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How Can I Prove I am a Minority Shareholder in a US Entity?
Question: Does the US state where the corporation was formed collect this information? Is there a public owner registry? If not, how do I prove to my government that I am an owner of this US entity and not laundering money?
No US State or Federal Public Registry of Owners Exists
Unlike some countries, neither US states nor the federal government maintain a public registry of company owners. This privacy is one of the appeals of doing business in the US. While the US now requires beneficial ownership reporting through the Corporate Transparency Act, (see here and here), this will not change the publicly available information on any closely held (non-public) entities in the United States
Various Options to Prove You are an Owner
Your home country government's requirements will differ, but generally you can use any of the following to prove you are an owner of a business in the United States:
1. Stock Certificate
If the corporation issues stock certificates, you may have received one when you acquired your shares. Although not always required, these certificates can be electronically created and maintained. They typically include:
- The name of the corporation.
- Your name as the shareholder.
- The number of shares owned.
- The date of issuance.
- The signatures of authorized officers of the corporation.
2. Shareholder Agreement
A shareholder agreement can specify your ownership percentage and rights. This document is valuable evidence of your status, especially in disputes or when clarity is needed. If you are the sole shareholder of a corporation, you will typically not have a shareholder agreement
3. Corporate Records
The corporation's official records, often kept in a (digital) corporate minute book by the corporation's secretary, will include:
- Stock Ledger: A record of all shareholders and the number of shares each holds.
- Meeting Minutes: Minutes from shareholder meetings that may list attendees and confirm your shareholder status.
- Resolutions: Any resolutions or decisions that involve shareholder actions can also indicate your status. These are also called written consents and are often prepared in lieu of holding a meeting.
4. Subscription Agreement or Purchase Agreement
If you purchased your shares directly from the corporation, you likely signed a subscription or purchase agreement. This document outlines the terms of your purchase and serves as proof of your shareholding.
5. Communication and Correspondence
Regular communication from the corporation can also serve as proof, such as:
- Annual reports.
- Dividend statements.
- Notices of shareholder meetings.
- Other official correspondence addressed to you as a shareholder.
6. IRS Filings (if applicable)
If the corporation has been in existence for long enough, it may have submitted its annual tax return (Form 1120 for corporations and Form 1065 for LLCs/partnerships) to the Internal Revenue Service.
7. Attorney Letter
A US business lawyer can help you obtain and review these documents, ensuring your shareholder rights are recognized and protected. An attorney can also write an opinion letter regarding your ownership.
Conclusion
Proving minority ownership in a US corporation can seem challenging due to the lack of a public owner registry. But there are multiple ways to provide the necessary documentation. Depending on your specific circumstances and the requirements of your home country's government, you can leverage various documents, such as stock certificates, shareholder agreements, corporate records, subscription or purchase agreements, and regular corporate communications. IRS filings and letters from attorneys can also serve as robust proof of ownership.
You should ask for, gather, and organize these documents systematically to ensure you can easily present them when needed. Engaging a US business lawyer can also provide you added assurance and legal validation of your ownership status, helping to prevent any issues related to compliance or accusations of money laundering. By following these steps, you can demonstrate your legitimate ownership and fulfill your reporting obligations back home.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.