Source: http://delcode.delaware.gov/title8/c005/index.shtml
Timestamp: 2019-04-21 17:13:09+00:00

Document:
§ 501 Corporations subject to and exempt from franchise tax.
(a) 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 (other than a captive insurance company licensed under Chapter 69 of Title 18), 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 exempt corporation, any banking corporation, savings bank, building and loan association or any captive insurance company licensed under Chapter 69 of Title 18, or any corporation for drainage and reclamation of lowlands.
b. No part of its net earnings inures to the benefit of any member or individual.
§ 502 Annual franchise tax report; contents; failure to file and pay tax; duties of Secretary of State.
(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 $200 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 § 321(b) 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.
§ 503 Rates and computation of franchise tax.
(1) Where a corporation that is not authorized to issue capital stock is not an exempt corporation under § 501(b) of this title, $175; where the authorized capital stock does not exceed 5,000 shares, $175; where the authorized capital stock exceeds 5,000 shares, but is not more than 10,000 shares, $250; and the further sum of $85 on each 10,000 shares or part thereof.
(2) One hundred and 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; $250 where the assumed no-par capital exceeds $500,000 but is not more than $1,000,000; and the further sum of $85 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 (a)(2) of this section, the corporation's assumed no-par capital, whenever the phrase "assumed no-par capital" is used in paragraph (a)(2) of this section, 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 $400 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 $400 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 (a)(1) of this section.
provided that if the corporation's financial statements are reported in a currency other than United States dollars, then, for purposes of measuring the amount of revenues and assets set forth therein, such amounts shall be converted into United States dollars using the applicable spot exchange rate for value established by Bloomberg as of the last day of the corporation's most recently completed fiscal year.
b. "Succession" means the direct acquisition of assets and liabilities comprising a going business from a predecessor, whether by merger, consolidation, purchase or other direct transfer.
(4) Notwithstanding subsection (a) of this section and the first sentence of this subsection, for each corporation satisfying the requirements of paragraphs (c)(1) and (c)(2) of this section for a fiscal year for which its annual franchise tax would otherwise be $200,000 as computed under paragraph (a)(1) or (2) of this section (each, a "large corporate filer"), the Secretary of State shall fix the annual franchise tax for such taxable year at $250,000. If a corporation would otherwise qualify as a large corporate filer but has no filed annual report with the United States Securities and Exchange Commission (or any similar foreign agency), and became listed on a national securities exchange in connection with a succession within the taxable year, then reference must be made to the most recent annual report of the predecessor of such corporation for purposes of determining whether such corporation has satisfied the requirements of paragraphs (c)(2)a. and (c)(2)b. of this section.
(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. The filing of a certificate of validation pursuant to § 204 of this title shall not reduce the annual franchise tax due for any period prior to the filing of such certificate of validation and any calculation of additional annual franchise tax due for any period prior to the filing of such certificate of validation shall be calculated at the current rates in effect pursuant to this section.
(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 (a)(1) or (a)(2) of this section, or a tax at the rate of $350 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 $90,000. 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 (a)(1) and (a)(2) 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. If such schedule or its replacement reports on a consolidated basis, the reporting corporation shall submit to the Secretary of State the consolidating ending balance sheets which accompany such schedule as 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.
§ 504 Collection and disposition of tax; tentative return and tax; penalty interest; investigation of annual franchise tax report; notice of additional tax due.
(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 1 1/2 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.
§ 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 second 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 § 312(c) 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 § 312(g) 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(a) 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.
§ 506 Fund for payment of refunds.
§ 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.
§ 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.
§ 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.
§ 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.
§ 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.
§ 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.
§ 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.
§ 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.
§ 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.
§ 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.
§ 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.
§ 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.

References: § 502
 § 503
 § 503
 § 503
 § 321

§ 503
 § 501
 § 204
 § 851
 § 851

§ 504
 § 506

§ 505
 § 312
 § 312
 § 501
 § 502

§ 506

§ 507

§ 508

§ 509
 § 511

§ 510

§ 511

§ 512
 § 511

§ 513

§ 514

§ 515

§ 516

§ 517

§ 518