Delaware – Corporation Franchise Tax

Delaware Potal

Corporations

CHAPTER 5. CORPORATION FRANCHISE TAX

§ 501. Corporations subject to and exempt from franchise tax.

Every telegraph, telephone or cable
company, every electric company organized for the production and/or
distribution of light, heat or power, every company organized for the
purpose of producing and/or distributing steam, heat or power, every
company organized for the purpose of the production and/or distribution
and/or sale of gas, every parlor, palace or sleeping car company, every
express company, every pipeline company, every life insurance company,
every other insurance company of whatever kind, and every corporation
now existing or hereafter to be incorporated under the laws of this
State, shall pay an annual tax, for the use of the State, by way of
license for the corporate franchise as prescribed in this chapter. No
such tax shall be paid by any banking corporation, savings bank or
building and loan association, or any corporation for drainage and
reclamation of lowlands, or religious corporation, or purely charitable
or educational association, or any company, association or society,
which, by its certificate of incorporation, shall have for its object
the assistance of sick, needy or disabled members, or the defraying of
funeral expenses of deceased members, or to provide for the wants of
the widows and families after death of its members. (21 Del. Laws, c.
166, § 1; 22 Del. Laws, c. 15, § 1; Code 1915, § 102; 35 Del. Laws, c.
5, § 2; 36 Del. Laws, c. 6, § 1; 38 Del. Laws, c. 10, §§ 1-3; Code
1935, § 96; 8 Del. C. 1953, § 501; 55 Del. Laws, c. 90, § 1; 57 Del.
Laws, c. 65, §§ 1, 2.)

§ 502. Annual franchise tax report; contents; failure to file and pay tax; duties of Secretary of State.

(a) Annually on or before March 1, every
corporation now existing or hereafter incorporated under Chapter 1 of
this title or which has accepted the Constitution of this State, shall
make an annual franchise tax report to the Secretary of State. The
report shall be made on a form designated by the Secretary of State and
shall be signed by the corporation’s president, secretary, treasurer or
other proper officer duly authorized so to act, or by any of its
directors, or by any incorporator in the event its board of directors
shall not have been elected. The fact that an individual’s name is
signed on the report shall be prima facie evidence that such individual
is authorized to certify the report on behalf of the corporation;
however, the official title or position of the individual signing the
corporate report shall be designated. The report shall contain the
following information:

(1) The location of its registered office
in this State, stated with the degree of particularity required by
paragraph (2) of subsection (a) of § 102 of this title;

(2) The name of the agent upon whom service of process against the corporation may be served;

(3) The location (city, town, street and
number of same, if number there be) of the principal place of business
of the corporation;

(4) The names and addresses of all the
directors as of the filing date of the report and the name and address
of the officer who signs the report;

(5) The number of shares and the par
value per share of each class of capital stock having a par value and
the number of shares of each class of stock without par value which the
corporation is authorized to issue;

(6) If exempt from taxation for any cause, the specific facts entitling the corporation to exemption from taxation; and

(7) Such additional information,
schedules and attachments as the Secretary shall require to ascertain
the franchise tax due to the State.

(b) If any officer or director of a
corporation required to make an annual franchise tax report to the
Secretary of State shall knowingly make any false statement in the
report, such officer or director shall be guilty of perjury.

(c) If the annual franchise tax report
and the franchise tax due are not filed or paid by the corporation as
required by this chapter, the Secretary of State shall ascertain and
fix the amount of the franchise tax as determined in the manner
prescribed by § 503(a) of this title and the amount so fixed by the
Secretary of State shall stand as the basis of taxation under the
provisions of this chapter unless the corporation shall thereafter
elect to compute the franchise tax in the manner prescribed by §
503(a)(2) of this title by filing the annual franchise tax report and
complying with the provisions of § 503(b) of this title. In the event
of neglect, refusal or failure on the part of any corporation to file a
complete annual franchise tax report with the Secretary of State on or
before March 1, the corporation shall pay the sum of $100 to be
recovered by adding that amount to the franchise tax as herein
determined and fixed, and such additional sum shall become a part of
the franchise tax as so determined and fixed, and shall be collected in
the same manner and subject to the same penalties.

