Does a Taiwan entity need a US corporation to sign contracts with US counter-parties in the US?

Business Entrepreneurship
1

A friend of mine in Taiwan asked me if his Taiwan company needs to establish a US entity to sign agreements or contracts with American companies in the US. His understanding is that US business law only “recognizes” corporations that are Incorporated (Inc) or are Limited Liability Corporations (LLC). He actually has an offshore company incorporated in HK (Ltd).

I have told him it isn’t necessary. He can use his Taiwan incorporated entity (Inc) or his HK entity (Ltd). Worst comes to worse, he can set up a Delaware corporation in 1 day (or in 5 minutes, if you believe some ads on Google - n.pr/Vn0o8i) – hilarious :laughing:

My understanding is based on common sense. I could see how a US organization might balk at signing with an entity from the “Republic of China”, but for my friend, his HK corp should more than suffice. I wish I could point my friend to an authoritative source to back it up. Can you recommend anything? I did a (very very) quick look at RocketLawyer.com and didn’t see anything jump out at me about appropriate counterparties in an agreement.

2

I am not sure if I understand your question correctly.
You need to know where you want the contact to be valid and to whom.

  1. About where: Most of the countries admit the entity if its domestic law deems it is a company or legal person. You should check the “conflict law” or “rule of choosing law” of a specific country, not “company law”.
  2. About whom: If you think your friend might have a lot of liabilities during the performance, he should make the counterparty hard to pursue himself by using Taiwanese company. Because it will be costly for foreigner to come to Taiwan and file a lawsuit. if the counterparty will have more liabilities instead and have more properties in US, then your friend should amend the contract based on US law and situations. It is because that you might have to enforce the contract in US in the future, such as filing a lawsuit or injunction.