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Jon D'Amato, David Poehler, Clive Cohen

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10/5/17 3:00 PM

Delaware Issues Final Reporting & Examination Manual

On October 1, the Delaware Department of Finance (DOF) published the final version of its Reporting and Examination Manual regulation addressing audit procedures and method of estimation.  See previous blog: DE Secretary of State to Begin Issuing Notices to Non-Compliant Holders in Mid-October. The final regulation is substantially similar to the August 1, 2017 draft. For more information, see our blog post from Aug. 7, 2017.

Per the final Manual:

THEREFORE IT IS ORDERED that the following Regulation 104, Department of Finance Abandoned or Unclaimed Property Reporting and Examination Manual is adopted and shall be final effective October 11, 2017 and shall apply to all reporting and examinations not complete as of that date.

With an adoption date of October 11, 2017, holders currently under a Delaware audit authorized by the State Escheator on or before July 22, 2015, will have until December 10, 2017 (60 days from October 11) to convert to the SOS VDA Program.

Unsurprisingly, the final DOF regulations do not substantially change the basic estimation and extrapolation techniques that a federal judge in last year’s Temple Inland litigation stated results in “significantly misleading results”.  A number of other troubling provisions were retained in the final DOF regulations, such as the inclusion of non-Delaware domiciled subsidiaries and affiliates within the scope of an examination and a requirement that these entities provide any and all records.

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Topics: Delaware, Compliance, Audit, Voluntary Disclosure Agreements

9/29/17 1:53 PM

Delaware Secretary of State to Begin Issuing Notices to Non-Compliant Holders in Mid-October

On Friday September 29th, the Delaware Secretary of State issued an update on their VDA program, indicating that in two weeks they will begin issuing notices to Holders who have been identified as likely being out of compliance with the Delaware escheat laws.  The full update is below:

As an unclaimed property professional who has represented Holders in the Delaware unclaimed property audit and/or SOS VDA Program, you should be aware of an important update about the Delaware SOS VDA Program.

In two weeks, my office will begin mailing notices to Holders who have been identified as likely   being out of compliance with Delaware law as it relates to reporting dormant abandoned or                unclaimed property.  Holders that do not enroll in the SOS VDA Program within 60 days of the          mailing of this notice will be referred to the State Escheator for examination.  If an audit notice         is issued, the Department of State will have no legal ability to accept a Holder into the SOS VDA        Program.  

The SOS VDA Program was put in place to respond to concerns about Delaware’s ongoing audit      program, and to encourage more companies to come into compliance with their legal    responsibilities as they relate to abandoned property.  Through recent changes in the law,               Delaware is providing every company with an opportunity to voluntarily comply prior to being              issued an examination notice.  We urge you, your clients and potential clients to take advantage   of this opportunity to enroll in the SOS VDA Program.

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Topics: Delaware, Audit, Voluntary Disclosure Agreements