(d) In case any corporation shall fail to
file its annual franchise tax report and the franchise tax due within
the time required by this chapter, and in case the agent in charge of
the registered office of any corporation upon whom process against the
corporation may be served shall die, resign, refuse to act as such,
remove from this State or cannot with due diligence be found, it shall
be lawful while default continues to serve process against the
corporation upon the Secretary of State. Such service upon the
Secretary of State shall be made in the manner and shall have the
effect stated in subsection (b) of § 321 of this title and shall be
governed in all respects by said subsection.

(e) The Secretary of State shall safely
keep all reports returned in such manner as they may be open to the
inspection of all persons pursuant to the provisions set forth in
Chapter 100 of Title 29. Any tax information provided pursuant to
paragraph (a)(7) of this section, contained on annual franchise tax
reports filed after tax year 2006 shall not be deemed public.

(f) The Secretary of State shall not
issue certificates of good standing that pertain to any corporation
that has an unpaid franchise tax balance due to the State or does not
have on file a completed annual franchise tax report for the relevant
time period. (21 Del. Laws, c. 166, §§ 2, 3; 22 Del. Laws, c. 15, §§ 2,
3; 22 Del. Laws, c. 16, § 1; 27 Del. Laws, c. 19, § 1; Code 1915, §§
103, 104; 28 Del. Laws, c. 9, § 1; 35 Del. Laws, c. 5, § 3; 36 Del.
Laws, c. 6, § 2; 37 Del. Laws, c. 7, § 1; Code 1935, § 97; 8 Del. C.
1953, § 502; 51 Del. Laws, c. 102; 54 Del. Laws, c. 88, § 14; 55 Del.
Laws, c. 90, § 1; 57 Del. Laws, c. 421, § 15; 58 Del. Laws, c. 216, §
2; 58 Del. Laws, c. 450, § 1; 60 Del. Laws, c. 353, §§ 1-3; 64 Del.
Laws, c. 317, § 3; 67 Del. Laws, c. 190, § 13; 67 Del. Laws, c. 229, §
12; 67 Del. Laws, c. 376, § 29; 69 Del. Laws, c. 53, § 1; 69 Del. Laws,
c. 54, § 1; 71 Del. Laws, c. 339, §§ 95-97; 74 Del. Laws, c. 51, § 10;
75 Del. Laws, c. 306, §§ 18-21.)

§ 503. Rates and computation of franchise tax.

(a) All corporations accepting the
provisions of the Constitution of this State and coming under Chapter 1
of this title, and all corporations which have heretofore filed or may
hereafter file a certificate of incorporation under said chapter, shall
pay to the Secretary of State as an annual franchise tax whichever of
the applicable amounts prescribed by paragraphs (1) and (2) of this
subsection is the lesser:

(1) Where the authorized capital stock
does not exceed 5,000 shares, $75; where the authorized capital stock
exceeds 5,000 shares, but is not more than 10,000 shares, $150; and the
further sum of $75 on each 10,000 shares or part thereof.

(2) Seventy-five dollars where the
assumed no-par capital of the corporation, found in the manner provided
in this paragraph, does not exceed $500,000; $150 where the assumed
no-par capital exceeds $500,000 but is not more than $1,000,000; and
the further sum of $75 for each $1,000,000 or part thereof of such
additional assumed no-par capital.

For the purpose of computing the tax in
accordance with paragraph (2) of this subsection, the corporation’s
assumed no-par capital, whenever the phrase “assumed no-par capital” is
used in paragraph (2) of this subsection, shall be found by multiplying
the number of authorized shares of capital stock without par value by
$100.

To the amount of tax attributable to the
corporation’s assumed no-par capital, computed as above prescribed, add
$250 for each $1,000,000 or fraction thereof in excess of $1,000,000 of
an assumed par value capital, found by multiplying the number of
authorized shares of capital stock having par value by the quotient
resulting from dividing the amount of the total assets of the
corporation, as shown in the manner hereinafter provided, by the total
number of issued shares of all denominations and classes. If the
quotient shall be less than the par value of any denomination or class
of authorized shares having par value, the number of the shares of each
class shall be multiplied by their par value for the purpose of
ascertaining the assumed par value capital in respect of the shares and
the number of authorized shares having a par value to be multiplied by
the quotient, as aforesaid, shall be reduced by the number of the
shares whose par value exceeds the quotient; and where, to determine
the assumed par value capital, it is necessary to multiply a class or
classes of shares by the quotient and also to multiply a class or
classes of shares by the par value of the shares, the assumed par value
capital of the corporation shall be the sum of the products of the
multiplications. Whenever the amount of the assumed par value capital,
computed as above prescribed, is less than $1,000,000, the amount of
the tax attributable thereto shall be the amount that bears the same
relation to $250 that the amount of the assumed par value capital bears
to $1,000,000.

