How do i industry sign banking delaware claim
good afternoon everyone and thank you for attending today's webcast on delaware unclaimed property compliance before i introduce our speakers and get into the presentation i'd like to tell you a bit about devon selves Stefan Phelps is the global advisor that protects stores and maximizes value for clients and areas of valuation corporate finance beats and investigations compliance and regulatory matters and other governance related issues we have over 7500 clients which include the leading companies across all industries including over 60% of the Fortune 100 companies and 50% of the fortune 500 kept over 3,000 professionals located in 70 offices in 20 countries around the world just a few quick housekeeping items before we begin you will be eligible for CPE credits by attending and listening to today's webcast you will need to answer all the questions that are placed throughout the presentation polling questions to be eligible for CPE and you may download your CPE certificate at the end of the presentation by clicking in the certification box on your webcast console I encourage you to submit questions throughout the presentation you can submit questions electronically through the webcast console we don't have a chance to answer every question we will be sure to follow up either with you directly after the webcast please note that all questions will be posed anonymously to our panel today you can download a copy of the slides under the resource widget on your console a recording of today's webcast will be posted to our website and distributed to all attendees along with a copy of the slides so now let's get started I'd like to begin by introducing today's presenters my name is Scott Regan I'm a director at Duffin Phelps in Philadelphia it's a pleasure to address you all today I'm also joined by Sonia Walden a director in our clan property group in Chicago Sonya thank you for joining us you're welcome spot Scott good afternoon everyone thank you I'd also like to introduce our guest today Brenda my rack brenda is statist reader and director office of unclaimed property at Delaware Department of Finance Brenda thank you for joining us thanks Scott so folks as you can see here today is our agenda we'll cover a very basic and briefly an overview of unclaimed property and section too Brenda will give her remarks on an overview of Delaware's unclaimed property program section three Sonya will compare and contrast Delaware's voluntary compliance and other programs and then in section four will address your questions as you can see on this slide these are our learning objectives for today's presentation which we're required to present and post or CPD credit we'll be providing a complete and hopefully thorough overview of all areas of unclaimed property compliance in Delaware so here's our first polling question why are you attending this webinar and the possible responses are you're responsible for unclaimed property compliance at your company your firm is considering unclaimed property compliance for the first time your firm is under unclaimed property audit or your boss may do please submit your answers like 75% have indicated that they are responsible for unclaimed property compliance at their a company and we've got a few folks that say they're under audit and a few who are honest and said their boss made him attend so we certainly appreciate that all right let's begin so unclaimed property has been around for many years in the United States many people may not know that it dates back to English common law in the feudal times all 50 states including Washington DC five territories outside the US and three Canadian provinces have laws and these laws are often Stowe Deol in nature in essence the state the states are standing in the shoes of the rightful owner of the property and their safekeeping that property for the benefit of all folks in the States purpose of the laws of course is reunification and safekeeping but this is an important source of temporary funding for many states so property that has not been claimed by an owner for a specific period of time is called the dormancy period and that's considered abandoned property after a holder and most of the folks on this phone would be considered holders after a corporation held on to a piece of property or for a particular period of time that's defined by each state they must file an annual report with that state and remit the property to the appropriate jurisdictions all property must be fixed in certain and what that means is you have to actually got what you paid for that's the offer consideration and acceptance the unclaimed property rules the way the states manage this is defined by Supreme Court case in 1965 called Texas versus New Jersey and it established their priority rules so priority rules the first priority rule is to report to the state of the last known address on your books and records that's the number one priority if you have a customer in Pennsylvania then Pennsylvania's law takes precedence over that over that property and that's filing if there is no address or if it's a foreign address the second priority rule comes into effect and that states that you would remit and report that property state of incorporation number of reasons why you may not have an address typical reasons could be data systems conversion or it's beyond the limit of your record retention though three priority rule is very important there are a lot of different property types to keep in mind I'd say the big three of course are trade ap or accounts payable and vendor checks wages and payroll and then what we think of as customer credits or accounts receivable credits probably the biggest if you're if you're think about where to look those are the the big three there are a number of other property types we've listed some of them here some of them are related to stocks and bonds and banking property types but certainly allowed to consider so uniformity the you know many would say that there's not a ton of uniformity in the states of course the states have