Professor Bainbridge...on law, politics, religion, culture & food

Coors reincorporates in Delaware

According to the The Denver Business Journal Coors has reincorporated in Delaware (moving from Colorado) via a downstream merger with a wholly owned subsidiary:

"This change will be beneficial to the company and its shareholders through obtaining the benefits of Delaware's comprehensive, widely used and extensively interpreted corporate law," said Peter Coors, chairman, in a statement.

The proposal received strong (80%) shareholder support. The proxy statement listed three reasons for the move:

Through its General Corporation Law of the State of Delaware (DGCL), the state has especially flexible and comprehensive corporate laws. Because of those laws, 60 percent of Fortune 500 companies are incorporated in the state.

Delaware has a special court, the Court of Chancery, that deals exclusively with corporate legal cases. Most states, including Colorado, don't have such a business-oriented court.

Reincorporating from Colorado to Delaware also may make it easier to attract future board members since such candidates should already be familiar with Delaware corporate law.

In other words, the company perceives Delaware law as racing (or, at least, rising) to the top. Next week I'm off to a conference at Vanderbilt law school to comment on a paper attacking the race to the top hypothesis. I'll be posting more on this topic then. In the meanwhile, my article The Creeping Federalization of Corporate Law has my most recent defense of the race to the top hypothesis.