What Is the Delaware General Corporation Law?

The Delaware General Corporation Law is the statute, codified at Title 8 of the Delaware Code, that governs how corporations form, operate, and dissolve in Delaware. It sets the required contents of the certificate of incorporation, the authority of boards and officers, the rights of stockholders, the limits of director liability, and the procedures for annual compliance and dissolution. More than half of all publicly traded companies in the United States and a large share of the Fortune 500 are incorporated under it, in part because its governance rules are flexible and in part because the Court of Chancery resolves corporate disputes quickly, without juries, through judges who specialize in business law.¹

What the Certificate of Incorporation Must Contain

A Delaware corporation does not legally exist until its Certificate of Incorporation is filed with the Division of Corporations. Section 102 of the DGCL lists what the document must include.²

A corporate name that includes a word such as “Corporation,” “Company,” “Incorporated,” or “Limited” (abbreviations count) and is distinguishable from every other entity on file. The Division can waive the naming-word requirement for corporations with at least $10 million in total assets, but that exception rarely matters for new companies.
A Delaware street address for the registered office and the name of a registered agent at that address who can accept legal papers for the corporation. If you have no Delaware office, a professional registered agent service handles this for a modest annual fee.
A business purpose. Most certificates use a catch-all statement that the corporation can engage in any lawful activity.
The stock structure. For a single class, state the total number of authorized shares and the par value (or declare them no par value). For multiple classes, lay out the number of shares in each class, which classes carry par value, and the preferences or rights attached to each.³
The name and mailing address of each incorporator. If the incorporator’s role ends at filing, the certificate must also list the initial directors.

Optional provisions can customize governance from day one. The most common is an exculpation clause under Section 102(b)(7), which limits directors’ personal liability for certain breaches of duty. Choosing what to include at the start matters because later amendments require stockholder approval.

Public Benefit Corporations

Delaware also allows a variant called a public benefit corporation. A PBC is a for-profit entity that commits in its certificate to promoting one or more specific public benefits, such as environmental sustainability or workforce development, alongside stockholder returns. The certificate must name the specific benefit and include the words “public benefit corporation” in its heading.⁴ Directors of a PBC must balance stockholders’ financial interests against the interests of those affected by the company’s conduct and the stated public benefit. The PBC designation can serve as the naming word on its own, so “Greenfield Solar PBC” satisfies the naming requirement without adding “Inc.” or “Corp.”

How Stock Structure Drives Your Franchise Tax

The number and type of shares you authorize in the certificate directly determines your annual franchise tax, so this is a formation decision with long-term financial consequences. Delaware calculates the tax two ways and charges you whichever produces the lower amount.⁵

The Authorized Shares Method is simpler. Up to 5,000 authorized shares, the tax is $175 per year. From 5,001 to 10,000 shares, it is $250. Each additional 10,000 shares (or fraction) adds $85.⁶ A startup that authorizes 10 million shares of no-par stock to accommodate future fundraising would, under this method alone, see a tax bill in the tens of thousands.

The Assumed Par Value Capital Method factors in total gross assets (from your federal tax return) and issued shares to produce a figure called assumed par value capital. The tax is $400 per million dollars of that figure, with a $400 minimum. For companies with high authorized shares but relatively low assets, this method often produces a far lower number. Both methods cap the annual tax at $200,000.⁵

One practical catch: if you issue no-par stock, the Authorized Shares Method will always control, because the Assumed Par Value Capital Method requires par value shares to produce a meaningful comparison. Founders who authorize millions of no-par shares without understanding this often receive a very high initial tax notice and only later discover they could have lowered it by assigning a nominal par value.

Filing, Fees, and Timing

You can file the Certificate of Incorporation electronically through the Division of Corporations’ online portal or by mailing physical copies to its office. The base filing fee for a stock corporation is $109, though the total may increase depending on the number of authorized shares.⁷ That amount covers the filing fee, indexing, data entry, and county recording for a one-page document.

