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Selling majority ownership of my S Corp
Los Angeles, CA
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Posted about 1 year ago in Corporate / Incorporation
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I have a small international TV program distribution company based in LA. An investor outside the US wants to buy 80 % of my company. I am an S Corp. Can a foreign entiry take partial ownership of an S Corp? Do i sell them shares in the company?
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Answers (2)
Randolph Leigh Rhett
This attorney is licensed in California.
Posted about 1 year ago.
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The short answer is "no". A foreign entity cannot be a shareholder in an S Corp. If you choose to sell 80% of your company you will have to abandon you S election.
Selling 80% of your company is an opened Pandora's box of issues. I highly recommend that you consult a good corporate lawyer on what taking on a partner really can mean. 
Thomas L. McLain
This attorney is licensed in Georgia.
Posted about 1 year ago.
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Randolph is correct, however, a foreign entity can own an interest in an LLC and LLC's have the same pass-through tax treatment as S Corps. Thus, depending on the circumstances, there might be a way to structure this transaction in a way that works for you tax-wise, but converting to an LLC could be problematic. Moreover, as Randolph points out, you need to understand fully the implications of giving up 80% of your company. The bottom line: find a good corporate attorney in LA.
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