Corporate Law Advisory

What Corporations Should Do When Notice of Shareholder Meetings and Dividends Go Unclaimed

Under Pennsylvania law, when a shareholder has moved and provided no forwarding address, the corporation should continue mailing all notices to the shareholder's address of record for at least 24 months. That is because under Section 1707(b) of Pennsylvania's Business Corporation Law of 1988 (15 Pa. C.S. § 1101, et seq.), when a corporation is unable to communicate with a shareholder for more than 24 consecutive months because communications to the shareholder are returned unclaimed or the shareholder has otherwise failed to provide the corporation with a current address, the giving of notice or communication to that shareholder will no longer be required. After such 24-month period, any action or meeting that is taken or held without notice or communication to that shareholder shall have the same validity as if the notice or communication had been duly given. This 24-month rule holds for corporations organized under Pennsylvania law.

In addition to shareholders failing to respond to notices, many times dividends and voting rights go unclaimed. Addressing these issues is a bit more complicated, because the unclaimed property law (or escheat law) of the state of the shareholder's last known address holds priority over both the law of the state of the company's incorporation and the law of the state of incorporation of any intermediary, such as an investment company or stockbroker, that ultimately holds the dividends on account for the shareholder. See Texas v. New Jersey, 379 U.S. 674 (U.S. 1965), Pennsylvania v. New York, 407 U.S. 206 (U.S. 1972), and Delaware v. New York, 507 U.S. 490 (U.S. 1993).

Each state has different requirements and time periods after which the unclaimed dividends or unexercised stock powers are considered to be abandoned. Once dividends or certificates of stock are deemed abandoned, the corporation is required to adhere to certain requirements under the applicable unclaimed property law. A corporation's failure to comply with a state's unclaimed property law could result in criminal/civil penalties.

If the nonresponsive shareholder's last known address is located in Pennsylvania, under Pennsylvania's Unclaimed Property Act (72 P.S. § 1301.1 et seq.) (the "Act"), the dividends and/or the certificates of stock the shareholder owns will be deemed abandoned if the shareholder fails to claim the dividends or indicate an interest in the stock for a period of three years. In such a scenario, the corporation is required to submit a report to the Commonwealth's Treasurer in accordance with Section 1301.11 of the Act prior to April 15 of the year following the date in which the property was first presumed abandoned and must also follow other reporting requirements set forth in the Act.

When notices and/or shares go unclaimed or undeliverable for a period of time, a corporation should document the non-delivery and escrow all dividends so that it is able to make a valid report to the state's treasurer. Taking reasonable steps to locate the shareholder will enable the company to avoid having to deal with the unclaimed property laws and procedures of different states, and the penalties that go along with failure to comply.

For more information about this or any Corporate Law matter, please contact Tim Quinn, or any of the below listed MUS Corporate attorneys.

This material is for informational purposes only.  It is not and should not be solely relied on as legal advice in dealing with any specific situation.

Timothy C. Quinn is an Associate in Meyer, Unkovic & Scott's Corporate Law Group.

He can be reached at: 412.456.2846 or jcq@muslaw.com.

Don’t delay in preparing H-1B applications

Various factors may affect the H-1B visa program this year, including potential changes by the new administration and a pending lawsuit related to H1-B visa lottery procedures. Read more in this article by Gary Sanderson, "Don’t delay in preparing H-1B applications."

Immigration Law Alert - H-1B Visa Applications Can Be Filed On April 3

Do not delay in preparing your H-1B visa applications as the demand is great, and it is likely that the U.S. Citizenship and Immigration Services (USCIS) will receive more applications than there are available H-1B visas. There is an annual cap of 65,000 for foreign national employees holding the equivalent of a U.S. Bachelor's degree and an additional 20,000 visas available for employees with a U.S. Master's degree or higher. Because of the increased demand, in the past several years the USCIS has conducted a lottery to select an appropriate number of applications for consideration of H-1B eligibility.

To be selected in the lottery, employers must file on or about April 3, 2017 for employment beginning on October 1, 2017, the first day of the government's fiscal year. Traditionally the filing date is April 1;  however, that date is a Saturday this year, which results in USCIS accepting applications on Monday, April 3rd, 2017. Employers can file H-1B applications no earlier than six months in advance of the anticipated start date; therefore, April 3, 2017 marks the beginning of the race for obtaining an H-1B visa. The USCIS will announce in advance how many days following April 3 it will accept applications. Last year, the USCIS received nearly 236,000 applications during the filing period. Companies filing for students on Optional Practical Training (OPT) with work authorization expiring after April 1 secure an automatic extension of the student's work authorization until there is a decision on whether the case is selected, and, if selected, the extension continues until October 1, 2017.

Employers need to be aware that every H-1B application requires a Labor Condition Application (LCA) certified by the U.S. Department of Labor (DOL). The DOL takes approximately one week to certify an LCA. If an employer has not previously filed an LCA with the DOL, it may take additional time for the DOL to verify the employer's Federal Employer Identification Number. Companies need to consider the lead time necessary to prepare an H-1B application.

It is important for companies to carefully prepare their applications as the USCIS has increased its scrutiny and regularly requests additional evidence from employers. Employers can work with counsel to develop detailed explanations as to why the employee qualifies for this visa.

Lastly, it is possible that USCIS may make changes to the H-1B visa program this year, given the change in the Executive Branch. As of the date of publication, no official changes have been proposed or adopted. In addition, there is a pending lawsuit related to the H-1B visa lottery procedure, which could have an impact on this year's H-1B visa process. Meyer, Unkovic & Scott will continue to monitor these matters and issue an updated alert if there are any changes.

For more information about H-1B Visas, or any other Immigration Law matter, please contact Joel Pfeffer, Elaina Smiley, or Gary Sanderson.

This material is for informational purposes only.  It is not and should not be solely relied on as legal advice in dealing with any specific situation.