NRAI Compliance Updates - August, 2003

Please find below NRAI's monthly collection of Business Entity, SEC changes and alerts. Please follow the links to additional information where applicable.


Court Decisions

On May 28, 2003 the Delaware Court of Chancery handed down a decision that further defines the developing trend in Director liability for breach of the Duty of Care. To read the full text of In re The Walt Disney Co. Derivative Litigation No. 15452 (Del Ch. May 28, 2003) go to http://courts.state.de.us/chancery/opinions/15452-126.pdf


In the case of McKesson HBOC v. N. Y. State Common Retirement Fund 03 C. D. O. S. 7259 the Ninth Circuit found that McKesson could not sue HBOC shareholders under a claim of unjust enrichment triggered by alleged accounting improprieties by HBOC. The claim was that the shareholders received fully valued McKesson shares in exchange for artificially inflated shares of HBOC. Full Text may be accessed at http://caselaw.lp.findlaw.com/data2/circs/9th/0215301p.pdf


Sarbanes-Oxley Developments

Final Rules promulgated by the SEC regarding Internal Control and Section 302 and Section 906 Certifications. Full Text may be viewed at http://www.sec.gov/rules/final/33-8238.htm


SEC Material

"Up the ladder" reporting requirements have gone into effect August 5, 2003. Under Section 307 of the Sarbanes-Oxley Act. This requires attorneys in a corporate setting to report a material violation of the law up the corporate ladder until an appropriate response is received. Not surprisingly, this has created some controversy regarding ethical duties and whistle-blowing. The American Bar Association will be considering this matter at its' annual meeting in San Francisco this month.

Online Filing of Section 16 forms 3, 4, and 5, which went into effect on July 1, 2003, seems to be working well. Yet with all the publicity heralding the new requirement, there were still paper filings being made in the hundreds. However, the number of online filings jumped dramatically as filers made the switch. On June 30, the day before the new rules went into effect, there were 765 Online filings, compared to 2040 on July 1, 2003.


Fee Changes

Ohio

The Ohio Legislature has raised County Recording fees by 100%, as of August 1, 2003. The rationalization for the fee increase is to fund the Ohio Housing Trust Fund with only 1% going back to the Counties for administrative costs.

Kansas

The fee increases, which were "temporarily" implemented on July 1, 2003, are expected to become permanent on September 3, 2003. The fees are as follows:

Certificate of Good Standing $15.00
Letters of Good Standing     $10.00
Special Certificates of Fact $20.00
Certified Copies             $15.00 + $1.00 per page

Colorado

Effective September 1, 2003 fees for Colorado Periodic Reports will be as follows:

Paper filed                  $25.00
E-Filed                      $10.00

Delinquent Paper Filed       $45.00
Delinquent E-Filed           $30.00

Suspended LLC's Filing Periodic Reports for Reinstatement

Paper filed                  $150.00
E-filed                      $55.00

Michigan

Effective October 1, 2003, the fee for the annual statement of registered agent and registered office for all LLC's, foreign and domestic, is raised from $25.00 from $15.00. Supposedly, this is a temporary fee increase that will expire on October 1, 2007.

Nevada

Effective October 1, 2003, the Application fee for the Annual Business License to conduct business is raised from $25.00 to $100.00.



Tax Changes

Arizona

There will be a tax amnesty for the period September 1, 2003 to October 31, 2003. Applications must include tax type, periods covered, and be filed with the appropriate returns for the periods at issue. For further information, please see legislative bills L. 2003, H2533(c. 263).

A Minimum Corporate Tax of $1000.00 is instituted, as well as decoupling of Federal IRC Section 179 regarding expensing of equipment and machinery.

Ohio

A sale tax increase in Ohio from 5% to 6% went into effect July 1, 2003, having only been approved by the legislature on June 20, 2003. This increase is effective until June 30, 2005, unless the legislature takes further action.

Vermont

Two changes in Vermont---first for tax years beginning January 1, 2003, capital gains treatment of dividends will not pass through to the Vermont Income Tax Return. Dividends will be included as ordinary income for Vermont Taxable Income purposes.

Secondly, effective October 1, 2003, the Sales Tax will increase from 5% to 6%.

Washington

Effective August 1, 2003, Business and Occupations Tax Return and Payment and Sale and Use Tax Returns are both due on the 20th of the month (previously due on the 25th of the month).


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