If Wal-Mart is an Arkansas company, why is it incorporated in Delaware?

Question

If Wal-Mart is an Arkansas company, why is it incorporated in Delaware?

Answer 1

Wal-Mart's Home Office is located in Bentonville, Arkansas,USA in the northwest corner of the state.

Wal-Mart Stores, Inc. was incorporated in Delaware on October 31, 1969.

WHY DELAWARE?

In a phrase it could be put as: "Court of Chancery "

Details:

1) Location : Convenient in terms of its geographic location for most constituents--not for the typical unsecured creditor, however. It is close to Washington, D.C., New York and Philadelphia.

2) Law: Delaware has a very well-recognized and established commercial court.

The corporation law of Delaware is widely regarded as the most extensive and well-defined body of corporate law in the United States. Both the legislature and the courts in Delaware have demonstrated an ability and a willingness to act quickly and effectively to meet changing business needs.

Taxes: The big reason for corporations to incorporate in the state is to avoid taxes.

The Lawyer’s Guide to Delaware:  (www.hg.org/guide-delaware.html)

“Delaware has evolved the most modern and flexible business organization laws in the United States, has adopted modern banking and consumer credit laws and has reduced personal income taxes and established a nationwide reputation for innovative tax structure,”

“A corporation incorporated in Delaware but not doing any business in Delaware and simply maintaining a statutory corporate office in Delaware is exempt from Delaware corporate income tax,” says the Lawyer’s Guide. Corporations that do conduct actual business in the state also have a number of tax advantages.

Despite Delaware’s small size, more than 525,000 corporations are incorporated in Delaware, including nearly 60 percent of “the Fortune 500 largest U.S. corporations” - including Wal-Mart

Regards

Hari Krishnan

Hari Somanath