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What
is the #1 Reason to
Incorporate in Nevada?
Is
it the fact that Nevada has NO State Income Tax?
NO! This ONLY applies
if you're actually operating your business IN Nevada, and your employees
live in Nevada.
Is
it the PRIVACY offered by Nevada?
NO! This is really
a minor benefit. Basically, stockholders are not listed in the Secretary
of State records. But once you obtain a business license in Nevada
or, more likely, in your home state, your privacy is out the window!
Is
it the fact that Nevada does not exchange
information with the IRS?
NO! 95% of the companies
formed in Nevada should register as foreign entities. When that happens,
your HOME STATE exchanges information with the IRS!
The Real Reason You Should
Incorporate in Nevada:
Is it the fact that Nevada is the hardest state
in the country in which to PIERCE your CORPORATE VEIL?
YES!
Nevada appears like an iron fortress to your creditors. In fact, the
corporate veil has only been pierced two times in Nevada in the last
30 years!! And that was when the corporation was actually doing business
in Nevada and had committed fraud against a Nevada resident.
AGAIN-The
Corporate Veil has only been pierced TWO TIMES in the LAST 30 YEARS
in Nevada!
Nevada Corporate Planners, Inc.
hired a team of outside attorneys to do extensive research to determine
if Nevada is as impregnable as has been touted over the years. Click
here to see the results of their extensive research.
What
are the other major benefits to domiciling your company in
Nevada?
Benefit
1: In 1987, the Nevada Legislature passed a revolutionary
law that permits corporations to place provisions in their articles
of incorporation that would eliminate the personal liability of
officers and directors to the stockholders of Nevada Corporations.
This is one of the main reasons
large companies like Citibank domicile in Nevada. Although Delaware
and a few other states soon adopted lesser versions of this law, Nevada's
law remains among the most thorough and comprehensive in the country.
Contained in the Nevada Revised
Statues (78.037), the law in part reads as follows:
"The articles of incorporation
may also contain:
Benefit
2: Nevada Corporation Code allows for the indemnification
of all officers, directors, employees, stockholders, or agents
of a corporation for all actions that they take on behalf of the corporation
that they had reasonable cause to believe was legal. This indemnification
can include any and all civil, criminal and administrative action.
(See NRS 78.751.) These two laws can provide complete protection
for the officers and directors of Nevada corporations as long
as they act prudently in their roles
The other significant change in
Nevada law is the abolishment of joint and several liability.
Joint and several liability means that should a judgment be entered
against several defendants, they will each assume equal liability
for the full amount of the judgment, regardless of their relative
fault in causing the damages. Nevada now requires the court to assign
a percentage of fault to each defendant, from zero to one hundred
with the total equal to 100 percent. Every defendant found liable
is required to pay a share of the total judgment no greater than his/her
fault.
This means that if you haven't
done anything wrong, chances are good you won't be held responsible
should other people in your corporation act poorly.
Benefit
3: Jurisdictional Strategies
What about Nevada vs. Delaware?
The main rights in Delaware law
benefit shareholders of public corporations. This attracts
large, public companies that trade on various exchanges across the
country to provide the best protection to their shareholders. Delaware's
corporate law, with regards to corporate takeovers is the strongest
anywhere in the US.
More recently however, Nevada's
corporate law has surpassed Delaware's in its efforts to ensure
the protection of the rights of small corporations. Delaware for example,
has adopted a statute that allows the corporation to limit the liability
of a director for monetary damages. However, it has far to go to be
compared to similar statutes adopted by Nevada. For example, the following
are acts for which officers and directors would be protected
under Nevada law, but exposed under Delaware Statues:
- Acts or omissions not in good faith.
- Acts by officers are not exempt from monetary
damages under Delaware law.
- Breach of a director's duty of loyalty.
- Transactions involving undisclosed personal
benefit to the officer or director.
- Acts or omissions that occurred prior to
the date that the statute which provides for indemnification of
directors, was passed and approved.
One requirement that Delaware has
is that an officer must reasonably believe that he or she is performing
his or her duties in a manner that is in the best interests of the
corporation. This requirement is not present in Nevada.
- This research
attempts to answer the question of whether or not a state
can apply its own law regarding piercing an entity to so-called "pseudo-foreign" corporations.
Which State to Incorporate In?