I am currently working on a list of red flags for business account openings and recall reading some literature that suggested enhanced scrutiny be used when an entity was incorporated in the state of Delaware but am unable to locate this information. Can anyone provide some insight or a link to this information? Any direction would be extremely helpful. Thanks.

I certainly hope that's not true!

Our holding company (and many, many others) are incorporated in Delaware because of their favorable laws.

I believe mine is too. Delaware attracted business filings with their tax laws purposely. This isn't to say it didn't also attract some less than desirable companies, but you can't put all these in one basket.

Arizona is another state where it's favorable to incorporate. Montana tried to jump on board with relaxed laws for incorporation but I don't think it ever caught on.

Incorporating in Delaware has to go back 100 years. It's a great source of revenue for that small state. Many boats are also registered in Delaware -- I think to avoid sales tax. Such a place of incorporation would not raise red flags with me.

It's referred to as "forum shopping." If you want laws very favorable to corporations, you incorporate in Delaware. If you want to escape your debts, move to Florida.

Now that WorldCon--oops, WorldCom has brought such attention to Florida; I wonder how long it will take them to change their laws. Maybe a probation period will be added--say, state resident for 5 years before property can be exempted from attachment.

I don't think they ever will. Some years ago, 60 Minutes did a story about executives who have milked/mismanaged their businesses and then moved to Florida and filed bankruptcy. A couple of the notables in thew story were Marvin Warner and Bowie Kuhn.

The United States General Accounting Office issued a report to the Ranking Minority Member, Permanent Subcommittee on Investigations, Committee on Government Affairs, United States Senate in Oct. 2000. The report is titled Suspicious Banking Activities, Possible Money Laundering by U.S. Corporations Formed for Russian Entities.

This report detailed how easy it is for foreign companies to incorporate in the State of Delaware. GOA's website should have the report: www.goa.gov

I have no idea if this is still in effect but at one point Deleware did not have any collection laws. If someone moved there you couldn't file any legal actions to collect from them in the state.