Corporate Services of Nevada
502 North Division St.,
Carson City, Nevada 89703-4103
Phone: (775) 883-3711,
Toll free: (800) 655-0538,
FAX: (775) 883-2723
502 North Division St.,
Carson City, Nevada 89703-4103
Phone: (775) 883-3711,
Toll free: (800) 655-0538,
FAX: (775) 883-2723
With certain exceptions, Nevada can provide Director Immunity from Lawsuits
LEGAL ADVANTAGES; A COMPARISON WITH DELAWARE (continued)
Not intended to be legal advice, for discussion purposes only.
2. Director Immunity from Lawsuits
With certain exceptions, unless the corporation’s articles provide for greater individual liability, directors and officers of a Nevada corporation will not be individually liable to the corporation, its stockholders or creditors for any damages as a result of any act or failure to act in their capacity as a director or officer unless it is proven that the act or failure to act breached fiduciary duties as a director or officer and such breach involved intentional misconduct, fraud, or a knowing violation of law. Nev. Rev. Stat. § 78.138(7).
The statute does provide exceptions to this general rule, including imposing liability in the following special circumstances: ouster (Nev. Rev. Stat. § 35.230), securities violations (Nev. Rev. Stat. § 90.660), commodities violations (Nev. Rev. Stat. § 91.250), receiving deposits in insolvent banks with knowledge of insolvency (Nev. Rev. Stat. § 668.045), and recovery by an insurer of profits realized from transactions made with unfair use of information (Nev. Rev. Stat. § 694A.030).
Delaware provides a lower level of protection to corporate directors in that there is no liability protection with respect to the corporation’s creditors. In addition, the Delaware statutes do not protect corporate officers. Unlike Nevada, limitations on a director’s liability for monetary damages must be included in the corporation’s certificate of incorporation to be effective. Del. Code Ann. tit. viii, § 102(b)(7).
Moreover, although Nevada generally requires both intentional misconduct, fraud or a knowing violation of the law and a breach of a fiduciary duty to impose liability on a director, under Delaware law, a director may be held liable for a breach of a fiduciary duty absent intentional misconduct, fraud or a knowing violation of the law. Nev Rev. Stat. §78.138(7); Del. Code Ann. tit. viii, § 102(b)(7).
A further benefit of incorporating in Nevada is that some of the taxes and filing fees paid by a Nevada corporation are lower than the comparable taxes and fees paid by a Delaware corporation. The following is a list of tax benefits enjoyed by Nevada corporations:
• No Corporate Income Tax
• No Taxes on Corporate Shares
• No Franchise Tax
• No Personal Income Tax
• No Franchise Tax on Income
• No Inheritance or Gift Tax
• No Unitary Tax
• No Estate Tax
• Competitive Sales and Property Tax Rates
• Minimal Employer Payroll Tax–0.7% of gross wages with deductions for employer paid health insurance
• Nominal Annual Fees
Not intended to be legal advice, for discussion purposes only.
2. Director Immunity from Lawsuits
With certain exceptions, unless the corporation’s articles provide for greater individual liability, directors and officers of a Nevada corporation will not be individually liable to the corporation, its stockholders or creditors for any damages as a result of any act or failure to act in their capacity as a director or officer unless it is proven that the act or failure to act breached fiduciary duties as a director or officer and such breach involved intentional misconduct, fraud, or a knowing violation of law. Nev. Rev. Stat. § 78.138(7).
The statute does provide exceptions to this general rule, including imposing liability in the following special circumstances: ouster (Nev. Rev. Stat. § 35.230), securities violations (Nev. Rev. Stat. § 90.660), commodities violations (Nev. Rev. Stat. § 91.250), receiving deposits in insolvent banks with knowledge of insolvency (Nev. Rev. Stat. § 668.045), and recovery by an insurer of profits realized from transactions made with unfair use of information (Nev. Rev. Stat. § 694A.030).
Delaware provides a lower level of protection to corporate directors in that there is no liability protection with respect to the corporation’s creditors. In addition, the Delaware statutes do not protect corporate officers. Unlike Nevada, limitations on a director’s liability for monetary damages must be included in the corporation’s certificate of incorporation to be effective. Del. Code Ann. tit. viii, § 102(b)(7).
Moreover, although Nevada generally requires both intentional misconduct, fraud or a knowing violation of the law and a breach of a fiduciary duty to impose liability on a director, under Delaware law, a director may be held liable for a breach of a fiduciary duty absent intentional misconduct, fraud or a knowing violation of the law. Nev Rev. Stat. §78.138(7); Del. Code Ann. tit. viii, § 102(b)(7).
A further benefit of incorporating in Nevada is that some of the taxes and filing fees paid by a Nevada corporation are lower than the comparable taxes and fees paid by a Delaware corporation. The following is a list of tax benefits enjoyed by Nevada corporations:
• No Corporate Income Tax
• No Taxes on Corporate Shares
• No Franchise Tax
• No Personal Income Tax
• No Franchise Tax on Income
• No Inheritance or Gift Tax
• No Unitary Tax
• No Estate Tax
• Competitive Sales and Property Tax Rates
• Minimal Employer Payroll Tax–0.7% of gross wages with deductions for employer paid health insurance
• Nominal Annual Fees
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