DOING BUSINESS IN USA
FORMS OF BUSINESS ORGANISATION
Principal forms of doing business
Foreign investors face no particular problems establishing companies in the US. The general requirements for US corporations are described below.
Requirements of a corporation in the US
There is no federal company law in the US. Similarities in state legislation, however, make it possible to provide the following outline of requirements. Recent changes to corporate-governance laws apply only to publicly listed companies.
Capital. No minimum for manufacturing companies, except for the funds needed to start operations and obtain credit. Most states requiring minimum paid-in capital specify US$1,000. Minimum capital requirements are in effect, however, for banking, insurance and related activities. The banking industry uses capital requirements set by the Bank of International Settlements in Basle, Switzerland; requirements for the insurance industry are established by the National Association of Insurance Commissioners, headquartered in Washington, DC.
Most states require that subscribed capital be fully paid in before authorized shares are issued. There are no legal reserve requirements.
Founders. Traditionally a minimum of three; a growing number of states permit one (often corporate) incorporator. Some states have residence or citizenship requirements for founders; in practice, these do not present an obstacle since incorporators are needed only for organizational formalities.
Directors. Frequently, a minimum of three; many states now allow one. Generally, no restrictions on residence or citizenship apply. For publicly listed firms, the firmÃ¢â‚¬â„¢s chief executive officer (CEO) and chief financial officer (CFO) must certify all financial reports filed with the Securities and Exchange Commission (SEC). A firm may not lend funds to any of its directors or executive officers unless such loans are made in the ordinary course of the firmÃ¢â‚¬â„¢s lending business. Terms must be the same as those offered to the general public. The SEC may prohibit any person found guilty of fraud from serving as an officer or director of a firm. Directors may not purchase, sell or otherwise transfer securities under their individual retirement account plans. Changes in directorsÃ¢â‚¬â„¢ and executive officersÃ¢â‚¬â„¢ share ownership must be filed with the SEC within two business days. Since July 2003 these filings must be made electronically and be available for public viewing on the companyÃ¢â‚¬â„¢s website.
Management. No nationality or residence requirement. No stipulations that labor be represented on the board of directors or in management.
Disclosure. Financial data must be published by all companies the year they are established; thereafter, data are required only of those listed on national securities exchanges. Some states require annual filings (containing minimal information) by foreign corporations licensed to do business in the state. If a firm has 500 or more shareholders and more than US$1m in assets, it is subject to the reporting requirements of the Securities and Exchange Act of 1934 and to various state reporting requirements. (The Securities and Exchange Act and its amendments pertain primarily to publicly owned corporations, dictating corporate disclosures made in annual reports, insider-trading reports, balance sheets, income statements, proxy material and other public reporting.)
SEC guidelines require a publicly listed company to disclose quickly any changes in its financial condition or operations. Pro forma financial information contained in any public disclosure must not be misleading and must be reconciled with the firmÃ¢â‚¬â„¢s financial condition and operating results under generally accepted accounting principles (GAAP). The SEC will review each firmÃ¢â‚¬â„¢s periodic reports at least once every three years. A firm may not discriminate against an employee if he or she assists in an investigation or proceeding involving an alleged violation of securities law. During an investigation, the SEC may petition a court to freeze any Ã¢â‚¬Å“extraordinaryÃ¢â‚¬