What did Della wear, boys? A brand new corporation … lots of 'em

Why Are There So Many Anonymous Corporations in Delaware? 

By Libby Watson, Sunlight Foundation | Tuesday, 12 April 2016

From the Federal Election Commission's suggestion that it might finally begin scrutinizing donations to super PACs from mystery limited liability corporations (LLCs) to the revelations in the Panama Papers, LLCs are very in right now. The leak of the Panama Papers reportedly shows the use of offshore shell companies to hide cash by many high-profile foreign figures, from highly-paid soccer star Lionel Messi to the prime minister of Iceland, but the lack of Americans implicated in the investigations has raised eyebrows in the international community. We'd all like to believe that it's because most Americans are law-abiding folks, but there might be another answer: Americans don't need offshore companies in tiny island nations to hide their money. America has Delaware.

Delaware is home to more than a million corporations, meaning it has more corporations than actual human residents. In 2012, The New York Times reported that a single building in Wilmington was the legal address of over 285,000 separate businesses. About 65 percent of Fortune 500 companies are incorporated in Delaware. Many companies choose to incorporate there because of the "business-friendly" climate and extensive body of corporate law, or because Delaware has much lower corporate taxes than most states. The New York Times says incorporating in Delaware "has enabled corporations to reduce the taxes paid to other states by an estimated $9.5 billion." But it also happens to be one of the easiest places in the world to set up an anonymous company, making it a great place to establish an LLC to do business that you don't want anyone to know about or you don't want to be easily connected to.

Setting up a company in Delaware is extremely quick, easy and inexpensive. Openness advocates like the Financial Transparency Coalition point out that a person needs to provide more personal information to register for a library card than to register an LLC in Delaware. We encountered this problem when we looked into some of the LLCs making donations to super PACs: Two LLCs that made big donations to the super PAC supporting Carly Fiorina, for example, are registered only to Harvard Business Services, with no further identifying information available on public documents. Harvard Business Services charges $50 to list itself as the registered agent, which makes it impossible to find the real owners. In Delaware, that's perfectly legal.

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