Oftentimes, when setting up a business, business owners wish to stay anonymous. Owners may believe that maintaining a certain level of privacy will better protect their assets. Most states require that the identity of the officers within the corporation be listed in the Articles of Incorporation which is the initial corporate filing as well as annual corporate filings. Many states, however, allow the use of nominee officers to shield the identities of the actual officer of the corporation. Furthermore, some states, however, only require that these names be listed in the annual corporate filings and not the Articles of Incorporation.
The Benefits of Being Anonymous
One of the primary benefits of being anonymous is that anonymity helps protect the owners of the company from frivolous lawsuits. Attorneys often seek the identities of owners, officers, and directors so that they can be attached to a lawsuit. In addition, some business owners do not want their personal name connected with their business.
States that Help to Maintain Anonymity
Delaware is a state that is known for protecting the anonymity of business owners. In Delaware, a company does not have to disclose the names of beneficial owners. Furthermore, the state allows the use of nominee officers and directors in the Articles of Incorporation. In addition, the state charges a fee when someone seeks to gain information about a Delaware company by online search. Thus, Delaware is considered to be the most anonymous state in the country for incorporating a business.
The states of Nevada and Wyoming are known to protect the anonymity of the owners of a corporation. In these two states, nominee officers can be used. Furthermore, these states allow the use of bearer shares which allow controlling shares to be secretly transferred to another party. Nevada, however, does require that directors’ names and addresses be listed in the initial corporate filings and an Annual List of Officers and Directors be filed each year. In addition, the address of the business does not have to be listed on public documents filed in Nevada. Wyoming, on the other hand, does require that the address of the business be listed in these documents.
Virginia does not require the names of anyone other than the attorney handling the incorporation and the registered agent be disclosed in the initial corporate filings. There are a number of other states that require less than full public disclosure of the beneficial owners, officers, and directors; thus, if anonymity is a concerning for you as a business owner, it is important to find out the amount of disclosure that is required before selecting a state in which to incorporate.
Drawbacks of Seeking Anonymity
Investors may be hesitant to invest in a corporation that makes a limited amount of disclosure concerning the beneficial owners due to that fact that they prefer transparency. Anonymous companies are viewed with a heightened level of suspicion due to the fact that they are more likely to be used for corrupt purposes. For this reason, many have urged the U.S. Congress to require a certain amount of disclosure among all states and the laws in this area may be changing soon. Delaware, for example, recently changed its laws so that the identity of beneficial owners must be disclosed, however, this information does not have to be made available to the public.
It is important to note that simply maintaining anonymity does not protect your assets. Attorneys and creditors can still sue and come after your personal assets in the event that it is warranted. Furthermore, if a corporation is doing business in more than one state, each state in which the corporation does business sets the requirements for the disclosure of the name of the beneficial owners, officers, and directors. Thus, seeking a high level of anonymity may limit the number of states in which a business can operate.
