question How does a foreign national gain equity in a private US company?

[Arfy]

Hi All,

My broker and I are working on a domain name sale, a part of which may involve gaining equity into the company that will be using the name. Still awaiting financials to understand what that equity would look like and still negotiating on the cash portion of the deal.

Anyway, without going into the other detail, how would I go about gaining equity into a private US company when I am UK domiciled / a British citizen myself? This might be a question for the buyer but I don't want to hinder the sale and want to do as much research as possible before hand. If it is too complicated I might just avoid equity altogether.

If equity is problematic in my situation, what other options are there in addition to cash? Royalties? Any advice is appreciated!

thanks,

Arfy

 

[branding]

Can't help you there but maybe it's an idea to offer a payment plan instead?

 

[TheBaldOne]

Just a quick idea, not sure it will float though, but you could easily set up a proxy company in the US solely owned by you that takes the equity share. I believe that the State of Delaware could provide a base for your 'new' business.

Here is a link to the basics to get you started ( https://transferwise.com/gb/blog/start-a-business-in-usa-non-resident ), BUT ...……… I seriously suggest you get personal legal advice because the last thing you want to do is get lumbered with double taxation or even worse find you have made a simplistic mistake and lose everything with no legal recourse to a solution.

 

[BrandAptly.com]

I would take a portion of the fee in equity and offer a payment plan for the balance. I will structure the deal such that if the venture fails, the domain comes back to me.

 

[NickB]

speak to a financial adviser....they are the experts and will give you a definitive answer...

 

[bmugford]

Hi All,

My broker and I are working on a domain name sale, a part of which may involve gaining equity into the company that will be using the name. Still awaiting financials to understand what that equity would look like and still negotiating on the cash portion of the deal.

Anyway, without going into the other detail, how would I go about gaining equity into a private US company when I am UK domiciled / a British citizen myself? This might be a question for the buyer but I don't want to hinder the sale and want to do as much research as possible before hand. If it is too complicated I might just avoid equity altogether.

If equity is problematic in my situation, what other options are there in addition to cash? Royalties? Any advice is appreciated!

thanks,

Arfy

I don't really see why your location would matter all that much. There are not generally rules against foreign parties owning equity stakes in US companies.

You would need a lawyer to be involved, but the easiest way would probably be for the company to just issue shares to you (Corp) or list you as a member (LLC). If they are a LLC or Corp it should not be all that complicated. The process might be different depending on the state.

Brad

 

[Arfy]

I don't really see why your location would matter all that much. There are not generally rules against foreign parties owning equity stakes in US companies.

You would need a lawyer to be involved, but the easiest way would probably be for the company to just issue shares to you (Corp) or list you as a member (LLC). If they are a LLC or Corp it should not be all that complicated. The process might be different depending on the state.

Brad

Thank you Brad. I know domicile is not an issue when buying shares in publicly traded companies but I suspected that this is because there are international exchanges facilitating the buy and sell and the platform that you use acts as a broker for your share purchase. If it is was publically traded it would be so much better as there is greater liquidity. However, it's not the case.

With a private company I wasn't sure if you had to be a resident of ths US to be added as a shareholder / member.

If you have any resources to hand I would be grateful. Otherwise, I will do some further digging on Google. I believe the company is based in Miami.

I would take a portion of the fee in equity and offer a payment plan for the balance. I will structure the deal such that if the venture fails, the domain comes back to me.

Yes that is the plan (apart from the part where the domain comes back to me) I'm not sure they would go for that. The question is how would I go about getting equity as a non-US resident?

Just a quick idea, not sure it will float though, but you could easily set up a proxy company in the US solely owned by you that takes the equity share. I believe that the State of Delaware could provide a base for your 'new' business.

Here is a link to the basics to get you started ( https://transferwise.com/gb/blog/start-a-business-in-usa-non-resident ), BUT ...……… I seriously suggest you get personal legal advice because the last thing you want to do is get lumbered with double taxation or even worse find you have made a simplistic mistake and lose everything with no legal recourse to a solution.

