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One Nation, Under Scams, With Liberty (less justice) For Some



December 19, 2006 – Comments (1)

This is, sadly, Chris Byron's last piece for the post. It should be required reading for anyone who thinks that microcaps are the way to get rich.


Key paragraphs -- but make sure you read the whole thing:

"According to the Levin committee, more than 1.9 million companies a year are incorporated in America. To get in on the action, dozens of U.S. states are competing to supplant Delaware as the new Switzerland of America, dreaming up ways to make their incorporation processes easier, quicker and cheaper, while offering broader and broader guarantees of anonymity and secrecy to the incorporators.

For a fee of $1,100, you can now set up a corporation in Nevada, over the Internet, in less than an hour, confident that your name will appear on no public records.

In see-no-evil Colorado, which is spewing out 5,000 such incorporations a month, the business climate is even friendlier - everything is handled by computer, with no human oversight or review of any of the information provided.

Bottom line: In a number of states, it's now possible to establish completely anonymous control of a fully legal corporation, usually for a fee of about $100, with less hassle - and less background information - than it takes to get a driver's license or open a bank account."

1 Comments – Post Your Own

#1) On December 19, 2006 at 3:21 PM, metoo105 (28.03) wrote:

There can be little doubt that there is a race to the bottom under way.

But these numbers of very misleading since most of these incorporations are designed to take advantage of the "asset protection" and "tax avoidance" elements and are merely products peddled by estate planners for these purposes. Many of the more elaborate estate planning devices involve the incorporation of multiple LLCs within a plan for just one person or couple.

The article also seems to misapprehend the governmental division of labor since laws of incorporation have very little to do with the reporting requirements placed on public companies. The US has never placed much of burden on would-be incorporaters and prior barriers, mostly financial, had as much to do with lawyers protecting their financial interests as much as anything else.

Personally, I am not sure that the fact that prices have dropped or that Delaware might lose its stranglehold in setting US corporate law are particularly bad things.

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