Delaware
 

   Benefits of Delaware

   The first benefit of using US based companies such as Delaware lies in the wide selection of governing Laws to choose from. Each US jurisdiction has its own laws regarding the formation and governance of companies.

   Although there is a broad similarity among the laws of the States, and while many states have followed models of others when updating their laws, no two jurisdictions are identical.

   Generally speaking, there are two distinct types of entities used for business purposes: the corporation and the limited liability company (LLC).

   The Business Corporation is owned by shareholders. Proportion of ownership is determined by the relative number of issued voting shares controlled by the shareholder. It is governed by “by-laws”, which are largely determined by the laws of jurisdiction.

   The Limited Liability Companies are owned by the members. Proportion of ownership is determined by the proportion of profits and losses allocated to the member. It is governed by an operating agreement and the articles of formation.

   The Delaware Limited Liability Company Act provides for the formation of a limited liability company which will qualify for partnership tax treatment for US Federal Tax purposes.

   Delaware’s Corporate Advantage

State of Delaware considered the most attractive in the nation for organizing.

Delaware courts have reputation of reaching reasonable and fair conclusions when constructing the corporation laws.

Only one incorporator is required. A corporation may be the incorporator.

There is no minimum capital requirement.

The franchise tax compares favourably with that of any other state.

For companies doing business outside Delaware, there is no corporation income tax.

Delaware has no sales tax, personal property tax, or intangible property tax on corporations.

No taxation upon shares of stock held by non-residents and no inheritance tax upon non-resident holders.

A corporation may keep all of its books and records outside Delaware.

You may have a principal place of business/address outside the state of Delaware as well.

   Other reasons why you should incorporate your business, whether large or small, include:

Corporation can raise capital by issuing stock, bonds or other securities

Corporation is the most enduring form of business structure. If an owner of a corporation dies, the ownership portion can be quickly transferred and the corporation can continue to operate.

Estate and family planning becomes easier because shares of a corporation can be easily distributed between family members.

There is greater ease doing business for a corporation. Most stores and banks favour corporate accounts and offer discounts.

    Benefits of Delaware Business Corporations

Owned by shareholders. Proportion of ownership is by the relative number of determined issued voting shares controlled by the shareholder.

Liability of shareholders limited to amount of capital invested.

May (but need not) have perpetual existence.

A completely separate entity from its owners.

Governed by by-laws, which are largely determined by the laws of the jurisdiction. Many formal procedures must be followed to conform to the corporate statutes.

Administered by Directors (who are elected by the shareholders for specified terms), and managed by Officers ( who are appointed by Directors). Directors are empowered to determine the value of non-cash contributions in exchange for stock in the corporation.

A citizen of the jurisdiction in which it is formed, and must follow the corporation laws of that jurisdiction.

Can own shares of other corporations and be a member of limited liability companies, in the same or other jurisdiction.

Shareholders in a “C” corporation can be US or non-US resident individual, corporations, LLCs, trusts (domestic or foreign) or other entities. Directors must be natural persons and are personally liable for the actions of the corporation.

“C” corporations pay a federal tax on their world-wide income and may be also liable for state taxes as well.

Protect your personal assets. By far, the overwhelming reason why our clients incorporate is to help protect their personal assets – home, car, family savings, etc. - from business debt. No one can attach your personal assets if your business fails or you lose a lawsuit. This “limited liability” feature of corporations is not available in sole proprietorships or partnerships, where the individual or the partners are personally liable for all debts of the business.

Increase your tax savings. Tax saving options for a corporation far outnumber those available for sole proprietorships and partnerships. For example, you can establish pension, profit-sharing and stock ownership plans, thus lowering the corporation’s taxable income. Medical, life and disability insurance premiums can be completely tax deductible for the corporation. Also, a corporation may own shares of stock in another corporation and receive 80% of the dividends tax free.

   Benefits of Delaware Limited Liability Companies(LLC)

Owned by the members. Proportion of ownership is determined by the proportion of profits and losses allocated to each member.

Liability of the members limited to amount of capital contributed.

Duration is limited in some states; New York and Delaware allow perpetual existence.

Entity is separated from its members only by the limitation of liability.