to pass laws that it's a benefit of everyone in their particular jurisdiction there has been an effort to gain a bit more uniformity the Uniform Law Commission first established uniform unclaimed property Act in 1924 and they revised it in 1981 in 1995 recently in July of 2016 during its annual meeting the ulc passed a new reformed unclaimed property act what we in the industry call Rupa and so we begin to see states enact legislation that's inspired by Rupa Delaware in fact was an early adopter of a Rupa styled unclaimed property act which they enacted with Senate bill 2013 in February of 2017 and so moving forward we're expecting to see more and more states pass acts that would be based on Rupa of course and that should I think help with uniformity but there always will be some nuances for each jurisdiction because each legislature is responsible for ensuring that the laws satisfied the needs of all those in their states and so what you might see in terms of you know a little bit of differences in each would be you know different dormancy periods by different property types you might see different due diligence requirements different filing deadlines and different reporting and remaining protocols so before we move on to a random a rocks portion it's time for our second polling question what is your company's state of incorporation is that Delaware Nevada California or none of the above there were an audience of 30 seconds to respond so looks like we've got seven about 75% in Delaware none in Nevada got the 6% of the companies who responded to their corporate in California and 20% said a different state really relevant audience for today alright with that I'm going to hand it off to Brenda in Iraq Brenda thanks Scott and I'd like to thank Delfin Phelps for putting this webinar together I always appreciate any opportunity that I have as we save a sheeter to speak directly to holders and to the folks at their companies who are responsible for unclaimed property compliance about the Delaware program and what we're trying to do here I was appointed to this position just about two years ago in January of 2018 prior to that I I'm trained as an attorney and I've worked as an attorney representing holders who are actually under audit by Delaware and other states so I I come from the other side and certainly by design with with my appointment so I am a political appointee appointed by the Secretary of Finance Ric Eisenberger and given the direction to really bring this program and address some of the I think rightful criticisms that have been levied by folders and by the holder community about the program and be sure that we are running a program that is fair transparent and efficient for Delaware corporations so this first slide gives you a sense of the structure of our program as you can see again I'm look I'm an appointee of the Secretary of Finance the Delaware office of unclaimed property is its own office in the office of the secretary we are distinct from the other four divisions of the Department of Finance which are the division of revenue division of Lottery and division of accounting and Delaware's unique amongst data unclaimed property programs in that we have a voluntary disclosure program that is actually placed in a completely separate agency and that is the Department of State and it's overseen by deputy secretary krysta Knight and the reason for that is again Delaware recognizing that it is a favorite corporate jurisdiction for 1.3 million legal entities we want holders in the first instance to voluntarily comply with all of our laws including unclaimed property laws and so the Department of State administers our voluntary disclosure agreement program which I'll talk about a bit more later the office of unclaimed property has two main branches first is compliance and this is the group that really handles the operations and logistics of holder reporting managing securities and then also processing claims and then we have our enforcement side which oversees our audit programs and our voluntary box our compliance review program and of course we no longer have a voluntary Colin Terry disclosure agreement program that's run by the Department of Finance that program was completed in June of this year so Delaware primarily brings in unclaimed property in three ways annual filings voluntary disclosure agreements which are of course administered by the Secretary of State and then unclaimed property exams and the state's preference is really for unclaimed property to come in in that order in the first instance we prefer that holders are filing annually and that they are complying with their obligations to Delaware and on a multi-state basis to file and claim property if a holder has a historical liability and they'd like to come forward in an interest in penalty-free opportunity then we have the VDA program as a last resort and only for those holders who have not availed themselves of the first two options then we do have to have a robust enforcement program most the experience of most states is that without that in for program voluntary compliance and filings really do fall off so that's how property comes in the state maintains it forever in perpetuity and then claimants can come forward and claim that property with the proper documentation and as I'll mention at the end holders are also owners and thus potentially claimants of unclaimed property as well moving to the next slide this gives you a sense again of how property comes in the data is from fiscal year 18 but it's fairly stable from year to year again over 60% of our property is coming from annual filings and and that is what we want to maintain going forward the next largest portion comes from voluntary disclosure agreements again companies who recognize that they maybe haven't been as compliant historically as they should have been or they've acquired a company that wasn't as compliant they're coming forward voluntarily to to get a clean bill of health historically and then the small component but again a necessary component comes from exams and the breakdown of cash property