Low start-up and maintenance costs. Currently no due diligence and 'know your client' requirements. Excellent professional infrastructure. A popular jurisdiction for its user-friendly corporate laws.
The State of Delaware is the second smallest state in America, situated on the east coast of the United States. Presently 800,000 people populate this English-speaking democratic state.
Delaware is the leading jurisdiction for the incorporation of companies in the United States (US). Companies incorporated in Delaware account for more than half of the Fortune 500 companies as well as one out of every three companies listed on the New York Stock Exchange and the American Stock Exchange.
Law and Taxation
One frequently-cited advantage is that the state's internationally renowned Court of Chancery deals exclusively with corporate matters. The judges of this court are appointed on merit alone and are not elected.
The corporate laws of Delaware are very user-friendly and have often been used by other states as a standard for testing corporate laws. As a result, the corporate laws in Delaware are familiar to many lawyers both domestically and internationally.
Companies of primary interest to offshore investors are the Corporation and the Limited Liability Company (LLC). LLC's are a hybrid of a Corporation and a Partnership, sharing the same features as a Corporation but may also choose to be taxed as a corporation, partnership or trust.
There is no state income tax for Delaware Corporations or LLC's that do not conduct business in the US. The only tax typically payable is an annual franchise tax which falls due on the 1st of March (Corporation) and 1st June (LLC) each year respectively. The minimum annual franchise tax for a Corporation with the standard minimum share capital is US$75 plus an additional US$25 filing fee for the annual franchise tax report. For an LLC, the franchise tax is US$250.
In situations where no business is conducted in the US and the shareholders, directors and officers are not US citizens, a Delaware Company has the same characteristics as a normal "offshore" company.
The minimum number of directors and shareholders for a Corporation is one. Corporate Directors are not permitted. A President, Treasurer and Secretary must be appointed. One person can hold all of these offices and there are no residency requirements. However, the Registered Office and Registered Agent must be situated in Delaware. The Office and Agent details are also included in the Certificate of Incorporation. There are no minimum capital requirements. Details of directors and officers must be provided.
Corporate governance for LLC's is governed by a written agreement among its members. Subject to the Certificate of Incorporation or the by-laws, shareholders and directors are not required to hold meetings, as the law permits shareholders and directors to act by written unanimous consent.
There are no restrictions as to the type of business for a Corporation. Delaware permits a general purpose clause for any legal business activity for which a Corporation may be incorporated. LLC's may not take on the business of insurance or banking for which licences are required.
The legal infrastructure in Delaware is regarded as the best in the US, especially given the Chancery Court's 200 years of legal precedent. Banking and accounting services are also readily available.