The second thing that's important is the existence of a legal infrastructure. The Delaware Secretary of State, e.g.which maintains the division of corporations, that's the, that's the office of the state that handles incorporation papers, mergers, amendments of charters and things like that sort of routine corporate life. That? In other states can get very clumsy and slow and expensive, but in Delaware is. Automated to the.That it's not an obstacle to people. The way it is has been in some places. So there's that infrastructure, there's the infrastructure of the corporate bar, which makes doing business and handling incorporation matters. Easy makes it easy to get advice, although I have to say that one of the attractions about Delaware corporate law is that lawyers all around the country practice it you don't have to go to Delaware to get good Delaware legal advice. It's what gets taught in law schools it's what gets practiced when people come out into corporate law practice. So there's a huge. I guess you can call it a Network externality if you're an economist. But. A leg up on the advice that people get, that clients get about where to incorporate, because if you go to a lawyer who knows Delaware law, they're going to have a preference for a Delaware Corporation because they don't have to learn Wyoming or Texas law. Third major advantage that has attracted and kept companies incorporating in Delaware is the court system. There have been efforts from time to time in other states to create business courts. That's, I think, a useful thing to create a judicial body that is. Have specialized knowledge. But. Delaware has had it for a long time its courts have developed a massive body of precedent. That? Whate everyone can say about? Uncertainty is in litigation. The existence of all that precedent does minimize it doesn't eliminate it, but it minimizes that uncertainty. And when you are choosing Delaware incorporation, you are, in effect choosing to make yourself available for litigation about internal claims, stock holders versus management that kind of thing you're making yourself available in Delaware to a court there for hearing those claims, and the Court of Chancery in Delaware is the one that has primary jurisdiction over those claims. But it's a court that sits without a jury, which. Does enhance predictability of the result? And it assures. Litigators and litigants that if there's a corporate dispute, you're going to be in front of a judge who knows what she or he is talking about in this field, just by virtue of having had the experience. A concentrated experience in dealing with corporate law issues. So all those things, I think. Explain how Dela wre got to where it is. And the fourth thing that I kind of think is underrated is. You could call it inertia. If you are going to. Want to go public, take a company public and issue stock to lots of people and use underwriters on Wall Street and so forth. You are going to encounter. A raised eyebrow or resistance, if you say well, we're going to use a South Dakota Corporation. I live in South Dakota. But. That their law, their legal system and corporate law is not well-known nationally and internationally in the way Delaware is. So lawyers who are trained in Delaware law but not South Dakota law, are going to gravitate toward that. And investors who look at companies and want predictability in the interests of minimizing their costs of investment. Are going to prefer a known quantity? And that, I guess, and stop me if you want. But that can lead. Yeah, I mean overall, yeah to me it sounds you know from a again, I'm not, you know, I work in a Corporation, but I am not of a corporate, you know. History or involvement? But to me it sounds a bit like you know, for corporations, Delaware, it is kind of like a premium product. Right, it's a well-known, high-quality service and I imagine my understanding is that you know the incorporation fees and some of the franchise fees are a bit higher in Delaware. But. With that, you get. You know this, this level of service, if you will, plus whatever protections come with, you know that legal liability and all that that a Corporation like that would offer. So then my question then becomes Well then, why are we seeing some companies reincorporate, and I'm thinking of Texas as a big example. But we've seen in recent years Nevada Also, you get into that game. What's the pull for these companies and also what's? What are these states trying to do to steal that business away? Yeah. Let me just starting from the end of what you were asking about stealing the business. I think Texas and Nevada are very different that way, Texas is a huge state geographically and in dollar terms compared to Delaware. Compared to a lot of states and? I think. The idea that Texas would care about stealing Delaware's business. In order to get the annual franchise tax fees. Is kind of laughable because it's a drop in the bucket in Texas and.