versus securities property over 61% is coming from securities and that that's unique for Delaware bond as opposed to other states so just we get a sense of the overall landscape as I said Delaware has 1.3 million legal entities we're a favored jurisdiction for many large companies two-thirds of the fortune 500 and that's because of our reputation for efficiency predictability and fairness in our corporate laws in our court system our Court of Chancery but despite having that many legal entities we really only see annual filings from 10,000 companies now I certainly wouldn't expect that we would have 1.3 million legal entities certainly many of those are holding companies there are subsidiaries who are filing on a consolidated basis but I think it's pretty clear that there's some number between 10,000 and 1.3 that should be filing on claim property in Delaware and isn't and so that's really where our outreach education and enforcement efforts are focused is on getting those filers holder's who should be filing but are not to start filing and there can be many reasons for that as I mentioned you know parent-subsidiary or maybe you have a company that's filing securities and disbursements but they're not filing credits or you have a company that's been filing and then the person who is in charge of it retires and it's not picked up as a responsibility going forward by someone else so even companies who have had a filing history might have a gap and then of course we're focused on the opportunity to get companies that should be filing but aren't to start annual filing again as I mentioned going to the next slide our priorities for holders we want holders to be filing on an annual basis and knowing that I'm talking to people at companies who are in charge of unclaimed property my advice to you is if your company is not reporting annually start reporting and there are certainly resources out there like Duff Duff and Phelps who can help manage that process which I acknowledge is complex and constantly changing fifty different state laws different deadlines different requirements but if your company is not currently reporting my advice is to start reporting if your company has a historical exposure then Delaware has the VDA program many other states also administer a similar vda program where companies can come forward on a historical basis and and bring their reporting the current and then enforcement as I mentioned is viewed as a last resort it's viewed for those holders who have not availed themselves or the first two options and it's needed to promote compliance because any any voluntary reporting regime whether it's personal income tax or unclaimed property or otherwise requires that enforcement component or the threat of enforcement to see higher and better rates of voluntary compliance and an exam would be a view of the books and records and it could involve interest in penalties Delaware has four annual reporting a dormancy period of five years for most property types for securities we do have a shorter dormancy period three years we made the switch to online reporting two years ago where we were accepting filings on paper or on disk we now require that all holders submit an online report which is called a knop of file it's a standardized data file that our website is able to accept via upload for holders who might only have a few properties due to Delaware we do have an option that allows those properties to be input manually and individually but really for large companies that may be reporting dozens or hundreds of items it's better to construct the Natha file and certainly that's something that doesn't Phelps was able to help with on a multi-state basis our deadlines are throughout the year we have a shorter smaller fall reporting period that were actually in the middle of so banks have a November deadline insurance companies have a December deadline and then all other holders most companies would have a spring deadline of March first we do accept negative reports they are not required and we do require owner outreach which is cal
ed the industry a due diligence letter is required for all cash property over fifty dollars and for any securities property part of my initiative as data sheeter has been to increase our outreach and education efforts to holders which includes webinars such as this but once you start filing with Delaware you will get a reminder letter each year reminding you of your obligation to file and and how again if there is a need for an extension to to file we are happy to accommodate that mostly we just want to know that we're in touch with you and again as I mentioned voluntary disclosure agreements are administered by the Secretary of State I'm just going to the next slide Department of Finance no longer has a voluntary disclosure program as a June of this year our process now and we had a very significant change to our law in 2017 the enactment of Senate bill 13 as Scott mentioned which adopted Ruffa and many parts of Rupa now holders prior to receiving an exam notice will always get an invite from the Secretary of State to participate in the VDA program and that's a statutory requirement upon receipt of that invitation the holder has 60 days to opt in to the Secretary of State's PDA program the VDA is a holder directed program the holder will be able to determine which entities are in scope which property types are in scope which gears are in scope the holder will have much more flexibility about methodology and testing in the context of a BBA program and so upon invitation or even without an invitation a holder can opt into the VDA program at any time the holder can basically get a clean bill of health and become current on any historical liability that might be out there and that's done with a full waiver of interesting penalties in the VDA program so holders have that option either on their own or after the receipt of an invitation from the Secretary of State to conduct a voluntary disclosure agreement outside of that as I said as a necessary last resort for holders who are not filing annually and have