Legal & Regulatory

7/30/2010

MAPI Legal Analysis: Dodd-Frank Bill Applicable to Most Public Companies

Although the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), which was signed into law on July 21, 2010, is focused on changing the business practices of Wall Street banks and other financial institutions, the legislation also contains several key provisions applicable to most public companies, including those outside the financial sector, and pertain to certain aspects of executive compensation and corporate governance.

In Executive Compensation and Corporate Governance Provisions of the Dodd-Frank Financial Reform Legislation Apply to Most Public Companies (LAR-502), Leslie D. Miller, MAPI Senior Attorney and report author, offers an analysis of the legislation. The broad new provisions cover a number of areas such as executive compensation disclosures, golden parachutes, independence standards for the compensation committees of boards of directors, clawback of incentive compensation, proxy access rules, and rules governing the position of chairman and CEO. This paper summarizes and reviews the most important of these new rules.

The report is available free to MAPI members and $50 for non-members. Click on the link above or contact Jasmine Hopwood, Administrative Assistant, at 703.647.5132 (jhopwood@mapi.net).

Posted at 10:42 AM by 37584 | Category: Legal & Regulatory | Permalink | Email this Post | Comments ()

7/14/2010

MAPI Report: New U.K. Bribery Act, Heightened FCPA Actions Will Impact U.S. Multinationals

By its own admission, the United States Department of Justice is ramping up its anti-bribery enforcement, more than quadrupling its open investigations, and pursuing individuals as well as companies. In April, the United Kingdom passed its own anti-bribery law that applies more broadly, has stricter scrutiny, and imposes tougher penalties than the U.S. law. The result is that companies with a nexus to the U.K. must seriously reexamine their corporate compliance and ethics (C&E) programs – even those with stellar U.S. compliance – and perhaps revise their business practices, according to a new Manufacturers Alliance/MAPI report.

In Reexamining Corporate Compliance Programs in Light of Recent U.S. FCPA Enforcement and the New U.K. Anti-bribery Law (LAR-501), attorney and report author Rae Ann S. Johnson writes that “signs abound that corporate compliance is a global growth industry.”

“Not only are the United States enforcements efforts reaching all-time highs, but now Britain has thrown its own new anti-bribery law into the mix” she said. “Efforts to curb corporate corruption are increasing across the globe.”

The U.S. passed the first international anti-bribery law, the Foreign Corrupt Practices Act (FCPA) in 1977. In April 2010, the U.K. passed its own Bribery Act of 2010. In addition to the U.S. and U.K. initiatives, in November 2009 the Organization for Economic Cooperation and Development (OECD) issued recommendations for its other member countries to adopt corporate international anti-bribery measures. Primary among these recommendations is that countries adopt strong foreign anti-bribery laws, encourage civil and criminal penalties, include accounting requirements and provisions, and emphasize corporate C&E programs and good internal business controls.

“The OECD recommendations are broad and, if fully adopted, could force companies to incorporate stricter compliance efforts,” Johnson said.

U.S. FCPA enforcement is growing with over 130 current investigations this year alone. Moreover, in early 2010 the U.S. government conducted its first-ever FCPA sting operation resulting in the arrest of 22 alleged bribery offenders. In addition, the U.S. Sentencing Commission recently approved changes to the C&E program-related provisions of the Commission’s Organizational Guidelines which strongly encourage the use of an outside advisor to assess a C&E program and the direct reporting of compliance officers to a company’s Board of Directors.

Johnson concludes that the U.K. Bribery Act could become an even greater concern to multinational companies than the U.S. FCPA.

“The U.K. Bribery Act applies to bribery more broadly than the FCPA, including private citizens, creates a new offense for a company’s failure to prevent bribery, and institutes more serious penalties for violations,” Johnson said. “In addition, anyone with a minimal business connection – such as using a third party broker who resides in the U.K. – could be subject to the law. Penalties include up to 10 years in prison per offense plus unlimited fines. By contrast, the FCPA applies only to bribes of government officials, and only allows up to five years per offense, plus possible individual fines up to $100,000 and corporate fines up to $2 million per offense.

