MBO Partners’ Post

𝐓𝐲𝐩𝐢𝐜𝐚𝐥 𝐂𝐥𝐚𝐮𝐬𝐞𝐬/𝐄𝐱𝐭𝐞𝐧𝐬𝐢𝐨𝐧𝐬 𝐮𝐧𝐝𝐞𝐫 𝐃𝐢𝐫𝐞𝐜𝐭𝐨𝐫𝐬 & 𝐎𝐟𝐟𝐢𝐜𝐞𝐫𝐬 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐲: It is customary to find clauses and extensions such as the ones enumerated below depending on the quality of risks and the insurer’s appetite. 1) Company Reimbursement: Where the insurer would pay for cost incurred by the company 2) Securities Claim: This is for settlement of issues arising from securities claim 3) Non-executive additional amount: The insurer pays claims for non-executive directors 4) Investigations claim: To be settled on behalf of the client in preparation for or an attendance to an investigation 5) Asset and Liability Proceeding Support 6) Shareholders Claims cost 7) Personal Tax Liability 8) Mitigation Cost 9) Reputational Crisis Cost 10) Interpretative counsel for international securities claim 11) Future Public Offerings Cover (Secondary Offerings) 12) Management buy-out 13) Representation at investigations and examination clause 14) Representation and Severability Clause 15) Retention Clause 16) Advancement of Costs Clause 17) Emergency Defense Cost 18) Run-off Cover for Subsidiaries Clause 19) Cyber Liability 20) Automatic New Subsidiary Cover 21) Civil fines and penalties 𝐓𝐲𝐩𝐢𝐜𝐚𝐥 𝐄𝐱𝐜𝐥𝐮𝐬𝐢𝐨𝐧𝐬 𝐮𝐧𝐝𝐞𝐫 𝐃𝐢𝐫𝐞𝐜𝐭𝐨𝐫𝐬 & 𝐎𝐟𝐟𝐢𝐜𝐞𝐫𝐬 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐲: There are certain exclusions which depend on the quality of risks and the insurer’s appetite. It is important to mention that some of the exclusions can be bought back depending on the nature of the risks. 1) Criminal fines and criminal penalties 2) Remuneration or employment related benefits 3) Clean-up cost relating to hazardous materials, pollution or product effects 4) Any sum pursuant to a financial support direction or contribution notice by the Pensions Regulator; 5) Taxes 6) Any amounts which are uninsurable under the law applicable to the policy or in the jurisdiction in which the Claim is brought other than in respect of amounts which are punitive, exemplary or the multiplied portion of multiple damages as specified 7) Punitive or exemplary damages awarded for an Employment Practice Wrongful Act. 8) Conduct a) arising out of, based upon or attributable to the committing of a deliberately dishonest or a deliberately fraudulent act by the Insured; or b) for the gaining of any personal profit, remuneration or advantage by the Insured to which they were not legally entitled, where such behavior or gain is established by: a final, non-appealable adjudication in the underlying proceedings; or a formal written admission by the Insured. 9) Prior Claims / Circumstances 10) Prior and Pending Litigation 11) Bodily Injury and Property Damage 12) Company vs. Insured 13) Offering of Securities Author-Peter Offiong

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Part 2 Raising of Claim Most claim fails, not because the legal principle is incorrect or the Employer is obnoxious towards claim, but there are insufficient records to support the additional ‘cost’ and/or additional ‘time’ or both i.e., the claim. The problem with the record, is not that it is difficult to be contemporaneously maintained but its importance is only felt when claim need to be substantiated. It must be understood that records are main ingredient for any claim to be successfully settled. Records For a claim to be successful, the contractor must find answer to 5 (five) ‘Ws’ before the claim can be submitted to the Employer. ·        What happened? ·        Why did it happen? ·        Who is liable? ·        When did it happened? ·        When it ended or expected to end? The documents which answer the above 5 (five) ‘Ws’ constitute the ‘Record’. Let’s discuss the 5 (five) ‘Ws’ to introspect. ·        What happened? The Contractor before raising any claim towards the Employer, must be aware of the breach or the circumstances which caused the breach by the Employer. To the know the nature and extent of the breach, the Contractor must have a reference and in contractual terms, the contractor must have a clear and detailed base line works program. The Contractor while entering the contract, must prepare base line works program, indicating when the Employer should have or expected to perform his part of the promise. More the base line works program is detailed, more the contractor can discern, ‘What Happened?’. ·        Why did it happen? & Who is liable? If the Contractor, is not a contributor in the breach committed by the Employer, the Contractor entitles itself for the remedy provided under the contract or the law, the right granted in section 51 of the Act. The Contractor should also aware of any ‘concurrent delays’ caused by itself. Thus, the Contractor must be aware of such circumstances and cases of ‘concurrent delays’.  Subject to the foregoing, the Contractor is entitled to claim benefit of Employer’s default, and in case of occurrence of neutral event(s). However, the benefit, the Contractor can extract out, on the occurrence of neutral events, should governed by the stipulation in the contract. Investigating “What Happened?”, will answer “Why did it happen?” ·        When did it happened? & When it ended or expected to end? Time of occurrence or the time at which the effect of breach by the Employer is felt, is important to claim the extent of remedy from the Employer. The delay caused by the Employer, need to be built in the baseline works program, to see the deviation from the baseline works program to see the effect on the project timelines

See full details here on the final Section 111 penalties rule from CMS! Timely reporting will be essential to RREs avoiding penalties.

