The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.
We work with ambitious entrepreneurs from all over the world to help form their Delaware companies for different kinds of business ventures.
When operating a Delaware LLC or corporation internationally, you may find that at some point you will be required to provide your incorporation documents affixed with an Apostille.
The Apostille de la Hague was put in place by the Hague Convention on October 5, 1961; it replaces the need for the legalization of foreign documents. In a nutshell, the Apostille is a means for documents to be recognized in all the countries that are currently a member of the Hague Convention.
We can obtain an Apostille document for any of your Delaware company’s documents on file with the Delaware Secretary of State, such as a Certificate of Good Standing, annual report or a variety of formation documents.
Our Apostille Service is fast and efficient, and we send you both a digital version via email and a hard copy via mail (expedited courier service is available in lieu of mail for an additional fee).
Delaware LLCs have been known to operate in all 50 states using a process called Foreign Qualification.
An LLC that is formed in Delaware is domestic to Delaware and foreign to every other state.
The Foreign Qualification process is the way in which another state gives a business owner the permission to operate in that state using the Delaware LLC.
If a business has a physical presence in another state other than its state of incorporation —via operating, banking, hiring employees or even holding an asset—the company owner must often foreign qualify the business in order for it to operate in that state.
Each state is different in its requirements to register a Delaware LLC as a foreign entity in the state.
Wisconsin, like many other states, has an application process and a state fee. Wisconsin, unlike many states, does not require a Certificate of Good Standing for a Delaware LLC to register there as a foreign entity.
Wisconsin will, like most states, require a Registered Agent in the state of Wisconsin in order to receive any correspondence directly from the state. It will be the Registered Agent’s job to forward any correspondence from the state of Wisconsin to the company contact person, including the annual reporting requirements.
Your Delaware Registered Agent will still be responsible for forwarding any correspondence from the Secretary of State of Delaware.
Once registered as a foreign entity in Wisconsin with your Delaware LLC, you will be responsible for Wisconsin’s annual report fees. Do not confuse these with the Delaware Franchise Taxes.
A Delaware LLC registered as a foreign entity in Wisconsin will be required to pay the Delaware Franchise Tax of $300 as well as the Wisconsin annual report fee of $80.
The Delaware Franchise Tax is due before June 1, and the Wisconsin annual report will be due before March 31 of each year. The Wisconsin annual report must be filed by a manager or a member of the Delaware LLC.
To initiate this process of foreign qualifying your Delaware LLC in Wisconsin, you can call us and we will be happy to assist you. We can take your information over the phone, prepare the documents and email them to you for signature.
We will then file the documents with Wisconsin. The turnaround time is typically about seven business days. If you require a Registered Agent in Wisconsin, we can assist with this as well.
For more information on registering your Delaware LLC in Wisconsin, or to get started, please call 1-800-345-2677 x6130 or email me.
Under Delaware law, a series LLC (limited liability company) may be composed of individual series of membership interests. This type of entity is referred to as a Delaware series LLC.
Each series is effectively treated as a separate entity, meaning the debts, liabilities, obligations and expenses of one series cannot be enforced against another series of the LLC, or against the LLC as a whole.
Each series can hold its own assets, have its own members, conduct its own operations and pursue different business objectives, but each series remains insulated from claims of members, creditors or litigants pursuing the assets of or asserting claims against another series.
The structure of the series LLC, which is often likened to a piece of honeycomb, is Delaware’s version of the "segregated portfolio companies" which are widely used (under various names) in the Cayman Islands, British Virgin Islands and other non-U.S. jurisdictions.
The Delaware series LLC reduces the fees incurred in creating and maintaining separate business entities for different ventures or investments. Only one filing fee is required to form a Delaware series LLC, regardless of the number of series it contains.
In addition, this type of LLC is treated as one entity for Franchise Tax and Registered Agent Fee and service purposes, meaning it is assigned one Registered Agent Fee and one $300 annual Franchise Tax, rather than the separate taxes and fees that would otherwise be applied, individually, to separate LLCs.