not entered the VDA program we have our enforcement programs which are the responsibility of the office of unclaimed property a relatively new program that we have is the annual compliance review program and this was established by Senate bill thirteen two years ago and this is a vehicle for our office to give holder annual reports a closer look it's not an exam but it is a chance for our office to review the ending report make sure that it's complete and accurate make sure that due diligence or owner outreach is occurring correctly it's an opportunity for the holder to remedy any errors or oversights that may have occurred in that most recent annual filing and it's also been a really good educational opportunity for us to talk with holders about reporting online reporting in compliance with the correct deadlines and and for holders who say do not have any unclaimed property due to the state of Delaware one thing that we do ask for is a copy of the company's policies and procedures that govern unclaimed property my view is that particularly for holders who've completed an exam or if completed of EDA if you are filing annually with Delaware and you're filing what's called a negative report or a zero report basically stating that no unclaimed property is due to the state is that that reports a result of a robust and deliberative process to review the books and records and ensure that no unclaimed property is due to the state so part of that annual compliance process which which really is just to kick the tires that that we conduct on select holders each year we will ask for a copy of the company's policies and procedures the most important thing with an annual compliance review if you get that letter is to respond to it ignoring the letter ignoring our follow-ups is a pretty fast track to escalation and referral to the VDA program or an exam notice that we are conducting this entirely in-house at this point we have state employees who are who are conducting this program and we really just look for cooperation from the holders who are already compliant and already filing just to do this quick check of their report going to the next slide we're selecting holders right now we're still really in a pilot stage we do plan to promulgate regulations to show what what this program is and what our standard communications are but what we'll flag a holder for a potential compliance review is filing and then having a year where there's no no report filed or filing a significant amount of property and then filing a zero report being a particular property type drop-off of reports so you you've maybe been historically filing disbursements and securities and accounts receivable and then we don't see we maybe see a securities filing one year but we don't see the general ledger side filing and this program has been successful I think one of the best things is we've been able to communicate with holders and educate them about how to make their and reports more accurate and and better and we've learned a lot from the process as well so that's one aspect of our enforcement program the other part is moving on in the next slide our exam program and as I mentioned any holder will receive an invitation to the VDA program but from the Secretary of State if they do not opt into the VDA program after 60 days then we will send an exam notice and all holders who do not opt into the VDA will receive that exam notice the exam if it might be over relatively quickly if the holder is cooperative with document requests and there's a finding that there's there's no material liability it could wrap up pretty quickly or it could take longer and that's why all holders have that opportunity first to come forward voluntarily we've made some changes in collaboration with the Secretary of State about how those EDA notices or invitations go out we have started mailing a copy of them not only to the company usually to the CFO but also to their Delaware registered agent and we've seen and improvements in the number of companies that are opting into the mediated program so two years ago we probably had about 10 to 15% opt-in rate now those opt-in rates are well over 50% in approaching 60% which for my point of view is a success because the holistic overall program and success of the Delaware unclaimed property program again it's based on annual filing voluntary compliance through the VDA program and then exams as a last resort so whether a holder is coming forward through the VDA program that's that's really preferred I think really the only folks out there can probably aren't happy about the increase in VTA elections are the contract audit firms that we employ for this but that I'll handle that that's okay or so we think that by copying the Delaware registered agent that these invitations are getting to the decision-makers at the company faster who can then evaluate the liability picture and the risks involved and can make that decision to opt in again what most Native Delaware's point of view we we view that as a success we would rather have companies going into the VDA program that's run by the Secretary of State than having to go under a compulsory audit for those holders who do not opt into the VDA then we have the exam process the exam of course is state directed the state will determine which entities are in scope which property types are up scope the look-back period is dictated by our statute we now have a ten year left dormancy look-back period which is in effect 15 years interest and penalties are a possibility we expect that holders respond to all of our document requests within 30 to 60 days and if not there will first be a warning letter from the state that we call a 30-day letter and then the next step if we don't have cooperation would be the issuance of an Ministry of subpoena and generally all exams should be able to be completed within two to three years and the extent holders are able to devote the necessary external and internal resources to the exam and comply with the document requests and get the auditors the documents they need to move it forward it is possible