Shelf Corporations

Whether or not there is a scam relating to this particular inquiry is unknown. Anyone can form a NV corp. for $200. Anyone can buy an aged or shelf NV corporation that is for sale. Either method gets you a NV corporation.

More info from a vendor is here:

Seems to me that unless you are located in Nevada, anyone trying to convince you that any NV corporation is any better than one in your home state is promoting a scam. Normally there is no advantage whatsoever, and often there is greater cost and bureaucracy if you do that.

prefer NV or DE incorporation. California, for example, requires cumulative voting for directors while NV does not, and NV has a lot of other rules that make life easier for management.

Unfortunately it doesn't work that way. In your example, if the corporation has more than half its securities are owned by Californians, or more than half of the average of its payroll, property and sales are in CA, then California law will apply to internal corporate affairs rather than the state of incorporation. See California Corporations Code §2115.

I'd be surprised if other states didn't have similar laws.

But why would anyone NOT in NV nor doing business IN NV want one?

ChEAR$, Harlan Lunsford, EA n LA

.. for some of the same reasons that companies incorporate in Delaware? Here's what the NV Secretary of State says on the subject:

Incorporating in NV, like Delaware, only makes sense for publicly traded corporations. In generally there is no benefit whatsoever to non-public corporations - in fact it might even be more expensive to do so.

# No Corporate Income Tax # No Taxes on Corporate Shares # No Franchise Tax # No Personal Income Tax

You still have to pay business income tax (for C corps, and S corps in California) and personal income tax (for S corps, and dividends of C corps) in other state.

# Nominal Annual Fees

Nevada's annual fee is $125? CA is $25 and TX is none.

# Nevada corporations may purchase, hold, sell or transfer shares of its own stock. # Nevada corporations may issue stock for capital, services, personal property, or real estate, including leases and options. The directors may determine the value of any of these transactions, and their decision is final.

Not sure, but I think all corporations can do this.

# No Franchise Tax on Income

Think I covered this above.

# No Inheritance or Gift Tax # No Unitary Tax # No Estate Tax

What does this have to do with businesses?

# Competitive Sales and Property Tax Rates

This might make sense if operating from NV.

# Minimal Employer Payroll Tax - 0.7% of gross wages with deductions for employer paid health insurance

Do you have to pay this tax only on gross wages of NV employees?

# Nevada's Business Court

There was a court case recently where the decision was that multi- state corps have to follow the rules of the state they operate in.

Why does it make sense for publicly traded corporations only?

I found what I was concerned about. In addition to all the discussion on why some one out side of Nevada, New York in My Case, would want a "shelf" corporation, I see the FDIC has flagged this as an area of abuse.

TO: CHIEF EXECUTIVE OFFICER (also of interest to Loan Officers) SUBJECT: Lending to Shell and Shelf Companies Summary: Shell and shelf companies may be used as vehicles for financial fraud.

Noel Nichols

Very interesting. Thanks for the follow-up.

Dick, I think you made a wise decision to let Noel's post through.

Katie in San Diego