backOpening of Company in Delaware (US)
Delaware is known worldwide for its high relevance to the establishment of business companies in the United States.
With this, delaware’s legislation is also attractiveto foreign companies seeking its expansion in the market, thus opening its operation to several countries.
Generally,Delaware’s business laws offer numerous benefits to international trade. In addition, Delaware law also provides efficient procedures in the business sphere, such as transactions involving mergers, conversions, transfers, etc
1.1 – Opening of Company in Delaware (US)
I. Ease of creation
In Delaware it is accepted that business holders (partners) have a greater ease in creating companies through eficient and simple processes.
The State Secretariat has improved its operations, providing a more accelerated process, to meet international quality standards, allowing a greater ease in the constitution of new companies
The ease of creation and flexibility in administration in the face of other international business laws that it holds in more costly procedures, are seen as more eficient and demonstrategreater opportunities in certain operations.
In this way, the benefits offered make it a desirable location for new organizations, including those outside the United States.
II. Flexibility in administration and control structures
Providing substantial flexibility for parties in international trade to form corporate companies other than necessarily corporations, including limited liability companies and limited liability companies that canbe appropriated for certain situations.
Partners of business companies registered in Delaware maystructure their companies in order to adapt to special situations, since Delaware law allows multiple class ofcontrol interests, each may hold control rights or preferential (economic) rights. In other words, such structural flexibility favors transactions such as a joint venture, in which the parties may not have an equivalent stake
III. Limitation of liability
Generally, Delaware allows the parties to define their operations, eliminating personal liability on the part of the investor, through its LLC operating contract, titled as contractual freedom.
In this way, Delaware law also recognizes the limitation of fiduciary liability for violation of the duty of caution, as well as the broad indemnification for liability, promoting less exposure to directors and board members.
IV. Efficient and fair procedures for conflict resolution
Over the years, the state of Delaware and its courts have taken numerous initiatives to help companies resolve complex business disputes outside the justice system. With this, laws and rules that promote vast alternative solutions for the reresolution of conflicts were adopted in the Court of Chancery.
Being allowed the parties involved in certain disputes seek so far, the mediation of their demand before another judicial authority, other than that responsible for the monitoring of their proceedings.
The Delaware Court of Chancery is a special court of equity, its legal system is known worldwide for expertise in conflict resolution, thus promoting more efficient and fairer procedures.
Some of the main benefits for conflict resolution are: agility, process confidentiality and efficiency.
1.2 – Constitution of a Company in the USA
For the most part, they are limited liability company LLCs – Limited Liability Company, an LLC is a relatively new type of entity in the United States. However, it is important to mention that while LLCs can be treated as partnerships, they are not corporations.
An LLC is a commercial vehicle with separate and distinct legal existence from its owners, where owners and managers are not personally responsible for the company’s debts and obligations. The operations and management ofan LLC are governed by a written agreement composed of its owners, called the LLC Operating Agreement , and although Delaware LLC allows it to be administered by its members, it does not require members to be managers.
That is, the main objective of the constitution is the opening of a commercial vehicle with a separate and distinct existence from its owners. Therefore, for taxation in the USA, owners and managers are not personally responsible for the company’s debts and obligations.
1.3 – Constitution and Regularization of the Company in Delaware
I. Name for the company
You must choose 3 different names and make sure they are still available. After that, the names are sent for approval by the Delaware government.
II. Registered Agent da empresa
It may be a natural or legal person, who will help the company receive important information, such as official government notifications, legal documents, tax forms and others related to legal proceedings. That is, will present the point of contact of the company with the State.
III. Arquivamento do Certificate of Formation
To register an LLC in Delaware, business owners need to file the certificate with the Secretary of State. This can be done online or by mail to the Corporation’s Delaware division website.
IV. Obtaining the EIN
The Delaware company requires obtaining the employer’s identi cation number (EIN) to declare taxes and pay taxes thereafter.
V. Drafting and signing of LLC Agreement
Final step for the constitution and regularization of the company.
1.4 – Management
I. Delaware law, for LLCs, allows them to be administered by their members, but does not require members to be administrators.
II.Delaware Law states that no member or manager is personally liable for any debts, obligations or lideies of Delaware LLC just by being a member or acting as a manager.
III. The Delaware Limited Liability Company Act, known as freedom of contract, allows the parties to define their operations, management and business relationship in the Contribution Agreement.
Opening of a Company In the Cayman Islands
2.1 – Structuring
Cayman Islands companies and their corporate laws attract international business, and with this, numerous offshore investors choose to incorporate into their jurisdiction, their structuring is seen as interesting because theirdeveloped and stable econom
2.2 – Main benefits of Setting up a Controlled Holding Company in the Cayman Islands
I. Non-need for federal income tax return in the U.S. by the shareholders of the parent holding company.
II. With the complete structure, llc in Delaware would not be considered as an American company for tax purposes.
III. Investors feel more comfortable investing in a company through its parent holding company located in the Cayman Islands.
IV. Unlike U.S. LLCs and C-Corps, cayman holding companies do not require reporting or statement statements.
2.3 Negative Points of a Holding Company in the Cayman Islands
I.Additional expenses for maintaining the additional company in the corporate structure.
II.More expensive costs for constitution and maintenance, compared to companies in the state of Delaware, USA.
III. The possibility for investors, usually U.S.-based funds, to owe the establishment of a structure where the parent company is based in the Cayman Islands.
2.4 Requirements for the Establishment and Regularization of the Company in Delaware
I. Information about members and directors
II.Description of the structure and purpose of the company
III.Other information to vary depending on the characteristics of the holding company, such as checking the availability of the name
IV. Registered Office for compliance with tax obligations before the government and responsible body of the Cayman Islands
V.Preparation of the company’s constitutive documents, usually prepared by the Registered Office of the holding company
VI.Obtaining the EIN (employer identification number). For the Cayman holding company, obtaining the EIN is used for the opening of a bank account in American banks, where the company will receive its contributions and investments.
Check out the explanatory Infographic about Creation of Company in the USA and in Cayman at the link:
Campos Thomaz & Meirelles advogados | Infographic Creation of Company in the USA and in Cayman
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