it is not necessary for a corporation to have an office in the state in which it inc 691654

It is not necessary for a corporation to have an office in the state in which it incorporates. In fact, more than 50 percent of the Fortune 500 corporations are incorporated in Delaware. A primary reason is the Delaware courts’ long standing “business judgment rule.” The rule provides that as long as directors exercise “due care” in the interests of stockholders, their actions will not be second guessed by the courts. The rule has enabled directors to reject hostile takeover offers and to spurn takeovers simply because they did not want to sell the company. However, new interpretations are emerging. In a recent case, the state court ruled for a company that made a hostile takeover bid. On appeal, the Delaware Supreme Court ruled for the directors but gave the following guideline to the state courts: “Was the board’s response reasonable in the light of the threat posed?”