The small US state is the stage for Musk’s Twitter battle – AFR

A high-stakes court battle between Elon Musk and Twitter began Tuesday in Delaware, a tiny stretch of America’s east coast best known for being the nation’s oldest state.

Nonetheless, it is also the legal home of many businesses, drawn by its reputation as a tax haven and its expertise in resolving business disputes.

Here’s a closer look at Delaware:

Twitter chose in 2007 to locate Delaware, less than a two-hour drive northeast of Washington, instead of California, where the social network is headquartered.

The one-to-many messaging platform isn’t alone: ​​Beverage giant Coca-Cola, mega-retailer Walmart, and aerospace giant Boeing are all registered in Delaware.

According to official data from the Delaware Business Service, more than 1.6 million businesses are legally incorporated in the state.

That’s far more than the state’s population of about 970,000.

More than two-thirds of the companies on the Fortune 500 list of the largest US companies have chosen Delaware as their place of residence.

A PO Box is often the only physical presence of many of these businesses in the state.

One of the reasons businesses register in Delaware is the state’s reputation for the ease and speed with which it can process a business registration.

For $1,000, the Delaware government’s corporate division can register a new corporation in one hour.

In other states, the average processing fee is $100-$200 but takes a full business day.

This ease of procedure also comes with limited transparency: Delaware does not require the name of the actual beneficiary at the time of registration, allowing companies to guarantee their owners near total secrecy.

As a result, shell companies are thriving on US soil, the Panama Papers revealed in 2016.

The lack of transparency is offset by favorable tax policies for companies.

If a company does not conduct its business in the state – which is the case for the majority of big names registered there – it does not have to pay income tax.

Instead, the organization pays a much more modest franchise tax.

As a result, Delaware is often seen as a corporate tax haven – despite government insistence to the contrary.

With this surge of corporations, an entire legal system has developed in Delaware, giving it a reputation for expertise in handling corporate disputes.

The Musk-Twitter case is being heard in the Delaware Court of Chancery, a commercial court established in 1792 on the model of a British court of the same name.

“The Delaware Court of Chancery is widely recognized as the nation’s preeminent forum for adjudicating disputes affecting the internal affairs of thousands upon thousands of Delaware corporations and other business entities,” says its website.

The court notes that its decisions are largely based on the concept of fiduciary duty, which is the obligation to act in the best interests of someone or something else.

And especially in the United States, the court does not use a jury to decide a case.

During Tuesday’s first hearing, Judge Kathaleen McCormick scheduled the Musk-Twitter trial to begin in October.