Comments on: The North Dakota Experiment: Bundle Up! http://blogs.law.harvard.edu/corpgov/2007/04/26/the-north-dakota-experiment-bundle-up/ Sponsored by the HLS Corporate Governance Program Mon, 23 Nov 2009 18:31:21 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: William H. Clark, Jr. http://blogs.law.harvard.edu/corpgov/2007/04/26/the-north-dakota-experiment-bundle-up/comment-page-1/#comment-2863 William H. Clark, Jr. Mon, 30 Apr 2007 15:16:20 +0000 http://blogs.law.harvard.edu/corpgov/2007/04/26/the-north-dakota-experiment-bundle-up#comment-2863 It's not surprising to see a Delaware lawyer respond so quickly. It's also not surprising to see the Delaware response focus on the perspective of corporate managements. Managements have, of course, not drafted their certificates of incorporation and bylaws to provide the rights that shareholders now have under the North Dakota law. Who would really expect them to? Managements knew that, prior to the North Dakota becoming available, the only option shareholders had was to seek discrete amendments which would take a long time and a lot of effort. The cautionary questions at the end of this Delaware response also miss the mark: The North Dakota Secretary of State's office is one of the most efficient in the country. They offer turn-around times of a few hours when processing filings. And, unlike Delaware, they don't ask for additional fees to provide faster processing. The North Dakota legislature has one of the most open processes in the country. Every bill that is introduced must be voted on. There is no way for a committee chair or legislative leadership to bury bills they don't like. But it is the question about the North Dakota court system that most misses the mark. If North Dakota had simply copied the Delaware General Corporation Law, there would indeed be no reason to incorporate in Delaware and give up having the Delaware courts available. But from the perspective of a shareholder: Would you rather invest in a North Dakota corporation and have all the additional rights being in North Dakota provides you to protect your investment? Or would you rather invest in a Delaware corporation and not have the North Dakota rights and be forced instead to rely on the Delaware judges to protect your investment? I think shareholders will find North Dakota to be an easy choice. It’s not surprising to see a Delaware lawyer respond so quickly. It’s also not surprising to see the Delaware response focus on the perspective of corporate managements. Managements have, of course, not drafted their certificates of incorporation and bylaws to provide the rights that shareholders now have under the North Dakota law. Who would really expect them to? Managements knew that, prior to the North Dakota becoming available, the only option shareholders had was to seek discrete amendments which would take a long time and a lot of effort.

The cautionary questions at the end of this Delaware response also miss the mark:

The North Dakota Secretary of State’s office is one of the most efficient in the country. They offer turn-around times of a few hours when processing filings. And, unlike Delaware, they don’t ask for additional fees to provide faster processing.

The North Dakota legislature has one of the most open processes in the country. Every bill that is introduced must be voted on. There is no way for a committee chair or legislative leadership to bury bills they don’t like.

But it is the question about the North Dakota court system that most misses the mark. If North Dakota had simply copied the Delaware General Corporation Law, there would indeed be no reason to incorporate in Delaware and give up having the Delaware courts available. But from the perspective of a shareholder: Would you rather invest in a North Dakota corporation and have all the additional rights being in North Dakota provides you to protect your investment? Or would you rather invest in a Delaware corporation and not have the North Dakota rights and be forced instead to rely on the Delaware judges to protect your investment? I think shareholders will find North Dakota to be an easy choice.

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