Saying "[w]ith respect to climate pollution, we will act," and that "[t]he Clean Air Act does in fact allow us to do so" Administrator Jackson today announced that greenhouse gases threaten the public health and welfare of the American people.
 
Administrator Jackson indicated at the press briefing that the agency's intention with regards to the finding was to "release the science and reduce the questions." Stressing that "we'll continue to work under the Clean Air Act" Administrator Jackson also stated that the agency is "compelled" to address climate change pollution.
 
She fielded questions on the legislative timeline and agenda and stressed that EPA's and the legislative initiatives are independent.  Administrator Jackson did emphasize that the agency would move forward with work that the EPA had planned, and that there is no reason to delay.  A common question at the briefing was what EPA's timeline is on additional rules for stationery sources and additional rulemaking for reductions in light of the greenhouse gas reporting rule. Administrator Jackson said that there was no timeline for the next rules on emissions, including next steps on the tailoring rule, and stated that "I have no additional information on timelines." 
 
So why issue this rule now, and not concurrent with the transportation rule?  She stressed again that this is a unique situation and responded that this finding itself was the subject of a U.S. Supreme Court Case and that they wanted to project the image that the "EPA is on the job and is about doing the job."  She said that they intend to "keep the ball moving."
 
The overall message from the press conference was, "with respect to climate pollution, we will act."

To view a full transcript of Administrator Jackson's remarks, click here.

The Environmental Protection Agency (EPA) issued the Final Mandatory Reporting of Greenhouse Gases Rule today.  The rule requires reporting of greenhouse gas (GHG) emissions from large sources and suppliers in the United States. According to EPA, it is intended to collect accurate and timely emissions data to inform future policy decisions.  EPA's Web site provides: 
 See http://www.epa.gov/climatechange/emissions/ghgrulemaking.html for the rule.

Japan is the world's second-largest economy.  Their gross domestic product was over $4.8 trillion in 2008.  As I mentioned in a previous post, Japan is expanding ties with other countries in Asia to help diversify their economic relations with the U.S. and Europe, although those ties are still strong.  Because the Japanese-American relationship has such a large technological and economic impact on the world, they cooperate on a broad range of global issues, including development assistance, combating communicable diseases and protecting the environment and natural resources.  Both countries also have strong collaboration in science and technology.

Japan is slightly smaller than the state of California and about 73 percent of the country is mountainous.  Because there isn't much flat land, many hills and mountainsides are cultivated all the way to the summits.  Their agriculture consists of rice, vegetables, fruit, milk, meat, silk and fish.  Japan is an urban society with only about 4 percent of the labor force engaged in agriculture.

The agricultural economy is highly subsidized and protected.  Japan has few natural resources, fish being their primary natural resource, and trade helps it earn the foreign exchange needed to purchase raw materials for its economy.  Japan is the largest foreign market for U.S. agricultural products, with total agricultural exports valued at over $10 billion in 2007.

Japan's population, over 127 million, has slowed due to falling birth rates.  In 2005, Japan's population declined for the first time.

Japan is a major market for many U.S. products, including chemicals, pharmaceuticals, films and music, commercial aircraft, nonferrous metals, plastics and medical and scientific supplies.

Day 8 - Monday, September 14
We attended the opening ceremony of the Midwest U.S.–Japan Association Conference.  Mitch Daniels is one of three U.S. governors who is attending this conference.  Governor Jennifer Granholm of Michigan and Governor Jim Doyle of Wisconsin are in attendance as well.  There are four Japanese governors participating.

Several members of the delegation were able to meet privately with a representative from Sony.  He discussed that Sony's top issues right now are quality and the environment.  He also discussed the increased need for universities and businesses to collaborate more; specifically pointing out excellent programs at Purdue and Rose-Hulman that would be of importance to Sony.  This representative is happy with their Indiana connections and feels that Indiana strives to keep the costs of conducting business in the state low.

Overall, Japanese business leaders are looking to expand relationships throughout Asia and not rely so heavily on the U.S. and Europe  The current economic conditions that the U.S. and Europe are facing have impacted Japan because of their market presence.

Over the weekend Governor Daniels announced that beginning in 2010 the Indiana State Fair will feature a different country each year.  Japan will be the first country featured.  Japanese exhibits will include performing arts, cuisine, interactive displays and educational opportunities.

Day 7 – Sunday, September 13
Today was the first opportunity the delegates had to do some sightseeing on their own.  Some of the delegates visited Japanese shrines but I decided to do a bit of shopping in the "fashion capital of the world!" 

The Ginza District of Japan features many of the world's best designer shops as well as smaller shops featuring hand painted stationery, paper, umbrellas and fans.  The Japanese culture emphasizes order and cleanliness.  For example, you must take your shoes off when entering a dressing room and put a cloth over your face to protect the clothes.  On escalators, you hear instructions on which side to stand and reminders to hold small toddlers.

This emphasis on order and cleanliness even translates to their public restrooms.  The toilet seats in public restrooms are heated and all the restrooms have bidets.  Restrooms are easy to find and are on located on every floor.  There is a special deodorizing spray and you hear a continuous flushing sound to protect your privacy. 

In Japan you'll find that many stores have a lot of customer service representatives to assist you. In one small section of a department store I found 3-4 representatives designated to help customers in just that one section.

The Japanese stores tend to only carry three sizes: small, medium and large.  In America, I usually wear an extra small but in Japan I'm a medium. Most of the Japanese women are very slender and all are about the same height.  You'll find very little obesity among the Japanese.

Today's weather, beautiful, clear and in the mid-70s (similar to our Fall), gave me an opportunity to observe interesting aspects of the Japanese culture.  Even in the summer many Japanese wear boots.  As in China, pale skin is preferred and many of the women carry umbrellas.  Japanese society is very disciplined.  The city streets are clean and people don’t dress as casually as they do in the U.S.  For example, you don't find many people wearing flip-flops.

Sunday Evening
In the evening we attended the gala reception for the Midwest U.S.-Japan Association Conference in Tokyo.   For nearly three decades, business leaders from the Midwest region of the U.S. and Japan have met on an annual basis to discuss the growth and progress of economic relations of the American Midwest and Japan.  The Midwest U.S.-Japan Association is comprised of ten member states including Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, Ohio and Wisconsin.   Membership in the Japan-Midwest U.S. Association is comprised of corporations that have direct economic ties to Japan or are interested in developing them.  The association has some 100 corporate members including Toyota Motors, Mitsui & Co., Saison Group, Sumitomo Chemical, Kajima Corporation, and Sony.  The associations reinforce the economic, political and cultural ties that link the national economy of Japan with the regional economy of the Midwest.

