The last several posts have made it clear that both corporations and limited liability companies tend to incorporate either in their home states or in Delaware. Businesses do not appear to choose among all fifty states when deciding where to organize: the vast majority of them simply choose between their home states and Delaware, as Professor Robert Daines argued in 2002. Thus, Delaware's rival is not any particular state, but the "home state" as a generic concept.
The landscape has changed somwhat from when Daines wrote his article in 2002, although his basic points are still true. First, the state of Nevada, which had only a tiny proportion of incorporations then, has grown dramatically in the number of public companies incorporated there. Second, the state of North Dakota launched an attempt to lure companies away from Delaware with a "shareholder-friendly" corporate law.
North Dakota still has not made a dent in Delaware's share of incorporations but its efforts hold significant potential if retooled. Nevada, on the other hand, actually has made a difference in Delaware's share of public companies, but its story is more complex. In coming posts, we'll look at the efforts of both of these potential rival states to attract companies away from Delaware.