The Delaware series LLC Operating Agreement (which is not required to be publicly filed) may provide for any number of series. The Certificate of Formation for a Delaware series LLC must specifically note, however, that the LLC is divided into distinct series and the assets and obligations of a series are attributable only to that series.
Additional series can be added, or series can be terminated, at any time by an amendment of the series LLC Operating Agreement. In order to maintain the legal distinction among the series, a series LLC must maintain records documenting the assets and liabilities of each series; however, from a practical perspective, records should be kept as though each series is a separate entity.
Although series LLCs have become increasingly popular, there is a certain degree of uncertainty surrounding the Delaware series LLC. For example, the legal separation of the assets and liabilities of each series has not been tested in court.
Although Delaware law clearly provides for legal separation of each series, it is unclear whether courts in other states and/or jurisdictions would recognize a legal separation of assets and liabilities within what is, technically, a single entity.
Therefore, even if a Delaware series LLC were properly structured and operated, with distinct records relating to the assets and liabilities of each series, a court in another jurisdiction could decide not to recognize the legal separation afforded under Delaware law.
Additionally, the United States federal tax treatment afforded to individual series is not certain.
In January 2008, the Internal Revenue Service held that the distinct series within a Delaware series LLC will generally be taxed as separate entities for federal income tax purposes; however, many states have not provided concrete guidance on the effect of the series distinction for state tax purposes.
We have been creating Delaware series LLCs for the last 10 years, and possesses the experience to allow you to take advantage of this flexible and efficient business formation. If you think the Delaware series LLC may be right for you, please call 800-345-2677 or email us for more details.
We can also offer guidance if you need help creating a series LLC Operating Agreement. We also offer a series LLC Operating Agreement template.
For more information on the Delaware series LLC, please read these helpful articles:
Is your Delaware Registered Agent doing everything it can for you and your business?
While all Registered Agents abide by basic standards, an exceptional one will offer you services that are both convenient and necessary to business owners.
What if you bought a car from a dealership but were never offered assistance with service or parts?
The situation is similar for a Registered Agent, who should be able to help you after the initial formation of your company.
Here are some services your Registered Agent should be able to assist you with:
If your current Registered Agent is not providing you with quality service, then consider changing your Delaware Registered Agent.
Delaware’s reign as the nation’s number one place to incorporate is no secret, but what remains a secret to so many is the reason why it is number one.
Actually, Delaware’s “corporate crown” can be credited in large part to a court system whose roots reach back to feudal England.
In its infancy the Court of Chancery was set up by the King of England to hear matters where no law was in existence to settle some disputes.
Thus the King’s Chancellor was to hear the case and consider the fairness of the matter. This type of court does not exist in other legal systems and only three U.S. States have such a court.
A court of equity differs from a court of law; matters before the Court of Chancery are heard as bench trials meaning that they are tried before a judge, alone. Without juries, judges are left to make rulings considering all issues of fact and law.
For more than 200 years, the Delaware Court of Chancery has exercised exclusive jurisdiction over all matters and causes in equity in the State of Delaware.
The Court is comprised of one chancellor and four vice chancellors, all of whom are nominated by the Governor and confirmed for 12 year terms by the Senate. The five chancellors must all be well versed in law and must be Delaware citizens. The Delaware Court of Chancery has jurisdiction over a number of matters including commercial proceedings, real property, guardianship, and civil matters.
The majority of the litigation heard in today’s Delaware Court of Chancery consists of corporate, trust and estate matters. The most notable power of the Court is its ability to issue injunctions and temporary restraining orders, and is most frequently exercised in corporate differences over mergers or acquisitions.
A typical merger dispute will see a plaintiff seek temporary relief to preserve the status quo until a trial can occur. If the need should arise, the Court of Chancery may order issues of fact to be tried by a jury in the Supreme Court of Delaware.
With more than 200 years of judicial precedent, the Delaware Court of Chancery is hailed as the nation’s leading forum for settling corporate disputes, and is one of the most important reasons why Delaware is the most favorable environment for the world’s commercial affairs.