Corporate inversions have been used for years as a powerful vehicle to optimize a company’s tax strategy. Inversion is the practice of reincorporating a company in a foreign country with lower corporate tax rates for the purpose of reducing taxes. A company may execute an inversion organically by incorporating in a more tax-favorable geography where a good portion of its revenue is generated. A more common approach, recently in vogue, is an inorganic strategy. An inorganic inversion is one in which a corporation will acquire a company in a tax-friendly jurisdiction and move the acquiring company’s corporate headquarters to the new location.
Chief financial officers have been using inversion strategies for years. Legislative guardrails are known and regulatory guidelines also have been relatively easy to identify. U.S. Internal Revenue Service regulation section 7874 was the most recent significant adjustment to the tax regulations governing inversions. Section 7874 identifies the parameters around post-deal, residual U.S. company stock ownership percentages. It also outlines tests to determine if the inversion is motivated by business efficiency or is a pure tax-driven strategy. However, the inversion waters are growing more turbulent, and 7874 is in the crosshairs of legislators trying to tighten the requirements
. [Read more…
The report, International Comparisons of Litigation Costs and its supplement on Brazil, Japan and China, by NERA Economic Consulting provides a groundbreaking comparison of liability costs – a phrase used here to describe the costs of claims, whether resolved through litigation or other claims resolution processes – as a fraction of Gross Domestic Product (GDP) across Europe, the U.S., Canada and Japan. Businesses’ general liability insurance costs provide a basis for comparing liability costs among countries, with researchers controlling for non-litigation-related factors. Insurance costs are a meaningful basis for analysis because a large fraction of liability costs are covered by insurance, and coverage is sufficiently similar in Europe, the U.S., Japan and Canada. These countries also are generally similar in the scope of civil redress they provide for harm caused by third parties. [Read more…]
A recent ALM article, “Sea Change in GC Role Requires New Competencies
,” by E. Leigh Dance, got me thinking. I agree with Dance on the competencies required of a general counsel, except for one thing.
The article could have been written 30 years ago. The same skills have been required for a long time because some aspects of the general counsel’s responsibilities haven’t changed. But some have, and this is where some GCs need to focus to ensure that they have the appropriate skills for the job—in the 21st Century.
The best general counsels know what is going on in their company and in the law department. A GC who thinks that his or her job is just to advise the board and CEO, and can delegate everything else, is adopting a risky strategy. The GC is responsible for managing the legal risks facing the organization. While the CEO and the board may be the primary clients of the general counsel, it was never a good idea to say “I’ve got other people handling that area.” What does the GC say when he or she is surprised by a labor problem, or an antitrust problem, or an e-discovery problem? “My people let me down?” This is guaranteed not to satisfy the CEO. [Read more…
When: Wednesday, September 17, 2014 to Thursday, September 18, 2014
Where: One King West, Toronto
To Learn more visit: www.CanadianInstitute.com/CorporateCounsel