“All of these efforts make it important for companies to review current C&E programs to ensure they meet basic criteria and to address the new rules and regulations,” Johnson said.

Posted at 2:38 PM by 37584 | Category: Legal & Regulatory | Permalink | Email this Post | Comments ()

9/30/2009

MAPI Report Analyzes First Circuit’s New Test for ‘Work Product’ and Its Potential Impact on Manufacturers

A recent ruling by the First Circuit regarding the work product doctrine (United States v. Textron) that applied a more stringent standard in determining what qualifies for work product protection could have far ranging implications for manufacturers.

A Manufacturers Alliance/MAPI report, When Protected “Work Product” Isn’t (LAR-500) provides an in-depth review of the work product doctrine, an analysis of the First Circuit decision and rationale, and the potential repercussions for manufacturer-prepared documents.

The work product doctrine is a tenet of law that protects information relative to litigation from having to be shared with opposing parties. The doctrine applies to items generated not only by attorneys, but also by representatives of attorneys. This distinction is important, particularly to manufacturers, because it ostensibly provides protection to work papers generated by company specialists such as tax accountants, environmental engineers, and product safety engineers, among others, acting as agents of an attorney on behalf of a company.

Reversing a consistent trend from most other federal appeals courts, the First Circuit’s recent Textron decision seems to have established a newer, stricter test for whether business documents merit work product protection. The paper, authored by MAPI attorney Rae Ann S. Johnson, provides an historical analysis of the doctrine and discusses what impact the First Circuit decision may have on the protection of business documentation in the future.

To order, click on the title above or contact Iesha Ward at 703.647.5119.

Posted at 1:52 PM by 37584 | Category: Legal & Regulatory | Permalink | Email this Post | Comments ()

9/23/2009

MAPI Report: Border Adjustment Provision in House-Passed Climate Change Bill Could Test U.S. WTO Commitment

The U.S. House of Representatives recently approved H.R. 2454, the American Clean Energy and Securities Act. The bill would, over time, seek to reduce greenhouse gas (GHG) emissions in the United States.

A new Manufacturers Alliance/MAPI policy review, International Trade and the Environment: Will “Green Tariffs” Cause a Trade War, analyzes controversial provisions in the bill which are designed to protect the competitiveness of U.S. industry by imposing tariffs on carbon-intense imports from countries that are less strict in controlling their GHG emissions. MAPI Vice President, General Counsel and Secretary and report author Frederick T. Stocker concludes that these “green tariffs” may run contrary to certain obligations of the United States as a member of the World Trade Organization.

The report examines this potential conflict and reviews the possible reactions of U.S. trading partners to its imposition of these unilateral “border adjustments.”

To order, click on the title above or contact Iesha Ward at 703.647.5119.

Posted at 9:59 AM by 37584 | Category: Legal & Regulatory | Permalink | Email this Post | Comments ()

5/5/2009

MAPI Analysis Sees EPA Findings and Rule on GHGs Possible Precursor to Cap-and-Trade

The Environmental Protection Agency (EPA) signaled a major shift in it policies by recently finding greenhouse gases (GHGs) are a danger to public health and by proposing mandatory GHG reporting starting on January 1, 2010. According to a Manufacturers Alliance/MAPI report this determination could be a precursor to the regulation of GHG emissions, possibly through a cap-and-trade system.

First Steps Toward Cap-and-Trade: EPA Calls Greenhouse Gases Dangerous to Public Health and Proposes Mandatory GHG Emissions Reporting (LAR-499) summarizes both the rule and the endangerment findings, provides links to supporting documentation, and describes potential transactional issues for manufacturers to consider as they strategize compliance efforts.

