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Wednesday, June 18, 2008

Vermont OKs the Creation of Virtual Corporations

On June 6th, Gov. Jim Douglas signed an inauspicious-sounding bill entitled “H.0888, Miscellaneous Tax Documents” that could revolutionize the way startup companies are formed and run. As New York Law School professor David Johnson explained to me, up until now, U.S. law required LLCs to have physical headquarters, in-person board meetings and other regulations that have little relevance in the digital age.

No longer. Under the new law, for example, a board meeting may be conducted “in person or through the use of [an] electronic or telecommunications medium.” A “‘virtual company’ will be, as a legal matter, a Vermont limited liability company,” said Johnson. And other states are required to recognize the corporation as a legitimate LLC. So while in the past many companies registered in Delaware to take advantage of that state’s business-friendly policies, with this law, Internet-driven startups may find Vermont even more ideal.

Vermont OKs the Creation of Virtual Corporations

This appears to be along the fuzzy business lines like the "captive insurance" industry. A lot of revenue flows through these corporations, and a tiny percentage stays in the state. I think Vermont needs to create whatever business advatages it can, to bring new revenues to the state. We should also be focusing on attracting green technology businesses, but our digital infrastructure is ancient or non-existient. So far the private sector has been unable or unwilling to bring us out of the information stone age. Perhaps it is time for the state to find the funds and a partner to provide statewide broadband and cellular coverage. The only way we can retain our way of life is by being connected to the rest of the world in order to compete in the global marketplace.
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