to complete an exam in that amount of time and currently we're at the tail end of what's called the expedited exam program and the experience we've had from that program suggests to me that when there is a deadline and when there is a sense of urgency exams can get done much more quickly than they historically maybe have so again exams that enforcement tool is viewed by the state as a last resort but it is a necessary component of our program so now clicking to the other side I mentioned claims briefly Delaware has really improved its performance in unclaimed property claims which is of course returning property to the rightful owners we moved from paper claims to a completely online system we have a website that's available 24/7 365 where property owners and claimants can search for property that might be due to them or their family members they can submit their documents online I mentioned this to companies because holders are also owners and you would be surprised how even the largest and most sophisticated corporations still will have unclaimed property that is due to them from their vendors and the other businesses that they may be interacting with so in addition to focusing on your company's compliance I'd encourage everyone to consider doing multi-state searches to see if your company or any of its legal entities are actually owed unclaimed property and filing claims there can be significant recovery there of course from Delaware's point of view we do require that claimants who are claiming property on behalf of a business that they establish their identity that they establish that they have authority to claim unclaimed property on behalf of their business and then for any property we require proof of a holder relationship or a right to the property which can vary again depending on whether it's an individual consumer someone coming forward on behalf of a deceased relative or in a state or a business claim so there can be some process to that to get the claims passed and this the state has really had to we've had to adjust because there is an awareness out there that the states are holding submiss against amount significant amounts of unclaimed property and unfortunately what that has brought out is a lot of fraudulent attempts to get that property so states have had to react to that and increase some of their requirements which can sometimes admittedly make it difficult for legitimate claimants to get their property but we're trying to strike the right balance so that the rightful owners do get their property so finally I will wrap up again I appreciate the opportunity to talk directly to the people employed by holders who are in charge of their unclaimed property programs and what can you do I would encourage you to implement robust policies and procedures to ensure that you're tracking unclaimed property that you're trying to get it back to the owners and that you're filing annual reports with Delaware and with all states that you comply with those annual reporting deadlines if you are not reporting annually to Delaware you should start filing annually and if you think there's a historical liability consider the VDA program in Delaware or in other states you should initiate a program at your company to look for unclaimed property that might be owed to your company and if you do receive correspondence from the state of Delaware regarding unclaimed property treat it seriously and respond in a timely manner that might be a reminder about your uncle your annual filing it might be an invitation of the VDA program it might be an annual compliance review request or it might be a notice of exam and the faster that that correspondence is escalated to the right decision makers at your company I think that that gives your company the best opportunity to become compliant and to make sure that the resources are available so that concludes my presentation again I appreciate the opportunity and I look forward to your questions Thank You Brenda now it's time for our next polling question what method are using to file unclaimed property reports software a manual process outsourcing or not filing yet if the audience a moment to submit their answers looks like about 53% are using software around 33% or using a manual process zero outsourcing and 13% not fouling yet so moving on to our next section I'm going to invite Sonia Walden my colleague to talk about the comparisons of Delaware's voluntary compliance versus auto programs Sonia thank you Scott Grenda just just informed us of the various ways in which accompanies can gain compliance in the state of Delaware one being the voluntary disclosure program and the others we've also learned that the state has the ability to use enforcement actions in the form of an audit so as we think about voluntary disclosure programs and audits there are similarities and distinct differences in the review processes for both and I'm just going to take a few minutes to highlight some of these but just to reiterate one of the points that Brenda made if your farm receives an invitation to participate in Delaware's video program it is absolutely advisable that you consider this and the issue that we've seen with respect to a lot of our clients is that sometimes that letter does not make its way to the right representative so we want to encourage those of you that are that up but but participated in the webcast today that you let your c-suite know you certainly let your Delaware read registered agent know to be on the lookout for these letters so if they come in that they are forwarded to the right representative so that that 60-day period can be utilized and you have the ability to certainly participate in the program so let's look at the some of the distinct differences between the VDA s and the audits so when we're in the review process the way in which the data is used to comprise the population is it developed using what we call the aging criteria and that determines what property do we need to look at to review to remediate to demonstrate your compliance new policies and procedures well in the video process