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.
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.
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.
Strategies to handle new changes
These changes stand to affect hundreds, if not thousands of Wyoming entities. There are strategies that can be used to handle these changes and preserve the confidentiality traditionally associated with Wyoming limited liability companies and corporations. If you have any questions about these strategies, please feel free to contact Harmony Law.