Compliance and New Legislation in Delaware and Beyond. Sponsored By: Wolters Kluwer. CT Corporation

Transcription

1 Compliance and New Legislation in Delaware and Beyond PRESENTED BY: ALAN STACHURA SENIOR MANAGER GOVERNMENT RELATIONS Sponsored By:

2 Agenda OFAC & Compliance 2018 in Delaware Delaware Updates Hot Topics & Trends Questions 2

3 OFAC & Compliance 3

4 This Got Our Attention All organizations involved in the corporate registration process need to understand OFAC regulations. Undertaking any type of business or financial transaction with a sanctions target is illegal under federal law and the industry can make an important contribution to the achievement of national security goals by identifying sanctioned targets in order to block their ability to use the U.S. financial system or do business in the United States.

5 OFAC Sanctions programs are strict liability and apply to: U.S. persons, wherever located; Persons within the United States; U.S. origin goods, technology or services wherever located

6 Types of Sanctions Programs Jurisdictional Jurisdictional sanctions impose restrictions on a particular geography or location; for example, U.S. Persons are prohibited to export goods to Iran. List based List based sanctions prohibit U.S. Persons from engaging in any transactions (directly or indirectly) where there is an interest in property of a sanctioned party identified on the SDN List. Sectoral sectoral sanctions programs target an individual, entity, or industry sector but only for certain types of activities. For example, Crimea do not restrict U.S. Persons from all dealings with listed parties

7 Types of Sanctions Programs List based Terrorists and their supporters Narcotics traffickers and their supporters Persons engaged in the proliferation of weapons of mass destruction Government officials who suppress democracy Country based Balkans related Belarus Burundi Central African Republic Congo, Democratic Republic of Cuba Iran Iraq Korea, Democratic People s Republic of Lebanon Libya Somalia Sudan Syria Ukraine Venezuela Yemen Zimbabwe

8 Sanctional Lists Consolidated Sanctions List Foreign Sanctions Evaders (FSE) List Sectoral Sanctions Identifications (SSI) List Palestinian Legislative Council (NS PLC) list The List of Foreign Financial Institutions Subject to Part 561 (the Part 561 List) Non SDN Iranian Sanctions Act (NS ISA) List List of Persons Identified as Blocked Solely Pursuant to Executive Order (the List) 8

9 SDN Search Page

10 OFAC Penalties Civil fines up to $289,000 (indexed to inflation) or twice the value of the transaction, whichever is greater. Civil penalties can accrue even if a U.S. person has no knowledge of the violation. Criminal provisions cover persons who willfully commit, attempt to commit, conspire to commit, or aid or abet in the commission of an IEEPA related violation. U.S. persons that willfully violate sanctions regulations now face potential criminal fines of up to $1 million and up to twenty years in prison.

11 OFAC & Compliance OFAC Compliance Is Easy, Until Something Changes Legitimate Entity is Formed Russia invades Crimea OFAC List Changes They were okay, but now they aren t Terminate from entity or get a license from OFAC ($5,000+ legal fees) Risk a $289,000+ fine Difficult to Always Know If 50% of the BOs are on the OFAC list, it s a sanctioned entity even though it s not on the list Software Solutions are VERY Expensive 11

12 Non OFAC Compliance Delaware Delaware HB 404 Registered Agents are required to complete the following steps to verify filings prior to submission: Reasonable steps to verify the identity of potential customers Check OFAC lists prior to engaging with a new customer Collect full name, business address & phone number of communications contact May collect additional information including officers, directors, members, managing members, partners, & owners Update communications contact at least annually Check all records against OFAC list at least quarterly Official comments due by October 15 th,

13 Non OFAC Compliance Nevada & Wyoming Nevada Recordkeeping 23 separate statutes 15 Custodian of Record 8 with variations Non compliance fines of $500/entity (cap of $10,000 per RA per audit) Can audit multiple times Wyoming Recordkeeping Non compliance fines of $500/entity with no maximum 13

14 2018 in Delaware 14

15 What Percent of Fortune 500 Companies are Incorporated in Delaware? 67% of Fortune 500 1,332,251 Active Entities in DE 315,000 Corporations 1,017,000 Alternative Entities 198,263 New Entities formed in % of all New US IPO's Over 1 Business Entity Per Capita (currently 1.22) 15

16 New Entity Formations 16

17 Delaware Corporations & Alternative Entities 17

18 Delaware Updates 18

19 Delaware Updates House Bill 175 Senate Bills 180, 181, 182, & 183 Senate Bills 310 & 196 Expedited Services 19

20 House Bill 175 Increases Price of Statutory Trust Filings $200 to $500 Effective August 1 st,

21 Senate Bill 180 Corporations Expands Validations to Include Nonstock Entities Amends 114 Provides that 204 & 205 apply to nonstock corporations Appraisal Rights Amends 262 regarding shareholder appraisal rights Revocation or Forfeiture of Charter Amends 284 Clear process using the AG & Court of Chancery to deal with misuse Technical Clean Up of Revivals & Exempt Annual Reports Updates 313 and

22 Senate Bill 183 LLCs Several technical clarifications Use of Blockchain (g), (d), (d), New Certificates of Division Domestic LLCs ONLY Division MUST be accompanied by one or more Formation(s) New Cert Re Division available Separate filing fees Annual taxes on each resulting entity Public Benefit LLC For profit public benefit LLC Combines the benefits of Delaware s PBC and the advantages of LLC law 22

23 Senate Bills 181 & 182 LPs & GPs LP Updates (Senate Bill 182) Several technical clarifications Use of Blockchain (g), (e), (d), GP Updates (Senate Bill 181) Several technical clarifications 23

24 Senate Bill 310 Certification of Adoption of Transparency and Sustainability Act 5000E Effective October 1 st, 2018 Separate website to be created Entirely Voluntary Fully Self Reported No Verification by Delaware 24

25 Senate Bills 180, 181, 182, 183, & 196 Effective August 1 st, 2019 Big Changes to existing Series LLC statutes Creation of Protected Series and Registered Series Registered Series voluntarily file Qualification Annual tax of $75 per Registered Series ($50 penalty for delinquency) Unlimited number of Protected & Registered Series Registered Series can obtain Good Standings & Certified Copies plus complete filings like a standard LLC Registered Agent flows down from parent LLC Each Registered Series has their own status, but parent can override Can convert to and from Protected & Registered Series Proposed names must be distinguishable from names of Registered Series Can file UCCs on series within a Series LLC 25

26 Expedite Options Standard Services 30 Minute $1,500 One Hour $1,000 Two Hour $500 Same Day $50 $ Hour $50 $100 Global Filing Service Secure Future File Date/Preparation Needed $2,500 Expedite Fee 26

27 Hot Topics & Trends 27

28 Hot Topics & Trends Blockchain enotary & Remote Notary Beneficial Ownership Additional Scrutiny 28

29 Questions? 29

30 Thank You for Attending Compliance and New Legislation in Delaware and Beyond 30