ABSTRACT
In the United States, businesses are free to choose where they incorporate. Delaware has long been the most popular choice because of its expert judiciary and well-developed body of corporate law. But in recent years, a number of high-profile businesses have chosen to reincorporate either offshore or in states that purport to be more deferential to management. These moves have increased the salience of the internal affairs doctrine, a choice-of-law doctrine whose origins are as much a product of history as of policy. That doctrine directs courts adjudicating claims about a corporation’s governance to apply the law of the state of incorporation.
This Article argues that courts should treat the internal affairs doctrine as a standard, not a rule. Courts should generally defer to the law of the state of incorporation, but they should consider the shareholder protection policies of states with a material interest in the corporation’s affairs. They should be open to applying a different state’s law in cases in which a business has reincorporated or incorporated abroad or operates exclusively in one state but has incorporated elsewhere. This approach is consistent with precedent because courts that express a more absolute conception of the doctrine typically do so when applying it would not frustrate the policies of a state more closely connected to the corporation.
Sterk, Stewart E, Internal Affairs Revisited (June 5, 2026), 48 Cardozo Law Review (forthcoming); Cardozo Legal Studies Research Paper No 2026-11.
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