The State of Delaware is known worldwide for its clear corporate law and predictable, fast courts. For these reasons, many non-U.S. enterprises choose Delaware to incorporate corporations or form limited liability companies (LLCs) or limited partnerships (LPs) to do business worldwide. Israel is among the leading non-U.S. jurisdictions to use Delaware corporations. In recognition of this fact, Governor Jack Markell, former Chief Justice of the Delaware Supreme Court Myron Steele, and Cynthia Kane, special assistant to the Delaware Secretary of State, have each visited Israel in the last two years. Greenberg Traurig’s Tel Aviv office was proud to take part in several events surrounding those visits to promote Delaware as an excellent and efficient choice of for Israel-related business entities. General information, in Hebrew, on why to choose Delaware as the state of incorporation or formation for your U.S.-based entity is available here.
Occasionally, Delaware corporations, LPs or LLCs can fall out of so-called “good standing” with the Delaware Secretary of State. This can happen for a variety of reasons, which may be exacerbated by the geographic distance between Israel and Delaware. While it is best to keep your Delaware company in good standing, failure to do so can be easily remedied. The Global Delaware Blog recently provided simple guidance to restoring your company to good standing in Delaware. Below are some takeaways gleaned from the provided guidance.
Owners of Delaware corporations should be sure to: (1) pay your corporation’s annual franchise taxes, (2) file a complete, annual franchise tax report on behalf of your corporation, and (3) keep a Delaware agent registered for your corporation. Failure to complete the first two steps will render your corporation “void,” which means your corporation has no operative corporate powers. Failure to complete the third step will render a corporation “forfeit.” An LLC or LP that does not take the basic maintenance steps will be rendered “cancelled.” Reviving a “void,” “forfeit,” or “cancelled” Delaware business entity is relatively straightforward, and basically involves paying back unpaid taxes and fees and making certain corrective filings. Corporate actions taken during the time period when the company was not in good standing can be restored as valid actions, once the company’s status is revived.
Readers should note that void/forfeit corporations and canceled LLCs or LPs in Delaware do not enjoy name protection. In other words, while your corporation is void/forfeit or your LLC or LP is canceled, other companies can incorporate or form using your company’s name. If this happens, you will need to revive your company with a new name. Before attempting to revive your company, be sure to check with the Delaware Secretary of State to confirm whether your company’s name is still available. This will avoid extra time and money spent on the revival process.