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Wyoming removes the cloak of anonymity for shell companies

Posted by Clyde Hutchins | Mar 29, 2017 | 0 Comments

Wyoming removes the cloak of anonymity for shell companies.

As I have wrote about in the past, Wyoming provides opportunities for great secrecy when owning companies. Someone can setup a Wyoming business entity through a registered agent and hide the true owner of the entity from both the public and State government. This unique privacy function has contributed to Wyoming being known as a haven for corporate secrecy. This all changed this month when Governor Mead signed an act (HEA 105) passed by the Wyoming legislature this month. HEA 105 aims to reduce the amount of anonymity allowed Wyoming company owners. I have been following this bill as it progressed through the Wyoming legislature over the past couple of months. It is now law and will take effect on July 1, 2017.

HEA 105 will not remove all the opportunities for secrecy in Wyoming companies, but it will remove one layer of the deep anonymity allowed for Wyoming entity owners. HEA 105 makes two significant changes. First, it clarifies what addresses have to be reported. Second, it makes changes to who can be a "designated contact" for a Wyoming company.

Business Address

HEA 105 removes the requirement that the company contact have a "business address" listed with the Secretary of State. That section was modified to require that a mailing address, and if different, the physical address of the entity's contact be listed. This reflects the longstanding problem of defining what is a "business address." If the business address is not defined, then it becomes problematic requiring that a company report its business address. The reason this is an issue is because many Wyoming companies do not actually have a storefront, office, factory building or warehouse. Instead, many companies operate out of someone's home or a virtual office somewhere and have no actual physical office location. It is difficult to require that a "business address" be reported when that term is not well defined. Furthermore, the address requirement is tied to the designated contact of the company. Many of the designated contacts do not have offices or business addresses.

Designated Contact

HEA 105 changes who can be a "designated contact" for a company. Currently, the law requires that Wyoming entities have the name of a natural person on file with the registered agent, who is authorized to receive communications for the entity. In practice, many Wyoming entities have simply used the registered agent, or employee of a registered agent to be the natural person. In other cases, some entities have utilized the company lawyer as the designated contact. This tactic creates obstacles for the Secretary of State or law enforcement in discovering who is actually behind a company.

HEA 105 changes the existing law to require that the designated contact of the company be one of the following: a natural person who is a (a) Director; (b) Officer; (c) limited liability company member or manager; (d) managing partner; or (e) trustee of the company. Starting July 1, 2017, there will have to be a real person, who is actually associated with the company, listed as the designated contact.

These changes stand to affect hundreds, if not thousands of Wyoming entities. If you have any questions about HEA 105 and its changes to Wyoming law, please feel free to contact Harmony Law.

About the Author

Clyde Hutchins

Clyde Hutchins is the founder of Harmony Law. Prior to opening Harmony Law, Mr. Hutchins worked in the Wyoming Attorney General's Office for several years where he developed a strong consumer protection enforcement unit. In that position he led over 120 investigations and enforcement actions under the Consumer Protection Act. He worked on numerous joint cases with the Federal Trade Commission and other states, including Colorado, on consumer protection matters. Mr. Hutchins is also a contributing author to Consumer Protection Law Developments, Second Edition. Previous to his work in the Attorney General's Office, Mr. Hutchins was in private practice in Anchorage, Alaska where he was the chief litigator for a firm. Mr. Hutchins represented municipalities on various matters. Mr. Hutchins provided counsel to businesses and investment advisors regarding compliance with securities laws. He was also a bond lawyer and worked on municipal financing matters. Prior to that, Mr. Hutchins practiced civil litigation with a law firm in Cheyenne, Wyoming. Mr. Hutchins devotes his spare time to his family, traveling and enjoying the great outdoors.

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