Why Delaware Is Still the Best Jurisdiction for SPVs

Why Delaware Is Still the Best Jurisdiction for SPVs

While Delaware might be losing ground in the world of high-growth startups and corporate governance battles, it remains unmatched when it comes to structuring Special Purpose Vehicles — particularly those formed as LLCs or Limited Partnerships.

Here’s why:

✅ 1. Waiver of Fiduciary Duties

This is arguably Delaware’s greatest advantage for SPV formation.

Delaware allows full waiver of fiduciary duties in LLC and LP agreements. This means the manager or GP of the SPV can limit or eliminate duties like loyalty, care, and conflict avoidance, provided it's clearly written in the governing documents.

Why does that matter?
Because SPVs are often used to simplify governance. Investors are passive, the lead or GP runs the deal, and the goal is to avoid unnecessary liability or legal complexity. Delaware’s statutes allow for this — and no other state offers the same level of contractual freedom with the same legal certainty.

Citation: Delaware LLC Act § 18-1101(c)
“To the maximum extent permitted by law, the LLC agreement may eliminate or limit any and all liabilities for breach of fiduciary duties...”

This flexibility is essential for clean, efficient, and low-risk SPV management.

✅ 2. Court of Chancery and Legal Predictability

Delaware has a dedicated business court — the Court of Chancery — with judges who specialize in complex business matters. This creates a deep, consistent, and respected body of case law, which makes outcomes more predictable.

If you're an SPV organizer or a fund administrator, this is huge. You want clear rules and legal precedent. Delaware has more than a century of it.

✅ 3. Familiarity and Acceptance

Every investor, fund admin, and legal professional has worked with Delaware entities. Cap tables, deal documents, banking, tax filings — everything moves faster and smoother with Delaware SPVs because everyone knows the structure and language.

When it comes time to fund a deal, share documents with co-investors, or distribute proceeds, this familiarity is a hidden efficiency that saves time and reduces friction.

✅ 4. Flexible Statutes for LLCs and LPs

Delaware’s laws are designed to let private parties structure their business relationships however they want. This flexibility is especially important for investment vehicles, where the operating or LP agreement does all the work.

You can easily:

• Customize distribution waterfalls
  
  
• Set voting thresholds
  
  
• Add or remove members with minimal paperwork
  
  
• Establish side letters or carve-outs for specific investors
  
  

This customization is one of the reasons large VC and PE firms have used Delaware for decades. And it's just as powerful for a $250K syndicate deal as it is for a $500M fund.

✅ 5. Series Structures and Modern Support

Delaware supports Series LLCs and Series LPs, allowing you to create multiple deal-specific entities under a single umbrella. Each series can have its own assets, liabilities, and investors.

This is particularly valuable for SPV operators running multiple deals — and platforms like Sally make managing Series structures easy, automated, and scalable.

Conclusion: For SPVs, Delaware Still Wins

The headlines about companies fleeing Delaware are real — but they’re about a different set of issues, affecting a different type of entity.

If you're managing an SPV:

• You're not battling for board control.
  
  
• You’re not worried about hostile shareholder suits.
  
  
• You do care about legal flexibility, enforceability, and market familiarity.
  
  

And no state matches Delaware on those points — not Nevada, not Texas, not Wyoming.

So while the corporate world debates its next move, the SPV world should stay the course.
Delaware is still the right home.

💡 Bonus: Thinking about launching your own SPVs?

Check out Sally.co, an automated SPV platform built for speed, compliance, and control — all optimized for Delaware entities.

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