SETTING UP IN THE US

  • What are my choices?
    • Go direct
    • Branch
    • Subsidiary
    • "Flip" –creating US Holding Company

SETTING UP IN THE US: FUNDRAISING

  • Fundraising: Accessing US Venture Capital
    • Will US VC invest directly in foreign company?
    • Are you ready for VC financing?
    • VC financings

SETTING UP IN THE US: SUBSIDIARY

  • Objective: Established foreign company ("TechCo") needs US subsidiary for local presence and contracting, hiring, benefits, limited liability, IP/tax structuring
  • Key Steps:
    • Delaware corporation
    • One Shareholder
    • One Director (or more)
    • Officers: President, Chief Financial Officer, Secretary
    • Common Stock (ordinary share equivalent)
    • Timing: as fast as 1 day
    • "Qualify" in California or other States where operate
    • Consider operations and need for intercompany IP agreement
    • Consider tax optimization and intercompany services agreement and transfer

"FLIPS" –SETTING UP A NEW US PARENT

  • Objective: TechCo needs access to US venture capital and focus operations in US
  • Process: "Flip" the business from abroad to the U.S. by inserting a new US "Parent" company above TechCo
  • Key Steps:
    • Incorporate a new Delaware company ("US Newco")
    • Existing shareholders of TechCo contribute their TechCo shares to Newcoin exchange for US Newco shares
    • NewCo seeks US venture financing –using $ to fund operations in the US and for TechCo
    • Business conducted in US by US Newco; certain foreign activities continue through TechCo or other subsidiaries, as needed
    • CEO and sales staff typically US based
    • R&D; technical, development and support staff abroad
  • "Flips" to US seen from: Western Europe, Israel, Australia, Canada
    • Tax issues/valuation of TechCo–tax rollover/deferral
    • Tax considerations going forward
    • IP –Keep IP in TechCo or migrate to US
    • US Newco management and capital structure
    • Consents/approvals of TechCo and viability of flip
    • Compel exchange of TechCo shares for US Newco shares?
    • Effect flip sooner rather than later, prior to creation of significant 'value' in TechCo
    • Required legal and accounting team in place for transaction
    • Time/expenses to effect flip

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