Unclaimed Property Audit or VDA Program: The Delaware Dilemma November 28, 2017 Presented by: Mary Jane Wilson-Bilik Phillip Stano Wilson Barmeyer Liz Cha and State of Delaware, SOS VDA Administrator Alison Iavarone 2017 (US) LLP All Rights Reserved. This communication is for general informational purposes only and is not intended to constitute legal advice or a recommended course of action in any given situation. This communication is not intended to be, and should not be, relied upon by the recipient in making decisions of a legal nature with respect to the issues discussed herein. The recipient is encouraged to consult independent counsel before making any decisions or taking any action concerning the matters in this communication. This communication does not create an attorney-client relationship between (US) LLP and the recipient. (US) LLP is part of a global legal practice, operating through various separate and distinct legal entities, under. For a full description of the structure and a list of offices, please visit www.eversheds-sutherland.com.
Presenters Mary Jane Wilson-Bilik, Partner Phillip Stano, Partner Wilson Barmeyer, Counsel Liz Cha, Associate mjwilson-bilik@ eversheds-sutherland.com phillipstano@eversheds -sutherland.com wilsonbarmeyer@ eversheds-sutherland.com lizcha@evershedssutherland.com 202.383.0660 202.383.0261 202.383.0824 202.383.0533 Delaware SOS VDA Program Alison Iavarone Alison.iavarone@ state.de.us 302.577.8959 2
Introduction and Agenda Overview of DE Unclaimed Property Landscape Questions for DE s SOS VDA Administrator Other Considerations for Holders Conclusion 3
Overview of Delaware Unclaimed Property Landscape
Overview of Delaware Unclaimed Property Landscape In 2017, Delaware overhauled its unclaimed property laws: February 2, 2017: Delaware enacted SB 13 to amend its unclaimed property statute July 1, 2017: Secretary of State finalized new VDA regulations October 1, 2017: Dept. of Finance finalized new audit regulations A mix of preexisting Delaware law and the 2016 Uniform Act 5
Overview of Delaware Unclaimed Property Landscape New Delaware Audit and VDA options Already Under Audit (since before 7/22/2015) 1. Continue under audit 2. Convert audit to VDA 3. Elect expedited audit Make election by Dec. 11, 2017 Not Currently Under Audit Can enter VDA process any time DE must provide VDA option before initiating new audit Delaware sending notices (60 days to elect VDA or audit) 6
Questions for Delaware s SOS VDA Administrator
Delaware SOS VDA Program Secretary of State VDA Program Separate from Department of Finance Alison Iavarone SOS VDA Administrator Steps in a VDA 1. Enrollment (or Conversion from Audit) 2. General Company Information 3. Phase 1: Scoping 4. Phase 2: Detailed Records Review and Quantification 5. Phase 3: Validation 6. Phase 4: Settlement and Payment 8
Delaware SOS VDA Program Delaware VDA Notices Delaware sending notices to companies to determine compliance The company must enroll in the VDA program within 60 days of the notice, or the company will be referred for audit 9
Delaware SOS VDA Program VDA Enrollment (or Conversion from Audit) Enrollment: Holder submits a signed Form VDA-1 Audit Conversion: Holder submits Notice of Intent to Convert (NOI CONV). Deadline December 11, 2017. Dec-17 Sun Mon Tues Wed Thurs Fri Sat 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 10
Delaware SOS VDA Program Company Information and Scoping Holder provides signed NDA and initial questionnaire Determination of record availability and the entities, property types, and years to be included in the VDA 11
Delaware SOS VDA Program Detailed Records Review, Quantification, and Validation Detailed transaction-level review of records Estimation for years without complete records Submission of VDA to SOS for review 12
Delaware SOS VDA Program VDA Settlement and Payment Agreement to resolve VDA Execute Form VDA-2 (final VDA agreement) Receive demand letter and remit payment 13
Other Considerations for Holders
VDA Pros and Cons Advantages Company controls process More cooperative than audit Waiver of interest and penalties Control risk of audit Disadvantages Commitment to follow through Rigorous process; use of internal resources Future reporting expectations Payment 15
Expedited Audit Option (Delaware Dept. of Finance) Companies under audit (since before 7/22/2015) may elect expedited audit (by 12/11/2017) Audit must be completed within 2 years Phase I. Scoping Review scoping documents Identify In-Scope Property Types II. Quantification Obtain source data Compile transaction-level data Audit issues research populations III. Research, Remediation, and Due Diligence Holder research of populations Auditor to issue interim status report IV. Unclaimed Property Reporting Finalize research Auditor issues examination report Time Period 120 days (60 each for Holder/Auditor) 210 days (105 each for Holder/Auditor) 210 days (105 each for Holder/Auditor) 180 days (90 each for Holder/Auditor) 16
Conclusion
Presenters Mary Jane Wilson-Bilik, Partner Phillip Stano, Partner Wilson Barmeyer, Counsel Liz Cha, Associate mjwilson-bilik@ eversheds-sutherland.com phillipstano@eversheds -sutherland.com wilsonbarmeyer@ eversheds-sutherland.com lizcha@evershedssutherland.com 202.383.0660 202.383.0261 202.383.0824 202.383.0533 Delaware SOS VDA Program Alison Iavarone Alison.iavarone@ state.de.us 302.577.8959 18