Governed by an operating agreement and the Articles of Formation. The agreement is subject to a general framework dictated by jurisdictional law, otherwise the company is free to determine how formal it wants the operating agreement to be.

Managed either by designated Managers or by its Members acting as Managers, as determined by the articles of formation and/or the operating agreement.

A citizen of the jurisdiction in which it is formed, and subject to the laws of that jurisdiction.

Can be a member of other LLCs or shareholder in other corporations.

Members can be US or non-US resident individuals, corporations, LLCs, trusts (domestic or foreign) or other entities. Managers can be US or non-US resident individuals or corporations, but the laws of the different jurisdictions may restrict other types of entities from being designated as managers.

Enjoys flow-through taxation at the federal level. Some states tax LLCs as corporations, but New York, Delaware, Nevada and Wyoming use flat annual fees instead.

  Questions & Answers regarding Companies in Delaware

   A. The Structure of a Company.

   There are two distinct types of entities used for business purposes: the corporation and limited liability company (LLC).

   1. What is a Corporation Company?

   The Corporation Company is a suit generic entity, legally separate from its shareholders, and a creature (and citizen) of the state of its incorporation. As a statutory person, it can only be terminated by an action of the state of its incorporation.

   2. What is the Limited Liability Company (LLC)?

   The other entity is the limited liability company, which is essentially derived from partership law. As such, it is not truly separate from its owners (members) and can be terminated by any number of occurrences without action by its state of origin. The LLC is a much newer innovation, and many aspects are still being determined by the courts and the tax authorities.

   3. What Documents are required to Incorporate a Company?

   Delaware companies can be incorporated within 48 hours. Documents such as the Certificate of Incorporation take approximately one week to arrive from Delaware.

    The name of a Delaware company may be in any language provided the name is written in Roman letters. All names must contain a word denoting corporate personality such as “Association”, “Company”, “Corporation”, “Club”, “Foundation”, “Fund”, “Incorporated”, “Institute”, “Society”, “Union”, “Syndicate”, “Limited” or abbreviations “Co.”, “Corp.”, “Inc.” or “Ltd”.

   4. How can I form a corporation in the state of my choice?

   The formation of a corporation is not a difficult process and in most cases it can be quickly and efficiently accomplished by a professional incorporating service company like C.I.S. As your agent, we will first investigate the availability of your proposed corporate name and reserve it for you. We will then prepare and file a Certificate of Incorporation. All state filing fees will be paid through C.I.S. to the appropriate state agencies.

   5. What information do I have to provide my agent to prepare and file my Certificate of Incorporation?

   The information required in addition to the name of the corporation is the address of the corporation, the directors(s) name(s), the country of the state where the corporation will be located and the number of shares of stock you want authorised. From this information the necessary documents will be prepared and filed.

   6. Do I need a special ending on my corporation’s name?

   In most states your corporation’s name must include an ending such as “Company”, “Corporation”, “Incorporated”, “Limited”, “Association”, “Club”, “Fund”, “Syndicate”, “Union” or abbreviations such as “Co.”, “Corp.”, “Inc.”, or “Ltd”.

   7. Is it necessary to use an attorney to form my corporation?

   No. When using a professional incorporating service company like C.I.S., it is not necessary to employ the services of an attorney to form a corporation. However, C.I.S. is always willing to work with an attorney if that is what you prefer.

   8. Can C.I.S. provide registered agent services in every state?

   Yes. In addition to forming corporations in all 50 states, C.I.S. has a nation-wide network of registered agents that can represent your corporation. C.I.S. is based on a calendar year, billed January 1 and due March 1 of each year.

   9. What is the difference between "par" and "no par" stock and how much stock do I need?

   Par value stock has a stated value on its face. No par value stock has no stated value and its worth depends on what an investor is willing to pay. C.I.S. will always request the minimum amount of authorised shares of no par value stock so you qualify for the minimum incorporating fee or minimum annual franchise tax unless you instruct us otherwise.

   10. How and when will I know if my corporation is formed?

   Delaware corporations are formed the same day you call us and you will receive your filed documents within 5-7 business days. Corporations are formed in other states within 48 hours so that you will receive your filed documents in 7-10 business days.