Day 6 – Saturday, September 12
We traveled by bullet train to Tochigi Prefecture, Indiana's sister-state in Japan.  The bullet train was very comfortable and is an extremely efficient mode of transportation for the Japanese.  The train is low energy, low noise, seats a very high capacity of passengers and is easy to maintain.  The Japanese culture emphasizes order and you see that in their transit system.  Their average delay is less than one minute.  Everything is on time and there are no last minute changes.  Seventy-two percent of transportation is done on these bullet trains in Tokyo central and 56 percent in metro Japan.

When we arrived we attended a ceremony to celebrate the 10th anniversary of the sister-state agreement by planting a tulip tree, the official state tree of Indiana, in the central park of Tochigi.  This park is beautiful with many fountains and tulip trees.  The Japanese mentioned that the relationship between Tochigi and Indiana was fate.  Tulip trees were planted in this park 15 years before we became sister states and they feel there is strong significance in the fact that the tulip tree is Indiana's state tree.  These goodwill gestures were further endorsed by the fact that it was a rainy afternoon, but the clouds broke just as the planting ceremony began.

After the tree planning ceremony, we attended the 10th Anniversary Commemorative Symposium at the Tobu Hotel.  Over 100 Japanese government and business leaders attended this event.  Governor Fukuda, the governor of the Tochigi Prefecture, expressed his appreciation and his view of the importance of the delegation coming to Japan.  Personal connections are very important to the Japanese and these face-to-face visits are crucial to successful relationships.

After thy symposium, we attended a reception for the Indiana delegation which was hosted by Fukuda.  We were able to witness the tradition of the "breaking of the barrel."  Six Japanese officials broke a barrel, filled with Saki, with wooden hammers.

An interesting observation that I've made is that many of the roofs in Japan are "green."  The tops of the buildings have grass, trees and bushes.  Not only is this great for their environment, but it is a way for the Japanese to have yards in an area that is highly populated.

Day 3 - September 9, 2009 – Traveling to Hangzhou

I was really looking forward to traveling by train to Hangzhou and I was not disappointed.  It was a great opportunity for me to learn more about the Chinese culture and see more of China's beautiful landscape.

Hangzhou is in the Zhejiang Province located about 112 miles southwest of Shanghai.    Hangzhou has a population of over 6 million people, which is small by Chinese standards, and has a beautiful fresh water lake called West Lake.  West Lake is surrounded by mountains on three sides and is very well known in China.

Many Chinese homes, especially in farm villages, have temples on top of them to pay homage to their ancestors.  Ancestry and history play a large part of the Chinese culture and the temples are another example of these influences.

I also thought it was interesting, that unlike the U.S., Chinese grooms and their families pay for about 80 percent of the cost of their weddings.

It is early in the day of September 9, 2009 – 9/9/09 – and 9 is a very lucky number in the Chinese culture.  If fact, the Chinese celebrate the ninth second, of the ninth minute, of the ninth hour, of the ninth day, of the ninth month of the ninth year.  The luck of nine did not rub off on the number four in this culture.  Four is considered very unlucky, similar to the U.S. perception of the number 13.

I look forward to reporting more about this day's events in tomorrow's blog.

September 8, 2009 - Day 2

We spent the first part of our day with the American Chamber of Commerce for a discussion on "green collar" jobs.  Chinese carbon emissions are escalating and China has seven of the 10 most polluted cities in the world.  As a result, environmental protection has become more important to the Chinese.

Later in the day we traveled to Eli Lilly's facility at the Pudong Science Park.  Lilly has over 2,000 employees in China, which means China has the second largest Lilly operation in the world.  Pudong is one of Shanghai's newest districts with a focus on three main industries: life sciences, software and integrated circuits.

Some of us were also able to visit ShangPharma.  ShangPharma provides research services to pharmaceutical and biotech companies.  They currently have over 1,600 scientists.  An interesting question was raised about how intellectual property is protected for the company and its clients.  The uncertainty of intellectual property protection is not isolated to just ShangPharma.  It is an issue that China is addressing as a country.

Following these visits we had a traditional Chinese lunch that was again served on a lazy Susan.  There were six different courses that included duck, shrimp, squid, scallops, fresh vegetables, jellyfish and fried rice.  Beer and wine were again offered.  Chinese meals are traditionally very  large.  I was curious how the society remains so thin.  Meal preparation seems to hold the answer.  They use vegetable oils and other "waist friendly" and heart healthy preparation methods.

The day concluded with a Friends of Indiana reception.  Guests included companies that have a business connection to Indiana or have an interest in doing business in Indiana.  Eli Lilly, Cummins and Alison Transmission all attended.

I'm really looking forward to traveling by train to Hangzhou tomorrow.  It will be a great opportunity for me to see some of the rural parts of China and its landscape.

We've arrived in Shanghai China!  China is the world's most populous country with a population of 1.3 billion (with over 700,000 million living in rural farm villages) and one of the largest producers and consumers of agricultural products.  Over 40 percent of China's labor force is engaged in agriculture, even though only 10 percent of the land is suitable for cultivation and crops.  China is among the world's largest producers of rice, corn, wheat, soybeans, vegetables, tea and port. Industry and construction account for about 46 percent of China's gross domestic product (GDP). 

China is the second largest producer of oil after the U.S.  Coal makes up the bulk of China's energy consumption and is the largest producer and consumer of coal in the world.  China is home to 7 of the world's top 10 most polluted cities. 

China is now one of the most important markets for U.S. exports and in 2007, U.S. exports to China totaled $65.2 billion. 

Shanghai is beautiful with many high-rise buildings and lovely architecture.  It's approximately 200-300 years old, relatively new by Chinese standards.  It's very cosmopolitan and has one of the world's largest buildings.  The highways are elevated and the transportation system is very efficient with subways and lots of taxis, but traffic jams are not uncommon. 

The average age of marriage is 25 and it's not uncommon for many generations to reside in the same household.   This makes defining China's "middle class" difficult.  A young adult will have low expenses because they live with their elders, but they have a large impact on spending.

We concluded the evening with a wonderful 7 course dinner.  Keeping with tradition, we changed chopsticks with each course.  Dinner consisted of many "firsts" for me including sautéed prawns in chile sauce, shredded chicken soup, steamed garoupa, pan-fired beef and mushrooms, and a sweetened almond crème with pastries for dessert. 

During dinner many toasts were given, as is tradition in China.   When a person receives a toast they must participate by taking a drink.  Many high ranking officials and business leaders have people who help "protect" them from toasts so the leader isn't required to drink a large amount of alcohol.  When receiving a toasting you should hold your wine glass below the glass of the person who is making the toast as a sign of respect.

Monday, Sept. 7, 2009
We had a briefing at the hotel by the U.S. Commercial Service and we talked a lot about China.  We started off breakfast before the presentation with a combined traditional Chinese/American breakfast.  On the Chinese side we had soups, dumplings, fresh seafood, salad and loose leaf tea.

