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:
- No citizenship requirements.
- No limitation on type of members (*actually LLCs are limited to about 250 members).
- No limitation on one class of shares.
- No limitation on ownership of other corporations.
- No tax penalties on liquidation.
- Allows limited liability to all members including those who participate in management. The duration of an LLC is generally perpetual. LLCs may carry on any activity except insurance or banking.
Movement Of Funds
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.
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.
Shareholders of the Company
The minimum of members required for LLCs is one (1). Members need not be American citizens nor US residents and may be individuals, trustees, corporations or other entities, foreign or American.
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.
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.
Share Capital of the Company
There is no minimum or maximum requirement regarding the contribution of capital for a Delaware LLC. OMC standard capital contribution is US$500.
It is recommended to issue stock certificates as evidence of ownership.
Units in an LLC may not be transferred without the consent of all the rest of the members and all new members must sign the LLC Operating Agreement.
Delaware LLCs must have a registered office and a registered agent.
LLC Operating Agreement
Every LLC has a LLC Operating Agreement or Members Agreement. The agreement is a private instrument among the members or executed by the Sole Member. A standard Operating Agreement would include: the domicile, object, duration, names and details of managers and members, duties and responsibilities of the managers and members, voting rights and contributions of capital, among other important matters in the business affairs of the LLC.
Books and Records
The books may be kept anywhere in the world. It is advisable for LLCs to register in minutes of meetings all resolutions made by the Managers and Members.
The Annual Delaware Franchise Tax for LLCs is US$ 250, 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 contact our offices.