Standard processing takes several weeks. If you need it faster, Delaware offers tiered expedited service on top of the base fee:⁷

24-hour service: $50 to $100 additional, depending on document type
Same-day service: $100 to $200 additional
Two-hour priority: $500 additional
One-hour priority: $1,000 additional

Once the Division accepts the filing, it issues a stamped receipt with the official date and time the corporation came into existence. That receipt is your proof of legal formation. State incorporation does not provide a federal tax ID, so you will separately need an Employer Identification Number from the IRS before opening a bank account, hiring, or filing federal returns.⁸

Board, Officers, and Bylaws

Under Section 141, the board of directors holds authority over the corporation’s business and affairs unless the certificate provides otherwise.⁹ Stockholders elect directors at annual meetings. The board sets strategic direction, approves major transactions, and appoints officers to run day-to-day operations. It can delegate most of its authority to committees of one or more directors, but two actions must stay with the full board: amending the certificate of incorporation and approving mergers.

A common misconception is that Delaware requires a president, secretary, and treasurer. It does not. Section 142 says a corporation must have whatever officers the bylaws or a board resolution call for, with whatever titles make sense for the business.⁹ The only specific statutory requirement is that at least one officer must be responsible for recording the minutes of stockholder and board meetings. One person can hold multiple officer positions unless the certificate or bylaws say otherwise.

Bylaws function as the corporation’s internal rulebook, covering meeting procedures, voting thresholds, officer responsibilities, and committee structures. They are not filed with the state. By default, the power to adopt and amend bylaws belongs to the stockholders, but the certificate can grant that power to the board as well. Even when the board has bylaw authority, stockholders never lose their own power to change the bylaws.¹⁰

Stockholder Rights the DGCL Guarantees

Delaware stockholders have several core rights built into the statute.

Voting. Stockholders vote on major corporate actions: electing directors, approving mergers, amending the certificate, and authorizing dissolution. The certificate can create classes of stock with different voting rights, but for certain fundamental changes the statute sets a floor the certificate cannot override.

Inspection of books and records. Under Section 220, any stockholder can demand access to the corporation’s books and records, including meeting minutes, financial statements, and director questionnaires, so long as the request is made in writing, under oath, and for a “proper purpose” related to the stockholder’s interest as a stockholder.¹¹ The right can extend to subsidiary records if the parent corporation has control over them. The Court of Chancery handles disputes about whether a stated purpose qualifies.

Action by written consent. Unless the certificate says otherwise, stockholders can take any action that would normally require a meeting without actually holding one, by circulating a written consent signed by holders of at least the same number of votes that would have been needed at a meeting where all shares were present.¹² The consent must be delivered to the corporation within 60 days of the first signature. Many public companies restrict or eliminate this right in their certificates because it can be used for hostile actions. For closely held corporations it is a practical way to avoid the logistics of a formal meeting.

Director Exculpation and Indemnification

Two DGCL mechanisms shield directors and officers from personal financial exposure, and together they are a major reason companies choose Delaware.

Exculpation Under Section 102(b)(7)

A corporation can include a provision in its certificate that eliminates directors’ personal liability for monetary damages arising from breaches of the duty of care.³ Nearly every Delaware corporation includes this clause. The protection has hard limits: it does not cover breaches of the duty of loyalty, acts done in bad faith, intentional misconduct, or transactions in which a director received an improper personal benefit. Careless-but-honest business decisions are shielded; self-dealing and knowing approval of illegal conduct are not.

Indemnification Under Section 145

Beyond exculpation, Delaware law allows corporations to reimburse directors and officers for legal expenses, judgments, fines, and settlement costs incurred in lawsuits related to their corporate roles. Indemnification comes in two forms.

Mandatory indemnification applies when a director or officer wins a lawsuit, or successfully defends any claim within it. The corporation must reimburse their legal expenses, including attorneys’ fees. No discretion is involved.¹³

Permissive indemnification applies to cases that do not end in a clear win. The corporation may choose to indemnify a director or officer who acted in good faith and reasonably believed their conduct was in the corporation’s best interests. In derivative suits brought by the corporation itself, a court must approve any indemnification if the person was found liable.

Corporations can also purchase directors’ and officers’ (D&O) insurance under the same statute, which can provide coverage even in situations where indemnification by the corporation itself would not be permitted. Most well-advised companies carry it.

Staying in Good Standing

Forming the corporation is the easy part. Keeping it in good standing requires hitting two deadlines every year and continuously maintaining a registered agent.

Every Delaware corporation must file an Annual Franchise Tax Report with the Secretary of State by March 1.⁶ The report lists the names and addresses of all directors and at least one officer, along with the corporation’s principal place of business. Filing the report and paying the franchise tax happen together through the Division’s online system.

