Corporate Services of Nevada

LEGAL ADVANTAGES; A COMPARISON WITH DELAWARE (continued)
Not intended to be legal advice, for discussion purposes only.

13. Stockholder Inspection Rights
Nevada provides greater privacy for corporate records than Delaware. Under Nevada law, only a stockholder of record who owns at least 15% of the corporation’s outstanding shares, or has been authorized in writing by holders of at least 15% of the outstanding shares, is entitled to inspect and make copies of the corporation’s financial records. Nev. Rev. Stat. § 78.257(1). Only a person who has been a stockholder of record for at least six months, or who owns at least 5% of the corporation’s outstanding shares or has been authorized in writing by holders of at least 5% of the outstanding shares, is entitled to inspect and make copies of the corporation’s stock ledger, articles of incorporation, and bylaws. Nev. Rev. Stat. § 78.105(3).

Delaware law generally grants any stockholder of record the right to inspect and to copy for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other records.   A proper purpose is one reasonably related to such person’s interest as a stockholder.   Del. Code Ann. tit. viii, § 220(b). Directors also have the right to examine the corporation’s stock ledger, a list of its stockholders and its other records for a purpose reasonably related to their positions as directors. Del. Code Ann. tit. viii, § 220(d).

14. Derivative Suits
Under both Nevada and Delaware law, a stockholder may bring a derivative action on behalf of the corporation only if the stockholder was a stockholder of the corporation at the time of the transaction in question or the stockholder acquired the stock thereafter by operation of law. Nev. R. Civ. P. 23.1; Del. Code Ann. tit. viii, § 327.

15. Special Meetings of Stockholders
Nevada law permits the entire board of directors, any two directors, or the president to call special meetings of the stockholders and directors, unless the articles of incorporation or bylaws provide otherwise. Nev. Rev. Stat. § 78.310(2). Delaware law permits special meetings of stockholders to be called by the board of directors or by any other one or more persons authorized in the certificate of incorporation or bylaws to call a special stockholder meeting. Del. Code Ann. tit. viii, § 211(d).

16. Renunciation of Specific Business Opportunities
Both Nevada and Delaware laws provide that a corporation may renounce specified business opportunities in its articles (Nevada) or certificate (Delaware), or in an action or resolution of the board. Nev. Rev. Stat. § 78.070; Del. Code Ann. tit. viii, § 122(17). These provisions allow a safe harbor to directors and officers to pursue the renounced businesses where an opportunity to profit therefrom has been presented to the corporation or to one or more of its directors, officers, or stockholders.

17. Other Nevada Laws
Further benefits to businesses electing to incorporate in Nevada include that a Nevada corporation may purchase, hold, sell, or transfer shares of its own stock, and issue stock for capital, services, personal property, or real estate, including leases and options. Nev. Rev. Stat. §§ 78.070(3), 78.211(1). Moreover, the directors may determine the value of any of these transactions, and their decision is final in the absence of actual fraud in the transaction. Nev. Rev. Stat. § 78.211(1). Finally, Nevada provides more privacy for its corporate business owners.

While non-publicly traded corporations must provide the Secretary of State with an up-to-date list of owners of record or a statement indicating where such a list is maintained, the information provided must be kept confidential. Nev. Rev. Stat. § 78.152. Nevertheless, in connection with a law enforcement agency’s request in the course of a criminal investigation, the Secretary of State may require a corporation to submit a copy of the list of owners or owner answer interrogatories related to the investigation. Nev. Rev. Stat. § 78.152.