(b) Unless a corporation shall submit to
the Secretary of State, at the time of filing its annual franchise tax
report, a statement setting forth the number of shares of each class of
stock actually issued, if any, and the amount of the total gross assets
of the corporation, as of the nearest date on which the amount is
obtainable, including in the statement its goodwill valued at the same
amount at which it is valued in the books of account of the
corporation, it shall pay a franchise tax for such year computed in the
manner prescribed by paragraph (1) of subsection (a) of this section.

(c) In no case shall the tax on any
corporation for a full taxable year, by whichever of paragraphs (1) and
(2) of subsection (a) of this section the same is computed, be more
than $165,000 nor less than $75.

(d) In case the corporation has not been
in existence during the whole year, the amount of tax due, at the
foregoing rates and as above provided, shall be prorated for the
portion of the year during which the corporation was in existence.

(e) In case a corporation shall have
changed during the taxable year the amount of its authorized capital
stock, the total annual franchise tax payable at the foregoing rates
shall be arrived at by adding together the franchise taxes calculated
as above set forth as prorated for the several periods of the year
during which each distinct authorized amount of capital stock was in
effect.

(f) Every corporation which shall show on
its annual franchise tax report that it has not been engaged in any of
the business activities for which it was granted a certificate of
incorporation, shall pay only at the rate of one half of the amount of
taxes scheduled above for the portion of the year as it shall not have
been so engaged and at the full rate for the remainder of the year. The
Secretary of State may require the filling of a supplemental affidavit
stating fully the pertinent facts upon which the claim for one-half
rate is based.

(g) For the purpose of computing the
taxes imposed by this section, the authorized capital stock of a
corporation shall be considered to be the total number of shares which
the corporation is authorized to issue, whether or not the number of
shares that may be outstanding at any one time be limited to a less
number.

(h) All corporations as defined in this
section which are regulated investment companies as defined by § 851 of
the federal Internal Revenue Code [26 U.S.C. § 851], shall pay to the
Secretary of State as an annual franchise tax, a tax computed either
under paragraph (1) or paragraph (2) of subsection (a) of this section,
or a tax at the rate of $250 per annum for each $1,000,000, or fraction
thereof in excess of $1,000,000, of the average gross assets thereof
during the taxable year, whichever be the least, provided that in no
case shall the tax on any corporation for a full taxable year under
this subsection be more than $75,000. The average assets for the
purposes of this section shall be taken to be the mean of the gross
assets on January 1 and December 31 of the taxable year. Any
corporation electing to pay a tax under this subsection shall show on
its annual franchise tax report that the corporation is a regulated
investment company as above defined, and the amount of its assets on
January 1 and December 31 of the taxable year, and the mean thereof.
The Secretary of State may investigate the facts set forth in the
report and if it should be found that the corporation so electing to
pay under this subsection shall not be a regulated investment company,
as above defined, shall assess upon the corporation a tax under
paragraphs (1) and (2) of subsection (a) of this section, whichever be
the lesser.

(i) As used in subsections (a) and (b) of
this section, the term “total assets” and the term “total gross assets”
are identical terms and mean all assets of the corporation, net only of
allowances for bad debts, accumulated depreciation, accumulated
depletion, accumulated amortization of land and accumulated
amortization of intangible assets.

Such total assets and total gross assets
shall be those “total assets” reported to the United States on U.S.
Form 1120 Schedule L, relative to the company’s fiscal year ending in
the calendar year prior to filing with the Secretary of State pursuant
to this section. If such schedule is no longer in use, the Secretary of
State shall designate a replacement. The Secretary of State may at any
time require a true and correct copy of such schedule to be filed with
the Secretary of State’s office.

No corporation shall consolidate with its
assets the assets of another entity for purposes of this section. If
such schedule or its replacement reports on a consolidated basis, the
reporting corporation shall submit to the Secretary of State a
reconciliation of its reported total assets or total gross assets to
the consolidated total assets reported on the schedule.