Missing the March 1 deadline triggers a $200 penalty on top of the tax balance. Unpaid taxes accrue interest at 1.5% per month.¹⁴ The Secretary of State will also refuse to issue certificates of good standing for any corporation with an unpaid balance or a missing report, which can block financing, acquisitions, and other transactions that require that proof.

You must also maintain a registered agent with a physical Delaware address at all times. If your agent resigns and you fail to appoint a replacement, the state can eventually void your charter. Many inactive corporations get caught here: the agent stops service, the corporation misses the notice, and the charter lapses without anyone realizing it.

Dissolving the Corporation

When it is time to shut down, the DGCL lays out a structured process. The board must first adopt a resolution declaring that dissolution is advisable and recommending a stockholder vote. A majority of the outstanding shares entitled to vote must then approve.¹⁵ Alternatively, if all stockholders agree, they can authorize dissolution by written consent with no board resolution at all.

After the vote, you file a Certificate of Dissolution with the Division of Corporations. The filing fee is $224, and any outstanding franchise taxes must be paid at the same time.⁷ The board can abandon the dissolution any time before the filing becomes effective, without another stockholder vote.

Filing the certificate does not end the corporation’s existence immediately. Under Section 278, a dissolved corporation continues to exist for three years (or longer if the Court of Chancery extends the period) for the purpose of winding up its affairs. During that time, the corporation can settle debts, sell remaining property, resolve pending lawsuits, and distribute whatever is left to stockholders.¹⁶ It cannot continue operating the business it was formed to run. Any lawsuit pending at dissolution survives the three-year period until fully resolved.

Timing matters for tax purposes. Filing before December 31 avoids triggering the next year’s franchise tax obligation.

Operating Outside Delaware

Incorporating under the DGCL does not automatically give you the right to do business in other states. If your corporation has employees, an office, or sells products or services in another state, that state will generally require you to register as a foreign corporation by filing for a certificate of authority. Triggers vary, but common ones include hiring local employees, leasing office space, and bidding on contracts. Maintaining a bank account, holding internal board meetings, or conducting isolated transactions typically do not trigger the requirement.

The consequences of skipping foreign qualification can be severe. Most states will bar an unregistered foreign corporation from filing lawsuits in their courts until it comes into compliance, which can mean you cannot sue a customer for an unpaid invoice or a vendor for breach of contract. You will also face back taxes, penalties, and interest once discovered. Filing fees for foreign qualification vary widely by state, so budget accordingly if you plan to operate in multiple jurisdictions.

1
Delaware Corporation Law Council. Litigation in the Delaware Court of Chancery and the Delaware Supreme Court
2
Justia. Delaware Code Title 8 Chapter 1 Subchapter I Section 102 – Contents of Certificate of Incorporation
3
Delaware Code Online. Delaware Code Title 8 Chapter 1 Subchapter I – Formation
4
Justia. Delaware Code Title 8 Chapter 1 Subchapter XV Section 362 – Public Benefit Corporation Defined
5
Delaware Division of Corporations. How to Calculate Franchise Taxes
6
Delaware Code Online. Delaware Code Title 8 Chapter 5 – Corporation Franchise Tax
7
Delaware Department of State. Division of Corporations Fee Schedule
8
Internal Revenue Service. Application for Employer Identification Number
9
Delaware Code Online. Delaware Code Title 8 Chapter 1 Subchapter IV – Directors and Officers
10
Delaware Code Online. Delaware Code Title 8 Chapter 1 Subchapter I – Formation
11
Delaware Code Online. Delaware Code Title 8 Chapter 1 Subchapter VII – Meetings, Elections, Voting and Notice
12
Justia. Delaware Code Title 8 Chapter 1 Subchapter VII Section 228 – Consent of Stockholders or Members in Lieu of Meeting
13
Justia. Delaware Code Title 8 Chapter 1 Subchapter IV Section 145 – Indemnification of Officers, Directors, Employees and Agents
14
State of Delaware. Franchise Taxes
15
Justia. Delaware Code Title 8 Chapter 1 Subchapter X Section 275 – Dissolution Generally
16
Justia. Delaware Code Title 8 Chapter 1 Subchapter X Section 278 – Continuation of Corporation After Dissolution for Purposes of Suit and Winding Up Affairs