Saga Communications on Wednesday completed the reincorporation of the company in Florida after years as a Delaware-incorporated business. The company is not relocating; it remains headquartered in Grosse Pointe Farms, MI, outside Detroit. The change, which was approved by shareholders at the company’s annual meeting on May 11, is more about saving money on taxes.
The nitty gritty of the reincorporation involved a merger of Saga with its wholly-owned Florida subsidiary, Saga Communications Reincorporation Inc. In turn Saga Florida has been renamed Saga Communications and became the successor issuer of the company.
The end result is a change in the state of incorporation from Delaware to Florida. There’s no change in the name, business, management, fiscal year, accounting or assets or liabilities of the company, Saga said in a regulatory filing. CEO Ed Christian and other executive officers aren’t changing locations – Christian already splits his time between offices in Michigan and Florida. Shares of “SGA” continue to trade on Nasdaq and shareholders don’t have to exchange any stock. However, their rights are now governed by the Florida Business Corporation Act.
“The principal factor the board considered in electing to pursue the reincorporation was reduction in our franchise tax liability,” the company explained to shareholders when first proposing the change. Unlike Delaware, Florida doesn’t require domestic corporations to pay a franchise tax. As a result Saga estimates that had it remained incorporated in Delaware, it would pay about $200,000 in franchise taxes to Delaware each year. But Florida only requires the payment of $150 in annual fees when a corporation files its annual report.