1. Setting Up Business
Operations in Silicon Valley
January, 2013
Richard Allan Horning
SNR Denton US LLP
T +1.650.798.0370
M +1.415.412.4479
Skype: Richard_Allan_Horning
Email: Richard.Horning@snrdenton.com
Web: www.snrdenton.com
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7. SETTING UP SHOP IN THE VALLEY
Agency
Joint Venture
Branch Office
Subsidiary
– C corporation
– Limited Liability Corporation
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8. MANAGEMENT AND OVERSIGHT
No Nationality Requirement for Officers and Directors
Directors are Not Necessarily Employees of the Local Company
The Board Can Meet Anywhere, Including CyberSpace
All Corporate But Elections Can Be By Written Consent [Maybe
Even Elections]
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9. INVESTMENT COSTS
Creation of a DE Company Can Be Overnight
No Minimum Capital Required
Annual Franchise Fee in DE as Low as $75
Qualification in California
Tax ID and Employer ID
Bank Account
General Liability Insurance
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10. TAXATION
Tax Treaty
US Tax System Based on Taxation of Profits / Earnings
Transfer Pricing and International Tax Planning
Federal Corporate Tax Rate on Profits (15%, 25%, 34%, 39%, 35%)
Federal Tax on Dividends to Parent (15%)
Federal “Partnership” Tax (35%)
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11. EMPLOYMENT
Non-Residents Need a Work Visa to be Employed in the US
Employment is Generally “At Will”
Non-Compete Clauses Generally Unenforceable
Employees Generally Expect Equity Participation Plans a/k/a
Stock Options
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12. ACCESS TO LOCAL CAPITAL
The Credit Rating System
The “Flip” as a Precondition for Local Equity Capital
– Usually Has Tax Consequences for Foreign Shareholders
Acquiring the DE Stock, But Careful Planning May Minimize
the Hit
– Local Equity Capital Will Generally be in the Form of Preferred
Stock
– Local Capital Usually Implies Board Seats and Restrictions on
Complete Freedom to Operate Without the Consent of the
Investors
– The “Term Sheet”
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13. VC CONSIDERATIONS
Team
Opportunity
Scalability
Protectibility
“Monopoly”
Exit Plan
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