Opinion ID: 1540447
Heading Depth: 1
Heading Rank: 15

Heading: GenCorp and Delaware

Text: Although GenCorp did not form RKO General as a Delaware subsidiary, it knew at the time of its acquisition that RKO General was incorporated under the laws of the State of Delaware. The record reflects that GenCorp has owned and operated RKO General as a Delaware subsidiary since 1955  more than 30 years. We find that the difference between creating a wholly owned subsidiary in Delaware and purchasing a Delaware subsidiary is a distinction without significance, when the subsidiary is not thereafter reincorporated in another state. The decision to reincorporate or not to reincorporate in a particular jurisdiction is a deliberate one. The majority stockholders in a parent corporation can vote to change the state of incorporation of the parent, or of a subsidiary, anytime there is a preference to be governed by the laws of another jurisdiction. Ratner & Schwartz, The Impact of Shaffer v. Heitner on the Substantive Law of Corporations, 45 Brooklyn L.Rev. 641, 642 (1979). [33] In fact, after the United States Supreme Court decision in Shaffer, the Delaware corporation involved in that litigation, Greyhound, reincorporated in Arizona. Id. at 653-54. Conversely, it is well known that many corporations have chosen to incorporate or reincorporate in the State of Delaware, although the reasons for the decision have been debated. These competing positions are discussed at length in Macey & Miller, Toward an Interest-Group Theory of Delaware Corporate Law, 65 Tex.L.Rev. 469 (1987). [34] Although scholars may debate its motivation, the fact remains that for more than thirty years, GenCorp has made the conscious decision to operate RKO General, its subsidiary, as a Delaware corporation. For more than thirty years, GenCorp has benefited from the protections of the Delaware law in operating RKO General for commercial gain, including the benefits afforded to it directly as a shareholder of a Delaware corporation. [35] We conclude that GenCorp intentionally established and maintained minimum contacts with Delaware by its decision to continue to operate its wholly owned subsidiary, RKO General, as a Delaware corporation. [36]