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

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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