This crossed my mind actually. I will have a read of the article!

 

[xynames]

There are some future hurdles. Everything may be done. Overseas clients pay me for this sort of set up work all the time.

 

[Arfy]

There are some future hurdles. Everything may be done. Overseas clients pay me for this sort of set up work all the time.

Can you elaborate on what you do that they pay you for? Thanks.

 

[xynames]

You'll get free advice in a free forum that is worth what you pay!

 

[Samer]

I don't really see why your location would matter all that much. There are not generally rules against foreign parties owning equity stakes in US companies.

Brad, Check this out;

llc not recognized outside US, or preferred by outside investors or IPO

I actually think Corporation better in this case.

Then C. Corp. Remind this wanna-be lawyer why C. Corp better?

 

[Samer]

Better source than Wikipedia. LegalZoom.
https://www.legalzoom.com/business/business-formation/compare.html

Thanks for a great discussion,
Samer

 

[Arfy]

Better source than Wikipedia. LegalZoom.
https://www.legalzoom.com/business/business-formation/compare.html

Thanks for a great discussion,
Samer

Thanks Samer, very helpful. I'll take a look at this today!

 

[WhoaDomain.com]

Set up a corporation or even LLC in either Delaware or Nevada or Wyoming they have pretty cheap prices on corporation set ups and some great privacy.

Or a Trust? any and all funds you receive flows thru the Trust? Maybe and REIT?

It might seem odd that a newly created corp was made just for this deal.

Seems obvious. Might get flagged.

Depending on the company. sounds difficult but you might also consider buying a well established Shell corporation already and have the funds again flow thru that.

from that corp. I guess THAT corp could always "invest" in your foreign company.

And then there is the EB-5.

You can "claim" you are domain is say worth $500,000 or more and that is your "investment" in a USA based company that will create jobs.

As an extra bonus you might become a legitimate USA citizen. Although there is a long backlog.


I wouldn't quote me on this. just off the top of my head. lol

 

[digitalmarketing3302]

Assessments of the US may differ on numerous themes, yet it is hard to contend that the US offers open doors for rewarding ventures. Not just the 320 million or so American residents can put resources into the US; nearly anyone has the privilege to buy or put resources into US property or organizations. It would be a misstep anyway to not break down your US charge suggestions for remote interest in the US.

 

[Name Trader]

It's extremely easy to form an LLC in USA. Delaware, Nevada, Wyoming, seem to be particular favorites. You'll need to do your own research, and get legal advice.

 

[Arfy]

It's extremely easy to form an LLC in USA. Delaware, Nevada, Wyoming, seem to be particular favorites. You'll need to do your own research, and get legal advice.

And there is no requirement to have a permanent residence in the US?

 

[Name Trader]

And there is no requirement to have a permanent residence in the US?

It's been a while since I investigated this, but if you google search for "how to form an LLC in USA" you should find plenty of resources to ask. Far more qualified than on a domain forum. But the answer is, yes

 

[Arfy]

It's been a while since I investigated this, but if you google search for "how to form an LLC in USA" you should find plenty of resources to ask. Far more qualified than on a domain forum. But the answer is, yes

Thanks Stub!

 

[AEProgram]

Companies in one country are always getting investors from another. The biggest issue is not if you could own a percentage in a company, sure you can, a company can give a percentage to a random mouse in the street too. In the agreement you will cover in what jurisdiction legal matters must be handled if they happen (in your country or theirs) and you will ensure that in their official books and records (sometime they must file that with the state) you are a shareholder.

I never heard of someone needing to setup companies in the US in order to be able to invest in a company there.

If they are a normal company and not a scam or underfunded, it might be a good deal. However, in almost all cases you will be better off with the cash even if its a payment plan. Most startups and businesses in general will fail.