Tuesday, Sept. 30, 1997 | 10:51 a.m.
It's lucrative for a business to incorporate in Nevada, but the Secretary of State's Office isn't happy that a Washington-based company under investigation is implying that the state's liberal laws can shield directors from authorities.
Profit Financial Corp., a Seattle company that conducts financial seminars and publishes books by its chief executive officer, Wade Cook, is asking its shareholders to approve the shift of its incorporation to Nevada. The vote is scheduled at the company's annual meeting Oct. 14.
According to a proxy statement filed by Profit Financial, the SEC and the Washington State Securities Administrator are investigating Cook and his dealings.
The company is now incorporated in Utah and would keep its primary office in Seattle.
Cook, author of "The Wall Street Money Machine" and "Stock Market Miracles," runs a half-hour syndicated radio show Saturdays on KVBC 105.1-FM and KNUU 720-AM. He also has conducted seminars on how to make 20 percent per month in the stock market. The company reportedly charges as much as $3,695 for a two-day seminar.
Shares in Profit Financial have climbed this year, closing Monday at $11.50, up 25 cents. Stock, trading on Nasdaq under the symbol WADE, split 3-1 in the middle of September setting off a frenzy in the investment community among investors who thought the stock price had plummeted $14.
Vicki Means, a spokeswoman for the Secretary of State's Office, said Nevada is among the top 10 states in the nation for incorporations. She said the reason businesses set up here is because of the friendly tax structure and nominal annual fees. In addition, the state has no information-sharing agreement with the Internal Revenue Service and the names of stockholders are not public record.
The fact that there are minimal reporting requirements and only three of a corporation's officers -- the president, secretary and treasurer -- have to be disclosed, businesses find Nevada to be a good place to incorporate without drawing much attention.
That apparently is what Profit Financial is alluding to on its website, where it touts Nevada as the best place to incorporate. The company sets up corporations for a fee and its Internet site recommends that businessmen not "incorporate in any state but Nevada," which it calls "a good place for an American entity to move money offshore."
Means admitted that businesses enjoy the state's tax benefits, but that "has nothing to do with hiding things." She added that if a company wants to sell shares in the company in the state, it would still have to register with the Securities Division and would have to abide by rules established by the federal Securities and Exchange Commission.
Other states with liberal incorporation laws include Delaware, California, Texas, New York and Florida. Nevada has no corporate income tax, no taxes on corporate shares, no franchise tax and no personal income tax.
In addition, stockholders, directors and officers don't need to live in or hold meetings in Nevada and don't have to be U.S. citizens.
Officers and directors of a Nevada corporation can be protected from personal liability for lawful acts of the business. Nevada corporations may buy, hold or sell its own stock and can issue stock for capital, services, property or real estate.
The initial filing fee for profit corporations is based on the total number of authorized shares stated in the company's articles of incorporation. For $25,000 in stock or less, the fee is $125. The range extends up to a maximum of $25,000.
The annual fee after the initial filing is $85 a year.
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