   11. If I form a Delaware corporation can I do business in other states?

   Yes. Your Delaware corporation is what is known as a "domestic" corporation in Delaware. In other states it is considered a "foreign" corporation. Depending on the nature of the business, you may have to register your Delaware corporation in the state(s) in which you plan to maintain offices, hire employees and transact business. Because of Delaware’s many corporate advantages and low annual franchise tax, many businesses prefer to operate as a Delaware corporation in their home state. C.I.S. can register your Delaware corporation in any State.

  12. Does my business have to maintain a bank account or any physical presence in Delaware?

   No. Your business does not need to maintain a bank account or any offices in Delaware as long as you are represented by a professional registered agent like C.I.S. Currently, nearly a quarter million companies are registered in Delaware and few have ever even visited the State.

   B. Provisions in the Act relating to the Management and Administration of the Company.

  1. Directors.

    At least one director is required. There are no residency or nationality requirements placed on directors. Directors need not be shareholders. Unless otherwise provided for in the Certificate of Incorporation, the business and affairs of the company are managed by the directors. Corporate directors are not permitted.

  2. Shares and Shareholders.

   The minimum number of shareholders is one. There are no minimum (or maximum) authorised or paid-up share capital requirements. There are no residency or nationality requirements placed upon shareholders.

   3. Registered Office and Agent.

   A registered office and agent for service of legal process must be maintained within the State of Delaware. Shareholders and directors meetings may be held anywhere in the world, and provided certain formalities are observed, resolutions of shareholders and directors may be in writing in lieu of a formal meeting if required.

   4. Officers.

   Every company shall have officers with such titles and duties as stated in its by-laws or in the resolution of the Board of Directors appointing officers. A company usually maintains a President, Secretary and Treasurer. The same person may hold all three offices although this is unusual and not recommended.

   C. 15 Reasons Why Delaware is Recognised as the Preferred State of Incorporation for American as well as Foreign Businesses

  1. It is easy to form a Delaware corporation by phone, fax or mail when you use the services of C.I.S. We check and reserve your preferred corporate name within seconds and form your new Delaware corporation the same day.
     

  2. Delaware is the least costly state in which to form a corporation.

  1. No minimum amount of capital is required when forming a corporation in Delaware. While some other states may require US $500, US $1,000 or more, your investment in a Delaware corporation can be zero.
  1. A Delaware corporation allows one individual to hold all the corporate offices including: President, Treasurer and Secretary.

    Other states may require different individuals for these offices.

  2. Delaware corporations have a special "Director Shield" that permits corporations to shelter their directors from personal liability in connection with their actions as board members. Delaware statutes also help limit hostile or abusive takeover tactics.
     

  3. A Delaware corporation may be operated anonymously, never revealing the owner’s identity to the State of Delaware.

  4. The by-laws of a Delaware corporation may be formulated or altered at any time by its directors.

  1. Delaware is the only state with a special court system dedicated specifically to corporate law. Over the years the Delaware Chancery Court has built a body of case law that has no equal and is often cited as precedent in other state courts. In the event of legal action the outcome is highly predictable and the court has a long history of "pro-management" decisions.
  1. The corporate headquarters and the records of a Delaware corporation may be located in any state in America or in any country in the world as long as you maintain a registered agent to represent you in Delaware. Most of the owners of Delaware corporations have never set foot in Delaware.
  1. There is no Delaware sales tax, no property tax or state corporate income tax for corporations that are formed in Delaware and do

    not transact business in the state.

  2. The annual franchise tax in Delaware consistently remain among the lowest in the nation to attract and maintain corporate business.
     

  3. There is no State of Delaware inheritance tax on shares of stock held by non-residents of Delaware.

  4. Delaware corporations are permitted to pay dividends out of profits as well as out of surplus.

  1. Delaware corporation stock can be privately owned or publicly traded on any stock exchange anywhere in the world when

    properly registered.

  2. With a Delaware corporation you do not need to maintain a Delaware business address except for your registered agent address which is required by law for service of process in case of legal action against your company.

 

  Notes

   (1) For a copy of a full set of documents to be made apostille in the jurisdiction will cost a minimum US $

   (2) We recommend that the issued share capital is US $

 

   We are not responsible for any forthcoming changes concerning the rules and regulations of the jurisdiction.

 

| Countries |