DLA Piper’s Advertising Group is pleased to present the 2014 edition of our Prize Promotions Across the World Handbook, covering 20 jurisdictions. Many companies use prize promotions as an effective and increasingly popular marketing tool — and the internet and various social media platforms make this an attractive, cost efficient means of reaching a large, multi-jurisdictional customer base, but it is not without its legal challenges. The handbook provides a high-level overview of some of the key requirements surrounding prize promotions, from the management of the early stages, and highlights potentially problematic issues. A .pdf of the full handbook can be found here.
Article prepared by and republished courtesy of our colleagues Evan M. Migdail and Bruce Thompson; originally published here: http://www.dlapiper.com/camp-unveils-major-tax-reform-plan-today/.
House Ways and Means Committee Chairman Dave Camp (R-Michigan) today unveiled his comprehensive tax reform proposal. Released as draft legislation, the Camp proposal calls for the most fundamental reform of the tax code in 27 years.
Upon releasing the plan, Camp said his reforms would make the tax code simpler and fairer for families and job creators, spur economic growth, create jobs, and put money back in the pockets of hardworking taxpayers.
The proposal would reduce the top individual tax rate to 25 percent from 39.6 percent and the corporate tax rate to 25 percent from 35 percent. The seven individual tax brackets would be reduced to two brackets of 10 and 25 percent, and a 10 percent surtax would be imposed on certain income above $450,000. Capital gains and dividends would be taxed as ordinary income, with a 40 percent exclusion.
The lower tax rates would be offset by eliminating or limiting a long list of individual and corporate tax deductions, exclusions and credits. Continue Reading
Compliments of our DLA Piper colleagues in the data protection and privacy practice, and co-editors Kate Lucente and Paul McCormack, here is the DLA Piper 2014 Data Protection Laws of the World Handbook. This new online edition of the handbook offers a high-level snapshot of selected features of international laws as they currently stand in 72 jurisdictions across the world. For example, here is a heat map that provides a visual representation of the privacy challenges faced in certain jurisdictions.
Here is a .pdf of the full 349-page handbook.
Just a reminder to those who have Delaware corporations, your annual report and franchise tax payment are both due on or before March 1 (which falls on a Saturday this year). At this point, you have likely already received from Delaware your notification of annual report and franchise tax due, which is sent to a corporation’s registered agent in December or January of each year. Delaware requires these reports to be filed electronically.
As you will notice, there are two methods that you can use to calculate the amount of Delaware franchise tax due for your corporation (i.e., the “Authorized Shares Method” and the “Assumed Par Value Capital Method”), which result in vastly different amounts due. The default payment amount listed on your notification is set by Delaware using the Authorized Shares Method, which method will almost always result in a much high amount due for startups with limited assets. The minimum franchise tax is $75 and the maximum franchise tax is $180,000.
Franchise taxes are generally due in arrears for the prior calendar year. However, note that Delaware requires corporations owing $5,000 or more for the prior year to make estimated payments for the current (going-forward) year’s franchise tax with 40% due June 1, 20% due by September 1, 20% due by December 1, and the remainder due March 1.
Here are some examples showing how the different methods can dramatically impact the amount of Delaware franchise tax due:
According to the MoneyTree Report by PricewaterhouseCoopers LLP and the National Venture Capital Association (NVCA), venture capitalists invested $29.4 billion in 3,995 deals in 2013, an increase of 7% in dollars and a 4% increase in deal volume over 2012 levels. The full Q4 and FY 2013 investing trends are available here.
A couple of interesting highlights for 2013:
- Internet-specific companies captured $7.1 billion, marking the highest level of Internet investment since 2001.
- Investments into the software industry also reached their highest level since 2000 with $11.0 billion flowing into 1,523 deals, which accounted for 37% of total venture capital invested for the year.
- Biotechnology investment dollars rose 8% while volume decreased 2% to $4.5 billion going into 470 deals, placing it as the second largest investment sector for the year.
- Investments into Seed Stage companies increased 14% in terms of dollars but fell 26% in deal volume, with $943 million going into 218 companies, the lowest number of seed deals since 2003.
- Early Stage investments experienced a 17% increase in dollars and a 15% increase in deal volume, with $9.8 billion going into 2,003 deals.
- Expansion Stage investments increased by 4% in dollars and were flat in terms of deal volume, with $9.8 billion going into 984 deals.
- Later Stage investments experienced a 1% increase in dollars and a 6% decrease in deal volume, with $8.8 billion going into 790 deals.
Employers, from startups to public companies, need to be aware of the following requirements and take action by January 31st if they apply. Section 6039 of the Internal Revenue Code requires a corporation to furnish a written statement to any employee or former employee who either (i) exercised an incentive stock option within the meaning of Section 422 of the Code (ISO) during 2013 or (ii) during 2013 first transferred legal title to shares acquired under the corporation’s employee stock purchase plan within the meaning of Section 423 of the Code (ESPP). This requirement applies to both privately held and publicly traded corporations. The corporation must furnish these statements on Forms 3921 and 3922 no later than January 31, 2014.
