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Forms of Business Organisation

Like other places in the US, foreign investors face no particular problems establishing companies in Baltimore.

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.

The usual requirements of a corporation in the US are:

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 authorised shares are issued. There are no legal reserve requirements.

Founders & Shareholders

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 organisational 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 firm’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 firm’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 directors’ and executive officers’ 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 company’s website.

Management

No nationality or residence requirement. No stipulations that labour be represented on the board of directors or in management.


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