An earlier post showed that Delaware is dominant state of incorporation for private companies that raise external financing. California was second with about 7% and Nevada was third with about 4%. A follow-up post showed that virtually all corporations incorporate in either their home state or Delaware. In fact, Delaware had about 91% of the corporations incorporated out of state. But Nevada had a respectable second place finish with about 5% of out-of-state incorporations. That is an especially impressive figure when one considers that the remaining 4% is spread among the other 48 states.
Overall, Delaware had about 62.5% of the private companies, as shown in the prior post "Where Do Privately Held Corporations Incorporate?" But how would Delaware fare among public companies reporting to the Securities and Exchange Commission? For many years, Delaware has been thought uniquely adapted to the needs of public companies, so we might expect it to have an even greater share there. We use the same data derived from Form D filings to find information on public companies. I determine whether a company is a reporting company by whether it has filed a 10-K or 10-Q on EDGAR.
Somewhat surprisingly the data show that among public companies filing reports with the Securities and Exchange Commission, Delaware actually has a substantially lower share than it had among private companies. Only 48% of the public reporting companies were incorporated in Delaware. Nevada was again second, but among the public companies its share was far higher, with about 27% (compared to 4% for private companies).
Indeed, not only does Nevada have a huge chunk of the reporting companies, it has had a rise in its share over the last several years. Among corporations incorporated prior to 2007, Nevada had a 20% share compared to Delaware’s 52%. Among those incorporated in 2007 or later, Nevada had a stunning 47% compared to Delaware’s 35%.
Is Delaware losing its grip on public companies to Nevada’s competition? The story is more complex, as we will see in the next post.