Nevada State Corporation Commission – The Advantage In A Paradox

September 23, 2004
By Richard Smith

Unlike the case almost anywhere else in the United States, including other states (such as Delaware) that have zero-rate corporate income tax, the position of Nevada State Corporation Commission doesn’t exist! In part the reason for this is that the role of overseeing good corporate governance is fulfilled by the Nevada Secretary of State for Corporations. On the other part, probably more practical, there seems to be little need for such a position.

Here, you may well be wondering why Nevada State doesn’t require the services of a corporate commission. The answer lies at one of the very cornerstones to the reason why Nevada is a popular state to incorporate in, beside the annual fees filing, which is submitted to the Secretary of State, corporations in Nevada are required to submit minimal (read zero) corporate filing documents (for example, in Nevada there is no obligation to submit the minutes of annual general meetings of shareholders). Thus, to all intense and purposes, there would be no need for such a position. Compounding this, however, are two additional factors: (a) as Nevada generates no state income from corporate income tax, the corporate income tax rate in Nevada is zero, it needs to maintain low outgoing costs, or else suffer the pains of a budget deficit; and (b) the Secretary of State of Nevada is an elected official who has overall responsibility for ensuring that consumers are protected and good corporate governance is maintained – thus creating an investment friendly atmosphere. The latter of these two evidence that having a corporate commission would merely double the workload, whilst the former suggests it could not be paid for in any event.

As mentioned then, without any commission for Nevada corporations to be accountable for, anyone who has any reason to report the behavior of any Nevada state registered company is required to submit such to the Secretary of State for Nevada.