Companies incorporated in Delaware enjoy a legislative and judicial environment that encourages them to conduct business efficiently and profitably without heavy government interference. Incorporation is fast and simple. This state offers attractive tax regulations, innovative corporate laws and the existence of a chancery court system. Delaware is the second smallest state in the United States situated northeast on the Atlantic Coast and has approximately 800,000 inhabitants.
Delaware has long been considered the most popular jurisdiction for incorporation of holding companies and multinational corporations. Most of the largest 500 US Corporations are now incorporated in Delaware, which is more than all other states combined.
The registration for Delaware LLCs is performed at the Offices of the Secretary of State in Delaware.
The Limited Liability Company (LLC) is the latest advance in the formation of a business. The concept has its historical origins in Europe and was accepted by the Internal Revenue Service in 1997. An LLC is a hybrid between a corporation and a partnership. The LLC combines the corporate advantage of limited liability with flow through advantages of partnership classification. The LLC has the following advantages:
The duration of an LLC is generally perpetual. LLCs may carry on any activity except insurance or banking.
United States law requires that anyone transacting more than $10,000 into or out of the United States must report this transaction to the United States Customs Authorities. In addition the United States Internal Revenue Service must be notified of certain cash transactions in excess of US$ 10,000.
Name: The name of the LLC must include the words Limited Liability Company, L.L.C. or LLC. The name must be distinguishable from the name of any other corporation, partnership, business, trust or Limited Liability Company organized under Delaware law or qualified to do business in Delaware unless the written consent of such other entity is obtained.
a. Members: There is no minimum of members (owners) required for LLCs. These may be formed with as few as one member. Members need not be American citizens nor US residents and may be individuals, trustees, corporations or other entities, foreign or American. To add confidentiality to a structure, the members may be of corporate nature.
The corporate identity of the LLC is separate from that of the individual members, thus the members' liability in respect to debts and obligations of the company are limited to their contributions to the company.
b. Managers: The managers of a Delaware LLC may be individuals or corporations of any nationality or domicile. The names of the managers may be included in the Certificate of Formation and normally indicated in the LLC Operating Agreement. The managers may also be members of the LLC. The managers may make appointments as follows: President, Vice President, Secretary, etc. Resolutions may be approved anywhere in the world and are always required even if done over the phone, in order for resolutions to be approved.
c. Capital: There is no minimum or maximum requirement regarding the contribution of capital for a Delaware LLC. We recommend standard capital contribution of US$ 500/-.
It is recommended to issue stock certificates as evidence of ownership. Units in an LLC may not be transferred without the consent of all the rest of the members and all new members must sign the LLC Operating Agreement.
d. Registered Office: Delaware LLCs must have a registered office and a registered agent.
e. LLC Operating Agreement: Every LLC has a LLC Operating Agreement or Members Agreement. The agreement is a private instrument among the members or executed by the sole member. A standard Operating Agreement would include: the domicile, object, duration, names and details of managers and members, duties and responsibilities of the managers and members, voting rights and contributions of capital, among other important matters in the business affairs of the LLC.
f. Books: The books may be kept anywhere in the world. It is advisable for LLCs to register in minutes of meetings all resolutions made by the Managers and Members.
g. Taxation: Annual Delaware Franchise Tax for LLCs is US$300 which is payable prior to June 1st of each year. If payment is made after June 1st, the LLC will incur in a penalty of US$200 plus 1.5% monthly interest.
The LLC is subject to the US Tax Code based on the nature of its income, distributions, residencies of the members and any Tax Treaty provisions. For further information on taxation requirements and government filing of income tax returns in the U.S. please consult a US tax advisor.
h. Company Renewal: Renewal of the company is to be paid on anniversary date of incorporation. Failure to do so results in penalties and could result in the striking-off of the company from the Registry.
Latest valid passport copy and recent utility bill for address proof of shareholder/director are required to be submitted at every renewal as a part of enhanced due diligence. If shareholder is a corporate entity, then latest certificate of incumbency and above stated docs of directors would be required.
Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal, tax or other professional advice. We do not accept any responsibility, legal or otherwise, for any errors or omissions.