Also known as: states of incorporation · incorporation state · state of formation
Written by attorneys · grounded in primary & secondary sources — see below
An administrative designation identifying the jurisdiction under whose laws a corporation is created by the filing of articles of incorporation with the appropriate state official.
Spectrum Financial faces a products liability suit in a state where it sells goods but conducts no other operations. The plaintiff argues that continuous sales create general jurisdiction over all claims. The court rejects the argument because Spectrum Financial is incorporated in Delaware and maintains its headquarters there, making those the only places it is essentially at home.
Southland Foods sues Silverline Industries in federal court asserting diversity jurisdiction. Silverline is an LLC whose members are citizens of three different states. The court treats Silverline as an unincorporated association and dismisses for lack of complete diversity because the LLC lacks a single state of incorporation for citizenship purposes.
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Starlight Media is incorporated in Delaware but maintains its headquarters and most operations in California. When sued in a California federal court, the parties dispute whether the company is a citizen of California for diversity. The court looks to the state of incorporation as one of two fixed citizenship points alongside the principal place of business.
Scott Summers, a minority shareholder of a corporation incorporated in Indiana, sues the controlling shareholder for breach of fiduciary duty. The court applies Indiana law to measure the fiduciary obligation because the state of incorporation supplies the governing corporate law even when the suit is filed elsewhere.
Sasha Stone purchases shares in a Delaware corporation. A plaintiff attempts to establish jurisdiction in Delaware by attaching those shares. The court holds that the state of incorporation alone does not create sufficient contacts for jurisdiction over the nonresident shareholder.
Sarah Sullivan brings a shareholder derivative action against directors of a corporation incorporated in Delaware. The court refuses to impose additional federal restrictions on the suit because the law of the state of incorporation controls the internal governance rules that govern derivative litigation.
A corporation is a citizen of its state of incorporation and the state of its principal place of business. This dual-citizenship rule prevents corporations from claiming diversity based solely on one location when they have substantial ties elsewhere.
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Yes. The local law of the state of incorporation determines whether corporate existence has been terminated or suspended, and other states generally recognize that determination.
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Corporate law matters are governed by the law of the state of incorporation regardless of where suit is brought or where the parties reside. This rule provides predictability for internal corporate affairs.
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The state of incorporation is the jurisdiction where articles are filed and the entity is created. The principal place of business is the location of the corporation's headquarters or nerve center. Both are used for citizenship but serve distinct functions.
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No. An LLC is treated as an unincorporated association and takes on the citizenship of each of its members. It does not receive the separate state-of-incorporation citizenship that corporations receive.
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…impose a duty of inquiry on every purchaser of securities in the national market. For unless the purchaser ascertains both the State of incorporation of the company whose shares he is buying, and also the idiosyncrasies of its law, he may be assuming an unknown risk of litigation. I therefore agree with the Court that on the record…