At MarketSphere, we like to keep our clients up-to-date with the latest changes in unclaimed property to help them anticipate and manage any issues, opportunities or requirements that might affect them. Currently, unclaimed property in general is being affected within two active spheres of change: Canadian provincial law and the American standardization of state statutes.
In both cases, enactment and standardization of unclaimed property laws is based on the work of each country’s official body for the drafting of uniform laws. In the United States, this is the Uniform Law Commission (ULC). In Canada, it is the Uniform Law Conference (ULC). The Canadian ULC unclaimed property act is, in large part, based upon the American unclaimed property act and its iterations.
The ULC, both in Canada and the U.S., is not a legislative body. Each is simply a commission or conference to which states have agreed to send representatives for the purpose of standardizing laws. States and provinces are encouraged to adopt as much as possible of each act the ULC presents.
Canadian Abandoned and Unclaimed Property Developments
Only a few Canadian provinces have enacted abandoned and unclaimed property laws in alignment with the Uniform Law Conference of Canada. Alberta and Québec have comprehensive unclaimed property laws. British Columbia has voluntary guidelines. The Bank of Canada has an unclaimed property program in place, and Ontario has been working on one for some time. The other provinces and territories of Canada (Manitoba, New Brunswick, Newfoundland, Nova Scotia, Saskatchewan, Prince Edward Island, Northwest Territories, Nunavut and Yukon) do not appear to have unclaimed property on the docket of legislative concerns.
We are beginning to see more interest on the part of provincial governments, as well as Canadian companies, in how this matter should be handled in the future. Discussions of Canadian unclaimed property law are taking place within American forums, such as the national meeting of the Unclaimed Property Professionals Organization (UPPO).
In July of this year (2014), the first-ever national meeting of unclaimed property professionals in Canada took place under the sponsorship of UPPO. The conference focused on teaching holder companies about the processes and issues of unclaimed property, with special focus on cross-border reporting.
We are advising MarketSphere clients to keep a close eye on Canadian developments, especially if they have business entities, operations, vendors or clients in Canada.
- Holders should ask themselves: 1) is the account in question a U.S. or Canadian account; 2) where were the funds initiated; and 3) are we dealing with a shared service function between the US and Canada?
- If a holder company issued property in the U.S. that is now owed to owners with a Canadian address, the Supreme Court’s TX v NJ second priority rule applies: for states/provinces that don’t have a rule governing where to report, a holder company should report to the state of incorporation.
- Holders must ensure they’ve reviewed or updated policies and procedures to account for any Canadian property, subsidiaries, etc.
- We anticipate other Canadian territories or provinces will establish abandoned and unclaimed property laws in the future. An increase in unclaimed property audits for the purpose of encouraging enforcement are likely to come soon after.
Read more about the Canadian ULC unclaimed property act here.
U.S. Standardization of Unclaimed Property Laws
For more than a half-century, based on American ULC unclaimed property acts, states have enacted unclaimed property statutes to govern the protection of consumer property.
The original ULC act has been improved upon several times. Because states can draw upon any version of the act, and because types of property vary so widely, the statutes lack uniformity from state to state.
Recently, there has been a movement to further standardize state laws through a new revision of the ULC act. This would make it easier for holders to manage their internal unclaimed property policies and processes. Many holder and state administrative advocates have become involved in the discussions.
The American ULC is in the process of receiving recommendations and studying standardization issues. If you would like to follow these proceedings, you can see recent comments from participants here.
Watch this space for updates as they become available.