the agent criteria is property greater than 90 days so if you're looking at voided checks you look at check that avoided greater than 90 days if you're looking at outstanding checks you're looking at that standing checks checks that are outstanding greater than 90 days and the rationale behind this is that the periods prior to 90 days are part of the company's normal policies and procedures are your normal business practices so therefore these items are likely not going to lend themselves to unclaimed property and would be resolved so we have a 90 day aging criteria if you're in the VDA if you're in the audit the agent criteria looks very different it is greater than 30 days for voided checks greater than 90 days for outstanding checks and we've seen auditors also using greater than 30 days with respect to accounts receivable credit balances so again the greater than 90 end of the video and then sort of a smattering of 30 to 90 on the audit side the base period what period are we going to use to test your compliance what are the years for which we have vote available and researchable records well we're in the VDA we are looking at pretty much the two oldest continuous years and this is where again we have records that are both available and researchable in the audit we're looking at at least three years within the researchable universe so again that difference of a year could certainly make make a difference credit for historical filings both the video and the audit will give you credit but the way in which the credit is applied tends to differ on the audit we tend to see more stipulations apply to the application of the credit as as opposed to the video side and and and the credit comes in again we talked about Brenda mentioned the the me well Delaware has a process whereby the year so which records are not available gets to be estimated and for those periods if you have property that has been filed with other states you get a credit again is any sort of estimated liability so that's why the cr
dit for the historical period becomes becomes relevant the base period for estimating calculations on the VDA side we have clients that like to use actual expenses and we have just found that when we're looking at the VDA there's generally more acceptance of not just using revenues but we could actually use parallel expenses we could actually use accounts payable expenses on the audit side it's a little bit more stringent they like to use revenues and we get it they like it because they can type back to a tax return and they have some comfort that they're looking at numbers that has some levels of consistency but again just some of the distinctions that a difference is that we've noted Brenda mentioned the abatement of interest in penalties on the VDA side and that is automatically waived the audit side interest is generally imposed although Delaware statute does provide means for Bateman if there is good cause that is at the direction of the state but generally on the audit we see interest and interest being opposed and certainly on the video side that is waived remediation this is one of my pet peeves on the audit side definitely very aggressive with respect to the documentation that's provided on the video side much more leniency we can demonstrate that the obligation has been satisfied no obligations owed to a third party on the video slide it tends to be a lot more pushback as to how specific you need to get even though you can show that the liability has been satisfied there's still questions with respect to linkage and is this entity related to that entity which gets to be very very convoluted with respect to getting items are remediated as was mentioned under the review on the vdh self-directed so you have much more latitude under the audit it you know the review process is driven by the audit so you certainly have much more stringent criteria which you need to work with and the timeframe audits generally take longer than VDS Brenda mentioned that the Delawares guidelines we can see audits being completed sooner than the timeframes that we've seen in the past but the videos definitely tend to get completed within a shorter period of time now let's take a look at some of the similarities the scope of review is now consistent we're now looking at a fifteen year look-back we're looking at a five year dormancy plus 10 year 10 year 10 years for review of property so a 15 year look-back statistical sampling we utilized in both the VTA and with respect to the audits one thing though if you and the VDA need to be cognizant of the gross back and the gross up because once you do a statistical sample you need to make sure you take that potential liability back to the full population so you can make sure that you have you've quantified your total liability sometimes that's missed in the process and both V Das and the audits you utilize estimations and this is done as I mentioned earlier where records are no longer available or they are not researchable DeLuise methodology with respect to estimations has remained unchanged and it's applied consistently in both audits and videos today so the video program again it's a self-directed process and the video program allows the company to avoid spending a lot of time trying to educate the auditor because books in our industries or different practices are different the things that generate or have the potential to generate unclaimed property could be different when we're in the video we're not having to take the time to educate the auditor with respect to that we can get right to it and we can certainly do that on the back end but certainly it makes it a more efficient process on the front-end VDA is generally focused on Delaware only we're just looking at Delaware only property when we looking at audits in Delaware the audits are conducted by third-party audit firms and they have contracts with numerous states so you're generally not looking at a Delaware only audit you're looking at what's called a multi-state audit so this is one of the reasons why sometimes the audits take take longer than than the VDA