China's GDP is about one-third of the U.S. and they have the third largest global economy.  China has had 5 years of rapid double-digit GDP growth.

Shanghai is not representative of China as a whole.  The standard of living between large metropolitan cities and farm villages is vast with marked differences in health care and education.  It is very cosmopolitan and an important economic center.  Like most countries, China has been impacted by the worldwide recession.  Exports are down 7.8 percent as of last year and they have had over 100,000 factory closings.  There are 26 million unemployed Chinese migrant workers.

China was the first major country to enact a stimulus package.  They injected $582 billion in their economy with a majority of the stimulus funds targeted toward infrastructure (air, railways, highways and power grids) and earthquake reconstruction. They have had a 2009 economic revival with a growth rate of 7.9 percent, mostly due to the stimulus package and an increase in lending.  Auto sales are up 25 percent and for the first time China has surpassed the United States.  Home sales have also improved recently.

Daniels was the featured speaker at a conference hosted by Cummins, Inc. for representatives of some of Cummins’ top Chinese suppler companies and members of the Indiana delegation.  Steve Chapman, Cummins’ group vice president for China and Russia, who lives in Beijing, introduced Daniels. The governor discussed Indiana’s business climate and encouraged conference attendees to visit the Hoosier state as they consider setting up operations in the U.S.  The governor was the guest of honor at a luncheon hosted by Cummins at the conclusion of the conference.

There has been quick growth in U.S. exports to China since China joined a common trade union in 2002.  There are many U.S. companies in China and a significant U.S. presence in human capital.  China has surpassed Japan as the U.S.'s largest export market behind Canada and Mexico.  U.S. companies with a presence in China tend to be profitable in their operations and include companies such as General Electric, 3M, GM, Boeing, Cargill, IBM  and Caterpillar.  The Chinese are less likely to have large corporate centers in the U.S. because they don't experience managing a worldwide work force and because labor is much more expensive in the U.S. compared to China.   The average labor cost in the U.S. is $25/hour compared to $1/hour in China.

Shanghai has a population of 20 million and is the commercial capital and one of the wealthiest areas of China, similar to Manhattan.  Shanghai is the economic powerhouse so an important area for Governor Daniels an our delegation to visit.

In the evening we met with the Shanghai Foreign Commerce Commission to discuss why Chinese companies should do business in Indiana.  Governor Daniels discussed how businesses would benefit from working with Indiana including the fact that Indiana has higher capital and foreign investments than any other U.S. state and Indiana does not raise taxes to pay for unbalanced budgets.  After we left the commerce commission, we immediately  went to the Hoosier Club of Shanghai reception at the yacht club.  Members of the Hoosier club are comprised of alumni from Indiana universities.  The governor spoke and commented on the importance of student exchange programs.
 
To end the evening we went to an authentic Chinese restaurant featuring several courses including shrimp, soft shell crab, beef and avocado.  The food here is incredible and made from many natural ingredients.

The state in which you form your business may not seem important now, but it could have consequences in the future.  Administrative expenses, tax issues, attraction of future investors and simply the ease of governing your entity can all be affected by the state in which your entity is organized.

That being said, it is relatively easy to change the state of your company's formation.  As your business develops, the important thing is to periodically evaluate whether it continues to make sense to be organized in the state you originally chose.

There are three main issues to consider when determining where to form your business:

• Location of your business
• Tax issues
• Attracting investors

Particularly with new ventures, the location of your business should be a big factor in deciding where to organize.  Your business has to have a registered agent to receive service of process in each state where it operates.  If you organize in the state where your business is physically located, someone at your company can be the registered agent.  However, if you choose to organize in a state other than your "home" state, then you will have to use a paid service to act as your registered agent.  Generally, the fee must be paid for each state in which the service acts as your registered agent.  As you can imagine, this cost can add up quickly for a new business.

Clearly, a start-up business wants to keep its tax bill as low as possible.  Your company will have to pay state taxes in each state in which it operates.  While these taxes are unavoidable, the business can take steps to limit them.  For example, Delaware corporations are subject to the annual Delaware business franchise tax.  However, many states have no franchise tax, or at least a much smaller tax.  While there are certainly valid reasons to incorporate in Delaware, its franchise tax could hit a new corporation with a large tax bill that may be needless.

If you anticipate raising money from outside investors, Delaware might be a good state to choose.  Investors are generally comfortable with Delaware entities because of the certainty that Delaware's business statutes and courts provide. A lot of businesses have formed in Delaware, and that has led to detailed statutes and a well established body of case law.  Investors and businesses can use the relative certainty of Delaware law to plan their relationships in a way that hopefully avoids potential trouble areas and litigation.

We all know that a business owner has hundreds of decisions to make when starting a new venture, and the state of formation may seem inconsequential.  Yet, with a little forethought and periodic monitoring of its situation, a business could save itself a lot of hassle (and money) in the long run.

When you are choosing an entity there are a number factors you should consider.  For instance, you should think of how you would like to manage the business, protection against liability and your preferred tax treatment.  Below are brief descriptions of several business entities that may suit your needs and some of the advantages and disadvantages of choosing those entities.

Sole Proprietorship
The sole proprietorship is the simplest form of business.  A sole proprietorship is not an entity separate from you.  Though the sole proprietorship is a simple and convenient way to operate your business, you should beware, you will be exposed to unlimited personal liability if you operate your business as a sole proprietorship.  The owner of a sole proprietorship is directly and personally liable to creditors and other claimants. 

Corporate Entities

Corporation
A corporation is a business entity created under state law and is as an independent legal "person" apart from its shareholders and directors. A corporation's shareholders are generally not liable for the obligations of the corporation and are thus generally shielded from the corporation's creditors even if the corporation cannot pay its obligations.  Corporations must comply with statutory rules which are typically more restrictive and require considerably more formality than limited liability companies.

C Corporation
The distinction between a C Corporation and an S Corporation relates to the corporation's tax treatment.  Some of the advantages of a C Corporation are that ordinarily you may deduct the entire value of the fringe benefits offered to shareholders who also serve as employees, the number of shareholders the entity may have is unlimited and they may be either individuals, entities, U.S. residents or foreign.  C Corporations also have significant flexibility to carry corporate losses forward to future tax years.  But, operating as a C Corporation usually subjects you to double taxation, i.e., tax at two levels.  First, the net earnings of the corporation are taxed, and then, the shareholders will be taxed on the earnings of the corporation distributed to the shareholders.  For example, if a corporation issues dividends to its shareholders, it has already paid income tax on that money, but the dividends remain taxable as income to each shareholder. 

