These are set up to minimise taxes in the US right? Are they just boiler plate companies or is there actually a man and his dog sitting in Delaware to give the company substance? Same applies to Bahamas/Cayman etc but I really think it is only a post box in those jurisdictions.
Muddahudda Wrote: ------------------------------------------------------- > These are set up to minimise taxes in the US right? Are they just boiler plate companies or is there actually a man and his dog sitting in Delaware to give the company substance? Same applies to Bahamas/Cayman etc but I really think it is only a post box in those jurisdictions. You don’t need to have legitimate business operations/interests in Delaware - though you do need a resident agent (basically a man and his dog). I’m assuming that’s probably the case for most states. My 2c.
there is basically a mailbox set up there
I wonder if these people are paid well. In some jurisdictions the local regulator requires you to have someone suitably qualified (could be CFA for example). Given they save companies millions, someone semi competent would presumably get an above average salary to push paper, sign stuff and stay contented. Would probably suit someone in the twilight of their career in that state.
you think these Chinese companies that set up reverse mergers in Delaware have people physically located at said location?
Delaware firms are excellent for money laund… err, I mean, for tax planning, especially if you are not a U.S. resident. You can incorporate from overseas through a registered agent.
Muddahudda Wrote: ------------------------------------------------------- > These are set up to minimise taxes in the US > right? Are they just boiler plate companies or is > there actually a man and his dog sitting in > Delaware to give the company substance? Same > applies to Bahamas/Cayman etc but I really think > it is only a post box in those jurisdictions. Just a legal address muddha (a PO box will do). Also, not just for taxes - there’s also huge advantages to being inrorporated in DE in the event of litigation because the courts and legal system are so corporation friendly. For a terrible recent example of this, google the stories on the failed Air Products & chemicals / Airgas hostile bid. There were several legal scholars who speculated that they would’ve won the case, had it not been in DE.
supersadface Wrote: ------------------------------------------------------- - there’s also huge > advantages to being inrorporated in DE in the > event of litigation because the courts and legal > system are so corporation friendly. > This is the main reason.
DE is also great for trusts. I believe the trust has to have a physical presence in DE, which is why there are trust companies that have office buildings full of empty cubicles with nothing but a phone and the name of a trust on the wall.
supersadface Wrote: ------------------------------------------------------- > Just a legal address muddha (a PO box will do). As far as I know Delaware law requires a resident agent. You can’t have a PO Box qualify as a Resident Agent. Additionally, if the implication is that you can establish/maintain a DE company with anonymity, practically that’s not the case.
LPoulin133 Wrote: ------------------------------------------------------- > supersadface Wrote: > -------------------------------------------------- > ----- > > Just a legal address muddha (a PO box will do). > > > As far as I know Delaware law requires a resident > agent. You can’t have a PO Box qualify as a > Resident Agent. > > Additionally, if the implication is that you can > establish/maintain a DE company with anonymity, > practically that’s not the case. Whoops, I think you’re right. Isn’t there a workaround though - designating a local lawyer as your ‘resident agent’, or some such?
supersadface Wrote: ------------------------------------------------------- > Whoops, I think you’re right. Isn’t there a workaround though - designating a local lawyer as your ‘resident agent’, or some such? Yes, it’s a cheap fix - usually less than $200 a year for these kinds of services. The point is, despite how simple it is to setup a DE company, there are many factors to consider which depend on your end goal. For example, what implications does a DE company have if I’m doing business in NY, or CA, or Italy? How long does it take to get a EIN number? What do I need to setup a bank account? …you can’t just setup a DE company and be laundering money a day later. It takes a bit more work than that.
Don’t think it has tax implications on what state you choose to incorporate/register- you submit state taxes where you do business. As sadface said, main reason is for Delaware’s business-friendly legal system. Went through the registered agent process last year for a few entities we have, and Poulin is right, an address alone is not sufficient. However, you don’t need to hire a registered agent either, you just need some physical presence that will receive mail and can answer the phone during business hours. You can serve as your own registered agent, but since no one wants to actually do business in Delaware you get these businesses that have hundreds or thousands of legal entities registered at their address.
sundevl21 Wrote: ------------------------------------------------------- > Don’t think it has tax implications on what state > you choose to incorporate/register- you submit > state taxes where you do business. As sadface > said, main reason is for Delaware’s > business-friendly legal system. > It can make a big difference if your company has significant intellectual property. For example, suppose your company has the patent for the world’s greatest widget and you want to manufacture that widget in PA for some reason. You set up a holding company in DE that owns the patent and licenses it to the PA domiciled company, effectively transferring profits to DE and it’s favorable tax rates. You have to document that the license is at market rates, but you still net a very nice tax savings in the end.
Its not a tax issue. Its a general legal issue. The Delaware court system has a reputation and history for having sophisticated business judges. Its the chancery court. http://courts.delaware.gov/chancery/