SENIOR MANAGER GOVERNMENT RELATIONS - NPRRA · – Combines the benefits of Delaware’s PBC and...

CT CorporationWolters Kluwer


Compliance and New Legislation in Delaware and BeyondPRESENTED BY:ALAN STACHURASENIOR MANAGER GOVERNMENT RELATIONS Sponsored By:


Agenda

• OFAC & Compliance

• 2018 in Delaware

• Delaware Updates

• Hot Topics & Trends

• Questions

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OFAC & Compliance

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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.


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


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 –


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


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 13599 (the 13599 List)

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SDN Search Page


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.


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

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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 15th, 2018

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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

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2018 in Delaware

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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 2017

• 85% of all New US IPO's

• Over 1 Business Entity Per Capita (currently 1.22)

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New Entity Formations

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Delaware Corporations & Alternative Entities

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Delaware Updates

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Delaware Updates

• House Bill 175

• Senate Bills 180, 181, 182, & 183

• Senate Bills 310 & 196

• Expedited Services

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House Bill 175

• Increases Price of Statutory Trust Filings– $200 to $500– Effective August 1st, 2018

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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 §502

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Senate Bill 183 ‐ LLCs

• Several technical clarifications

• Use of Blockchain §18‐104(g), §18‐302(d), §18‐404(d), §18‐305

• New Certificates of Division §18‐217

– 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 §18‐1201

– For profit public benefit LLC

– Combines the benefits of Delaware’s PBC and the advantages of LLC law

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Senate Bills 181 & 182 – LPs & GPs

• LP Updates (Senate Bill 182)– Several technical clarifications– Use of Blockchain §17‐104(g), §17‐302(e), §17‐405(d), §17‐305

• GP Updates (Senate Bill 181)– Several technical clarifications

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Senate Bill 310

• Certification of Adoption of Transparency and Sustainability Act

– §5000E

– Effective October 1st, 2018

– Separate website to be created

– Entirely Voluntary

– Fully Self Reported

No Verification by Delaware

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Senate Bills 180, 181, 182, 183, & 196

• Effective August 1st, 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

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Expedite Options

• Standard Services

– 30 Minute ‐ $1,500

– One Hour ‐ $1,000

– Two Hour ‐ $500

– Same Day ‐ $50 ‐ $200

– 24 Hour ‐ $50 ‐ $100

• Global Filing Service

– Secure Future File Date/Preparation Needed

– $2,500 Expedite Fee

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Hot Topics & Trends

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Hot Topics & Trends

• Blockchain

• eNotary & Remote Notary

• Beneficial Ownership

• Additional Scrutiny

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Questions?

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Compliance and New Legislation in Delaware and Beyond

Thank You for Attending

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