S Corporation
An S corporation is a regular corporation that has elected "S corporation" tax status. An S Corporation provides the limited liability of a corporation and the tax treatment of a partnership or a limited liability company.  With respect to non-tax considerations, the S corporation is essentially identical to a C Corporation.  The significant tax advantage with the S Corporation is that the corporation does not pay any income tax on its earnings.  Some disadvantages to an S Corporation are that only once class of stock is permitted and you must limit the shareholders to 100 individuals, none of which may be an entity (with the exception of estates and certain types of trusts) and none of which may be non-resident aliens.

Unincorporated Entities - Limited Liability Company
The limited liability company (LLC) has characteristics of both a corporation and a partnership. The primary characteristic an LLC shares with a corporation is limited liability, and the primary characteristic it shares with a partnership is the availability of "pass-through" income taxation.  Unlike a corporation, few of the LLC statutory rules are mandatory and most of its governance is dictated by an operating agreement executed by its members  The management powers in the LLC can be retained by the members of the LLC or centralized within a board of managers (who may or may not be members).  Another advantage of the LLC is that its flexibility allows for much less administrative paperwork and record keeping than a corporate structure.  Some disadvantages of an LLC are that some investors are more comfortable with a corporate structure (although this may only be an issue once the company is ready to take on significant investors and not in the early stages of your business) and some creditors may require that you, and other members, personally guarantee a loan to your LLC. 

Partnerships

General Partnership
In a general partnership, each partner has full and equal control over the partnership.  The partnership is a "pass through" entity for tax purposes.  While partners have considerable flexibility in structuring their relationship, partners run a great risk of loss because there is no limitation to a partner's liability.  Partners have joint and several liability for the acts of each partner within the scope of partnership business. 

Limited Partnership
Under a limited partnership (LP), unlike a general partnership, the limited partners are not responsible for partnership debts, obligations and liabilities.  An LP may have an unlimited number of limited partners, but must have at least one general partner who is responsible for the management of the partnership.  The general partner remains personally liable for partnership debts, obligations and liabilities, but the general partner can be a limited liability entity to add a layer of protection to the individuals managing it.  Like the general partnership, the LP is treated as a "pass-through" entity.  A disadvantage of the LP is that the limited partners must be careful not to become engaged in the decision making of the business or they will run the risk of losing limited liability protection. 

Limited Liability Partnership
A limited liability partnership (LLP) is a variation of the LP which allows a limitation of liability without the restriction on active participation required with an LP.  Under an LLP, partners remain liable for their own acts and are generally not liable for the acts of others, unless the partner has acted negligently or committed misconduct.  As with the general partnership and the LP, an LLP is treated as a "pass-through" entity for tax purposes.

Bottom Line:  There is no "one size fits all" answer to the choice of entity question.  You should give careful consideration to your needs and the needs of your business before settling on an entity.  Since the factors in consideration may be significant and the tax analysis complex, it may be wise to consult your tax advisor or an attorney to assist you in the decision process. 

Incentives are on the rise for businesses to provide "green" products and services.  Many consumers are willing to pay a premium for products that are environmentally friendly, and businesses have taken notice.  Buzzwords such as "organic," "recyclable" and "hybrid" are used to distinguish a product from its competitors.  Even the government has increased its focus on encouraging companies to provide environmentally friendly products and services by offering a wide array of tax incentives available to companies and consumers.  It is not surprising that many companies have responded to these incentives by embarking on green marketing campaigns.

However, companies engaged in green marketing are not only increasing their profits, but also their risk.  Lawsuits and class actions accusing companies of "greenwashing" - marketing the environmental friendliness of a company's product in a false or misleading way - have sprung up across the nation.  These lawsuits have been filed against companies in a variety of industries and trades, including construction companies, retailers, automakers, candy makers and manufacturers of cleaning supplies.

In addition to these consumer actions, the Federal Trade Commission (FTC) has also increased its scrutiny of green marketing.  In June 2009, the FTC filed suit against Kmart, Tender Corporation and Dyna-E International for making false and unsubstantiated claims that their products were biodegradable.  The FTC alleged that these claims did not conform with environmental marketing guidelines contained in the "Green Guides," a set of regulations used by the FTC to determine whether a company's environmental marketing constitutes consumer fraud.  A revised version of these guides will be released later this year and will address the changes and growth in green marketing over the past ten years.

Although green marketing is a potentially invaluable tool, companies should ensure that they understand and minimize the risks that are associated with its use.  For further information regarding green marketing and ways to manage its risk, please contact Michael McNally or Jacob Cox in Ice Miller LLP's Competitive Business Practices Litigation Practice Group and members of the Firm's Green Industries Initiative.

Many terms of art are used in venture capital transactions that can be difficult to understand. Most of them relate to key issues that may be points of negotiation in your venture capital transaction. Below are a few of the common terms of art used in venture capital transactions and their common meanings:

