Editor: What are some examples of Delaware's growth as a corporate home for America's businesses?
Windsor: The most notable sign of growth is Delaware's rising share of publicly traded companies. In 2005, 60 percent of Fortune 500 companies and more than 70 percent of U.S. initial public offerings were incorporated in Delaware. Fifteen years ago, these market share figures were closer to 50 percent.
Our growth has also been impressive among privately held businesses. The total number of business entities registered in Delaware increased nearly 37 percent in the first half of this decade to a total of more than 695,000. Last year, business formations increased nearly 20 percent, our highest one-year growth rate on record. Growth was broadly based across every type of business entity - to the point that some have jokingly suggested that we change our nickname to the "Alternative Business Entity Capital of the USA." For example, more than 74 percent of all new statutory trusts, 15 percent of all limited partnerships and 7 percent of all limited liability companies in the U.S. choose Delaware as their legal home.
Delaware has experienced remarkable growth in its UCC service business. In 2001, Article IX of the Uniform Commercial Code was amended to require filings in the debtor's state of incorporation - rather than the location of the debtor's assets. The result has been a 460 percent increase in Delaware UCC filings and a 160 percent increase in UCC searches over the last five years.
Web-based services are also an emerging area of growth. When I became Secretary of State in 2001, the Division of Corporations did not offer any web-based services other than a website. Last year, the Division processed 212,000 paid transactions over the Internet.
Editor: How has Delaware's outreach to global corporations expanded?
Windsor: During the last decade, our effort to expand Delaware's global market share has taken state officials to dozens of countries on every continent - except Antarctica! For example, in 2005 a state delegation to India visited Mumbai and the high-tech centers of Hyderabad and Bangalore as presenters in a series of venture capital and investment seminars developed in coordination with Indian universities.
Our department frequently hosts visiting delegations to Delaware including groups from Italy, Russia and Vietnam last year. We also welcomed two prestigious groups from China - one studying Delaware's corporate laws and the other researching our UCC and banking laws.
We frequently discuss Delaware's success with the international media. In 2005, our office was interviewed for articles and television broadcasts that appeared in Australia, Germany, Japan and the UK.
Editor: How do Delaware's three branches of government and the private sector work cooperatively to promote the corporate services provided by the state?
Windsor: I'm glad you asked this question because Delaware's successful collaboration is not due to any one single factor. Rather it is a unique combination of elements involving all three branches of government and the private sector that enables Delaware to provide unparalleled service to our corporate clients. For example, in March 2006, the U.S. Chamber of Commerce's annual survey of corporate attorneys rated Delaware's judiciary as the best in the nation for the fifth year in a row. Our Legislature has demonstrated a long-term commitment to working with the Delaware State Bar Association to keep Delaware's corporate laws the most enabling and flexible in the nation. The Executive Branch through the Division of Corporations works closely with the legal community to provide the most convenient and innovative filing office services in the nation. When Delaware officials and the private sector have the opportunity to tell our story, we most always involve each other in those efforts.
Editor: How does Delaware continue to refine and improve its existing corporate service offerings?
Windsor: In the 1990's Delaware became the first state to offer expedited services. We have continued to refine and build on this. For example, we now offer "Global 24 x 7 Service" to our international customers that wish to file documents on weekends and state holidays. Delaware offers "Emergency Filing Service" so that documents can be recorded even if the state is otherwise closed, for example, during a blizzard or other state emergency. We are the only state in the nation that provides the options of "1-Hour or 2-Hour Filings." This extremely popular service was used in more than 6,600 transactions last year.
We encourage visits to our new website at www.state.de.us/corp/default.shtml which allows customers to reserve corporate names, check the status of business entities, pay annual taxes and file UCC documents online. One very popular feature provides free and easy-to-use access to the most current version of the Delaware Code - which is updated within a few days of the Governor signing new legislation. These features make it more convenient than ever for customers to do business with Delaware on their PC, laptop or Blackberry.
Editor: What are a few of the new products and services that Delaware has to offer?