Interests in entities which are
consolidated with the reporting company shall be included within “total
assets” and “total gross assets” at a value determined in accordance
with generally accepted accounting principles. (21 Del. Laws, c. 166, §
4; 22 Del. Laws, c. 15, § 4; 22 Del. Laws, c. 16, § 2; 22 Del. Laws, c.
259, § 1; 24 Del. Laws, c. 47, § 1; 27 Del. Laws, c. 19, §§ 2, 3; 27
Del. Laws, c. 20, § 1; Code 1915, § 105; 35 Del. Laws, c. 5, § 4; 36
Del. Laws, c. 6, § 3; 37 Del. Laws, c. 7, § 2; Code 1935, § 98; 41 Del.
Laws, c. 5, § 1; 44 Del. Laws, c. 3, § 1; 48 Del. Laws, c. 355, § 1; 8
Del. C. 1953, § 503; 53 Del. Laws, c. 116; 53 Del. Laws, c. 144; 55
Del. Laws, c. 90, § 1; 57 Del. Laws, c. 150, §§ 10-12; 58 Del. Laws, c.
450, § 2; 59 Del. Laws, c. 450, § 1; 64 Del. Laws, c. 317, § 2(a)-(d);
67 Del. Laws, c. 190, § 14; 68 Del. Laws, c. 81, §§ 1, 2; 71 Del. Laws,
c. 339, § 98; 74 Del. Laws, c. 51, § 11; 75 Del. Laws, c. 306, § 22; 76
Del. Laws, c. 286, §§ 2-4.)

§ 504. Collection and
disposition of tax; tentative return and tax; penalty interest;
investigation of annual franchise tax report; notice of additional tax
due.

(a) The franchise tax shall be due and
payable on March 1 following the close of the calendar year, except
that with respect to a corporation whose franchise tax liability for
the current calendar year is estimated to be $5,000 or more, a
tentative return and tax shall be due and payable as follows:

(1) Forty percent of the estimated tax on June 1 of the current year;

(2) Twenty percent of the estimated tax on September 1 of the current year;

(3) Twenty percent of the estimated tax on December 1 of the current year; and

(4) The remainder of the tax as finally
determined together with the annual franchise tax report on March 1
following the close of the calendar year.

(b) The Department of State shall receive
the franchise tax and pay over all taxes collected to the Department of
Finance, except as provided in § 506 of this title.

(c) If the tax of any corporation remains
unpaid after the due dates established by this section, the tax shall
bear interest at the rate of 11/2 percent for each month or portion
thereof until fully paid.

(d) The Secretary of State has power to
inquire into the truth or falsity or accuracy of every report required
to be filed to carry out this chapter. The Secretary of State may
require the production of the books of any corporation referred to in
this chapter and may swear or affirm and examine witnesses in relation
thereto. Where the Secretary of State shall determine the amount of
franchise tax which has been paid is less than the franchise tax due,
the Secretary of State shall notify the taxpayer of the additional tax
and any interest thereon which is due. Such additional tax and interest
thereon shall be paid, or a petition for review thereof shall be filed,
within 60 days after the notification to the taxpayer.

(e) The tentative return and tax paid
thereon under subsection (a) of this section shall be based on the
annual franchise tax of the preceding year.

(f) The penalties for nonpayment of the
tentative franchise tax as set forth in subsection (a) of this section
shall be the same as those applied for any nonpayment of franchise tax
in this title.

(g) The Secretary of State may in the
Secretary of State’s discretion charge a fee of $60 for each check
received for payment of franchise taxes, penalties or interest thereon
that is returned due to insufficient funds or as the result of a stop
payment order to be recovered by adding the amount of that fee to the
franchise tax, and such sum shall become a part of the franchise tax
and shall be collected in the same manner and subject to the same
penalties. (21 Del. Laws, c. 166, § 5; 22 Del. Laws, c. 15, § 5; 22
Del. Laws, c. 16, § 3; 22 Del. Laws, c. 260, § 1; 27 Del. Laws, c. 21,
§ 1; Code 1915, § 106; 35 Del. Laws, c. 5, § 5; 36 Del. Laws, c. 6, §
4; Code 1935, § 99; 8 Del. C. 1953, § 504; 55 Del. Laws, c. 90, § 1; 57
Del. Laws, c. 421, §§ 16, 17; 58 Del. Laws, c. 450, § 3; 60 Del. Laws,
c. 353, §§ 4-6; 64 Del. Laws, c. 112, § 69; 68 Del. Laws, c. 81, § 3;
68 Del. Laws, c. 246, § 4; 69 Del. Laws, c. 54, § 2; 71 Del. Laws, c.
339, §§ 99, 100; 74 Del. Laws, c. 51, § 12.)

