Hi, I am a uk resident who will be shortly bankrupt here. Can I be a director and shareholder of a company in the USA? Namely setup in Baker...

Question

Hi, I am a uk resident who will be shortly bankrupt here. Can I be a director and shareholder of a company in the USA? Namely setup in Bakersfield, California? Will the UK authorities find out?

Answer

To the extent this question requires or expects me to opine upon the law of the U.K., I cannot give you an answer, as I simply don't know. Insofar as the law of the U.S. or California is concerned, however, (a) personal bankruptcy would not impair your ability to serve as a director or to be a shareholder in a California corporation, BUT (b) corporations that elect so-called "S" or "Subchapter S" taxation treatment cannot have a nonresident alien shareholder; (c) bankruptcy may be a disqualifying factor under the corporation's articles of incorporation or bylaws; and (d) it seems likely to me that U.K. bankruptcy laws would require the debtor in bankruptcy to make a full and complete disclosure of valuable property owned, so the U.K. authorities would find out about your Bakersfield investments via your own declaration.