Here is my summary and analysis of the recently published Section 111 penalties rule. CMS's straightforward approach to identifying untimely reported claims for penalties through a randomized audit process seems reasonable. While I still think the fines may be excessive compared to the actual harm to Medicare, it's Congress, not CMS, that placed the "up to $1,000 per day, per claim" provision in the statute. I encourage everyone to review CMS's responses to the comments submitted to the proposed rule. Compliments to CMS for providing a clear and concise explanation for not only the rule but also the reasoning behind the rule.

Having spoken to several clients who have had retrospective compliance checks for R&D, it's evident that it is very difficult to actually have a conversation with anybody at HMRC who has the specific industry knowledge (or anyone at all actually) to accurately and fairly make a judgement or "call" on the qualifying activity that some of the claimants have undertaken in the name of R&D. We have had compliance checks for 0.2% of the claims we have done historically over 5 years, but this rises to over 1% for those awarded within the last 12 months. A driver for enquiries, seems to be any liability issues historically with HMRC and judgement seems to be passed without fully understanding what a client does. We have seen (already) a reluctance of Companies to submit subsequent R&D claims on the back of this approach, so not only are Companies being "accused" of falsely claiming and some wanting to draw a line under the process, they are not claiming relief where applicable for R&D activity done in the following year(s). So have HMRC "won"? I certainly think they have stopped genuine claims being submitted already. All of this despite the Government banging the R&D drum at every budget/statement over the last few years. In summary, a more focused approach to the new claims (AIF on Gov Gateway being a key change) standardises the process, which can only be a good thing, however, innovators are losing confidence in the scheme when the work they do, is being questioned retrospectively after it has been "awarded".

Beneficial Owner Information (BOI) reporting requirements are coming in 2024. Unfortunately, CPAs have not received clear guidance on how we can help our clients and there are a lot of conflicting opinions. We're left to make our own professional assessments on how to assist clients (if we can). It's part of the Corporate Transparency Act (CTA) which was designed to protect against various illegal financing methods by requiring businesses to report “beneficial owner” information to the Financial Crimes Enforcement Network (FinCEN). It has initial and ongoing filing requirements with risk of significant penalties. FinCEN has published an extensive "Small Entity Compliance Guide." They expect to have the filing system available January 1, and they stated most businesses will be able to manage their own reporting. As the CTA is not a part of the tax code, the application of the regulations requires legal guidance. Despite my best efforts, there has been no clear and definitive guidance from the AICPA, OSCPA, Oregon Board of Accountancy, Oregon Bar Association, attorneys, or my insurance. My insurance has cautioned it may not be covered due to being an "unlicensed practice of law" and multiple attorneys have cautioned about the significant risk. Ultimately it comes down to no one knows how this will shake out until it gets litigated. At this point, the best recommendation seems to be using large registration service companies, like CorpNet, to file for a minimal fee. For more information, see https://www.fincen.gov/boi.

Limiting your Practice’s liability for your professional services? Yes please!! No one wants to pay for other people’s mistakes or misfortune, and that’s where a limitation of liability clause becomes an important addition to your consultancy agreements. A limitation of liability clause allows one party to exclude or cap their liability for losses and financial damages suffered by the other party. Risk Manager, Filomena Maffi explains how the K.I.S.S (Keep It Simple Silly) principle is particularly relevant when it comes to limitation of liability clauses, especially when you consider their potentially dire consequences. Read why it’s important to K.I.S.S the Clever Consultant: https://lnkd.in/ef5iQFNw #liability #limitation #consultancyagreements

The IUA has strongly opposed plans to publish details of future regulatory investigations before they reach their conclusion. Under proposals announced by the Financial Conduct Authority details of ongoing enquiries into alleged misconduct would be made publicly available. Such action could lead to market speculation, cause irreparable reputational damage and drive firms to financial hardship, even though they may subsequently be found innocent of any charges. The IUA has warned that premature publication of investigations may create an unwarranted perception of systemic problems within the financial services industry, impacting other companies not subject to enquiries. It may also increase the cost and restrict the availability of directors and officers insurance for firms regulated by the Financial Conduct Authority. Helen Dalziel, IUA Director of Public Policy, said: “The concept of ‘innocent until proven guilty’ is a fundamental doctrine of criminal law and the mere association with an ongoing investigation could cause substantial harm to a firm’s standing in the market. “If individuals are named and shamed before the outcome of an investigation is determined, there is a real danger that the possibility of a fair trial by an impartial tribunal would be impeded. Early disclosure of unverified facts and negative media coverage could create a prejudicial environment with guilt presumed. “Publishing any investigations that have not been fairly concluded is only likely to erode, rather than encourage, trust and confidence in financial services.” The IUA has submitted a formal response on behalf of its member companies to the Financial Conduct Authority’s consultation exercise ‘CP24/2: Our Enforcement Guide and publicising enforcement investigations - a new approach’. Proposals put forward by the regulator are said to be disproportionate to the potential harm it is seeking to mitigate. There is no evidence of any formal assessment being carried out of the potential impacts on reputation or market integrity. The IUA’s response suggests that many investigations do not actually lead to any enforcement action. A number of powers are already available to the authority that its own annual report illustrates are providing effective enforcement of regulations.

#Accountants, we know it's challenging dealing with the ins and outs of #construction #CIS, #IR35 and the responsibility of making sure your client is safe against the dreaded #HMRC enquiry. Remember, even if the #subbies are CIS, does NOT guarantee their employment status, the onus is still on the company, and your professional recommendation! HMRC has the power to #reclassify a #subcontractor at any time, and your client or company could be facing up to 6 years of eye-watering liabilities and penalties. We are here to help you. Give us a call or drop us an email for a free initial conversation. https://lnkd.in/eDvc4s_N #helpline #employmentstatus #taxlaw