When companies seek to shift their domicile from one US state to another in hope of a more conducive legal environment, it can draw a lot of attention. But the impact might not be so consequential — at least in what counts for their investors, the returns from their shares in the companies.
In the last year, several major US companies have moved or signalled a change in their state of incorporation for reasons such ranging from corporate governance wrangles to costs.
Delaware continues to be the dominant choice for companies for their state of corporation. Over the last 25 years, the percentage of the top 2,000 US companies by market capitalisation that are incorporated in Delaware has gone from just under 55 per cent to 70 per cent today. There are good reasons for this. The laws are well-understood and well-litigated in this “First State” of the US.