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The Nevada Law on Corporate Privacy

April 16th, 2008

Many promoters will tout the complete privacy offered by Nevada corporations and LLCs. But what they won’t tell you is that the law has changed and privacy has been somewhat compromised.Here is the law for corporations:

1. In addition to any records required to be kept at the registered office pursuant to NRS 78.105, a corporation that is not a publically traded corporation shall maintain at its registered office or principle place of business in this state:
   1. A current list of its owners of record; or
   2. A statement indicating where such a list is maintained.
2. The corporation shall:
   1. Provide the Secretary of State with the name and contact information of the custodian of the list described in subsection 1. The information required pursuant to this paragraph shall be kept confidential by the Secretary of State.
   2. Provide written notice to the Secretary of State within 10 days after any change in the information contained in the list described in subsection 1.
3. Upon the request of any law enforcement agency in the course of a criminal investigation, the Secretary of State may require a corporation to:
   1. Submit to the Secretary of State, within 3 business days, a copy of the list required to be maintained pursuant to subsection 1; or
   2. Answer any interrogatory submitted by the Secretary of State that will assist in the criminal investigation.
4. If a corporation fails to comply with any requirement pursuant to subsection 3, the Secretary of State may take any action necessary, including, without limitation, the suspension or revocation of the corporate charter
5. The Secretary of State shall not reinstate or revive a charter that was revoked or suspended pursuant to subsection 4 unless:
   1. The corporation complies with the requirements of subsection 3; or
   2. The law enforcement agency conducting the investigation advises the Secretary of State to reinstate or revive the corporate charter.
6. The Secretary of State may adopt regulations to administer the provisions of this section.

It is important to note that Nevada is not asking for the owners of the entity up front. The requirement is that the registered agent either keeps a list of the owners or the name of a contact person who has a list of the owners. The Secretary of State will request the ownership list only when a law enforcement agency needs it for a criminal investigation. Not for a civil case mind you, but only for a criminal case. What this means is that if your business and asset protection plans are on the up and up, your privacy will be protected. (If you are engaged in fraud and other crimes, we would ask that you go elsewhere.) But for the good guys, you will still maintain your privacy. Two points are worthy of further note. First, for limited partnerships the only owners the new legislation aims for are the general partners. While the generals do indeed control a limited partnership, frequently they only own 2% or less of the entity, and are usually just a management corporation or LLC. The limited partners will own 98% of the limited partnership and, except for management, are the economic beneficiaries of the entity. Whether the new law intentionally just wanted information only on the general partners or will be corrected to include the limited partners’ identities remains to be seen. But for now, people very concerned about privacy may want to use Nevada limited partnerships. The second point has to do with Wyoming. The corporate law of Wyoming does not have such an ownership disclosure procedure. Yet. Apparently the federal authorities are working to get a similar legislation approved in other states, including Wyoming. We will keep you informed of such developments. Until then, once again, those very concerned about privacy may want to use Wyoming entities.

One Response to “The Nevada Law on Corporate Privacy”

1. Tomas Zubicek Says:
   April 16th, 2008 at 12:03 pm

   I love yours articles mr. Garrett , there is so much to know about the “jungle” called Business , in order to keep my private sanity , I made a quote for myself :
   ” The key is not necessary do everything what’s legal , just avoid doing anything what’s ilegal..”
   I am sure , you catch the point of it….
   Thanks for keeping us informed.

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