so again it's in the video you get to focus just on Delaware and then focusing just on Delaware you now have the opportunity to determine what your compliance obligations are with respect to other jurisdictions do they have video programs as Windham mentioned or do you have other compliance options that you can take advantage of to make sure that your company is now fully compliant Delaware in its guidelines certainly recommends the use of an experienced adviser to get you through either the VDA or the audit we certainly condone that companies have the experience to help guide you through this process in a much more efficient way both speedy is in order to require a significant commitment of internal resources and this is important in order to keep the process going and in order to ensure ensure that we have the kind of momentum with the cooperation that we need from the various business units we recommend that we should have senior management involved at the very beginning that sort of creates and generates the full cooperation that we need to embarrass departments education also helps to if we're going to ask groups to assist us and remediated items it's helped it's helpful for them to understand why they're doing it the impact to the company and this again also adds to the the environment of just a more efficient both efficiency of the review and at the end as Brenda mentioned we want to ensure that we certainly recommend that we have policies and procedures in place this is not important to avoid this process it will certainly minimize sort of the pain if you have to do this again in the future in with that I am going to turn it back to Scott for the next polling question Thank You Sonja our next polling question what method does your company employ to recover unclaimed property manually looking up your company's name on missing money calm you get you folks get calls all the time from on one-off properties from vendors we have a vendor that comprehensively recovers unclaimed property or we have not attempted to recover unclaimed property I'll give this one another moment I'm understanding there may be a lag if anyone had tried to answer a question I was unable to and you want your CPA we'll just be sure to take care of that at the end looks like we've got 35% missing money 15% get those one-off calls 26% use a vendor and 23% haven't started that process so before I move on to questions which will come up next just a brief overview of how we help here at Devon Phelps I say it's broadly in three categories one is assisting with you know disclosure programs like Delaware's voluntary disclosure program and assisting with other programs as well generally speaking on an outsourced basis helping what's prospective ongoing compliance and then thirdly helping companies identify figure out where unclaimed property may be residing that they can go out and recover so if there's any questions on that feel free to shoot me an email all right audience questions and we did get quite a few so we're going to go in chronological order and I'll pose these questions to Sonja and to Brenda so here's one says what our priority rules when a holder is an LLC or partnership Brenda is that a good one for you to answer sure I think weather might there may have been some question about whether the term incorporation applied to those alternative entities I think ISM I think the uniform unclaimed property act the most recent one from 2016 and I think it's a fairly settled question that whatever the state of legal formation of the of the legal entity whether it's a corporation an LLC or another another legal entity that that would be the second priority state so holders of course based on the books and records would first report property to the state of the last known address and then if there is no last known address or the last known address is in a non-us jurisdiction of foreign jurisdiction it would go to the second priority state which would be the state of corporation which is colloquial colloquially used or the state of legal formation depending on the type of legal entity good thank you and Brenda another one is if you offer negative reporting but don't require it does it look like a gap in reporting if not completed parenthesis if no properties are do that that's really a determination for each each holder in conjunction with with your in-house legal counsel I hesitate to give anything that might be construed as legal advice I mean filing a negative report is a meaningful Act so if if a negative report is filed state of Delaware's expectation is that that negative report is the result of a robust and thorough review of the books and records and that there indeed is no unclaimed property due to be reported if that report is filed without that type of robust and systematic review and it turns out to be wrong there could be consequences for the company that said Delaware used to have a statute of limitations in place that would attach to the filing of a report negative or otherwise that particular provision was eliminated from our most recent statutory amendments so it depends on a state-by-state basis what what types of benefits or statutes of limitation might attach to those filing of a report generally they would not attach to the non filing of a report of course Delaware now just has a ten year look-back period regardless of whether a report has been filed so there can be advantages to filing a negative report if that indeed is correct there can also be problems as one is filed but it shouldn't have been so I guess we would probably view it the same way from from the standpoint of our annual compliance review program the non filing of a report makes us ask the question of what happened why didn't you file you've been filing the filing of a negative report then the question is okay you filed let's make sure it's accurate Thank You Brenda only this one was directed at you we both may have an answer what level of detail is required to establish an address under records thanks God under Delaware's revised statute it gives you the option of having two out of