New Law Could Make Vermont Most Business-Friendly State

Vermont has long been tagged as unfriendly to business.

But it’s poised to become the first state where virtual companies can incorporate entirely on line.

Vermont Law School Professor Oliver Goodenough says laws surrounding the creation of corporations haven’t kept pace with technology.

Oliver - The law is essentially written for the age of the telegram and the quill pen.

So he and his colleagues at Harvard University’s Berkman Center for Internet and Society set out to find a way to modernize corporate law.

Oliver – Obviously, this is the kind of thing which needs a little imagination and needs a little push to get enacted and Vermont’s legislative process, partly because of its size and partly because of its accessibility, was something we were able to put to good use in this context.

Goodenough’s wife, Alison Clarkson, is a state lawmaker.

She introduced—and the Vermont legislature passed-- a highly detailed bill called An Act Relating To Digital Corporate Transactions.

Clarkson - I think people were very excited about this opportunity, once they understood it.

The new law didn’t cause much stir in Vermont.

But the greater business community took note.

Investors Business Daily noted, “Vermont might have seized the title of America’s most business-friendly state in the 21st century…”

Inc. magazine ran a story before the law was even signed by Governor Jim Douglas.

Under the proposal, an entrepreneur anywhere in the world could register a company in Vermont.

They wouldn’t have to hire a lawyer or ever set foot in the state.

David Johnson is a visiting professor at New York Law School.

He’s helped start Internet businesses.

David Johnson - It makes it easier to start a company if the business you’re going into is one that is primarily based on sharing time, attention and effort rather than raising capital.

Under the new law, businesses can register in Vermont for about $300.

David Brown is CEO of Manfacturing Information Systems, Inc.

The Vermont-based software developer employs 18 and has annual sales in the millions.

Brown says the new law gives an important nod to what he calls “knowledge workers.”

He is not completely sold on the idea that Vermont is poised to become the new digital mecca.

That’s because it lacks sufficient broadband access.

But he says the law sets a positive tone.

Brown - It certainly doesn’t make it magic and it’s not just going to turn this thing overnight but it does facilitate people coming here and setting themselves up in business.

Legislation setting up the tax code for these new virtual corporations still must be passed.

Once that’s done, Vermont may be able to shed its reputation and claim the title of the nation’s most business friendly state.

For NHPR news, this is Kevin Forrest