Why Are So Many Shareholder Lawsuits Filed In Delaware?

No state is more associated with corporations and corporate law than Delaware. According to data from the Delaware Division of Corporations, approximately two-thirds of all Fortune 500 companies in the United States are incorporated in Delaware. For this reason, a significant percentage of major shareholder lawsuits are filed in Delaware. Here, our Miami shareholder dispute lawyers explain why so many big corporations call Delaware home and highlight the key things to know about legal jurisdiction and shareholder disputes. 

Delaware has a Well-Developed Corporate Law System 

Ranked 45th out of 50 in total population and lacking truly major cities, Delaware is not an obvious candidate to be the home to many of the nation’s largest corporations. Yet, a substantial portion of the most prominent businesses in the United States incorporated in Delaware. There are several different reasons why so many big companies call Delaware “home.” Here are the two main reasons:

1. Modern, Up-to-Date Corporate Laws: Delaware has the country’s most well-developed state-level corporate law structure. Delaware puts a strong emphasis on corporate law.
2. Experienced Judges and Effective Court System: Corporate cases are common in Delaware. The state’s court system has experienced adjudicators. Many companies rely on the Delaware Court of Chancery for relatively predictable outcomes in disputes. 

Shareholder Dispute and Jurisdiction 

Shareholder litigation is notoriously complex. For shareholders, there are often questions about where a claim should be filed. A shareholder (or class of shareholder) can file a lawsuit in any state that has jurisdiction over the case. Jurisdiction can sometimes be a complicated issue to work out in a corporate law case. In general, a state will have jurisdiction to hear a shareholder dispute if any one of the following three factors applies:

1. Incorporation: A shareholder can sue a company in the state that it is incorporated in. For example, if a business is incorporated in Delaware, a shareholder lawsuit can generally be filed in a Delaware court.
2. Main Office: Many companies that are incorporated in Delaware have their main office in another state. Often, a shareholder can also file a lawsuit against a company in their state where their principal office is located. A company with a principal office in Miami may be sued by a shareholder in a Florida court.
3. Sufficient Contacts (Issue Specific): Finally, a state may have subject matter jurisdiction over a particular shareholder lawsuit if there is sufficient contact between the state and the specific legal matter that is in dispute. 

Do You Need Help With a Shareholder Dispute in Southeastern Florida? 

We are more than ready to help protect your rights. At Pike & Lustig, LLP, our South Florida shareholder law attorneys have the professional expertise that you can count on. If you have questions about shareholder disputes and jurisdiction, we can help. Get in touch with us by phone or send us a direct message to set up your strictly private consultation. Our firm represents shareholders in Miami, West Palm Beach, and throughout the wider region in South Florida.

Resource:

corp.delaware.gov/stats/