Delaware Effect

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The Delaware effect describes an effect in the competition between locations in the US states for the most attractive corporate legal system .

meaning

The states of the USA can charge the registration of a company with an annual incorporation tax (franchise tax), which makes the attraction of companies a lucrative source of income, especially for smaller states. In addition, a company can be incorporated regardless of its actual seat in the state whose law the founders prefer.

In Delaware , the second smallest state in the northeastern United States with just under one million inhabitants, this fact led to a very liberal corporate law, the Delaware General Corporation Law, and a simultaneous reduction in corporate taxes. As a result, 850,000 companies were registered in this state, for example at the address of the Corporation Trust Center in Wilmington , including well-known companies such as The Coca-Cola Company, General Motors or Google and German DAX companies such as Daimler, Continental or Bosch. More than half of all listed companies in the US and 63% of the Fortune Global 500 have their legal headquarters ( mailbox company ) in Delaware, although they do not manufacture there.

Initially criticized as a race to the bottom , a more positive view has prevailed since the 1990s. The Delaware effect is to be seen as a race to the top , since the shareholders in Delaware have specialized lawyers and judges with special expertise at their disposal, as well as a sophisticated corporate law with precedents on almost every legal issue. Delaware lawmakers will endeavor to keep corporate law attractive.

Europe

In the European Union , since the decision of the European Court of Justice (ECJ) Polbud, competition to avoid regulatory legislation has opened up. In it, the ECJ emphasizes the priority of internal market freedoms over all national protective and regulatory provisions. It does not constitute abuse if a company establishes its seat under the law of a Member State in order to benefit from more favorable legislation. A change of legal form to avoid regulatory protection and co-determination regulations are thus part of the European constitutional model.

In Germany, the British limited company mainly competes with the German GmbH in the form of a dummy foreign company . As a reform of the GmbH, in the course of the law to modernize GmbH law and to combat abuse (MoMiG), the entrepreneurial company (limited liability) was introduced in order to remain competitive in the competition for the most attractive company form on the European internal market. In parallel, the European private company (Latin Societas Privata Europaea, SPE) is to be introduced as a legal form of a European corporation for small and medium-sized enterprises.

Such a race is ruled out between the German or Austrian federal states, as there is a nationwide uniform commercial or company code.

See also

Web links

Individual evidence

  1. ↑ Eva-Maria Kieninger: Competition of legal systems, dictionary of European private law 2009, accessed on July 23, 2020.
  2. ↑ corporate law in Delaware corplaw.delaware.gov, accessed on 23 July 2020th
  3. ↑ Thorsten Schröder: Tax havens: Delaware, darling of global corporations Die Zeit , May 3, 2013.
  4. ↑ Offshore Daughters: That attracts German companies to strange locations. Delaware's Impressive Benefits Wirtschaftswoche , April 15, 2013.
  5. ↑ Insolution Ltd. (Ed.): Individual States - Delaware and Florida. Retrieved July 23, 2020.
  6. ^ Delaware Division of Corporations
  7. ↑ cf. Roberta Romano: The Genius of American Corporate Law. 1993 (English).
  8. ↑ ECJ, judgment of October 25, 2017, case C ‑ 106/16 Polbud - Wykonawstwo sp. z oo
  9. ↑ Susanne Wixforth: Tax Law and Codetermination: On the Way to Delaware? DGB , January 30, 2018.
  10. ↑ Martin Höpner : regime shopping under the protection of European law: The Polbud judgment of the European Court on Jan. 23, 2018.