Incorporation is a registration as per the requirements of the company law in respective countries which is recognized legally as a separate existing entity in the eyes of law. Incorporation in delaware signifies that the business enterprises is not sole proprietorship or partnership and is a separate legal existence or entity.

WHAT ARE THE LEGAL BENEFITS OF INCORPORATION

1. Protection of personal assets sole proprietors or partners are personally and jointly responsible for all business liabilities

A Corporation is a separate and distinct legal entity. This signifies that a corporation can open a bank account, own property and do business all under its own name. The main advantage of a corporation is that its owners, known as stockholders or shareholders, are not personally liable for the debts and liability of the corporation.

2. Transferable ownership

3. Retirement funds

4. Taxation benefits

5. Raising funds from sale of stock

6. Durability/life

7. Credit rating

STEPS INVOLVED IN INCORPORATION

1. Finding a name

2. Purpose or objects

3. Principal place of business

4. Number and type of shares

5. Registration fees to state

6. Corporate bylaw

INCORPORATE IN DELAWARE

In the discussion carried above, we have understood the basis for going for Incorporation in delaware.

The objective of this article is to understand

the procedures, formalities and benefits of incorporation in Delaware. The Division of Corporations under Secretary of State of Delaware handles all business incorporations in Delaware. In fact the Division of Corporations Offer a comprehensive list of services which is complete and exhaustive for incorporation of a business in the State of Delaware.

Any discussion about business incorporations and comparison of better place for incorporation in any place of the world will be incomplete without reviewing the State of Delaware. The word Pedigree and Evolution generally apply only to living beings, But when it comes to non-living form of nature, the word best suits to the State of Delaware with regard to the favorable environment for incorporations. The Delaware General Corporation Law is the most updated, advanced and latest and flexible business formation statute in the entire USA and comparable with other similar places elsewhere outside of USA.

1. Select the Name of the Corporation

The first step to incorporate is selecting the name for the company. The name cannot infringe on a trademark or service mark.

The Name must contain the word Company, Incorporated or abbreviation. Name reservations can be made through internet.

The legal concept of Incorporation in delaware is recognized all over the world. In the United States, Corporations are identified by the term incorporated added after the business name such as XYZ Instruments, Incorporated or by putting the word corporation in the name of the company, as in Netscape Communications Corporation. In Germany, Austria and Switzerland, the GmbH (limited liability business association) as well as the AG (stock market traded business association) are the most common comparable concepts. In the United Kingdom, the titles Ltd (abbreviation for limited company) or plc (abbreviation for public limited company) are used for corporations. In France, Spain, Portugal, Poland, Romania and South America the title S.A. is used for corporations. Norway used AS for stock corporations and Sweden uses AB, Italy uses Srl (limited Liability Company) and SpA (stock Corporation). The Netherlands uses NV and Singapore uses Pte Ltd meaning private limited which is the equivalent of a U.S. incorporated entity. In India Ltd is used to denote public limited company and PVT Ltd is used to denote private limited company.

ARTICLES OF INCORPORATION IN DELAWARE

The name of the corporation must include a corporate suffix such as Corporation, Corp., Incorporated, Inc., Company or Co.

The main business of the Corporation is to be mentioned. Location of the principle place of business is to be mentioned. Also location of the registered office of the corporation is to be mentioned.

Particulars of Directors are required to be mentioned in the articles of incorporation. The details required to be mentioned are number of initial directors, their names and addresses, the Principal place of business and mailing address of the corporation.

Financial details like initial capital of the company are to be mentioned. Details of issue of shares of stock from the initial capital and subscribers to the same are to be mentioned. Details and rules and procedures for placing any restrictions on stock ownership or transfer of shares are to be mentioned clearly if the corporation decides to make such procedures.

The name and Delaware address (P.O. Box not allowed) of the initial registered agent. Also the name, address and signature of the registered agent are to be effected here. Incorporation in delaware Registered Agent is the person authorized to receive service of court papers etc.

A person can hold the offices as President, Secretary and also a sole director. The names and particulars are to be listed in the articles of incorporation.

Shareholders, Officers and Directors of the corporation need not be residents of Delaware, name and address of the Incorporator and his signature.

Other aspects in Delaware are almost similar to requirements of other states like:

1. Holding of initial meeting of Directors to adopt bylaws, appoint officers and for issue of shares.

2. Obtain Tax number from Internal Revenue Service

3. Opening of bank account

4. Appointment of Auditors

From the above discussion, readers might get a natural doubt that the rules and procedures of articles on incorporation in Delaware are similar to other states in USA. The inference arrived is right but not always. This is because each state is Unique in its offering of facilities provided and the following factors play a key role in selecting a state for incorporation of Business:

1. The cost of incorporation is one of the lowest in Delaware in USA

2. There is no corporate income tax for corporations incorporated in Delaware but not transacting business in the state

3. There is a separate corporate law court system in the State of Delaware. There is no jury system but only Judges who are well updated in Corporate Law. This is called as Delaware court of Chancery.

4. Shares of stock owned by persons outside Delaware are not liable for Delaware taxes.

One of the recent trends in USA, China and India is greater movement towards federal structure whereby various states have different legal provisions. These states in turn are competing with each other to attract investments and new business incorporations in their respective regions so as to increase the employment levels and revenue earning sources. Special economic Zones, Export orient units, Export Processing Zones, Tax holiday islands all are output of such ideology. These regions have received huge investments in terms of billions of dollars in the last decade as inward investments. This investments and revenue have helped those regional governments to improve their infrastructure facilities at comparable levels that are exist anywhere in the world. Change Airport in Singapore, the new face of Beijing in China and changing face of business map in India are there for all of us to see and understand.

But the above recent development is not without flip side. There is uneven flow of capital investment among states in a particular country and fiscal discipline is thrown out of winds Because of political compulsions, States have started competing with each other on uneven scale and have made legal provisions which are not in conformity with central provisions or federal provisions. These issues are to be rightly addressed by economists. For example, if a Governor of Delaware is lobbying to bring an overseas Corporation into Delaware it is well within his moral duty to do so. But suppose the same person is elected to the Office of The President of the United States of America, if he lobbies to bring the same overseas Corporation into Delaware ignoring rightful claims of other States in USA, there will be conflict of interest and dereliction in his duty.

Delaware is a well known corporate haven and as per industry estimates, over 50% of US publicly traded corporations and over 50% of the Fortune 500 Companies are incorporated in the State of Delaware.