I appreciate your feedback on my recent column about DraftKings and Twitter joining TransPerfect in leaving Delaware based on Chancery Court corruption that so many of you are worried about.
How much is the high price to Delaware as more companies leave? Many of you are concerned.
Here is some of the feedback you sent:
“Outrageous—Delaware must make changes. It gets worse and worse.
Good for TransPerfect. Thanks for keeping us informed.”
“IT NEVER ENDS, THE GOOD OLE BOYS ARE RUNNING THE SHOW. If we keep losing companies incorporated in Delaware, the money bonanza will end. Hooray for Mr. Shawe-Good article.”-Eric B.
“Delaware is losing money by the day. This must stop!”
“Nevada is stealing our business. Our lawmakers must wake up to what’s really happening!”
“The Chancery Court is out of touch and outdated. It should be changed or done-away with.
I hope you are able to usher in change on this. I’m reading all of your coverage.”
“If Delaware doesn’t do anything about this, It’s going to be too late to do anything.”
“Delaware is the Switzerland of the U.S. Is Nevada going to take over Delaware’s top role?
This is such depressing news for our state, Judson.”
“All of this news needs to be recognized by those in power in our state and action should be taken as soon as possible.Time is running out on this.”
After reading the above feedback, please see the piece below from Nevada’s newspaper. I appreciate your feedback. Keep it coming, folks!
JUDSON Bennett–Coastal Network
DExit to the desert: Why I left Delaware for Nevada
Some 80 years ago, visionaries saw a dusty military outpost in the middle of the Nevada desert, and imagined an entertainment mecca. Since then, Las Vegas has erupted into a thriving, world-famous tourist destination. Now, the innovative foresight that unleashed this legendary Nevada boom stands poised to open the next frontier of the Silver State’s economic expansion: as the future home of business incorporation.
Nevada is well-positioned to wrestle this position away from the current incorporation capital, Delaware, because the Silver State offers all the factors needed for certainty and success. These include low legal expenses; a fair and reasonable tax climate; a culture of protecting the personal privacy of shareholders and company officers; a consistent and impartial judicial system and — critically — confidence that the rules of the road will facilitate commonsense settlements and just outcomes.
This all stands in stark contrast to the failed status quo in Delaware. Like most major companies, I initially incorporated TransPerfect in Delaware, only to quickly learn its outmoded approach to the law was not in the best interests of my company or employees. Instead, benches like the Delaware Chancery foster ugly, protracted court clashes solely to enrich the state’s legal class.
The decay of Delaware’s courts into murky, self-dealing institutions is driving executives like me to seek a better place for legal stability and legitimacy. And I’m not alone. Companies such as Twitter and DraftKings have also abandoned Delaware. And thankfully, Nevada is providing that refuge for companies seeking fairness and reliability in state business courts.
Now, Nevada has an enormous opportunity to supplant Delaware as the premier location for job-creating companies to incorporate. Elected and civic leaders should aggressively pitch Nevada all over the globe, and continue to smartly refine its legislative and regulatory framework to lure more companies to incorporate in Nevada.
The benefits to the state would be significant: more investment, more jobs, and higher tax revenue to fund key priorities such as roads, school, fire and police services, and needed social programs.
Because even though shifting where your company is incorporated is no easy decision, businesses want a home that provides legal and operational stability. The Delaware status quo is no longer tenable.
As the founder and CEO of TransPerfect, the world’s largest provider of language services and technology for global businesses, I initially incorporated in Delaware, only to quickly learn that the corruption there is a feature, not a bug.
The Delaware Court of Chancery is the most important judicial bench in America that you’ve never heard of. Thanks to the state of Delaware’s unique laws, the Chancery is where the most significant business cases are heard. Fortune 500 companies — with their hundreds of thousands of employees, millions of customers and billions of dollars in profits — routinely find themselves before this court to resolve a wide range of commercial lawsuits and corporate cases.
The Chancery court is a vestige of the patronage court system that ran rampant in an earlier era — a 19th century institution in a 21st century world. Insiders trade on law firm connections and personal pedigree to land appointments to the court. Given this sweetheart arrangement for Delaware’s legal upper class, it’s no surprise that the Chancery is shrouded in secrecy and exempted from meaningful ethics oversight or reporting requirements. Those pesky protections would just hinder the ability of judges and lawyers to extort the legal process to line their pockets and expand their influence.
Decades ago, the entrepreneurial spirit of Nevada catalyzed one of the greatest economic explosions in human history. That same energy and vision can be applied once again to cement Nevada as the next incorporation capital of the world and reap staggering financial rewards. It would be a smashing success for the Silver State — and for all of the companies burned by the corruption that runs rampant in Delaware’s courts.
Phil Shawe is the CEO of TransPerfect. He resides in Puerto Rico.Employment signage as seen outside a business in Henderson on Tuesday, Dec. 21, 2021. (Daniel Clark/The Nevada Independent)