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Nevada Corporations |
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Financial Privacy: Private ControlPrivate Control through Contract Officers and DirectorThe use of what is commonly called “nominee service” (more properly referred to as “contract officers and director service”) has been an accepted practice in the State of Nevada since around 1925. Typically, this service—offered by most of the largest and most well-established resident agents in the state—provides the name and signature of a contract officer/director on the annual list of officers filed with the Secretary of State, the only NRS-mandated public record of the corporation. The use of contract officers and director service is fundamental to many of the strategies presented in The Nevada Corporation Manual. To understand why and how this works in Nevada you need only consider that the following acts of officers and directors are protected under Nevada law:
Nevada law is highly protective of a corporation’s officers and directors, which is why the risk of acting in those capacities, especially on an “in name only” basis, is manageable. And that explains why contract officer/director service—and consequently, PRIVACY—is widely available in Nevada as in no other jurisdiction in the United States. For a nominal fee you can expect a contract officer/director to sign corporate resolutions and any other documents where personal liability is not attached. In such cases the contract officer/director’s signature facsimile is affixed to the document, which allows the contract officer/director to subsequently either ratify or reject the signature should liability become manifest. A contract officer/director will generally NOT sign loans, leases or personal guarantees and will avoid signing contracts due to unknown personal liability. We are often asked about the contract officer/director signing tax returns—but the answer is a gentle “no” due to the potential for liability that would entail. A tax return must be signed by “an officer” but a corporation may have any number of officers (including vice presidents, assistant secretaries and/or assistant treasurers), who may serve for any length of time, however briefly. A little creative thinking will show you that there are a number of ways to maintain privacy as long as someone is prepared to take responsibility for the corporation’s tax obligations. Tax returns should be filed timely and taxes paid in accordance with the laws. Properly handled, it is still possible to maintain privacy of ownership and control while enjoying the tax benefits that proper structuring affords. When a contract officer/director or “puppet” is in place on the public record, the corporation can be controlled very privately from behind the scenes in a number of ways. You can be sure, for instance, that the contract officer/director as director will ratify corporate resolutions in response to “a whisper in the ear of the Board”. The corporation may be steered by a committee, which studies issues and makes recommendations according to the terms of the corporation’s BYLAWS (and oh, by the way, the bylaws of Nevada corporations are not a matter of public record). In summary, there are numerous ways to exert control privately, limited only by one’s imagination and corporate bylaws. And, as you will read in the next section, it is not at all necessary for you to own a corporation in order to have pretty much complete control over it.
Sidebar: A Closer Look at How the Largest Corporations Really WorkTheoretically: A corporation is founded by individuals who issue stock certificates signifying shares of ownership interest; the stockholders hold an initial meeting at which the articles of incorporation are ratified and corporate bylaws are adopted; the stockholders then appoint a Board of Directors; the Board then appoints officers in accordance with the offices established in the articles and/or bylaws. The Board controls the corporation in accordance with its charter, articles and bylaws, acting through its appointed officers (the executives execute the Board’s directives); the Board is accountable to the corporation’s stockholders and subject to replacement at annual (or every four years, or whatever term is specified in the bylaws) meetings of the stockholders. At least, that’s how it is on the face of things. Odds are that at some point in time you have owned at least one share in one of the larger and better-known public corporations, such as IBM, GE, HP, MCD, etc. The odds are significantly smaller, however, that you have ever attended a meeting of the stockholders, even though you were certainly entitled to do so. You most likely received some kind of notification of such a meeting, along with a PROXY sheet whereby you could vote on some narrowly defined issues by checking some boxes and sign away your vote otherwise to someone else. Sound familiar? It should because the vast majority of all stockholder voting is handled in this manner, by proxy. So, just how accountable is the Board of Directors to your personal wishes? How faithfully does the Board of Directors manage the corporation in accordance with the desires of its stockholders? Is the Board truly accountable to YOU and the many others it purportedly serves? The fact is that the Board of Directors of any corporation is only accountable to its stockholders to the extent that the owners hold the Board accountable for its actions. This is especially true with regard to the corporations known as governments, such as the UNITED STATES. Thinking in terms of corporate structure, the President is (theoretically) responsible only for carrying out the instructions of the Board of Directors, which is the Congress. The Board is supposed to be accountable to the stockholders—the people. When a corporation enters into bankruptcy, the Board becomes accountable to the bankruptcy trustee, whose job it is to see that the corporation’s creditors are paid. The interests of the owners are suborned to the interests of the creditors until the debt is paid off. In the case of the UNITED STATES corporation, which declared bankruptcy in 1933, you might begin to understand why the Board (Congress) is accountable to the debt-holders (international banking interests) and not to the stockholders (the people). One question you might ask yourself is, “Who is the bankruptcy trustee?” As a partial answer to that question it might suffice to state that the Secretary of the Treasury is paid by the International Monetary Fund. This is not a very sound corporate structure for the simple reason that the stockholders have no idea of what has beein going on with their corporation! (And there is no statute of limitations on fraud.) Without traveling further along that path at this time, the POINT is that there are many techniques for retaining control over a corporation while maintaining privacy. Perhaps John D. Rockefeller’s words start to make a little more sense: “Control everything; own nothing.” Click on the navigation buttons at the bottom of the page to continue your study of PRIVACY:
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