Doing Business in the United States A Guidebook for Foreign Companies Operating in the United States K&L GATES LLP DOING BUSINESS IN THE UNITED STATES A GUIDEBOOK FOR FOREIGN COMPANIES OPERATING IN THE UNITED STATES Table of Contents Chapter Page 1. Introduction......................................................................................................................................... 1 a. Introduction .................................................................................................................................. 1 b. K&L Gates International Practice............................................................................................... 1 2. Operations in the United States ...................................................................................................... 2 a. Business Climate .......................................................................................................................... 2 b. Trade Agencies and Organizations ........................................................................................... 2 c. Legal Environment....................................................................................................................... 2 d. Cultural Differences..................................................................................................................... 4 e. Relocation Incentives................................................................................................................... 6 3. Entity Selection................................................................................................................................... 7 a. Branches and Divisions ............................................................................................................... 7 b. Subsidiary Corporations ............................................................................................................. 7 c. Partnerships .................................................................................................................................. 7 d. Limited Liability Companies...................................................................................................... 8 e. Securities Laws ............................................................................................................................. 8 4. Corporation Formation and Operation .......................................................................................... 9 a. Formation and Entity Status....................................................................................................... 9 b. Organization ................................................................................................................................. 12 c. Stockholders, Directors and Officers......................................................................................... 13 d. Bylaws and Governance Documents......................................................................................... 14 e. Taxpayer Identification Number ............................................................................................... 15 5. Limited Liability Company Formation and Operation............................................................... 16 a. Formation and Entity Status....................................................................................................... 16 b. Members and Managers.............................................................................................................. 17 c. Operating Agreement.................................................................................................................. 18 d. Taxpayer Identification Number ............................................................................................... 20 6. Taxation of United States Operations ............................................................................................ 21 a. Introduction .................................................................................................................................. 21 b. Effect of Tax Treaties.................................................................................................................... 21 c. United States Subsidiary Operations......................................................................................... 22 d. Direct Operations in the United States...................................................................................... 23 e. Transfer Pricing Regulations ...................................................................................................... 25 f. State and Local Taxation ............................................................................................................. 25 g. Foreign Investment in Real Property Tax Act (FIRPTA) ........................................................ 25 h. Foreign Nationals in the United States ..................................................................................... 25 i. Partnership and Limited Liability Company Operations....................................................... 26 7. Regulation of Foreign Companies .................................................................................................. 27 a. Laws and Regulations ................................................................................................................. 27 b. International Investment and Trade in Services Survey Act.................................................. 27 c. Agricultural Foreign Investment Disclosure Act ..................................................................... 27 d. Currency & Foreign Transactions Reporting Act..................................................................... 27 e. Hart-Scott-Rodino Antitrust Improvements Act ..................................................................... 28 f. Committee on Foreign Investment in the United States (CFIUS).......................................... 28 g. Foreign Agents Registration Act ................................................................................................ 28 h Securities Laws ............................................................................................................................. 28 i. Government Contracting............................................................................................................. 29 j. Local and State Regulation.......................................................................................................... 29 8. Sales Representatives and Agents................................................................................................... 31 a. Necessity of Clear Contract Terms............................................................................................. 31 b. Status of Representative or Agent.............................................................................................. 31 c. Scope of Duties ............................................................................................................................. 31 d. Commission Arrangements ........................................................................................................ 32 e. Termination Provisions ............................................................................................................... 32 f. Disputes ......................................................................................................................................... 33 g. Other Provisions ........................................................................................................................... 33 9. Employment Law (Federal and State) ............................................................................................ 34 a. Employment Relationship........................................................................................................... 34 b. At Will Employees........................................................................................................................ 34 c. Employment Contracts and Employee Handbooks ................................................................ 34 d. Restrictive Covenants .................................................................................................................. 35 e. Intellectual Property Provisions ................................................................................................. 35 f. Independent Contractor and Employee Classification ........................................................... 36 g. Labor Unions................................................................................................................................. 36 h. Anti-discrimination Laws............................................................................................................ 37 i. Other Employment Based Laws................................................................................................. 37 j. Employee Benefits ........................................................................................................................ 38 k. Plant Closing and Layoff Regulations ....................................................................................... 40 l. Employee Severance .................................................................................................................... 40 10. Immigration Law...............................................................................................................................