Delaware Flaunts “Shell Company” Policy with New Website

The state of Delaware has launched a new website ( to promote Delaware’s business-friendly incorporation laws abroad.

An individual may- in any of 10 languages- register a corporation without providing information on the entities’ “beneficial owners”- or the real people behind the corporation.

Delaware is known for its policies, which allow for the creation of anonymous shell companies. In fact, Delaware is one of the easiest places in the world to obtain an untraceable shell company.

The state’s decision to flaunt its easy policy on incorporation ignores the impact that these policies have on American families and their communities.

According to Rebecca Wilkins of Citizens for Tax Justice:

Shell companies are often used for tax evasion-- and the rest of us pick up the slack. They are also used for all kinds of other illegal purposes, including financing terrorists and laundering money from activities like dealing in drugs, guns, and human trafficking.

Shell corporations can be used to anonymously influence domestic elections. “Nearly 17 percent of all business contributions to Super PACs came from identified shell companies [in 2012],” according to USPIRG. Similarly, shell companies have been utilized to defraud Medicare of millions of dollars.

The Delaware website is in part a response to recent negative media attention the state has received (see here and here). The site includes a “Myth v. Fact” landing page, which responds to recent criticism. The page addresses its allowance of anonymous shell companies, saying, “As a general matter, U.S. states do not collect the names of beneficial owners—the natural persons who ultimately own, control, or derive benefits from a company—through the incorporation process.”

In our view that’s the problem.

Senator Carl Levin (D-MI) has introduced the Incorporation Transparency and Law Enforcement Assistance Act (S.1465), which would require states to collect the names of beneficial owners for all businesses they incorporate. The main opposition to this legislation comes from state Secretaries of State, including Delaware’s.

To learn more about the “Delaware Loophole”, watch here.

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Contrary to the blog posting, the State of Delaware's new Corporate Law Website ( does not permit users to register a company with the State of Delaware in foreign languages. In fact, unlike many jurisdictions in the United States and elsewhere, it is not possible to incorporate or register a legal entity online in Delaware directly through the State of Delaware's websites -- specifically in order to deter the anonymity concerns outlined in this blog posting. What our new Corporate Law Website does do is to provide detailed information in 10 languages on the real reasons that domestic and international legal entities choose to form their business entities in Delaware. These reasons include Delaware's modern and flexible legal entity statutes, our highly respected judiciary that has authored much of the modern, corporate governance case law, the State's expert legal and corporate services community, and the world-class customer service provided by the Delaware Division of Corporations. Presumably, the Center for Effective Government is a strong advocate for efforts by federal and state agencies to improve their effectiveness by delivering information to customers in a diversity of languages. Perhaps your criticism of these efforts more appropriately belongs on the website of the "Center for In-effective Government". Sincerely, Richard J. Geisenberger, Chief Deputy Secretary of State, State of Delaware