Converting a Non-U.S. Entity to a Delaware Corporation
Clients continue to form Delaware companies every day and appoint Harvard Business Services, Inc. (HBS) as their Registered Agent, as Delaware continues to remain widely recognized as the incorporation capital of the world. We also frequently receive inquiries from clients located outside of the United States who are interested in converting, or “domesticating,” an existing company formed in another country into a Delaware entity. In these situations, the client is seeking to formally relocate an already established business from its current foreign jurisdiction to Delaware. And at HBS, we can help with the Delaware side of the domestication process.
Why Domesticate a Company?
One reason why clients consider this specific filing is that many investors, lenders, and business partners are familiar with Delaware entities and may prefer working with companies organized under the Delaware corporate law structure. In addition, companies may choose to domesticate into Delaware in anticipation of raising capital, expanding into the United States, restructuring their operations, or simplifying the management of their business. Rather than forming a new Delaware entity and transferring assets, a domestication may allow the company to continue its existence as the same legal entity while changing its jurisdiction to Delaware.
For example, we have extensive experience assisting clients with domesticating Cayman Islands companies into Delaware LLCs and Corporations. While the domestication process may initially seem complex or overwhelming, our experienced team helps guide clients through each step of the Delaware side of the process, making the transition as smooth and straightforward as possible.
How to Domesticate a Company
To complete the Delaware side of the domestication process, a Certificate of Domestication is filed with the Delaware Division of Corporations along with the appropriate Delaware formation document, such as a Certificate of Formation for an LLC, a Certificate of Incorporation for a Corporation, or a Certificate of Limited Partnership for a Limited Partnership. Once approved, the entity becomes active in Delaware.
The domestication process generally requires only a few key pieces of information to start. To begin, the state must know the type of Delaware entity that will be formed. For example, will the company be domesticated as a Limited Liability Company (LLC), Corporation, or Limited Partnership (LP)?
If the company will be domesticated as a Delaware Corporation, the state will require details regarding the total number of Authorized Shares, including the number of authorized common shares, any authorized preferred shares, and the par value of the shares. If the entity will be a Delaware Non-Profit Corporation, a mission statement must be provided for inclusion within the filing.
In addition, regardless of the entity type, clients will need to provide a country other than the United States where the Delaware documents will be used, which will help determine if the documents will be Certified with Apostille or Gold Seal to ensure the documents are recognized internationally.
And depending on the type of Delaware entity being formed, additional information regarding the individual signing the filing documents will be required. For a Delaware LLC, the client will need to provide the name of the Authorized Person who will sign the documents submitted to the state. For a Delaware Corporation, the client will need to provide the name and mailing address of the Incorporator who will execute the Certificate of Incorporation filed with the Delaware Division of Corporations. For a Delaware Limited Partnership, the names and addresses of the General Partner(s) will need to be provided. In addition, the client will need to identify the individual who will sign the Certificate of Limited Partnership that is submitted to the Delaware Division of Corporations for approval.
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Other essential information required to complete the Delaware filing, and if HBS is assisting with the filing or serving as the Delaware Registered Agent, includes the proposed Delaware company name, as well as the contact information for the company's primary communications contact. This information generally includes the contact's full name, physical address, email address, and telephone number.
In addition to the information required for the Delaware filing, the following details are often necessary to facilitate the remainder of the Delaware domestication process:
- The exact name of the company (where it is currently formed)
- The jurisdiction where the entity was first formed
- The date that the company was first formed
- The jurisdiction that constituted the seat or principal place of business
- And what entity type (LLC, LP, Corp., Non-Profit) was the company in the original jurisdiction?
After Domesticating a Company
Once the domestication is approved and the company becomes active in Delaware, the entity may need to obtain a Federal Employer Identification Number (EIN) from the Internal Revenue Service (IRS) if it does not already have one. An EIN is commonly used for purposes such as opening U.S. bank accounts, hiring employees, filing tax returns, and conducting other business activities within the United States. Whether a new EIN is required will depend on the company's specific circumstances, including its existing tax registrations and the manner in which the domestication is being completed. Because EIN requirements are determined by the IRS and may vary from one situation to another, clients will often consult with a qualified tax professional to determine whether a new EIN is necessary.
If you have any questions about domesticating your non-U.S. company into Delaware, feel free to contact our office at 1-302-645-7400 ext. 6900 or via email at info@delawareinc.com.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.