The mandatory reporting proposal is an important change, with many conceivable short- and long-term impacts for the manufacturing sector. In the short term, industry will likely be required to conduct additional monitoring and reporting on GHG emissions. In the long term, this is likely just a first step toward greater GHG regulation, and may foreshadow the U.S. adoption of a cap-and-trade system.

The analysis includes a summary chart of rule requirements, other related documents and a comprehensive appendix of materials for easy use and reference.

Posted at 2:33 PM by 37584 | Category: Legal & Regulatory | Permalink | Email this Post | Comments ()

1/22/2009

Report Reviews Key FMLA Rule Changes and New Rules

A Manufacturers Alliance/MAPI report offers in-depth analysis of revised Family and Medical Leave Act (FMLA) regulations implemented by the Department of Labor’s Wage and Hour Division.

In U.S. Department of Labor Issues Final Revised Family and Medical Leave Act Regulations (LAR-497e), the report concludes that some compliance requirements of employers and employees are increased while others are improved.

Overall, employers should find many of the rule changes have made it somewhat easier to administer FMLA leave. Nevertheless, the FMLA leave procedures remain complicated, with numerous notice and document requirements employers and employees must satisfy at various phases. Moreover, statutory expansion of the FMLA enacted in 2008 and reflected in the revised regulations (effective January 2009) to include military family leave has added to the compliance obligations of employers.

The report highlights that the revised rules enable employers to ultimately administer FMLA leave somewhat more effectively and efficiently, especially in areas that have been of considerable concern in the manufacturing sector, namely the taking of unscheduled intermittent leave and the medical certification process. It also discusses potential leave scenarios and commensurate applications.

Posted at 2:24 PM by 37584 | Category: Legal & Regulatory | Permalink | Email this Post | Comments ()

11/4/2008

MAPI Council Members, Companies Fill PCAOB Advisory Group

On October 30, 2008, the Public Company Accounting Oversight Board (PCAOB) announced the members of its Standing Advisory Group for 2009-2010. It includes two members of the Manufacturers Alliance/MAPI Internal Audit Councils as well as representatives from six MAPI member companies.

Douglas J. Anderson, Corporate Auditor for The Dow Chemical Company, and Warren E. Malmquist, Vice President, Global Internal Audit and Ethics, Molson Coors Brewing Company, are members of the MAPI Internal Audit Councils and appointees to the PCAOB 2009 Standing Advisory Group. Anderson is a new appointee while Malmquist is a current member.

The PCAOB is a private sector, non-profit organization, created by the Sarbanes-Oxley Act of 2002, to oversee the auditors of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports.

In addition to The Dow Chemical Company and the Molson Coors Brewing Company, MAPI companies represented on the PCAOB 2009 Standing Advisory Group include General Electric Company, Medtronic, Inc., Sara Lee Corporation, and Xerox Corporation.

“It speaks to the professional respect and broad insights of Internal Audit Council members like Doug and Warren and other MAPI corporate members that they are invited to be active participants in such an important and worthwhile effort,” said Tracy Hollingsworth, MAPI Vice President, Finance.

Posted at 11:39 AM by 37584 | Category: Legal & Regulatory | Permalink | Email this Post | Comments ()

10/21/2008

MAPI Report Analyzes Health Provisions in Economic Rescue Bill

The recently enacted Emergency Economic Stabilization Act of 2008, generally referred to as the “financial bailout bill," contains some sweeping new provisions directing group health plans to offer mental health benefits at parity with medical and surgical benefits.

A Manufacturers Alliance/MAPI report, New Private Health Plan Requirements: Mental Health and Substance Abuse Parity Provisions Included in Financial Rescue Legislation (LAR-496e), provides an overview and explanation of the Mental Health Parity Act (MHPA).

Leslie D. Miller, MAPI Senior Attorney and report author, argues that it is highly likely that health plan sponsors will incur some increased costs in providing mental health and substance abuse benefits as a result of complying with the new MHPA provisions.