• Conversion: Conversion refers to the conversion of shares of preferred stock into shares of common stock. Conversion provisions can be optional or mandatory. An optional conversion is when a shareholder has the option to convert its shares of preferred stock to shares of common stock at any time or when certain events happen. A mandatory conversion requires that all shares of preferred stock be converted into shares of common stock upon the occurrence of a certain event, such as consent of the majority of the holders of the preferred stock or a public offering. In a venture capital transaction, the typical negotiation points regarding conversion provisions, in addition to those mentioned under "Anti-dilution", are the events that trigger mandatory conversion, such as a public offering, and the dollar threshold that the event must reach before the conversion is mandatory.
• Anti-dilution: Anti-dilution provisions allow a preferred shareholder to keep the same or a similar ownership percentage in the company when the company sells more stock. This may be accomplished by giving the shareholder preemptive rights (see the definition below). Other terms that you may hear in conjunction with anti-dilution are weighted average and full ratchet. These are two methods for adjusting downward the conversion price per share of stock issued to the preferred shareholder when additional shares of stock are issued to new investors at a price lower than the price the preferred shareholder paid. In other words, if a preferred shareholder purchased its shares for $1.00 per share, and is able to convert its preferred shares into common shares at a deemed $1.00 per common share, the anti-dilution provisions may operate to make that conversion price lower, allowing the preferred shareholder to convert its preferred shares into a larger number of common shares. In a venture capital transaction, a typical negotiation point regarding anti-dilution provisions is whether a weighted average or full ratchet formula is used. A weighted average formula is currently the most common, but there are a number of ways a weighted average formula can be calculated.
• Preemptive rights: Preemptive rights are the rights of a shareholder to purchase its pro rata portion of any new shares of stock issued by the company at the same price and on the same terms as the new shares are being offered to new investors. A preemptive right, if exercised by the shareholder, allows the shareholder to retain its ownership percentage in the company. In a venture capital transaction, the typical negotiation points regarding preemptive rights are (i) who will receive the preemptive rights, such as the venture capital investors, major shareholders or all shareholders and (ii) what issuances are exempt from the preemptive rights.
• Right of first refusal: A right of first refusal gives each shareholder or certain specified shareholders the right to purchase its pro rata portion of shares offered by another shareholder to a third party, on the same terms. The company may have the first right of refusal and the shareholders may have a secondary right of refusal if the company elects not to purchase the shares. In a venture capital transaction, the typical negotiation points regarding rights of first refusal are (i) who is subject to the right of first refusal (i.e., who must offer their shares to the company and/or other shareholders prior to selling to a third party), (ii) who will receive the benefit of the right of first refusal, such as the venture capital investors, major shareholders or all shareholders and (iii) what transfers are exempt from the right of first refusal.
• Tag-along rights/Co-sale rights: Generally, a tag-along right is a protective provision for a minority shareholder. It allows a minority shareholder to sell its pro rata portion of shares of stock along with a selling significant shareholder. This right is often combined with the right of first refusal to allow a shareholder who does not exercise its right of first refusal to sell its pro rata portion with the selling shareholder, on the same terms and conditions. In a venture capital transaction, the typical negotiation points regarding tag-along rights are the same as those for rights of first refusal.
• Drag-along rights: Drag-along rights allows a defined group of shareholders (usually a single shareholder or group of shareholders who own a majority of the company) to require the remaining shareholders to sell their shares of stock in, and/or consent to, a transaction approved by the defined group, such as a sale of the assets of the company or a sale of all of the shares of stock of the company. In a venture capital transaction, the typical negotiation points regarding drag-along rights are (i) who are the shareholders that can initiate the transaction, and (ii) the percentage threshold of such shareholders that must approve (i.e. a majority, two-thirds, etc.).
• Redemption: Redemption happens when the company buys shares back from the investor. Redemption can be mandatory or optional on the part of the company or the shareholders. Generally, the redemption cannot occur before a certain date, such as five years after the first sale of the series of preferred stock, and must be approved by a certain percentage of the shareholders (i.e. a majority, two-thirds, etc.). This is designed the protect the venture capital investors' return on the transaction but also provides the company with some comfort that, absent special circumstances, it will not be required to come up with the cash to redeem prior to the agreed-upon date. There may be more specific negotiated redemption provisions that relate to the occurrence or non-occurrence of certain events by agreed upon dates. For example, if the venture capital is being used primarily to finance a construction project, there may be deadlines that have to be met in order to avoid mandatory redemption. In addition, the company may negotiate provisions that allow the company to redeem at its option after certain time periods have passed or certain events have occurred. In a venture capital transaction, the typical negotiation points regarding redemption provisions are (i) whether and under what circumstances redemption is required or allowed , (ii) the price for which each share is redeemable (e.g., the original purchase price plus accrued dividends or the greater of the original purchase price plus accrued dividends and the fair market value), (iii) the first date on which a redemption may be requested and (iv) the percentage of shareholders that is required to effect a redemption.
• PIK preferred: "PIK" stands for "paid-in-kind". This means that the dividends on PIK preferred are paid in the form of additional shares of preferred stock. In other words, rather than accruing dividends that must be paid in cash now or in the future, the preferred shareholder is deemed to own additional shares. The calculation of the number of PIK preferred shares issued in connection with any particular dividend is a point of negotiation between the parties.

At least that is Sen. Bob Corker's (R-Tenn.) take on carbon sequestration (as reported in BNA's Daily Environment Report) who says he finds it hard to believe that the infrastructure necessary to make carbon capture a reality, such as pipelines and right of way access, will ever come to pass.  His remarks are skeptical of the Senate Energy and Natural Resources Committee chairman Jeff Bingaman's (D-N.M.) proposal to add a bill establishing a national carbon capture and sequestration program.  The bill (S. 1013) would establish a national indemnity program through the Department of Energy (DOE) for up to 10 commercial scale carbon capture and sequestration projects. While the Department of the Interior is preparing a report that provides the framework for geological sequestration on public lands, the legislation authorizes DOE and the Environmental Protection Agency and the Department of Transportation to establish a grant program for state agencies.  The secretary of energy could take ownership of, and assume potential liability for, carbon dioxide injection as part of DOE sequestration demonstration projects according to Sen. Lisa Murkowski (R-Ala.). From a legal perspective the risk of loss of carbon capture and the issues surrounding indemnity have been a sticking point for potential projects.  Proponents of projects have been looking for certainty on what programs and agencies will govern the carbon capture programs.  In addition to the indemnity, the bill includes a legal framework for closing down a geological storage site to address these concerns.  Obviously not everyone is sold, as Sen. Corker also inquired "Are we smoking something?" and the Obama administration officials testifying before the committee said that DOE and the Interior Department are not prepared to take a position on the bill at this time.

In the meantime, donkey owners everywhere are tying them to fence posts; just in case.

Indiana Department of Environmental Management, DieselWise Indiana  - Application Deadline is May 15, 2009

The DieselWise program is grant availability for projects designed to significantly reduce diesel emissions across Indiana.  The total estimated funding for this competitive grant opportunity is in excess of $2,000,000.  DieselWise Indiana anticipates awarding cooperative agreements from this announcement ranging from $25,000 to $250,000, subject to availability of funds and the quality of proposals received.  Additional funds may be available in the near future.  Project proposals submitted under this grant announcement may be awarded for funding from these additional funds.  Preference will be given to applicants that are willing to provide a financial match and/or in-kind match, provide actual historic idling hours pre-installation and post installation of idle reduction technologies, along with a commitment to maximize the use of any installed diesel emission reduction technology.  Information can be found at http://www.in.gov/idem.5255.htm

USEPA Small Business Innovation Research Program - Solicitation closes May 20, 2009

The U.S. Environmental Protection Agency’s (EPA) Small Business Innovation Research Program supports small businesses in developing new environmental technologies.  The EPA anticipates the total funding that will be available for Phase I projects issued under this announcement will be $1.8 million. A total of $70,000 is available in funding for each EPA Phase I award. Recipients of Phase I awards will be eligible to compete for a much larger (up to $295,000) two-year Phase II award. Companies with fewer than 500 employees are eligible.  Solicitation closes May 20.

SBIR Phase I green building materials and systems research topics are:

• Building Materials and Site Management
• Energy and Indoor Environmental Quality
• Water Use and Management

HUD Brownfields Economic Development Initiative Funds - Application Deadline June 16, 2009
 
The Department of Housing and Urban Development (HUD) published a notice of availability of $20 million in Brownfields Economic Development Initiative (BEDI) funds (74 FR 20494) on May 4.  David Kaminsky, who works on development grants in HUD's Office of Economic Development, said the funds will be awarded competitively, and individual grants are capped at $2 million. BEDI grant funds are targeted for use in redeveloping brownfield sites as part of larger urban economic development projects, according to HUD. Brownfields are underutilized, abandoned or vacant sites where expansion or redevelopment may be burdened by confirmed or suspected environmental contamination, according to HUD. Kaminsky said BEDI grants must be used in conjunction with a new guaranteed loan under Section 108 of the Housing and Community Development Act. Section 108 is the loan guarantee provision of the Community Block Grant Program administered by HUD. The application deadline is June 16. The funds are coming from fiscal year 2008 and fiscal year 2009 appropriations, according to HUD. See http://www.hud.gov/offices/cpd/economicdevelopment/programs/bedi/funding09/index.cfm.