§ 505. Review and refund; jurisdiction and power of the Secretary of State; appeal.

(a) If any corporation claims that the
annual franchise tax or any penalties or interest were erroneously or
illegally fixed or paid with respect to a calendar year, the
corporation may, not later than March 1 of the 2nd calendar year
following the close of such calendar year, petition the Secretary of
State for a reduction or refund of such tax, penalties or interest.

(b) Prior to the filing of a certificate
required by subsection (c) of § 312 of this title, a corporation may
petition the Secretary of State for a reduction of taxes, penalties or
interest which the State claims are due it pursuant to subsection (g)
of § 312 of this title and which the corporation claims have been
erroneously or illegally fixed.

(c) If the Secretary of State determines
the tax, interest and/or penalties fixed by the Secretary or taxes paid
are excessive or incorrect, in whole or in part, the Secretary shall
resettle the same and adjust the assessment of tax, interest or
penalties accordingly and shall refund to the corporation any amount
paid in excess of the proper amount of tax, interest and/or penalties
so determined to be due. In the case of any corporation which is not
required to pay an annual tax under § 501 of this title, the Secretary
of State may remit all or part of the penalties and interest provided
in this chapter. Any refund due to a corporation which has merged into
another Delaware domestic corporation shall be credited to the
surviving Delaware corporation.

(d) Any corporation, within a period of
60 days after the determination by the Secretary of State on a petition
filed pursuant to subsections (a) and (b) of this section, may petition
the Court of Chancery, in and for the county where the registered
office or place of business of the corporation is located, for a review
de novo of the determination of the Secretary of State. The petition
shall set forth the facts upon which the petitioner relies. The
Secretary of State shall be named as respondent in any such petition
and be served therewith in the same manner as if the Secretary of State
were a defendant in a civil suit.

(e) If the Court of Chancery determines
that the tax, interest and/or penalties determined by the Secretary of
State pursuant to subsections (a) and (b) of this section are excessive
or incorrect, in whole or in part, it shall resettle the same and
adjust the assessment of tax, interest or penalties accordingly, and
notify the corporation and the Secretary of State of its determination
and direct the Secretary of State to refund to the corporation any
amount paid in excess of the proper amount of tax, interest and/or
penalties so determined to be due. The Court of Chancery may remit all
or part of the penalties and interest provided in § 502 of this title.

(f) [Repealed.] (21 Del. Laws, c. 166, §
17; 22 Del. Laws, c. 15, § 17; Code 1915, § 119; 36 Del. Laws, c. 6, §
8; 37 Del. Laws, c. 7, § 3; Code 1935, § 103; 41 Del. Laws, c. 7, § 1;
8 Del. C. 1953, § 505; 55 Del. Laws, c. 90, § 1; 56 Del. Laws, c. 186,
§ 32; 57 Del. Laws, c. 712, § 1; 58 Del. Laws, c. 450, § 4; 60 Del.
Laws, c. 371, § 15; 67 Del. Laws, c. 190, §§ 15, 16; 70 Del. Laws, c.
79, § 22; 70 Del. Laws, c. 186, § 1; 71 Del. Laws, c. 339, § 101.)

§ 506. Fund for payment of refunds.

The Secretary of State shall retain in
the Secretary of State’s hands out of the revenue collected from the
taxes imposed by this chapter a sum sufficient to provide at all times
a fund of at least $5,000, but not more than $70,000, out of which the
Secretary of State shall pay any refunds to which corporations shall
become entitled under this chapter. The fund shall be deposited in the
financial institution which is legal depository of state moneys to the
credit of the Secretary of State and shall be disbursable on order of
the Secretary of State. (21 Del. Laws, c. 166, § 17; 22 Del. Laws, c.
15, § 17; Code 1915, § 119; 36 Del. Laws, c. 6, § 8; 37 Del. Laws, c.
7, § 3; Code 1935, § 103; 8 Del. C. 1953, § 506; 55 Del. Laws, c. 90, §
1; 57 Del. Laws, c. 421, § 18; 71 Del. Laws, c. 339, § 102.)

