CORPORATE TRANSACTIONS & COMPLIANCE BLOG

Delaware Passes Amendment Promoting Corporate Transparency

By: John Morrissey, COGENCY GLOBAL INC. on Thu, Jul 05, 2018

Transparency - DE CATSS - Fotolia_151010763_SOn June 27th, 2018, Delaware Governor John Carney signed House Bill 310 into law, amending Subtitle II of Title 6 of the Delaware Code. This amendment enacts Chapter 50E, the Certification of Adoption of Transparency and Sustainability Standards (CATSS) Act, effective October 1st, 2018.

Supporting Delaware business entities in their global sustainability efforts, this bill creates a voluntary filing that certifies an entity’s adoption of sustainability and transparency standards.

Let’s walk through the highlights.

Key Definitions in HB 310

Section 5001E outlines terms used within the bill text, some of the most pertinent to the CATSS Act are included below:

  • Certification of Adoption of Transparency and Sustainability Standards (CATSS): A certificate, issued by the Secretary of State (SOS), that confirms a reporting entity has filed a Standards Statement with the state. The certificate shall state that Delaware has not reviewed the contents or implementation of matters referenced in the Standards Statement, nor verified any reports made by the reporting entity.

  • Reporting Entity: An entity that has been issued a currently effective CATSS.

  • Standards: Principles, guidelines or standards, based on Third Party Criteria, adopted by an entity to assess and report the impacts of its activities on society and the environment.

  • Third Party Criteria: Any principles, guidelines or standards developed and maintained by a third-party that are used to assist businesses in measuring, managing or reporting their social and environmental impact.

Statement of Adoption of Transparency and Sustainability Standards

Under the CATSS Act, if an entity’s governing body has adopted resolutions establishing the entity’s Standards and Assessment Measures (SAMs), it may file a Standards Statement that, according to §5003E:

  • Acknowledges the adoption of resolutions defining the entity’s SAMs.

  • Identifies a link on the entity’s website that provides open access—and at no cost—to its SAMs, the Third Party Criteria used to develop the standards, a description of the process used to identify, develop and approve the standards, and any report filed (or to be filed) by the entity, while it remains a reporting entity.

  • Confirms the entity’s agreement to acknowledge and deliver its most recent report within 30 days of an SOS request.

  • Affirms the entity’s commitment to:
    • Assess its performance in meeting its standards, using its stated assessment measures.
    • Review and assess its SAMs, and make such changes as the governing body in good faith determines are necessary or advisable in meeting the entity’s standards.
    • Prepare its report within 90 days of the end of each reporting period (see §5001E for definition of reporting period) and make it available to the public on the entity’s website.

  • Establishes a Delaware address where the SOS should mail notices.

This statement should also be acknowledged by an authorized person of the entity.

CATSS Issuance

According to §5002E, the SOS shall issue a CATSS to an entity upon satisfaction of the following conditions:

  • Execution, acknowledgement, and delivery of a standards statement to the SOS.
  • Payment of all fees and costs assessed by the SOS.
  • Remains a Reporting Entity.

Additionally, an entity should be in good standing if registered or formed with the Delaware SOS.

Renewal Statement

Section 5004E provides that Reporting Entities must submit a Renewal Statement to the SOS every year between October 1st and December 31st. On or before September 1st of each year, the SOS will mail notice (before or on September 1st) to each Reporting Entity that the Renewal Statement, together with applicable fees, is due on October 1st. Reporting Entities that do not file the Renewal Statement will become Non-Reporting Entities on January 1st of the following year.

Restoration Statement

Per §5005E, a Non-Reporting Entity may file a Restoration Statement during the following calendar year and once filed, resume its status as a Reporting Entity.

Fees

Filing fees, set in §5007E, include up to $200 for filing a Standards Statement or Renewal Statement payable to the SOS.

For further details, please review the full text of House Bill No. 310.

 

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

Topics: Corporate Transparency