Employers may request a one-year exemption if additional cost projections are satisfied. An exemption is only available, however, after a plan has first made the changes to comply with the parity requirements and those changes have been in place for six months.

The report concludes that there is the possibility that when faced with the additional costs of providing mental health parity, rather than utilize the temporary exemption, some plan sponsors will instead choose to reduce the types of mental health conditions their plans cover.

The review offers a brief historical perspective of the legislation and provides detail as to its components.

Posted at 11:35 AM by 37584 | Category: Legal & Regulatory | Permalink | Email this Post | Comments ()

10/7/2008

IRS Allows CFCs to Make 60 Day Loans to U.S. Parents

Last Friday IRS issued Notice 2008-91 (below) which extends the period for which a U.S. parent can borrow from a CFC from 30 to 60 days. The Notice explicitly states that its purpose is to “facilitate liquidity in the near term.” In 1988 IRS announced in Notice 88-102, 1988-2 CB 445 that final regulations under Section 956 would exclude certain short term loans (those collected within 30 days from the time incurred) from the definition of an “obligation” that constitute an investment in U.S. property. As noted, the current notice extends the 30-day period to 60 days.

Tracy Hollingsworth

Vice President, Finance and Director, Tax Councils

"Part III - Administrative, Procedural, and Miscellaneous
Treatment of Certain Obligations under Section 956(c)
Notice 2008-91

SECTION 1. OVERVIEW
Section 956(c) defines United States property generally to include an obligation of a United States person. On September 16, 1988, the Internal Revenue Service and
the Treasury Department published Notice 88-108, 1988-2 C.B. 445, which announced that final regulations issued under section 956 will exclude from the definition of the term "obligation" an obligation that would constitute an investment in United States property if held at the end of the controlled foreign corporation’s taxable year, so long as the obligation is collected within 30 days from the time it is incurred. This exclusion shall not apply, however, if the controlled foreign corporation holds for 60 or more calendar days during such taxable year obligations which, without regard to the 30 day rule described in the preceding sentence, would constitute an investment in United States property if held at the end of the controlled foreign corporation's taxable year.
See S. Rep. No. 103-37, at 178 (1993) (“The bill is not intended to change the measurement of U.S. property that may apply, for example, in the case of short-term obligations, as provided in IRS Notice 88-108”).

SECTION 2. TREATMENT OF CERTAIN OBLIGATIONS UNDER SECTION 956(c)
Recently, circumstances affecting liquidity have made it difficult for taxpayers to fund their operations. To facilitate liquidity in the near term, this notice announces that the Internal Revenue Service and the Treasury Department will issue regulations under section 956(e) that, for purposes of section 956, a controlled foreign corporation (within the meaning of section 957(a)) may choose to exclude from the definition of the term "obligation” an obligation held by the controlled foreign corporation that would constitute an investment in United States property provided the obligation is collected within 60 days from the time it is incurred. This exclusion shall not apply, however, if the
controlled foreign corporation holds for 180 or more calendar days during its taxable year obligations that, without regard to the 60 day rule described in the preceding
sentence, would constitute an investment in United States property. This notice does not otherwise affect the application of Notice 88-108. A
controlled foreign corporation may apply this notice or Notice 88-108, but not both.

SECTION 3. RELIANCE ON NOTICE
This notice shall only apply for the first two taxable years of a foreign corporation ending after October 3, 2008. Thus, if a foreign corporation has a calendar tax year,this notice shall apply for the foreign corporation’s taxable years ending December 31, 2008, and December 31, 2009.

SECTION 4. DRAFTING INFORMATION
The principal author of this notice is Ethan A. Atticks of the Office of Associate Chief Counsel (International). For further information regarding this notice contact Mr.
Atticks at (202) 622-3840 (not a toll free call)."

Posted at 11:26 AM by 47966 | Category: Legal & Regulatory | Permalink | Email this Post | Comments ()