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While Delaware Limited Liability companies are not required to list their members on the public record, the names and addresses of directors of Delaware corporations are required to be listed on the Delaware Annual Franchise Report, which is a public record document. This report must be updated every year by the first day of March.
The following information must be listed on the Delaware Annual Franchise Tax Report for all Delaware corporations:
Some companies are also required to disclose their Gross Assets and the number of issued shares of stock in order to favorably recalculate their tax. When that information is collected, it is not available for public viewing, even if a copy of the report is ordered later.
The Annual Franchise Tax Report must be signed by an officer or director of the company. If the signature is not legible, a printed or typed name of the signer must be on the document underneath the signature. Penalties exist for falsely filing this report.
It is permissible, however, to file the formation document, called the Certificate of Incorporation, without revealing the names of the initial directors, officers and shareholders if one uses a Registered Agent as their incorporator.
Thus, it is true to say that you can file a Delaware corporation without revealing the names of the directors, but they will not remain unnamed for long.
While the benefits of ambiguity are generally respected by Delaware law, the protections are reserved for stockholders rather than directors.
Stockholders of Delaware corporations own their stock as personal property and are not required to disclose their names and/or address information to the state of Delaware. Stock Registries of Delaware corporations are the purview of the corporation itself insofar as Delaware is concerned.
Actually, Delaware corporation law does not always favor the directors, as many people believe. The drafters of the DGCL (Delaware General Corporation Law) strive to be fair to both the stockholders and the directors, rather than show bias toward either.
However, the directors are typically given latitude to manage the company, whereas the shareholders are given the absolute right to their pro-rata share of the dividends and the right to vote on who fills the director positions.
Although there are many criteria for an exemplary jurisdiction in which to form a corporation, Delaware excels in every one of them, such as fairness of judges, rules of the court, promptness of decisions and consistent case law, according to the U.S. Chamber Institute for Legal Reform, which produces an annual report on which states are most favorable to do business in.
Every year for the past ten years, Delaware has been voted number one in the nation in almost every category.
The bottom line here is that directors of Delaware corporations are not given the right to remain anonymous but they are given protection from personal liability for company action and expenditures if they follow the tenants of the business judgement rule:
If the directors follow these basic rules, they will not be held personally liable for the consequences of their decisions.
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.
There is 1 comment left for Delaware Corporation Directors Cannot Be UndisclosedWilliam A Knochelmann CPA LLC said: Sunday, April 23, 2017
WHAT ARE THE TAX IMPLICATION OF A C CORORATION CONVERTING TO AN LLC AND ELECTING TO KEEP C-CORPORATION STATUS-CORPORATION HAS A FISICAL YEAR END OF FEBRUARYHBS Staff replied: Monday, April 24, 2017
That question is best answered by a CPA, which we are not, so we recommend you seek the counsel of a licensed accountant.