The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.
In this special news report our own Frannie Esparza gets a special interview with Harvard Business Services Founder & CEO Rick Bell. Rick tells us how he has helped form over 100,000 companies here in Delaware and why so many entrepreneurs choose Delaware as the “home of their corporation or LLC.”
Harvard Business Services is the company to choose when you need to form a Delaware LLC or corporation—we have the lowest rates and lifetime customer support.
In this 60-second video, we tell you why Harvard Business Services is the best choice to form your Delaware LLC or corporation. What separates us from all other formation companies and what we will do as your Delaware Registered Agent throughout the life of your company.
Sometimes a Delaware entity will unfortunately end up in a defunct status. For example, the registered agent of an entity has the option to file a resignation, which would cause the company to be in a forfeited status. A registered agent may perform this type of filing for various reasons. Typically, a resignation is filed if an entity does not pay the registered agent fee that is due annually. Occasionally, a client will specifically request that their entity be resigned upon because they are no longer in need of an active company.
Once a company is in a forfeited status, it is no longer considered to be active and in NOT in good standing with the State of Delaware. Clients in this situation often ask if they are still required to make payment arrangements for their annual franchise tax fees.
Every entity situation is different, but here are a couple general guidelines:
What if you are not interested in keeping the entity once it has been forfeited? Any franchise tax fees that may be due would be dependent on when the entity was resigned upon. If the company already had franchise tax fees imposed at the time of the resignation filing, then those outstanding fees would remain with the entity. The past due franchise tax fees do not simply “go away” because the company is in a forfeited status. However, the forfeit entity would not incur any new franchise tax fees either. The State of Delaware does not impose annual franchise tax fees on entities that are forfeited or in forfeit status.
But what if the company is forfeit and you actually need it to be in good standing? If you want to restore the entity, then a Certificate of Renewal would have to be filed and all past due fees would have to be paid. There is a costs associated with filing the renewal and the past due fees are franchise tax fees, penalties and interest, filing fees, registered agent fees.
If you have a forfeited company, call us at Harvard Business Services (1-800-345-CORP) for a free consultation. We will provide you with the exact details regarding your Delaware company. Once you have all the necessary information, then you can decide how best to proceed.
Because of Delaware’s reputation as a haven for corporations, the Delaware Court of Chancery together with the State Supreme Court have developed a worldwide reputation as a respected source of legal decisions. For this reason, businesses carefully watch when judicial change is coming, as the turnover could affect corporate cases for many years to come.
Supreme Court Chief Justice Myron Steele announced his retirement, effective November 30, becoming the first change in nine years on the Court. Because of its established case law and consistency of its courts, most of U.S. businesses are incorporated in Delaware, and almost 40 percent of Delaware’s revenue is tied to this. Judges have different styles and views on important technical issues, so although the fundamental nature of Delaware corporate law probably will not change, the selection will be very carefully watched.
There is great speculation as to who will be nominated by Gov. Jack Markell, but frontrunners are Delaware Court of Chancery Leo Strine, and Superior Court Judge Jan Jurden, although all of the present justices as well as other presiding judges or corporate law senior partners are in the running.
Both Leo Strine and Jan Jurden are well qualified, coming through the ranks over the years, Strine has been characterized as aggressively brilliant, while Jurden is known as being logistically grounded.
Governor Markell has a tough decision ahead, and if Leo Strine gets the position, his position as Chancellor will also need to be filled.
Governor Markell had high praise for outgoing Chief Justice Myron Steele, saying, “He has been a tireless and forceful advocate for our state’s judiciary and indeed, for the entire state of Delaware. It is no secret that Delaware’s judiciary is the finest in the nation. I want to thank chief Justice Steele for his tireless efforts in building and maintaining a court system that is truly a national model.”
One of the many benefits of forming a Delaware corporation is that the Directors’ names are not required to be listed on the Certificate of Incorporation. This serves as an added level of security for those people who value their privacy. The public can obtain any Delaware company's Certificate of Incorporation simply by contacting the state and paying a fee; however, whether or not the pubic can ascertain the person/people behind the company depends on which, and how much, information appears on the Certificate of Incorporation.
An incorporator handles the preparation, execution and filing of the Delaware Certificate of Incorporation. An incorporator is an individual who forms a corporation on behalf of the Directors by filing the Certificate of Incorporation with the Delaware Secretary of State. The incorporator then names the initial Directors of the corporation until successors are elected and qualified internally within the corporation. The powers of the incorporator are then discontinued, and the incorporator is no longer considered a part of the company. When you use Harvard Business Services, Inc. to form a Delaware corporation, Harvard is listed as the incorporator on your Certificate of Incorporation; it is signed by Richard H. Bell, II, the president of Harvard Business Services, Inc.
Some filing companies will, by default, list the Directors' names on the Certificate of Incorporation when filing it with the state. In addition to giving up your right to privacy, there are additional disadvantages to listing the Directors’ names on the Certificate. First is the fact that if you list Directors’ names, the state mandates you must also list Directors' addresses. If the corporation's Directors don’t own or rent an office, their home addresses must be listed. This is not only troublesome but also tedious, as the information then has to be updated every time the listed addresses change. If an address is not properly updated, the Certificate is no longer accurate. Many filing companies and business formation companies use this tactic to acquire additional money from their clients. They typically charge between $350 to $500 each time the address needs to be updated on a Certificate of Incorporation. They may also charge an additional fee if you ask them not to list the Directors on the Certificate from the start. At Harvard Business Services, Inc., we file all of our companies privately unless we are asked to do otherwise.
Listing the Directors' names on the Certificate of Incorporation is not the only way to illustrate a corporation's membership. Ownership in a Delaware corporation is created by issuing shares of stock. The issuing of shares is typically documented internally, in the company bylaws, as well as in the stock transfer ledger. This information is not required to be filed with Harvard Business Services, Inc., nor with the state of Delaware.
Be wary of companies that encourage you to list your corporation's Directors' names on your Certificate of Incorporation. This should be a red flag that the Registered Agent you have chosen may not be protecting your best interests or the best interests of your company. If you do choose to list your Directors' names on the Certificate, be sure you are doing so for the right reasons, such as an instruction from your attorney or accountant, or perhaps as a requirement of a business partner.
For additional information on forming a Delaware corporation, contact Harvard Business Services, Inc. at 1-800-345-2677.