§ 507. Collection of tax; preferred debt.

The franchise tax shall be a debt due
from the corporation to the State, for which an action at law may be
maintained after the same shall have been in arrears for a period of 1
month. The tax shall also be a preferred debt in case of insolvency.
(21 Del. Laws, c. 166, § 6; 22 Del. Laws, c. 15, § 6; Code 1915, § 107;
36 Del. Laws, c. 6, § 5; Code 1935, § 100; 8 Del. C. 1953, § 507; 55
Del. Laws, c. 90, § 1; 58 Del. Laws, c. 450, § 5.)

§ 508. Injunction against exercise of franchise or transacting business.

The Attorney General, either of the
Attorney General’s own motion or upon request of the Secretary of
State, whenever any franchise tax due under this chapter from any
corporation shall have remained in arrears for a period of 3 months
after the tax shall have become payable, may apply to the Court of
Chancery, by petition in the name of the State, on 5 days’ notice to
the corporation, which notice may be served in such manner as the Court
may direct, for an injunction to restrain the corporation from the
exercise of any franchise or the transaction of any business within the
State, until the payment of the tax, interest due thereon and the cost
of the application, which shall be fixed by the Court. The Court of
Chancery may grant the injunction, if a proper case appears, and upon
granting and service of the injunction, the corporation thereafter
shall not exercise any franchise or transact any business within this
State until the injunction shall be dissolved. (21 Del. Laws, c. 166, §
7; 22 Del. Laws, c. 15, § 7; Code 1915, § 108; 36 Del. Laws, c. 6, § 6;
Code 1935, § 101; 8 Del. C. 1953, § 508; 55 Del. Laws, c. 90, § 1; 71
Del. Laws, c. 339, § 103.)

§ 509. Further remedy in Court of Chancery; appointment of receiver or trustee; sale of property.

(a) After any corporation, now existing
or hereafter incorporated under Chapter 1 of this title, has failed or
neglected for the period of 1 year to pay the franchise taxes imposed
by law, and the Secretary of State shall have reported such corporation
to the Governor of the State, as provided in § 511 of this title, then
the Attorney General of this State may proceed against the corporation
in the Court of Chancery of this State for the appointment of a
receiver, or otherwise.

(b) The Court of Chancery in the
proceeding shall ascertain the amount of the taxes remaining due and
unpaid by the corporation to this State, and shall enter a final decree
for the amount so ascertained. Thereupon a fieri facias or other
process shall issue for the collection of the same as other debts are
collected. If no property which may be seized and sold on fieri facias
shall be found within this State sufficient to pay the decree, the
Court shall further order and decree that the corporation, within 10
days from and after the service of notice of the decree upon any
officer of the corporation upon whom service of process may be lawfully
made, or such notice as the Court shall direct, shall assign and
transfer to the trustee or receiver appointed by the Court, any chose
in action, or any patent or patents, or any assignments of or license
under any patented invention or inventions owned by, leased or licensed
to or controlled in whole or in part by the corporation, to be sold by
the receiver or trustee for the satisfaction of the decree. No
injunction theretofore issued nor any forfeiture of the charter of any
corporation shall be held to exempt the corporation from compliance
with the order of the Court.

(c) If the corporation neglects or
refuses within 10 days from and after the service of the notice of the
decree to assign and transfer the same to the receiver or trustee for
sale as aforesaid, the Court shall appoint a trustee to make the
assignment of the same, in the name and on behalf of the corporation,
to the receiver or trustee appointed to make the sale. The receiver or
trustee shall thereupon, after such notice and in such manner as
required for the sale under fieri facias of personal property, sell the
same to the highest bidder. The receiver or trustee, upon the payment
of the purchase money, shall execute and deliver to the purchaser an
assignment and transfer of all the patents and interests of the
corporation so sold, which assignment or transfer shall vest in the
purchaser a valid title to all right, title and interest whatsoever of
the corporation therein, and the proceeds of the sale shall be applied
to the payment of the unpaid taxes, together with the costs of the
proceedings. (21 Del. Laws, c. 166, § 14; 22 Del. Laws, c. 15, § 14;
Code 1915, § 115; 36 Del. Laws, c. 6, § 7; Code 1935, § 102; 8 Del. C.
1953, § 509; 55 Del. Laws, c. 90, § 1; 57 Del. Laws, c. 712, § 2.)