three data points a city or state and/or zip code to in order to determine in order to establish that you have you have identified the first priority state good Thank You Brenda any further comment on that question it was that the inter okay great I think this is probably for Brendon says as if we enrolled in the voluntary disclosure program previously in Delaware why would we be expected to enroll if we got a second you know an invitation this time around in order to avoid an exam uh so I guess one thing I've noticed just anecdotally for my own personal experience as a holder advocate is holders might might go through an exam or a vda but not not actually take the next step that that Sonia had mentioned of implementing robust policies and procedures to then continue with multi-state compliance going forward so I've certainly had former clients who went through an exam or VBA and then ten years later still were not compliant so at least the way Delaware law is structured right now that holder would get another opportunity to come forward in a VDA before an examination would be contemplated so even for holders who've gone through a video or an exam there is still a possibility that five or ten years later that compliance gap still exists and the state of Delaware will it will address that thank you there's a follow-up question saying is there a limit to the number of times the company can participate in a video under our current statute no and I'd also mention you know HP whether it's an exam or a vda there is a limit to what type of liability release is included in that so it's only whether it's a video or an exam the settlement agreement is only going to go through a certain point in time and it's only going to apply to certain legal entities or to certain property types depending on whether it's a video or an exam so you might have a situation where a company's completed a video and then they acquire another company that had very poor compliance history so they might want to go into a VDA for that acquisition and again certainly Delaware's priority is voluntary compliance we want to make that opportunity available to a parent that has already gone through to then complete the same process for an acquisition so right as our law stands right now there there is no limit I I think there is a reason to consider a statutory change where we might put some limitations around that particularly where we have holders that are just on a revolving door and they're going through a vda but they're never actually addressing the underlying problem because again we want holders to be compliant on an annual basis so the to the extent there's just this serial vda you know I would consider a statutory change to address that but at this point that's that's not our statute thanks Brenda this question was directed at Sonia it's going to hold her participate in the VDA without an invitation absolutely and that's actually the probably the best way to go forward where you've had an opportunity to review your books and records without the necessary two-year time frame I'll work get it at your own pace and then you can certainly go forward at that time and present your your submission to the state that is an excellent way to gain compliance thank you I have a question here not clear to us address services where do I find any exemptions and for instance if we exempt the current vendor or they exempt forever adjust until they are current something would that be good for you dancer if we're talking with respect to Delaware I'm not quite sure if if the company is indicating business-to-business exemptions which don't exist in Delaware Brenda are there any exemptions for Delaware that come to mind for property type reporting I mean we exempt you know say loyalty program credits onion voice payables I mean these are pretty somewhat obscure I mean from the main property type seller does not have any exam I guess we really have to consult I think state law on a state-by-state basis which I acknowledge is complex and changing and again that's where there are vendors who can assist companies with with those efforts to stay current on multi-state laws in this area I agree I think we would need to have a better sense of the question if it has to do just based on the way the question says do we keep them to exempt them forever it sounds like this might be based on some of the states that allow you to exempt a customer vendor or customer if they're current and if they if that status changes but again that would be specific to individual state statute thank you this question as opposed to Brenda Cesare any new requirements consider for 2019 2020 filing with the lower I said at this point no we again fully transition to online filing and we have not made any changes to our statute since the enactment of Senate bill 13 in February of 2017 we did just update our holder reporting guide which is available on our website and that's the place to look really for any technical or logistical changes but as a matter of statute no there are no changes at this point thanks Brenda one more for you which was Holder saying they filed a claim in Delaware in the past recover funds but they hadn't received a response there any advice you would give that holder in this context welcome you to reach out directly to me with the claim number and okay forward that to our claim staff to be sure it's reviewed you know particularly with business claims as I mentioned we have had fraud in this area so we really had to focus on ensuring that we're actually dealing with an authorized representative of the company to come forward on behalf of you know numerous legal entities that might might be affiliated so there can be some back and forth that's required in that process I would just ask for your persistence and patience well Brenda thank you so much for your participation today Sonya and I truly appreciate it and that concludes our webinar for today I'd like to thank all the attendees for participating and hope everyone has a perfect afternoon thank y
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