Delaware Indian firms' favourite

Delaware is proving to be the easiest state in the USA in which Indian companies, especially IT start-ups, can get incorporated.

The state's proactive approach in encouraging companies to get incorporated in it, coupled with the fact that every norm can be fulfilled at a certain cost, is making more and more Indian companies register themselves there and then spread their businesses elsewhere in the US.

While other states in the US call for stringent regulations for any company setting up a wholly-owned subsidiary or a branch office, Delaware is known as the "Incorporating capital of the world,", thanks to its business-friendly attitude.

Most Indian companies seem to be exploiting the opportunity before setting foot in their preferred location in the US as it saves them the time involved in getting incorporated.

Speaking to Business Standard, Khozema Anajwalla, country director, assurance services, Grant Thornton India Pvt Ltd, said, "Over 95 per cent of the Fortune 500 companies are registered out of Delaware as a result of its friendly approach to businesses. Most of the Indian companies that we have advised on setting up businesses in the US, have taken the same route. Everything can be done at a cost in Delaware. In fact, the shortest time required to register an incorporated entity is two hours."

Delaware ranks 49th in USA with a total area of 1,982 square miles. More than half a million business entities have their legal home in Delaware, including more than 50 per cent of all publicly-traded US companies and 58 per cent of the Fortune 500.

Businesses choose Delaware because it provides a complete package of incorporation services, including modern and flexible corporate laws, a business-friendly state government and a customer service-oriented staff at the Delaware Division of Corporations.

According to Anajwalla, "The entire process of incorporation by itself brings in huge amounts of revenue to Delaware. This state also has 250 years of jurisprudence to its credit. However, besides some good universities and reasonable industrial activity, there is not much of a business opportunity in that state. Hence, many firms world over, including Indian companies, go through the process of getting incorporated in Delaware before actually spreading their tentacles in the rest of US."

The fee structure in the state of Delaware for companies willing to get incorporated in the US is indicative of its business-friendly approach.

For instance, when a company needs to change its agent/office, the state tax and filing fee is $104, while each certified copy indicating this change will cost $30. A 24-hour fee to get this done is $50, whereas if the company requires the job to be done on the same day, then it would cost them $ 100.