§ 510. Failure to pay tax or file a complete annual report for 1 year; charter void; extension of time.

If any corporation, accepting the
Constitution of this State and coming under Chapter 1 of this title, or
any corporation which has heretofore filed or may hereafter file a
certificate of incorporation under said chapter, neglects or refuses
for 1 year to pay the State any franchise tax or taxes, which has or
have been, or shall be assessed against it, or which it is required to
pay under this chapter, or shall neglect or refuse to file a complete
annual franchise tax report, the charter of the corporation shall be
void, and all powers conferred by law upon the corporation are declared
inoperative, unless the Secretary of State, for good cause shown, shall
have given further time for payment of the tax or taxes or the
completion of an annual franchise tax report, in which case a
certificate thereof shall be filed in the office of the Secretary of
State stating the reason therefor. On or before November 30 in each
year, the Secretary of State shall notify each corporation which has
neglected or refused to pay the franchise tax or taxes assessed against
it or becoming due during the year or has refused or neglected to file
a complete annual franchise tax report, that the charter of the
corporation shall become void unless such taxes are paid and such
complete annual franchise tax report is filed on or before March 1 of
the following year. (21 Del. Laws, c. 166, § 10; 22 Del. Laws, c. 15, §
9; 27 Del. Laws, c. 21, § 2; Code 1915, § 111; 36 Del. Laws, c. 6, §
10; Code 1935, § 105; 44 Del. Laws, c. 3, § 2; 8 Del. C. 1953, § 510;
55 Del. Laws, c. 90, § 1; 57 Del. Laws, c. 712, §§ 3-5; 58 Del. Laws,
c. 450, § 6; 71 Del. Laws, c. 339, § 104; 75 Del. Laws, c. 306, § 23.)

§ 511. Repeal of charters of delinquent corporations; report to Governor and proclamation.

On or before June 30 in each year, the
Secretary of State shall report to the Governor a list of all the
corporations, which for 1 year next preceding such report, have failed,
neglected or refused to pay the franchise taxes assessed against them
or due by them, or to file a complete annual franchise tax report,
under the laws of this State, and the Governor shall forthwith issue a
proclamation declaring that the charters of these corporations are
repealed. (21 Del. Laws, c. 166, § 11; 22 Del. Laws, c. 15, § 11; Code
1915, § 112; 36 Del. Laws, c. 6, § 11; Code 1935, § 106; 8 Del. C.
1953, § 511; 55 Del. Laws, c. 90, § 1; 57 Del. Laws, c. 712, § 6; 58
Del. Laws, c. 450, § 7; 71 Del. Laws, c. 339, § 105; 75 Del. Laws, c.
306, § 24.)

§ 512. Filing and publication of proclamation.

A list of those corporations whose
charters were repealed by gubernatorial proclamation pursuant to § 511
of this title shall be filed in the office of the Secretary of State.
On or before October 31 of each calendar year, the Secretary of State
shall publish such proclamation on the Internet or on a similar medium
for a period of 1 week and shall advertise the website or other address
where such proclamation can be accessed in at least 1 newspaper of
general circulation in the State of Delaware. (21 Del. Laws, c. 166, §
12; 22 Del. Laws, c. 15, § 12; 26 Del. Laws, c. 11, § 1; Code 1915, §
113; 28 Del. Laws, c. 10, § 1; 36 Del. Laws, c. 6, § 12; Code 1935, §
107; 8 Del. C. 1953, § 512; 55 Del. Laws, c. 90, § 1; 70 Del. Laws, c.
587, § 37; 73 Del. Laws, c. 298, § 15.)

§ 513. Acting under proclaimed charter; penalty.

Whoever exercises or attempts to exercise
any powers under the certificate of incorporation of any corporation
which has been proclaimed by the Governor, after the issuance of the
proclamation, shall be fined not more than $1,000 or imprisoned not
more than 1 year, or both. (21 Del. Laws, c. 166, § 13; 22 Del. Laws,
c. 15, § 13; Code 1915, § 114; 36 Del. Laws, c. 6, § 13; Code 1935, §
108; 8 Del. C. 1953, § 513; 55 Del. Laws, c. 90, § 1.)

§ 514. Mistakes in proclamation; correction.

