Legal Question in Business Law in Delaware

I've read that when forming a Startup (Delaware corp) as an S-Corp, one can not have an international investor. However, can I have an international investor that receives convertible note in return for their investment. When the company will grow enough and actually have value (i.e A round) the convertible note will be converted to stocks and the S-Corp will be converted to a C-Corp. I'd like to keep the company an s-corp for now, since the amount of this specific investment (angel) is relatively small (150K) and I am not sure if it is worth giving up the s-election at this point.


Asked on 4/25/16, 6:57 pm

1 Answer from Attorneys
Roman Fichman Esq. Law Practice of Roman Fichman Esq.

Your general assumptions are correct. Be mindful that the convertible note needs to be drafted carefully so as not to disqualify the s-election.

My practice is dedicated to startups and I offer cost effective representation for founders. Contact me directly with assistance on the convertible note.

Roman R. Fichman, Esq.

email: Info (@) TheLegalists (dot) com

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Answered on 4/25/16, 7:49 pm


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