Venture capital firms generally demand a number of rights to protect their investments.

Venture capitalists usually receive shares of preferred stock when they invest in a company, while the founders and other initial investors hold common stock.  Of course, if you raise successive rounds from venture capital firms, you will likely end up with several different series of preferred stock with different rights and preferences.  Preferred stock has certain advantages over common stock, particularly dividend and liquidation preferences.  This means that if the company decides to distribute dividends to its stockholders, or sell its assets and distribute the proceeds to its stockholders, the holders of preferred stock will have priority over the common stockholders.  They will be entitled to receive some portion (or even all) of the dividend or sale proceeds before any of the common stockholders receive any money at all.

Preferred stock will probably have better voting rights as compared to common stock.  For example, the company will have to get approval from the holders of a certain percentage of the preferred shares to take major corporate actions, such as approval of the annual budget, amendment of articles or bylaws, liquidation of the company, creation of a new class of securities with rights equal to or better than the preferred stock, sale of the company or acquisition of another company.  This structure lets the venture capital firm have a say in decisions that will have a large impact on the company.

The venture capital firm will also likely demand representation on the company's board of directors.  The number of members will vary depending on the current structure of the company and the amount of capital invested by the venture capitalists, but at least one, and often more than one, spot on the board will probably be reserved for members elected or appointed by the venture capital firm.

Also, venture capital investors will want information and reports about the company so it can track its investment.  For example, the company will likely have to deliver its quarterly and annual unaudited financial statements.  Many venture capital firms will demand audited financial statements, which can be a significant expense for the company.  Plus, venture capital investors will expect some other rights, such as the right to force the company to register its common shares with the Securities and Exchange Commission under some circumstances or to participate in any registration initiated by the company (registration rights), the option to purchase shares of stock of the company that other stockholders want to sell (right of first refusal), the right to purchase any new shares issued by the company (preemptive rights) and an adjustment of the conversion to common stock price in the event the company sells stock at a lower valuation (anti-dilution protection).

Looking at all of the ownership and control pieces likely to be obtained by a venture firm, it will probably end up exercising a lot of control over the company.  Such is the price of venture capital.  However a venture capital firm will probably allow the day-to-day operations of the company to continue to be handled by the business people.

Modern agriculture is affected by more than just traditional farm policy - in other words, the statutes and programs that offer financial supports and incentives for production agriculture.  Today, new and changing policies and regulations require different strategic and business planning considerations.  Agriculture policy now is inextricably linked to rural, energy, trade, climate change, nutrition, transportation and infrastructure policies not to mention food safety, financial services and environmental regulations. 
 
This increasingly important set of policy priorities coupled with a new political administration in Washington, D.C. with a strong will to act suggest that the agriculture industry be prepared for something other than the status quo.  In just the last few weeks, several announcements and actions that connect the Environmental Protection Agency (EPA), the US Department of Agriculture (USDA), the Congress, the court system and the agriculture industry support this view. 
 
Consider the following:
 
1.  EPA's greenhouse gas endangerment finding  After a thorough scientific review ordered in 2007 by the U.S. Supreme Court, the EPA issued last week a proposed finding that greenhouse gases contribute to air pollution that may endanger public health or welfare. The gases in question are: carbon dioxide, methane, nitrous oxide, hydro fluorocarbons, per fluorocarbons and sulfur hexafluoride. 
 
As the proposed endangerment finding states, "in both magnitude and probability, climate change is an enormous problem. The greenhouse gases that are responsible for it endanger public health and welfare within the meaning of the Clean Air Act."  The report continues, "the science clearly shows that concentrations of these gases are at unprecedented levels as a result of human emissions, and these high levels are very likely the cause of the increase in average temperatures and other changes in our climate." 

Many industries send out warning signals at the first sign of "over-regulation" and agriculture is no exception.  This specific finding is a slippery slope for agriculture - especially the livestock industry that could be subject to new permit requirements for structure construction or modification and ultimately naturally occurring methane emission fees per animal to the tune of $175 per dairy cow, $87.50 per beef cow and $21.87 per hog (according to the American Farm Bureau Federation).  

In response, Nebraska Senator and former Secretary of Agriculture Mike Johanns has co-sponsored legislation that would protect animal agriculture from any greenhouse gas regulations promulgated by EPA.  Citing the significant economic value his state reaps from commercial red meat production, Johanns suggests this "cow tax" could cost Nebraska's farmers and ranchers tens of thousands of dollars per farm per year.
 
Before the finding takes effect, EPA is required to hold it open for public comment for 60 days and then issue proposed regulations which again would be subject to a public comment period. So EPA’s “deliberative process” could take another two years or more. Meanwhile, last week's announcement will increase pressure on Congress to move ahead on climate change legislation.

2.  Comprehensive climate change legislation  Climate change is near the top of the legislative agenda. In the Senate, Energy and Public Works Committee Chairman Barbara Boxer (D-CA) says she’ll do her best to work with anyone who seeks to move legislation quickly.  The House Energy and Commerce Committee is holding hearings now on a draft released by Chairman Rep. Henry Waxman (D-CA) and Rep. Ed Markey (D-MA) that proposes a mandatory cap-and-trade system to reduce greenhouse gas emissions.

The House Agriculture Committee wants a seat at the table on climate change, too. Committee staffers are currently reviewing stakeholder responses to a 29-question survey regarding the role of agriculture and forestry in a carbon reduction program. The input will be used in “crafting principles that could be part of any subsequent legislation,” explained Ag Committee Chairman Collin Peterson, who says the panel will launch its own hearings on the issue in the next few weeks.

3.  EPA does not appeal court decision on pesticide applications  The U.S. Justice Department recently announced it will not appeal a federal court decision that could eventually require farmers to seek permits from the EPA for all pesticide applications and open the door to citizen lawsuits.  The U.S. Court of Appeals 6th Circuit issued the decision on the case, National Cotton Council vs. EPA, in January, nullifying an earlier EPA ruling that allowed chemical applications to be regulated under existing federal pesticide regulations. Instead, the pesticides applied in or near waterways will now be classified under the Clean Water Act. The change, if allowed to stand, carries significant implications for agriculture as a user of pesticides unable to completely control runoff caused by rainfall. 

