For decades, most companies gave little thought to where to incorporate. Delaware was the default—home to millions of entities and more than half of all publicly traded U.S. companies. But that default is beginning to shift. Businesses are actively reassessing their legal domicile based on governance stability, statutory clarity, and cost.
Several prominent companies—including Tesla, Meta, Roblox Corporation, AMC Networks, and Dropbox—have recently announced plans to reincorporate in other jurisdictions, and many more are quietly evaluating their options. Legal costs, litigation exposure, and uncertainty in court decisions are prompting corporate boards to ask whether their current incorporation state still aligns with their long-term interests.
For companies with a presence in the Pacific Northwest, Washington should be near the top of the list. The state is already home to several leading public companies that have deliberately chosen to incorporate locally, including Microsoft, Costco, Starbucks, F5, and Zillow. Their presence reinforces Washington’s growing reputation as a jurisdiction that combines strong governance protections with a modern, well-maintained legal framework.
Three considerations should guide any decision to incorporate or reincorporate:
- The traditional default choice may no longer be the best fit for all companies.
- States that follow the Model Business Corporation Act (MBCA) offer valuable statutory structure and predictability.
- Among those, Washington offers distinctive advantages in legal clarity, cost efficiency, and director protections.
Rethinking the Automatic Choice for Incorporation
Many companies historically incorporated in a single, dominant state due to its court expertise, developed case law, and deference to board decisions. However, recent rulings have expanded fiduciary duty claims and unsettled previously well-understood governance principles, particularly in areas such as executive compensation, mergers, and shareholder agreements. This shifting landscape has introduced more uncertainty than many boards find comfortable.
At the same time, incorporation costs in some jurisdictions have continued to rise. Certain franchise taxes can reach as high as $250,000 annually. Companies that once viewed those expenses as a necessary part of operating in a leading legal environment are now asking whether comparable protections are available elsewhere at a lower cost.
Why Model Act States Are Worth Considering
More than 30 states have adopted all or part of the MBCA, a model statute developed and maintained by the American Bar Association. The MBCA provides a modern and comprehensive legal framework for corporate governance. Each section of the statute is supported by official commentary that clarifies its purpose and application, reducing ambiguity and litigation risk.
Because many jurisdictions have adopted similar provisions, courts often look to decisions from other MBCA states for interpretive guidance. This creates a degree of consistency not always present in states that rely more heavily on common law. The MBCA also balances shareholder rights and board authority, helping companies maintain good governance while avoiding excessive exposure to litigation.
Key features include: a universal demand requirement for derivative suits, clear director liability limitations, and streamlined processes for board and shareholder actions. These tools allow companies to operate within a clear legal structure while minimizing surprises from judicial interpretation.
What Sets Washington Apart
Among MBCA states, Washington stands out for its active oversight of corporate law and commitment to modernization. The Washington State Bar Association’s Corporate Act Revision Committee (CARC) plays a central role in monitoring and updating the Washington Business Corporation Act (WBCA). Unlike states where updates may be infrequent or reactive, Washington’s legislative process is deliberate, consistent, and closely aligned with emerging national standards.
CARC regularly reviews legal developments and proposes timely statutory refinements, helping ensure that Washington’s corporate laws remain clear, stable, and responsive to the needs of modern business.
Washington’s financial advantages are also compelling. The state does not impose a franchise tax, and incorporation and annual reporting fees are significantly lower than those in many other jurisdictions. Companies with an existing presence in Washington do not need to maintain a separate registered agent, further reducing administrative costs.
Washington also offers strong protections for directors and officers. The WBCA allows companies to eliminate director monetary liability to the fullest extent permitted under the MBCA. Its indemnification provisions are broad, allowing companies to advance and reimburse legal expenses in a wide range of circumstances. These features enhance leadership stability and reduce the risk of personal liability in business judgment cases.
Washington’s thoughtful approach to cost, legal clarity, and statutory upkeep makes it a strong choice for both new incorporations and strategic reincorporations.
For many years, companies defaulted to incorporating in a single, dominant jurisdiction, but the legal and financial calculus is shifting. As businesses rethink where they should be incorporated, MBCA states present compelling alternatives, offering statutory predictability, balanced governance tools, and greater cost efficiency.
Among those, Washington stands out. Its modernized corporate statute, ongoing legislative attention, and financial advantages make it an exceptional choice. Companies with a presence in the state, and even those without, should give serious consideration to whether Washington might offer a better corporate home.
Michael Hutchings. Michael is a partner at DLA Piper LLP (US) in Seattle, advising executives and boards of public and private companies on fiduciary duties, securities compliance, corporate strategy, and legislative and governmental affairs. He has served as chair of the Washington State Bar Association’s Corporate Act Revision Committee for over a decade, leading updates to the Washington Business Corporation Act (WBCA). He is also an author of the WBCA Sourcebook and a member of the American Bar Association’s Corporate Laws Committee, contributing to the development and refinement of the Model Business Corporation Act and corporate law on a national scale.
