Key provisions NOT included in Nevada’s corporate statutes

In the first four installments of “Tip of the Week” we took a close look at several very interesting provisions of Nevada’s corporate statutes.  Sometimes, however, what is NOT mentioned in the statutes is just as important.

In Nevada, as many readers may be aware, there is no statute mandating the issuance of stock.  (Nevada is not unique in this regard; several other states’ corporate statutes similarly ignore this key issue. What makes Nevada unique is the combination of statutory provisions, non-addressed key issues and actual practices, all of which add up to make Nevada the ONLY state that allows for privacy of ownership and control of a corporation.)

As if to underscore the non-necessity of stock issuance, there is no requirement to hold an annual meeting of stockholders. Yes, there are many references to the stockholders’ meeting but nowhere is it stated that any such meeting must be held.

Similarly, Nevada is one of a few states that does not nullify the use of “bearer” shares. It is not that there is a statutory provision endorsing the use of bearer shares or even addressing the issue; it is that the issue goes entirely unmentioned, whereas in most other states the use of bearer shares is statutorily denied.

A major, major issue that is not addressed anywhere in the Nevada Revised Statutes is that of nominee officers and directors.  The use of nominee officers and directors has been common in practice in Nevada for more than 75 years and yet this issue, which is the key to privacy of control of a Nevada corporation, is simply not mentioned. Doesn’t that make you wonder why not?

Other states (Wyoming comes to mind) have directly addressed the issue of nominee stockholders.  In Nevada, however, there seems to be more power granted by not restricting the use of this technique even by defining it. Nevada DOES, however, strongly protect corporate actors (nominee officers and directors, for instance) from liability, which is WHY “nominee service” works.

Nevada only requires a corporation’s primary officers to be listed annually but does not abridge the key roles that can be afforded to secondary officers, such as a vice president, who may exercise all of the powers of the president in the president’s absence; an assistant treasurer, who may be empowered to sign checks and otherwise fulfill the role of treasurer; or an assistant secretary, who may perform all of the duties of the secretary. When nominee service is used, the primary officers are assuredly absent, empowering these secondary officers, who are never listed in the public records with the Secretary of State.

Finally, since only an annual list of officers needs to be filed, a corporation may change its officers and directors at any time through a proper resolution (a PROTECTED “internal” record of the corporation) without notifying the state to modify the public record.

This listing is, of course, by no means all-inclusive. We trust, however, that it provides the reader with a lot of serious “food for thought” as to possibilities for private control and ownership of Nevada corporations.