Substitute Alert ‒ Delaware Technical Corrections Bill

Last Friday, the Delaware Senate released a substituted version of the bill (Senate Bill 79) introduced last month as a technical corrections bill to Senate Bill 13—the unclaimed property rewrite legislation enacted earlier this year.

The Senate substitute differs from the introduced version of Senate Bill 79 as follows:

1. It does not strike § 1147(a)—the provision that limits the ability of a holder to assign or otherwise transfer its obligation to pay or deliver property or to comply with the unclaimed property law to others (aside from a parent, subsidiary or affiliate of the holder).
2. It would delay the timeline that Delaware must promulgate regulations to December 1, 2017.
3. It would make changes to the State Escheator’s authority to grant waivers of interest and penalties under § 1185 as follows:
   1. Removes the language in the introduced bill that made the discretionary waiver of penalties only applicable to late filed property remitted while under examination.
   2. Gives State Escheator the following waiver authority for property remitted before January 1, 2019:
      1. Waive, in whole or in part, the calculable interest under § 1183 of this title for unclaimed property remitted to the State with a required report under § 1142 (the general holder report section) or § 1170 (the compliance review section) of this title.
      2. Waive, in whole or in part, the calculable interest under § 1183 of this title for unclaimed property remitted to the State as a result of securities examinations in which estimation is not required under §§ 1171 and 1172 of this title.
      3. Waive up to 50 percent of the calculable interest under § 1183 of this title for all unclaimed property remitted to the State and not provided for in paragraphs (b)(1) or (b)(2) of this section.
   3. Gives State Escheator the following waiver authority for property remitted on or after January 1, 2019:
      1. Waive, in whole or in part, the calculable interest under § 1183 of this title for unclaimed property remitted to the State with a required report under § 1142 (the general holder report section) or § 1170 (the compliance review section) of this title.
      2. Except for examinations expedited under § 1172(c) of this title, waive up to 50 percent of the calculable interest under § 1183 of this title for all unclaimed property remitted to the State and not provided for in paragraph (c)(1) of this section.

The legislation remains in the Senate Banking, Business & Insurance Committee and is scheduled for a hearing this Wednesday, June 7 at 11:30 am EDT in the Senate Majority Caucus Room (S165).

Practice Note

Proposed unclaimed property regulations were released on April 1, 2017, and Senate Bill 13 requires them to be final by July 1, 2017. The final regulations were not promulgated in the June 1, 2017, issue of the Register of Regulations and the substitute technical corrections bill appear to indicate that the regulations may not be finalized by the July 1, 2017, deadline. Because the 60-day period for holders currently under audit to elect to enter the Secretary of State Voluntary Disclosure Agreement program or convert to an expedited audit does not commence until the adoption of final unclaimed regulations, holders could have more time to consider their options—if the bill passes without further changes.

Holders are encouraged to contact the authors for more information on the substituted technical corrections bill or Delaware unclaimed property landscape post-Senate Bill 13.