A wide range of other beneficial pest control activities could be subjected to lawsuits from activists claiming that the use of pesticides is prohibited under the Clean Water Act unless authorized by permit.  This is of great concern to mosquito control officials and pest managers for forests, recreational waterways, irrigation canals and parks. 

In a March 6, 2009 letter, Agriculture Secretary Tom Vilsack asked EPA Administrator Lisa Jackson to seek a rehearing and request reversal of the 6th Circuit's decision. Senate Agriculture Committee Chairman Tom Harkin, (D-IA) and Ranking Member Saxby Chambliss (R-GA) weighed in with a similar letter.  But those requests were rebuffed, and the EPA has indicated they would be requesting a two-year implementation plan for the ruling. 

4.  EPA seeks public comment on raising the ethanol blend level to E15  EPA's broad reach into agriculture also is evident in its renewable fuel mandate authorities.  EPA is currently seeking public comment on a waiver application submitted by representatives of the ethanol industry to authorize up to 15 percent ethanol blends with gasoline.  The 30-day comment period will run through at least May 20, 2009. By law, the EPA is required to grant or deny the request no later than December 1, 2009.  Since 1978, the limit has been a 10 percent volume ethanol blend (E10) for conventional (non flex-fuel) vehicles.

According to the EPA release, the applicants contend that increasing the blend rate is needed to bring greater investment to next generation biofuels technologies and commercialization.  And the higher blend rate is arguably critical to fulfilling the 2007 Energy Independence and Security Act's renewable fuel mandates.  Opponents (typically environmental and consumer groups and small engine and car manufacturers) counter that the increased blend rate might damage pollution control equipment, reduce air quality, and undermine vehicle and equipment performance and warranties.

5.  New environmental and climate position at USDA   Agriculture Secretary Vilsack announced last week the creation of a new environmental and climate position in his inner office.  Robert Bonnie will serve as Senior Advisor to the USDA Secretary for Environment and Climate.   Referencing that two out of the three key goals of President Obama for USDA are tied to the environment, Vilsack will rely on Bonnie to help guide broad natural resource and climate policy and program decisions.  Bonnie has worked for the Environmental Defense Fund (EDF) for over 14 years with extensive experience in carbon credit programs and conservation initiatives for endangered species.

Independently, each of the above should be important to agriculture, but taken collectively they are evidence of an intensifying regulatory landscape for the industry.  Every part of agriculture - from crop and livestock production, food processing and manufacturing to alternative energy production - is affected by these developments.  Increasingly, EPA will be shaping environmental and climate policy that directly affects agriculture.  Climate change legislation and related programs will be developed and implemented - it's not a matter of if, but when and what form.  Agriculture must communicate with the new political and policy leaders, engage in the policy formation and influence more beneficial rather than harmful outcomes for the industry.
 

Once a business decides to raise money, management is left to figure out how to make it happen.  Strong advisors help, but there are some steps that any business can take to make it easier to raise funds.  Collecting information to give to investors is a good place to start. 

Regardless of who invests, the information that investors will want to see will be pretty much the same, and the business can get this ready ahead of time.  The information should be readily available to the business.

Managers can be surprised at the amount of information they need to provide.  When a business takes money from an investor, it gives something back – an interest in the business.  What the business gives back – whether it's called "stock," "partnership interests," "LLC interests," "notes," or some other name – is often a security.  When the business gives a security to the investor for their money, the investor is protected by securities laws.  One of the protections provided by securities laws is that, before the investor decides to invest, the business has to tell its investors everything material about itself – that is, it has to make a "full disclosure." 

Many managers see full disclosure as the opposite of marketing.  Sure, full disclosure includes the good parts about the business.  But investors will need to know all of the bad things too, as well as all of the indifferent but important things about the business.  To some managers, it seems that after convincing the investor that buying into the business is a great idea, the manager then needs to tell the investor all of the reasons that they should not invest.  Although this can be contrary to a sales mentality, investors should be left with a complete picture of the business – the good, the bad and the material.

The way you end up raising the money will impact how the information about the business is presented.  But the basic content that a business must provide will largely stay the same.  Time invested collecting this information early is well spent, and will save time later.  At minimum, any business looking to raise money should be sure to have the following available:

Financial Statements:  These are the basic financial statements for the business.  Investors will typically want to look back up to five years (if the business has been around that long).  If the financial statements are audited, investors will want to see the audit reports as well. 

Organizational documents:  These are the official documents that govern how the business exists and will vary depending on what kind of business it is.  For example, if the business is a corporation, they would be the articles of incorporation, bylaws, amendments, board minutes and resolutions, shareholder minutes and resolutions, etc.  If the business is a limited liability company, they would be the articles of organization, operating agreement, amendments, minutes and resolutions, etc.  These are often compiled in a "minute book" for the business.  Many businesses operate with multiple companies – subsidiaries, holding companies, etc.  If this is the case, you should keep one set of organizational documents for each subsidiary.  Investors will want to review these documents, as they are important to the kinds of investments that can be made.

Tax information:  This includes tax returns, tax registrations, tax ID numbers, listings of taxes for which the business has registered, etc.  Many businesses have tax advisors; if yours does, the advisor should be able to help compile and present them.  Investors will probably want to look back three to seven years.

Information about legal proceedings:  Investors will want to see if the business is in the middle of any lawsuits or if it has been threatened with a suit.  Lawsuits involving major owners and managers could be important as well.  The lawyer representing the business can help prepare the information that most investors would seek.  Working with the lawyer to put it together is usually advisable to protect against losing attorney-client privilege or disclosing things against the business's interests.

Information about real estate:  Investors will want to see a listing of all of the properties where the business has an interest.  Does it own the land?  Is it leased?  This will include all leases, deeds, mortgages, etc. on the properties.

Material contracts:  Investors will want to understand the business's important contracts.  Examples can include employee contracts, contracts with key customers and suppliers, leases, licenses, and other arrangements that are important for the business.  You probably do not need to include the office copier lease.

Regulatory issues:  Investors want to confirm that the business has the right authority to do its business.  It is helpful to prepare a listing of all of its applications, licenses and permits that the business has.  This can cover anything from investment advisor registrations to elevator permits.

Intellectual property (IP):  As IP continues to be critical in the economy, investors are sensitive to it.  It is helpful to have a list of any patents, trademarks, copyrights, licenses and any other registrations and applications that the business keeps.  It is also important to include any contracts that let the business use someone else's IP.

Insurance:  Prepare a listing of all insurance policies the business has of any kind.  It is also helpful to get a current insurance certificate for each of the business's policies as well.

Employee benefits: Prepare a list of the business's employee benefit plans, including health plans, retirement plans, 401(k)s, employee discounts, etc. and get copies of all of the plan documents (contracts, summaries, etc.). 

