Key Takeaways

  • Delaware allows foreign entities to transfer their incorporation to the state through a certificate of domestication.
  • The process involves preparing and submitting a certificate of domestication and certificate of incorporation to the Delaware Division of Corporations.
  • Businesses must be in good standing in their home jurisdiction and comply with both Delaware law and their home country's exit requirements.
  • The certificate of domestication must include specific details such as the current jurisdiction, original formation date, and future company name.
  • Delaware does not allow entities to be simultaneously domiciled in more than one jurisdiction.
  • Domestication is different from merely registering as a foreign entity; it changes the company’s legal home.
  • Some entities, like nonprofits or certain foreign entities, may not be eligible to domesticate in Delaware.

A Delaware certificate of domestication is used when merging a foreign business with a Delaware one. In order to domesticate the business in Delaware, it must be approved by both jurisdictions. Most jurisdictions will approve this transfer whether it is between an offshore business and a domestic one or two separate domestic ones.

It is rare, however, for Delaware to allow a business to be domesticated in more than one place. If you are considering re-domestication, it is important to first check whether or not you can be domesticated in both areas. The process for completing the required paperwork will depend on this.

Re-Domiciliation in an Offshore Country

Re-domiciliation is also sometimes referred to as a domestication or transfer. It is the process in which a business transfers its home location from a foreign country to a new one. The business continues to carry on with normal business practices during this process. It is common for re-domiciliation to occur in offshore centers like the Cayman Islands or the British Virgin Islands.

Domesticating in Delaware

There is a special section of the Delaware Corporation Law that also allows businesses outside of the U.S. to domesticate in Delaware. Companies that want to domesticate in Delaware should complete the following steps:

  • File a certificate of domestication.
  • Include a certificate of incorporation or formation with it.

Submit the forms to the Delaware Secretary of State.

Eligibility to File a Delaware Certificate of Domestication

Not every entity qualifies to file a certificate of domestication in Delaware. To be eligible:

  • The entity must be a non-U.S. or out-of-state company that is authorized under its governing jurisdiction to transfer its domicile.
  • The governing documents (e.g., operating agreement or articles of incorporation) must permit such a transfer.
  • The company must be in good standing with its original jurisdiction.
  • Certain entities, such as nonprofits or those with incompatible structures (e.g., some foreign limited partnerships), may not be eligible under Delaware law.

Businesses considering this move should first confirm their eligibility with both Delaware and their original jurisdiction.

Important Information on a Certificate of Domestication

The Delaware certificate of domestication should include the following information:

  • Original name of the company.
  • The intended name of the company after domestication.
  • The date of formation.
  • Current place of domestication.
  • Effective date if approved.

Delaware Domestication Filing Process

The Delaware domestication process includes several critical steps:

  1. Prepare a Certificate of Domestication
    • Must list the original name, date of formation, and jurisdiction.
    • Indicate the intended Delaware name (if different).
  2. Prepare a Delaware Certificate of Incorporation or Formation
    • This document must comply with Delaware law for corporations, LLCs, or partnerships, depending on the entity type.
  3. File with the Delaware Secretary of State
    • Submit both documents together to the Division of Corporations.
    • Pay the applicable filing fee (varies by entity type).
  4. Effective Date
    • The certificate may state an effective date, which can be at the time of filing or a later date within 90 days.
  5. Publication Requirements
    • Delaware does not impose publication requirements for domestication.

Delaware Company Domesticating into Another Country

There is also a specific part of the Delaware law that allows Delaware-domesticated businesses to re-domesticate into another country. This process requires one of the following documents:

  • File a certificate of transfer.
  • File a certificate of transfer and domestic continuance.

A Certificate of transfer must include the following information:

  • The name of the company.
  • Intended name of the company after the transfer, if approved.
  • The date of filing of the certificate of incorporation.
  • The new jurisdiction.

It is also necessary to assign the Delaware Secretary of State as the agent of process and then to assign a new address to forward the process to. After the business has filed this paperwork, the business no longer exists in the state of Delaware. It is not common for Delaware to allow a business to exist both in the state and in the new foreign location.

Legal Effects of Domestication

Once the domestication is approved and effective:

  • The entity is considered the same legal entity, not a new one.
  • It retains all rights, privileges, assets, and liabilities.
  • Legal proceedings involving the business may continue uninterrupted.
  • The company is now subject to Delaware law and must follow Delaware corporate compliance requirements (e.g., annual franchise tax reports).
  • The entity is no longer considered incorporated in its former jurisdiction, unless that jurisdiction permits dual status (which Delaware typically does not allow).

Basic Requirements for Re-Domiciliation

Companies that are currently in an offshore location and wish to file for re-domestication must have the following documents:

  • Certified copy of the certificate of incorporation.
  • All articles with evidence as to the name and intended name of the company.
  • A legal certificate stating where the business was originally formed.
  • A signed affidavit from a director of the business stating that they do not hold any financial insolvency.
  • Effect of continuation.

If a business desires to continue their domestication in an offshore location, they must have the following documents:

  • Certified copy of the certificate of incorporation.
  • A certificate of good standing.
  • Certified copy of the business' bylaws.
  • Name of the registered agent in the offshore location.
  • A signed affidavit stating that there is no financial insolvency.
  • Statements that all current creditors received notification of the re-domestication.
  • Effect of continuation.

Common Reasons for Domestication to Delaware

Businesses choose to file a certificate of domestication in Delaware for several strategic reasons:

  • Legal Stability: Delaware has a well-established body of corporate law and the respected Delaware Court of Chancery.
  • Investor Preference: Venture capitalists and institutional investors often prefer Delaware entities.
  • Tax Advantages: Delaware does not tax out-of-state income for corporations or LLCs not doing business in Delaware.
  • Operational Simplicity: Delaware offers streamlined business filings and responsive state agencies.

What is Domestication?

Domesticating a business is the process of moving the business charter to a new residence. There is an entire process required when moving charter locations. In most cases, re-domesticating will officially dissolve the business in its prior location. Once re-domesticated, the business will now be subject to the new locations' laws and business regulations. You can still register to do business in a new state without making it your official charter state.

Changing a business' domestication status will usually affect the taxes, fees, and business requirements for it. It is important to do your research before changing your business' domestication. You can change the domestic location of your business to any state or foreign area that supports it.

Domestication vs. Foreign Qualification

It’s important to distinguish between domestication and foreign qualification:

  • Domestication changes the business’s legal home (or domicile) to Delaware. It involves dissolving the original entity and reconstituting it under Delaware law.
  • Foreign qualification allows a business formed in one jurisdiction to register to do business in another without changing its home jurisdiction.

Domestication is a more permanent change with broader legal implications, including changes in governance, regulatory obligations, and possibly taxation.

Frequently Asked Questions

1. What is a Delaware certificate of domestication? A Delaware certificate of domestication is a legal document that allows a business formed outside the U.S. or in another state to move its legal home to Delaware.

2. Can my company be domiciled in both Delaware and another state? No. Delaware law generally does not permit dual domicile. Once a company domesticates into Delaware, it is no longer recognized in its original jurisdiction unless that jurisdiction allows otherwise.

3. How long does the domestication process take in Delaware? The processing time can vary, but standard filings are typically processed within 2–3 business days. Expedited services are available for an additional fee.

4. What are the filing fees for a certificate of domestication in Delaware? Fees vary based on the entity type. For LLCs, it's typically around $200–$300, but corporations may have higher fees depending on authorized shares.

5. Do I need a Delaware registered agent after domestication? Yes. Every domesticated entity must maintain a registered agent in Delaware to receive legal documents and government correspondence.

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