompliance is one of the major challenges that investors face whileforming corporations in different parts of the world. Tax laws are amajor factor that affects the investors since high tax rates wouldeither mean the investors would get smaller profit margins or woouldhave to sell their products at high prices so as to cover up for thecost incurred as Tax. The Delaware general corporation law allows thecorporations to minimize corporate expenditures that can be achievedby the legal standardization of corporate legal processes(Zeberkiewicz&amp Fresco 2016).Compliance to the law is not debatable which also lays a fair playground for all investors with economic interests in the State(Uebler,2010).

Shareholders

Theshareholders are another group of the stakeholders that are affectedby the law. One of the major provisions of the particular law is thatthe shareholders are not liable for the corporate debts that thecorporation could have accrued in its business transactions. Barbero&amp Marchiano (2016)explains that companies opt for debts and loans for expansion andgrowth. They explain that as a result of this over 60% of thecorporations operating in America have sought loans or debts in a bidexpand their operations to increase their profit margins. Thisparticular law ensures that the shareholders are not held liable forcorporate accumulated by the corporation. The Law treats theshareholders and the corporation as two different entities therebyensuring that even if the company is liquidated for some reason theshareholders will be not be held liable for the loans.

ThereLaw has been amended in 2016 June 30thapart from the ratification of defective corporate acts amendmentthat later took effect in the subsequent year, the amendments wereeffected in the year 2013 after Jack Markell the governor then signedinto law the amendments that were presented to him. The amendmentsubstantially affected the processes through the public companiesadopted when merging

Otherstakeholders

Consumersof the products are also affected by the law. The corporations arerequired to be registered first for them to be allowed to operate inDelaware. The registration brings in a sense of responsibility to theorganization in that incase a consumer wanted to sue the company itwould easily do that since the information of the organization can befound in the secretary of the State. The Delaware General CorporationLaw also protects the interests of other players in the sector. Forinstance the law prohibits corporations acting as banks. Thattherefore, ensures that banks are left to function as banks and cantherefore, not be faced out of business by corporations. In theoccurrence of a misunderstanding amongst the shareholders or thedirectors, the law provides for the a custodian being put in place incase there is a deadlock to ensure that the warring parties arebrought together to a collective decision. Thereby the law helps thecorporations from closing down or losing a lot in court cases

Inmy Opinion and based on the analysis of this law, I think the law isgood. () posits that for economic growth to take place in a givenplace, the economic environment has to fulfill certain provisions. Asound legal framework through which businesses can thrive withoutmuch tussle should be put in place. The law offers a sound frame workthat does not only ensure that the shareholders are protected, butalso protects and encourages investors in this State. The law alsosees to it that the interests of other players in that economy arealso safeguarded. As viewed in the discussion above, the lawprohibits corporation form acting as banks. That ensures that theplace of banks in the Delaware economy is secured and that investorsin the banking sector do not feel threatened or live in fear of beingfaced out of the market. Therefore, the law ensures that the variouseconomy players exist and earn from each other. The existence of thelaw also sees to that the consumers are protected. That is achievedby the provision of this law that the corporations are onlyconsidered to be existent after the certificate of incorporations isfiled with the secretary of State. Therefore, there isaccountability if a consumer feels that the product they purchasedform a company that may be vanished there is a way of tracing thecompany owners through the secretary of State and bringing them tobook. Also, the law has seen to it that has been many investors whohave invested in the State. The laws act as an incentive to theinvestors. Therefore, the growth of the corporations in Delaware andit strengthening economy can be attributed to this particular law. Itdid not only turn around the economy of Delaware but also led toother States adopting similar laws.

Ifother States assimilate this law and improved their economy then, theDelawareGeneral Corporation Law shouldnot be repealed or changed as the moment since it serves its purposeof encouraging investors and also protects all stakeholders involved.Thislaw has also had immense impacts in the economy of Delaware. One ofthe major impacts is that it has attracted investors into the region.The favorable laws have attracted many corporations due to theenvironment that has been created. It has also led to the growth ofother economies of States that have copied the Delaware laws.

Conclusion

Itis a provision of the both the federal and the statute law thatanyone in the United States can start up a company or business inthe United States of America. However, they are required to abide bythe laws that regulate the particular businesses that they intend toventure into. The United States corporate law is the main regulatorof governance, power of corporations and finance in the US law.The is a statute governing corporatelaw in the United States that is operation in the State of Delaware.Important to note is that it has been marked one of the mostimportant jurisdictions in the United States corporate law since thebeginning of the 20thcentury. As at Dec 2015, sixty percent of the publicly tradedcorporations on the United States been incorporated in Delaware.Also, sixty five percent of the Fortune five hundred was incorporatedin the State of Delaware. DelawareGeneral Corporation Law has impacted various players in the economicsector of the State. Investors are of the groups affected by the law.Shareholders one of the major provisions of the particular law isthat the shareholders are not liable for the corporate debts that thecorporation could have accrued in its business transactions. OtherstakeholdersConsumersof the products are also affected by the law. The corporations arerequired to be registered first for them to be allowed to operate inDelaware. The registration brings in a sense of responsibility to theorganization in that incase a consumer wanted to sue the company itwould easily do that since the information of the organization can befound in the secretary of the State.Thislaw has also had immense impacts in the economy of Delaware. One ofthe major impacts is that it has attracted investors into the region.The favorable laws have attracted many corporations due to theenvironment that has been created. It has also led to the growth ofother economies of States that have copied the Delaware laws. Thelaws act as an incentive to the investors. Therefore, the growth ofthe corporations in Delaware and it strengthening economy can beattributed to this particular law. It did not only turn around theeconomy of Delaware but also led to other States adopting similarlaws. If other laws assimilate this law and improved their economythen, the DelawareGeneral Corporation Law shouldnot be repealed or changed as the moment since it serves its purposeof encouraging investors and also protects all stakeholders involved.

Reference

Barbero,E. R., &amp Marchiano, M. (2016). Stakeholders or Shareholders?Board members` personal values and corporate identity. RevistaBrasileira De Gestão De Negócios, 18(61), 348-369.doi:10.7819/rbgn.v18i61.3020

Uebler,T. A. (2010). Reinterpreting Section 141(e) of Delaware`s GeneralCorporation Law: Why Interested Directors Should Be &quotFullyProtected&quot in Relying on Expert Advice. Business Lawyer,65(4), 1023-1054.

VanGorder, M. (2014). Boilermakers V. Chevron: Are Board AdoptedArbitration Bylaws Valid Under The ?.Delaware Journal Of Corporate Law, 39(2), 443-465.

Zeberkiewicz,J. M., &amp Fresco, B. V. (2016). 2016 Proposed Amendments to theGeneral Corporation Law of the State of Delaware. Insights: TheCorporate &amp Securities Law Advisor, 30(4), 14-19.

Zeberkiewicz,J. M., &amp Rohrbacher, B. (2011). New Day for NonstockCorporations: The 2010 Amendments to Delaware`s General CorporationLaw. Business Lawyer, 66(2), 271-313.