These are general rules that can help any kind of business get ready to work with its investors.  Every business is different, so not all businesses will have all of the information discussed above.  Others will need much more detail about some or all of these categories.  So the listing above is not a checklist but rather a guide to start reviewing your own business.  By preparing and collecting these materials ahead of time, businesses can better balance the burdens of raising funds, save time later in the process and reduce professional fees to collect these items.

When you are raising money for your company, a private placement memorandum (PPM) can be used to provide information to potential investors to help them evaluate the merits of an investment in your company.  It is intended to disclose material information to potential investors about the securities you are selling, your company and its business, in particular, the risk factors associated with an investment in your company.  A PPM is not always required for full legal compliance with securities regulations, but it is a useful way to show that you provided all material information to investors.  Generally, each PPM will include a business plan, risk factors, a description of how you intend to use the proceeds of the offering, a capitalization table and a description of the closing process for the investment.

However, there is no "one size fits all" PPM.  They will vary according to the company's size, industry, development stage, offering size and other factors.  Therefore, it is important that a company offering securities retain competent legal counsel to assist with preparing the PPM and conducting the offering.

Business Plan

The business plan section lets you educate potential investors about your company's strengths and weaknesses.  This section should describe the products and services offered by your company, the needs of the market place, the risks which may be posed by actual and potential competitors, your strategic plans with respect to innovation, marketing and financing, and the overall business environment in which your company will operate during the term of the investment.  In most cases, the business plan section is drafted by you and reviewed by legal counsel.  One of the major purposes of legal counsel's review is to ensure that the PPM, taken as a whole, is not misleading to potential investors.

Risk Factors

The risk factors section of the PPM is a specific description of some of the risks that may be associated with your company, the industry and the particular terms of the offering.  If well drafted, the risk factors section can provide useful protection against some potential claims by investors.  Although the actual risk factors for your company will depend on your company's specific business and activities, there are some fairly standard disclosures found in most PPMs.  For example, a "development stage" company will likely include in its PPM the following as risk factors:  lack of revenue, losses and financing requirements, product development risks, technological risks, manufacturing and distribution risks, dependence on key employees, competition, regulatory risks, potential inability to exercise a redemption right, dilution, no market for shares, and difficulty of determining an appropriate offering price.  The company should also include any other risks relevant to its particular business.

Use of Proceeds

The PPM should include a section that describes how you intend to use the proceeds of the offering.  Naturally, you will want to retain some flexibility regarding the use of the funds, but the investors will likely require at least a general breakdown of uses.  The use of proceeds section might list product development, acquisition of new technologies, facilities expansion, hiring of new employees or general working capital requirements as possible applications of the proceeds.  The key to this section is to strike the delicate balance between flexibility for your company and certainty for the investor.

Capitalization

The capitalization section describes the capital structure of your company.  The capitalization section should include a capitalization table which will allow a potential investor to determine how much of the company he will own (or how much of the company's debt he will own).  The capitalization table should reflect both the actual debt and shareholders' equity of the company prior to the offering, as well as the adjusted figures reflecting the completion of the offering on the terms contemplated in the PPM.

Closing Process

The closing process or subscription procedure (as some refer to it) can be foreign and confusing for investors.  Therefore, it is helpful to provide investors some guidance in the PPM regarding how the closing will proceed.  You can require that a minimum amount of money be raised before you will proceed with the offering.  If that is the case, the PPM should disclose the minimum aggregate capital commitments. After any applicable minimum is met, qualified investors generally have to complete and return a subscription agreement which obligates them to buy the securities, along with a check for the amount of the purchase price (payment may also be made by wire transfer), by a date specified in the subscription agreement.  Sometimes the subscription agreement is included with the PPM.

The investor may also be required to complete and return an "accredited investor" questionnaire to allow the company to comply with certain exemptions from the securities laws.  If required, the questionnaire is typically attached to the subscription agreement. 

After the company has received all signed documentation and funds, it should provide the investor signed counterparts of the documentation.  The company may also provide the investor share or unit certificates or promissory notes, if applicable, and signed copies of the company's governing documents.  If the company is making the private offering pursuant to certain registration exemptions, after the closing it may need to file various documents, including Form Ds and U-2 Uniform Consents to Service of Process, with the state and federal authorities where the investors are located.

On December 23, 2008, President Bush signed into law the "Worker, Retiree, and Employer Recovery Act of 2008" (Act).

The Act provides numerous technical corrections to the Pension Protection Act of 2006 (PPA) and provides pension funding relief in light of the current economic crisis.  

Read a summary of some of the Act's provisions of interest to single employer plans.

The House and the Senate passed H.R. 7327, also known as the "Worker, Retiree, and Employer Recovery Act of 2008" (Act), with unanimous consent.

H.R. 7327 provides numerous technical corrections to the Pension Protection Act of 2006 and other relief applicable to governmental plans. 

Read the summary of some of the Act's provisions of interest to governmental plans.

Update GHG Rule Published April 10th

The EPA's proposed Mandatory GHG Reporting Rule was published in the Federal Register on Friday, April 10, 2009.  There will be a second hearing on April 16, 2009 in Sacramento, CA (Sacramento Convention Center, 1400 J Street, Sacramento, CA 95814). Comments must be in to EPA by June 9, 2009.

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The Environmental Protection Agency, on March 10, 2009, issued a proposed rule for a mandatory federal greenhouse gas reporting program. The new reporting requirements would apply to suppliers of fossil fuels and industrial chemicals, manufacturers  of motor vehicles and engines, as well as direct emitters of greenhouse gases with emissions equal to or greater than a threshold of 25,000 metric tons per year.   The EPA estimates that approximately 13,000 facilities would be covered under the reporting program.

EPA indicated that in developing the program they considered work underway in many states and regional initiatives as well as voluntary programs.  Seventeen  states have developed, or are developing, mandatory GHG reporting rules. Reporting requirements have taken effect in 12 states as of 2009, the remaining are set to begin in 2010 or 2011. However, the proposed rule includes manufacturers of mobile sources and engines as required to report emissions from the vehicles and engines they produce, generally in terms of an emission rate, which is not typical in the reporting schemes considered by the agency.

The gases covered by the proposed rule are carbon dioxide (CO2), Methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC), sulfur hexaflouride (SF6), and other fluorinated gases including nitrogen trifluoride (NF3) and hydrofluorinated ethers (HFE).  The public has 60 days to comment on the proposed rule after it is published in the federal register. Comments are likely to address the mobile source requirement, the cost associated with the frequency and verification of reports included in the proposal and the thresholds for reporting.

As the nation focuses its attention on a struggling financial sector, there is still work to be done to improve our national security.  Approximately $2.8 billion will fund a variety of programs through the Department of Homeland Security including border protection, aviation security, bridge construction and repair as well as railroad and port security assistance.

Read more about the impact on homeland security.