Windsor: Delaware officials are constantly working with the private sector and the legal community to find ways to leverage Delaware's unique capabilities. In 2003, Governor Minner signed legislation expanding the jurisdiction of the Court of Chancery to handle technology cases and mediation. In 2005, the General Assembly approved legislation designed to make Delaware more attractive for the formation of onshore captive insurance companies.
In January of this year, the state restructured its bank franchise tax to maintain Delaware's leadership in attracting financial services companies. Delaware's Congressional delegation was recently successful in its efforts to add four new permanent judges to the U.S. Bankruptcy Court for the District of Delaware - helping to preserve and grow Delaware's reputation as a premier jurisdiction for corporate bankruptcy cases.
Editor: How does Delaware help support corporate best practices?
Editor: Long before the words "corporate governance" came into the lexicon, our Court of Chancery and Supreme Court rendered opinions that we believe have greatly improved the quality of internal board decision-making. More recently, Delaware has been unique among the states in promoting best practices through sponsorship and participation in a variety of organizations. For example, the state sponsors the John L. Weinberg Center for Corporate Governance at the University of Delaware, led by Professor of Law Charles M. Elson, one of the nation's leading authorities on corporate governance.
Delaware is the only state member of The Conference Board's Global Corporate Governance Research Center and the International Corporate Governance Network (ICGN). We work with a variety of academic programs including the corporate law program at Widener University School of Law in Delaware and the Institute for Law and Economics (ILE) at the University of Pennsylvania. Finally, the Division of Corporations donates hundreds of hours of time to provide data used in a growing body of academic research on the role of Delaware law in promoting best practices.
Editor: Delaware recently issued an RFP for redesign of its corporate information systems. How is the technology that supports your world-class services evolving?
Windsor: Twenty-five years ago our business was totally paper-based. In 1983, Delaware became the first state filing office to create a corporate database. Six year later, we launched the first document imaging and workflow tracking system. To this day, the Division of Corporations takes great pride in offering the highest level of functionality and speed of any State in the nation.
Unfortunately, the software used to maintain these systems dates back to 1980's. Although invisible to our customers, it requires a disproportionate investment in training and maintenance. By converting to more common software platforms - an Oracle database for example - the Division of Corporations hopes to significantly reduce costs and training time. Most importantly, it will allow us to make new and innovative services available to our customers more quickly.
Editor: Please give our readers a few examples of your department's responsibilities.
Windsor: Certainly. Corporations ranks at the top of my responsibilities. Inside Delaware, the Department of State is well-known for providing many other services that help grow our economy, improve public access to information, preserve our rich culture and history, protect consumers, and enhance Delaware's quality of life.
The Department of State has 18 other divisions including Arts, Human Relations, Historic Preservation, Museums, Professional Regulation, Veterans Affairs and many more. The common thread running through every one of these agencies is a commitment to providing award-winning customer service to every citizen and business.
For example, the Department's Government Information Center manages the State's web portal - www.delaware.gov - which last year was named the best in the nation by the Center for Digital Government. The Department's Division of Libraries won the 2005 Delaware Quality Award of Merit for its efforts to help local libraries meet the highest standards of quality in the industry. Our Delaware Public Archives is widely recognized as the finest state archives facility in the nation. Our Office of Human Relations is consistently rated among the best in the nation by the U.S. Department of Housing and Urban Development for its outstanding efforts to ensure equal opportunity in housing.
As a Department, we thrive on our diversity and are constantly finding ways to leverage good ideas across every agency.
Editor: Thank you for telling our readers about your efforts to meet and exceed customer expectations. Where can they learn more?
Windsor: I invite your readers to email me at [email protected] with any questions or ideas or to contact the Division of Corporations directly at (302) 739-3073 or via email at [email protected].
In Delaware, we have long understood that the best ideas for our business don't originate in Wilmington or Dover but with our customers around the U.S. and, indeed, the world. We welcome your readers' input into ways we can continue to provide world-class incorporation services.
Published May 1, 2006.