Whenever it is established to the
satisfaction of the Governor that any corporation named in the
proclamation has not neglected or refused to pay the franchise tax or
file a completed annual franchise tax report within 1 year, or has been
inadvertently reported to the Governor by the Secretary of State as
refusing or neglecting to pay the taxes or file a completed annual
franchise tax report, the Governor may correct the mistake and may make
the same known by filing a proclamation to that effect in the office of
the Secretary of State, who shall restore to the corporation its
charter, together with all the rights, privileges and immunities and
subject to all its duties, debts and liabilities which had been secured
or imposed by its original charter and all amendments thereto. (21 Del.
Laws, c. 166, § 15; 22 Del. Laws, c. 15, § 15; Code 1915, § 117; 36
Del. Laws, c. 6, § 15; Code 1935, § 110; 8 Del. C. 1953, § 514; 55 Del.
Laws, c. 90, § 1; 57 Del. Laws, c. 712, § 7; 71 Del. Laws, c. 339, §
106; 75 Del. Laws, c. 306, § 25.)

§ 515. Annual report of Secretary of State.

The Secretary of State shall prepare and
publish an annual report containing such statistics as may be available
with respect to the operation of this chapter, including the amounts
collected and amounts unpaid for each year for which the tax is
assessed, and such other facts as are pertinent and desirable. (21 Del.
Laws, c. 166, § 17; 22 Del. Laws, c. 15, § 17; Code 1915, § 119; 36
Del. Laws, c. 6, § 8; 37 Del. Laws, c. 7, § 3; Code 1935, § 103; 8 Del.
C. 1953, § 515; 55 Del. Laws, c. 90, § 1.)

§ 516. Retaliatory taxation and regulation; imposition.

When, by the laws of any other state or
nation, any other or greater taxes, fines, penalties, licenses, fees,
or other obligations or requirements are imposed upon corporations
chartered under Chapter 1 of this title, doing business in the other
state or nation, or upon their agents therein, than the law of this
State imposes upon their corporations or agents doing business in this
State, so long as the laws continue in force in the other state or
nation, the same taxes, fines, penalties, licenses, fees, obligations
and requirements of whatever kind shall be imposed upon all
corporations of the other state or nations doing business within this
State or upon their agents here. Nothing in this section shall be held
to repeal any duty, condition or requirement now imposed by law upon
the corporations of other states or nations transacting business in
this State. (21 Del. Laws, c. 166, § 9; 22 Del. Laws, c. 15, § 9; Code
1915, § 110; 36 Del. Laws, c. 6, § 9; Code 1935, § 104; 8 Del. C. 1953,
§ 516; 55 Del. Laws, c. 90, § 1.)

§ 517. Duties of Attorney General.

The Attorney General shall have all the
powers and authorities in conjunction with the Secretary of State to
collect franchise taxes and penalties due from proclaimed corporations
and corporations whose charter has become void by operation of law. (27
Del. Laws, c. 80, §§ 1, 2; Code 1915, § 116; 28 Del. Laws, c. 11, § 1;
34 Del. Laws, c. 10, §§ 1, 2; 36 Del. Laws, c. 6, § 14; Code 1935, §
109; 8 Del. C. 1953, § 517; 55 Del. Laws, c. 90, § 1; 75 Del. Laws, c.
306, § 26.)

§ 518. Relief for corporations with assets in certain unfriendly nations.

All corporations incorporated and
existing under the laws of this State, all of whose assets are located
in any country from which it is impossible to remove such assets or
withdraw income, or whose assets are located at any place where it is
made unlawful by any law of the United States of America now or
hereafter enacted or by any rule, regulation or proclamation or
executive order issued under any such law, to send any communications,
may, in the discretion of the Secretary of State, be relieved and freed
from any and all assessment of franchise taxes provided for by this
chapter and such corporations may further be relieved by the Secretary
of State of the necessity of filing any state reports due or required.

The Secretary of State shall administer
this section and may require such evidence, submitted by any officer or
agent, as in the Secretary of State’s judgment may be necessary or
desirable to determine whether or not a corporation deserves such
relief from taxes and the filing of reports, and may make such
regulations in relation thereto as the Secretary of State may deem
desirable or necessary. (8 Del. C. 1953, § 518; 49 Del. Laws, c. 185, §
1; 55 Del. Laws, c. 90, § 1; 71 Del. Laws, c. 339, § 107.)

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