IRS return filing requirement for 2013 transactions
In addition to the employee information statements, corporations must file returns with the Internal Revenue Service on Forms 3921 and 3922 no later than February 28, 2014, if filed on paper, or March 31, 2014, if filed electronically. These information returns, Form 3921 for ISO exercises and Form 3922 for initial ESPP share transfers, must be filed electronically by any corporation required to file 250 or more of a particular return and may otherwise be filed either electronically or in paper form.
Employee information statements for 2013 transactions must be furnished no later than January 31, 2014. Information statements may be furnished to employees electronically in accordance with requirements set forth in the General Instructions for Certain Information Returns.
Paper filings of Form 3921 and 3922 for 2013 transactions must be submitted to the IRS with transmittal Form 1096 for each type of return and are due no later than February 28, 2014. However, corporations required to file 250 or more of either type of form must file that form electronically following the procedures contained in Publication 1220. Electronic filings of Forms 3921 and 3922 for 2012 transactions are due no later than March 31, 2014.
For more information on the contents required to be provided in such information statements, as well as links to the relevant forms and IRS instructions, see this recent DLA Piper Client Alert by William H. Hoffman of our Employee Benefits and Executive Compensation Group.
Article prepared by and republished courtesy of our colleagues Andrew Weil, Alec Fraser and Bradley Phipps; originally published here: http://www.dlapiper.com/dodd-frank-affects-private-companies-too-practice-points-to-note/.
The Dodd-Frank Act – signed by President Barack Obama more than three years ago, and since then advanced with a host of rules and regulations – has been widely viewed as a law that addresses systemic risk in the financial system and enhances the corporate responsibility of public companies to shareholders.
Although the substantial majority of the corporate governance, executive compensation and disclosure provisions of the Dodd-Frank Act designed to enhance corporate responsibility apply to public companies, some private companies too are implementing similar controls in their governance structures. Certain private companies are opting to do this, and others are doing it because their investors demand it.
For private companies concerned about reviewing their governance structures in a post Dodd-Frank world, here is a capsule review of the relevant provisions of the Dodd-Frank Act that were crafted to enhance corporate responsibility, plus information on how they may affect private company governance structures. In addition, we take a look at the way the new derivatives regulations affect private companies. Continue Reading
As we’ve previously blogged, in July 2013 the SEC adopted rules that permit general solicitation and general advertising in connection with certain offerings of securities to accredited investors. Yesterday, to help the markets understand some common interpretative questions associated with these new rules, the SEC issued several new Compliance and Disclosure Interpretations. The new interpretations mainly address:
- when and how companies may switch between “old” Rule 506(b) (no general solicitation) and new 506(c) (general solicitation permitted),
- the need to amend Form D if such changes are made,
- the new Rule 506(c) exemption not being ruined by the subsequent discovery that an investor was not accredited, if the issuer had a reasonable belief the investor was accredited at the time of sale,
- and accredited investor verification issues.
The relevant interpretations are in Questions 260.05 through 260.13 — those of you following general solicitation of accredited investors may want to check it out.
There are also two new interpretations relating to Rule 144A (which now permits offering securities to persons other than “qualified institutional buyers,” or QIBs, by means of general solicitation if all sales are to QIBs), which are at Questions 138.03 and 138.04.
As this new and emerging area of law continues to mature, we’ll keep you posted on interesting updates.
Just a reminder that the temporary 100% exclusion for Federal capital gains tax on the sale of “qualified small business stock” (“QSBS”), under Section 1202 of the IRS regulations, is set to expire at the end of calendar year 2013.
The QSBS tax exemption was originally enacted to incentivize investment in certain small businesses by providing (non-corporate) investors the opportunity to exclude all or a portion of their gains from Federal capital gains tax in certain circumstances.
In order to qualify as QSBS, stock must be purchased from a domestic C corporation that (i) is engaged in an active trade or business (as defined by the IRS regulations) and (ii) has gross assets which do not exceed $50 million (measured when the stock is purchased). Further, in order to qualify for the tax exemption, the investor must hold the qualified stock for at least five years from the date of purchase. In addition, the timing of an investor’s purchase of the qualified stock will impact the amount excluded from Federal capital gains tax that may later apply when the stock is ultimately sold, according to the following percentages: Continue Reading
Earlier today, the Securities and Exchange Commission (SEC) took an important step in making securities-based crowdfunding a reality for many small companies with the release of its proposed rules governing crowdfunding. The proposed rules, called “Regulation Crowdfunding,” were drafted in connection with Title III of the JOBS Act. Whereas traditional crowdfunding involves a company offering things like advanced product or information releases, premium services or the ability to contribute to a given cause in exchange for an investment, Regulation Crowdfunding would allow those same companies to issue actual securities (i.e., debt or equity) in exchange for investments—a dramatic shift from what has become fairly common practice on websites such as Kickstarter or Microryza over the past few years.
The SEC’s Regulation Crowdfunding proposal would implement rules governing the offer and sale of securities under new Section 4(a)(6) of the Securities Act of 1933 (Section 4(a)(6)). The proposal also provides a framework for the regulation of registered funding portals and brokers, whom issuers must use as intermediaries in their crowdfunding efforts pursuant to Section 4(a)(6). In addition, the proposal would exempt securities sold pursuant to Section 4(a)(6) from the registration requirements of Section 12(g) of the Securities Exchange Act of 1934. Continue Reading