Cleveland Law Library Weblog

"B" Corporations Strive to "Benefit" Society

Until I read an article from the Christian Science Monitor today, I had no idea what a "B" corporation was. Although "B" corporations currently have no special legal significance where the IRS is concerned, they have a special focus when it comes to their operations, which must be designed to consider the interests of multiple stakeholders and "benefit" society. B Lab started the initiative in 2007 and can count 200 certified "B" corporations on its rolls, with a target of 300 by the end of this year. B Lab describes a "B" corporation as follows: "B Corporations are a new type of corporation which uses the power of business to solve social and environmental problems."  The article referenced above indicates that B Lab is lobbying the Obama administration for a lower tax rate for self-designated "B" corporations.

Ohio Business Gateway Updates its Electronic Filing

According to Ohio.gov, the Ohio Business Gateway has enhanced its website as of today to make filing business documents easier online. Although I could not get into the new site this morning, businesses will be able to access a single, consolidates site for logging in to all Gateway services, and they can give their lawyers and accountants shared access when necessary. Paying is supposed to be easier, as it logging out. A new plus will be the ability to check a history link for prior confirmations and receipts. Hopefully, the new site will be working later today:

https://ohiobusinessgateway.ohio.gov/OBG/Membership/Security.mvc/Login

More Corporate Reform Afoot

HB 134 aims to make incorporating in Ohio more attractive by allowing corporations to permit majority voting instead of plurality voting.  The bill builds upon corporate reforms made in the last session.  OSBA supports H.B. 134 , Inside OSBA, March 29, 2007.  See our prior post:  Ohio Corporate Law Modernization Act, Aug. 1, 2006.

Supporting "Culpable" Employees During Corporate Fraud Prosecutions

A recent article examines the impact of the McNulty Memorandum on a corporation's support of "culpable" employees during a corporate fraud investigation.  The Department of Justice can decide which employees are "culpable" even before a determination of guilt.  The McNulty Memorandum prohibits prosecutors from giving cooperation credit to a corporation for cutting off the payment of legal fees to executives or employees.   However, the government may penalize corporations for other types of support, such as continued employment without sanctions for misconduct or information sharing pursuant to a joint defense agreement.  See Will the Government Punish You for Standing by Your Employees? by R. Christopher Cook, Jones Day Publications, March, 2007.  Also see our prior post:  Justice Dept New Rules for Corporate Fraud Prosecutions. 

Advising Clients on Company Blogs

For a great article on how to advise corporate clients on legal issues concerning company blogs, see:  As Blogging Grows, So Do Its Do's and Don'ts by Alysa N. Zeltzer and John E. Villafranco, Internet Law & Strategy, Feb. 20, 2007.  The article mentions such items as:

* Considering how the blog will effect the company's document discovery and retention obligations

* Establishing a corporate blogging policy and making sure employees are complying.  The policy should cover such issues as preventing defamation suits and preventing other information damaging to the company from getting on the blog. 

*Being mindful of making representations in violation of consumer protection laws

*Being mindful of privacy and information security laws

IRS Releases Suggested Governance Guidelines for Nonprofits

The IRS has released proposed guidelines concerning the governance of nonprofits.  While the IRS lacks the power to enforce these guidelines, they are expected to be influential nonetheless when a final version is adopted.  The proposed guidelines should prompt tax-exempt organizations to review their governance rules, organizational documents and compensation policies.  See IRS Releases "Suggested" Governance Guidelines for Tax- Exempts by Jerry O. Allen and Allan D. Duffy, Bricker & Eckler, Feb. 2007. 

"The guidelines address the following nine general topics: (1) Adoption of a Mission Statement, (2) Adoption of a Code of Ethics and Whistleblower policies, (3) Satisfaction of the Duty of Care/Director Diligence, (4) Satisfaction of the Duty of Loyalty/effective conflicts of interest oversight, (5) Constituent transparency, (6) Oversight of fund-raising activity, (7) Stewardship of financial affairs, (8) Payment of reasonable compensation, and (9) Adoption of a document retention policy."

IRS Releases Suggested Governance Guidelines for Tax-Exempt Organizations by McDermott, Will & Emery, 2/5/2007.  This articles has a link to a copy of the proposed guidelines, "Good Governance Practices for 501(c)(3) Organizations".  A copy is also available at the IRS Website.

Cuyahoga County Commissioner's Economic Development Handbook

To find out about economic development programs which may assist your clients, consult the Economic Development Assistance Handbook compiled by the Cuyahoga County Board of Commissioners.  The 47 page book details programs from 15 different organizations, and provides links for more information.  Programs include public financing assistance and economic development technical assistance from such organizations as the Cuyahoga County Department of Development, Ohio Department of Development, Council of Development Finance Agencies, City of Cleveland Department of Economic Development and the Small Business Administration.

SEC Issues Final Rules for Proxy Materials on the Internet

The SEC issued its final rules concerning posting proxy materials on the Internet, as an alternative to sending them by mail. A company must issue notices indicating that the proxy materials are available on the web.  The final rules can be viewed in the  SEC Release No. 34-55146, Jan. 22, 2007.  For more details see SEC Posts Final Rules for Internet Availability of Proxy Materials by Bricker & Eckler, Jan. 2007.

SEC to Amend Recently Enacted Executive Comp Rules

The SEC "is altering the requirements for disclosing the value of stock option awards and giving firms more flexibility in how they report those expenses."  SEC Amends Rules on Disclosing Executive Compensation by Donna Block, The Deal, Dec. 27, 2006.  See also SEC Amends Executive Compensation Disclosure To More Closely Align With FAS 123R, Press Release 2006-219 and our prior post:  New SEC Rules on Executive Compensation.

Great Article on New Ohio Business Entities Law

For a great article detailing Ohio's business entity modernization act, H.B. 301, see Amendments to Ohio’s Business Entity Statutes Effective in October 2006, Jones Day Commentaries, September 2006 by David P. Porter, Jeanne M. Rickert, Randall M. Walters and Jennifer C. Lewis.  See our prior post:  Ohio Corporate Law Modernization Act, Aug. 1, 2006.