Global Headquarters Located in Seattle
Delaware Serves Only as Place of Incorporation
Registered Agent Is Official Channel for Legal Documents
Criticism of "Empty Headquarters"
Stems from Misunderstanding of Local Business Practices
Recently, it was revealed that Coupang's U.S. corporate office is empty, leading to suspicions that the company may be attempting to avoid responsibility by maintaining only a nominal address. However, some argue that this misunderstanding stems from a lack of understanding of Delaware's unique legal environment and the standard business strategies employed by global companies.
According to disclosures by the U.S. Securities and Exchange Commission (SEC), Coupang's holding company, Coupang, Inc., is incorporated in Delaware. However, Coupang's global headquarters is located in Seattle, Washington. Delaware serves only as the place of incorporation and is not where the company's actual headquarters is based.
Separating the place of incorporation from the headquarters is a common strategy among global companies. Under Delaware corporate law, all corporations are required to designate a "Registered Agent" within Delaware. The registered agent acts as the official channel for receiving and forwarding legal documents and notices. Coupang's Delaware address, the "Corporation Trust Center," is widely known as a representative registered agent address used by many global companies for practical purposes.
Since the actual headquarters of Coupang, Inc. is in Seattle, criticizing the company for having an "empty headquarters" may result from confusing the legal place of incorporation with the real headquarters under U.S. corporate law. A corporate law expert at a major law firm stated, "Having a corporate address in Delaware is a proven business strategy used by the majority of S&P 500 companies. Depending on the needs of each corporation, it is common to have only a registered agent or even just an email address for the agent, and there is no requirement to have employees stationed there. The absence of a physical office in Delaware is standard practice in the U.S." Another U.S. attorney specializing in corporate law explained, "Because Delaware has a business-friendly corporate law environment, it is standard practice to have the legal address in Delaware while the actual business base is elsewhere. Delaware is not suited to house large corporations due to its limited residential space, and using Delaware as a corporate address, as in Coupang's case, is a major source of revenue for the state, with many global companies following this practice."
There are various reasons why companies strategically choose Delaware. Delaware has the Court of Chancery, where judges specializing in corporate law handle business disputes, resulting in a large accumulation of legal precedents. U.S. attorney Kang Byungjin said, "There is a high degree of predictability regarding court decisions, which is why Delaware is considered a stable place for incorporation." Since corporate law is determined by each state in the U.S., companies choose Delaware for its predictability and stability compared to other states.
Corporate-related laws in Delaware are also business-friendly. When incorporating in Delaware, there is no obligation to publicly disclose or register the names of directors or shareholders with the state. Another U.S. corporate law expert noted, "Delaware corporate law grants strong authority to the board of directors and allows for relatively broad management discretion, so institutional burdens on companies are relatively low."
Although Delaware's business-friendly system has made it a popular choice for many companies, there have been recent exceptions. A senior foreign attorney specializing in corporate advisory at a major law firm stated, "Delaware's tradition of being favorable to companies does not mean that rulings are always in favor of corporations or that all decisions benefit them. For example, the recent invalidation of Tesla's compensation plan shows that courts can restrain management decisions, prompting some companies to consider relocating to other states such as Texas."
The fact that the recent class action lawsuit related to Coupang's personal information leak is being filed in New York, rather than Delaware, is seen as part of the same trend. A U.S. attorney explained, "Since securities law, which forms the basis for class actions, is federal law, New York federal courts are considered advantageous due to their accumulated precedents, high profile, and predictability in handling major cases."
Seo Hayeon, The Law Times Reporter
Shin Nayoung, The Law Times Reporter
※This article is based on content supplied by Law Times.
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