Why Delaware LLCs?
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Date
2012
Authors
Gevurtz, Franklin A.
Journal Title
Journal ISSN
Volume Title
Publisher
University of Oregon School of Law
Abstract
For years, scholars have debated why parties choose to
incorporate under Delaware law companies that operate businesses in other states—since different answers to this question lead to
different normative assessments of the practice. Traditionally, this
debate focused on public corporations and ignored private firms and
noncorporate forms of business. The exploding use of limited liability
companies (LLCs) instead of corporations, and the formation of LLCs
under Delaware law to operate businesses outside Delaware, call for
expanding this discourse to ask “Why Delaware LLCs?” This Article
adds to the recent literature seeking to answer this question
empirically. It critiques recent studies that looked for statistically
significant correlations between state of formation choices for LLCs
and differences in state LLC statutes and legal infrastructure. Finding
this methodology suffers from inherent limitations, this Article
presents results from a different approach. I interviewed business
attorneys whose clients have formed LLCs and asked them a battery
of questions designed to ascertain why their clients formed LLCs in
Delaware. The results of this survey provide important insights into
the aspects of Delaware’s substantive LLC law and its legal
infrastructure that motivate formation of Delaware LLCs, and thereby
serve as an important complement to the existing statistical studies.
Description
72 pages
Keywords
limited liability companies
Citation
91 Or. L. Rev. 57 (2012)