Most of those aren’t shell companies by the common definition of a shell company.
Usually people talking about shell companies are referring to companies with no business interests at all or if they are bring expansive only contracts/ip agreements. A construction company is doing actual business. Land owned in a corporation has an actual asset etc.
Most startups start as shell companies, you sort of can’t create a corporation without being one for some amount of time.
So I’m ok with the idea of corporate ownership reform but I think you’d need to get more specific than “shell companies == bad”
IANAL, and was not proposing specific legislation. I used "shell company" in colloquial sense - a token / minimal / empty legal organization, used by lawyers & their ilk for what most honest & reasonable non-lawyers would see as duplicitous or malicious purposes.
The corporations in this case a) hold assets and b) provide liability limits. That is the basis of all corporations.
So we’d need to get specific about which practice is duplicitous. Is it the treatment of IP as an asset? The transferability of patents ? Limited liability of patent defense?
I am no expert in any of those things but I bet there is value in each and bad unintended consequences of each.
If I described to a lay person that there was a hacker website frequented by lots and lots of people with an active forum community, you’d likely get at least some of them to suggest banning it…
>If I described to a lay person that there was a hacker website frequented by lots and lots of people with an active forum community, you’d likely get at least some of them to suggest banning it…
Different things. In this case you have a pathological outcome in the process. "Free real estate" as it were because you've got an organizational structuring that is essentially censure proof by the Court unless you pierce the corporate veil.
Remember, corporations are suffered to exist as a courtesy, and a means to distribute risk, but our Court system is very much tuned to "there is a person, get them in here now, and lets get this sorted."
If the Court has to choose between being ineffectual and exploitable, and piercing the veil in order to get to the bottom of duplicitous behavior, one can only hope the Judge will settle in and push the issue.
> The corporations in this case a) hold assets and b) provide liability limits. That is the basis of all corporations.
Surely the basis of all corporations is to trade and to undertake usefull economic activity.
We spesifically don't want them to limit liability where profit is made upfront, owners take off with the money, and there is no-one left to pay the costs.
There is no need for a corporation purely to enable trade. The entire point is to limit liability of the investors. Otherwise we could just ban them wholesale.
I think you could fix a lot of the issues by requiring that all companies must be recorded in a public registry that includes contact information, owner and executive names, as well as a list of actual physical locations where the company operates (if any -- online businesses don't need to have a physical location).
You’d need a federal level legislation to achieve that (and perhaps a constitutional amendment).
The states decide the information requirements in their jurisdictions and many have vested interests in not changing them (particularly Delaware where this case is).
This is called a beneficial ownership registry and Biden signed the most recent NDAA which actually included a rule to create this. FinCen is developing the framework now and we should have much more transparency pretty soon;
Usually people talking about shell companies are referring to companies with no business interests at all or if they are bring expansive only contracts/ip agreements. A construction company is doing actual business. Land owned in a corporation has an actual asset etc.
Most startups start as shell companies, you sort of can’t create a corporation without being one for some amount of time.
So I’m ok with the idea of corporate ownership reform but I think you’d need to get more specific than “shell companies == bad”