DE Proposes New UP Regs for Due Diligence & Audit Appeals! : Unclaimed Property News and Discussion Blog
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DE Proposes New UP Regs for Due Diligence & Audit Appeals!

by Tracey Reid on 01/05/12

Delaware has issued 2 proposed Regulations this week, one dealing with new Due Diligence Requirements for Securities & Related Property and the second addressing Unclaimed Property Audit Appeal Procedures. 

The first proposed rule, Regulation 965, “Regulation on Practice and Procedure for Establishing Running of the Full Period of Dormancy for Certain Securities and Related Property,” creates an obligation for holders to perform due diligence on specifically listed items.  This may seem like something you would already do, but Delaware has NEVER required due diligence in the past (so that they could hoard all of the unclaimed property they collected without having to return any to the true owners).  The list of property that would be included in this new due diligence requirement, if the property is valued at $250 or more, includes:

1.      Intangible ownership interests in corporations, whether or not represented by a stock certificate, bonds and other securities

2.      Dividends, cash, stock and other distributions made (or attempted to be made) by issuers of securities in respect of the securities issued

3.      Certificates of membership in a corporation or association

4.      Funds deposited by a Holder with fiscal agents or fiduciaries for payment to Owners of dividends, coupon interest and liquidation value of stocks and bonds and

5.      Funds to redeem stocks and bonds

The regulations propose requiring the typical first class letter be sent no more than 120 days and no less than 60 days before reporting the property, for all items where the Holder has a good postal address and has not sent other similar mailings in the past 90 days (as might be required for some types of securities/related property under federal law). The state does appear to be throwing Holders a bone in allowing a deduction of up to $5.00 per mailing, against the value of the property, to over “reasonable” administrative costs. 

The other proposed regulation, Regulation 959, lays out the guidelines for appeals of any determination by the Unclaimed Property Audit Manager. These appear to be intended to clarify and add meat to the July, 2010, Delaware legislature amendment to §1156 that allowed, for the first time, appeals of unclaimed property audit findings to the Secretary of Finance. The proposed talk about deadlines, designation of an independent reviewer, the form of submissions, hearings and evidence, the issuance of proposed Findings of Fact and Conclusions of Law, post-hearing briefs and appeals to the Delaware Court of Chancery. The entire proposed appellate procedure can be found at: http://regulations.delaware.gov/register/january2012/proposed/15%20DE%20Reg%20959%2001-01-12.htm

Now is your chance to have your voice as a Holder heard!  The state is requesting “Comments” on both proposed regulations. If you have such, you can submit your Comments, in writing, to Mark Udinski at the Department of Finance, Escheator of the State of Delaware, Carvel State Building, 820 North French Street, P.O. Box 8763, Wilmington, Delaware 19899-8763. Comments must be received on or before January 31, 2012.

Speak now or forever hold your peace.....

 

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