As the 116th United States Congress came to a close, in its final hours, and skipping weeks of political drama for purposes of this post, the legislative body took the unprecedented step and overrode a presidential veto for the first time during the Trump Administration to pass the National Defense Authorization Act for Fiscal Year 2021 (the Defense Act). Included in the Defense Act is the Corporate Transparency Act (the CTA). The CTA, which was initially introduced by the House of Representatives in 2019, seeks to provide appropriate safeguards to identify bad actors engaged in terrorism, money laundering, sex trafficking and other heinous acts through “shell companies” that are not actually engaged in a bona fide business venture but instead are created for the principal purpose of shielding the owners from liability for engaging in illicit behavior and, in many cases, their identities. (more…)
About Amy Besser
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Amy Besser has contributed 71 entries to our website, so far.
Following the lead of California, Illinois and other states, Nasdaq, which is home to some of the largest companies in the world including Amazon, Google and Facebook, may require diversity on the board of directors of those companies. Earlier this month, Nasdaq submitted to the Securities and Exchange Commission (SEC) its proposal to require at least two diverse board members and certain disclosure requirements on the 3,000+ public companies that trade on the Nasdaq exchange. Currently more than 75% of Nasdaq’s listed companies do not meet this requirement. (more…)
In a first for Congress, on December 4, 2020, the U.S. House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act of 2019 (MORE Act) by a vote of 228-164. The MORE Act effectively legalizes cannabis by requiring it to be removed from the list of scheduled drugs under the Controlled Substance Act (CSA). (more…)
The Tax Cuts and Jobs Act (2017 Tax Act) limited the deduction of state and local taxes to $10,000 for individuals. Several states, including Connecticut, New Jersey and Maryland, have passed legislation that imposed income tax on a pass-through entity (PTE) such as on an S corporation, a partnership or a limited liability company taxed as a partnership. The PTE deducts the income tax, which then reduces the taxable income allocable to the PTE shareholders and partners. The PTE shareholders and partners then typically receive a credit on their state income tax returns for their share of the taxes paid by the PTE. (more…)
Finders May Finally Be Keepers: SEC Proposes Rules Allowing for Unregistered Broker-Dealers to Participate in Capital-Raising Transactions Under Certain Circumstances
The ability to raise capital is one of the most critical challenges facing small businesses in the U.S. today. Capital can allow for exponential growth of a well-run startup with a good idea, but the lack of capital is the death knell for many others. While many small companies initially rely on friends and family for funding, there has perennially been a gap between raising money from those in your immediate circle and working with investment bankers who are registered broker-dealers for larger rounds of funding. In years past, unregistered finders stepped in to fill this gap despite the legal challenges involved. The role and responsibilities that a finder can legally undertake is a gray area. To the chagrin of their lawyers, companies often “looked the other way” and risked sanctions, possible rescission of offerings and other penalties in order to get the capital they so desperately sought. The problem of unregistered finders has been discussed by the Securities and Exchange Commission (SEC) for decades but, until the new rules proposed by the SEC on October 7, 2020, they did little to provide relief to small companies seeking to raise private placement funds through the use of finders.
By: Carl Koerner
My colleague, John McCarrick, an expert on director and officer responsibility, recently gave a talk about emerging issues in D&O liability and discussed the impact of the ESG movement. ESG is an acronym for Environmental, Social and (Corporate) Governance. The movement asks business enterprises to extend their purview beyond financial success to address issues of public concern, such as global warming or racial injustice. John was asked by a program participant whether the ESG movement might force more companies to reorganize as public benefit corporations (PBCs). (more…)
On Monday, August 31, 2020, the Employee Benefits Security Administration of the United States Department of Labor (DOL) released a proposed regulation governing the conduct of employee benefit plan fiduciaries (the “Regulation”). Specifically, the Regulation restricts the manner in which fiduciaries of employee benefit plans governed by ERISA exercise shareholder voting rights, including proxy voting power, on securities owned by such plans. (more…)
If the 2008 recession gives us the ability to predict anything about upcoming trends in commercial litigation, it is that healthy companies, which normally would not be targeted as defendants, will be sued because the primary wrongdoers are judgment proof. Businesses that are owed money from defunct companies are unlikely to accept substantial losses without exploring ways to collect their debt from third parties, whose liability may not be readily apparent. Under the law of most states, there are a variety of legal theories that can be used to potentially recover from third parties. Successor liability is one such theory. (more…)
Businesses Should Strike the Proper Balance Between Their Desire for Management Autonomy With Sensitivity to Social Justice Issues
By: John K. Baker
American business has been preparing to return to normal operations, with some tweaking due to COVID-19-related governmental guidelines, for weeks. Owners, managers and supervisors are being (or should be) trained about enforcing social distancing and the wearing of masks. As we return to the workplace, businesses should also focus on creating a safe and socially-conscious workplace for all employees. The failure to do so puts an employer at risk in the long term. The combination of savvy union organizers and the Black Lives Matter movement is putting the spotlight on injustice and can endanger the viability of an employer who chooses not to strike the proper balance. (more…)
On May 15, 2020, the House of Representatives passed the Economic Recovery Omnibus Emergency Solutions (HEROES) Act. Coming in at over 1,800 pages, there are sure to be a few surprises tucked into such a massive piece of legislation. One such financial services component is the reintroduction of the Secure and Fair Enforcement (SAFE) Banking Act. Ostensibly, as a response to the COVID-19 crisis, the stated purpose of the SAFE Banking Act is to “increase public safety by ensuring access to financial services to cannabis-related legitimate businesses and service providers and reducing the amount of cash at such businesses.” (more…)
- Corporate Transparency Act and Implications for Entity Formation and Transaction Structures
- Nasdaq’s Giant Leap Towards Diversity on the Board
- The Marijuana Opportunity Reinvestment and Expungement Act of 2019
- IRS to Allow “Workaround” to Deduction Limits for State and Local Income Taxes
- Finders May Finally Be Keepers: SEC Proposes Rules Allowing for Unregistered Broker-Dealers to Participate in Capital-Raising Transactions Under Certain Circumstances