A few asset protection groups have been touting Nevada corporations as the “ultimate” tool in asset protection. As a matter of fact, there are groups selling franchises that allows someone having no experience or training to become an “asset protection consultant” and begin selling Nevada corporations to the public.

These groups propose focuses on the state of Nevada allowing bearer shares along with it having a higher degree of secrecy and privacy than other States. They base this claim on the assumption that, since the corporation has bearer shares, no one would be able to discover who the actual owner is. This is enhanced by the fact that the state of Nevada does give some protection to the identities of the ownership of the corporation.

This is all well and good, but it doesn't mean the owners of the corporation can be kept hidden away or that the corporation will offer any special protection to either its owners or the assets held within it. In fact, there really aren't any advantages in using a Nevada corporation for anyone residing outside of the state of Nevada, or may finds themselves being sued in a federal court. Even within the state of Nevada, the special benefits offered by the Nevada Corporation are highly questionable.

Additionally, the people who sell Nevada corporations often fail to disclose the tax effects of what they are selling, which is not surprising, since, in most cases, they have no understanding of the tax consequences because of a lack of both education and training on these subjects. Therefore, anyone who purchases a Nevada corporation from any of these “asset protection consultants” may be putting themselves at risk of doing something that will cause them taxes down the road.

Contrary to a popular, but mistaken, belief, bearer share are not specifically authorized by Nevada corporation statutes. Therefore, at the moment it’s unknown whether Nevada law allows issuance of bearer shares, but certainly lack of specific statutory authorization indicates that there is no strong public policy in favor of allowing bearer shares, which are widely disregarded in nearly all other jurisdictions. Since subsequent court decisions may determine that Nevada does not allow bearer shares, and the Nevada legislature eventually may clarify the issue by disallowing bearer shares, then bearer shares should be avoided. Without a doubt, the laws of other states expressly disallowing bearer shares may operate to disregard Nevada bearer Share Corporation in those states.

Bearer shares do not offer the level of secrecy claimed by the promoters. To begin with, at a debtor's examination, creditors will ask the question, “In the last three years, have you ever held shares in any corporation?” If you held bearer shares during this period, you would have to answer “Yes,” or else you would be subjecting yourself to perjury

Another problem with bearer shares is that if the court cannot determine who holds the bearer shares all it has to do is just charge ownership to the person, or persons, directly involved with the corporation. Therefore, if a person puts his signature on a corporation’s bank account, he can be considered to be corporation’s owner regardless of whether or not the bearer shares can be found. Also, if the court is unable to locate the bearer shares, it could just rule for the dissolution of the corporation.

The outcome is that bearer shares are definitely not a good thing, and nearly all the top asset protection planners have warned that bearer shares are bad and should be avoided. Furthermore, the majority of the better offshore jurisdictions have eliminated bearer shares because of the problems they cause.

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