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Abandoned or Unclaimed Property
VDA Program



Laws & Guidelines


The Secretary of State Abandoned or Unclaimed Property Voluntary Disclosure Agreement (SOS VDA) Program was established in July 2012 by then Governor Jack Markell to provide a business friendly program to all companies seeking compliance with the Delaware unclaimed property laws. Initially, the SOS VDA Program is geared towards Delaware domiciled companies which desired to “catch up” on its past due abandoned or unclaimed property obligations.

In February of 2017, Governor Carney signed into law Senate Bill 13 (SB 13) which re-wrote Delaware’s abandoned or unclaimed property statutes. In June of 2017, Governor Carney signed Senate Substitute for Senate Bill 79, which provided updates to SB 13.

In July of 2017, the Department of State finalized regulations (SOS VDA Estimation Regulations) related to the SOS VDA Program on estimation and other SOS VDA related matters.

In October of 2017, the Department of Finance finalized regulations (DOF Regulations) entitled “104 Department of Finance Abandoned or Unclaimed Property Reporting and Estimation Manual.”

This section provides a history of the legislative changes, introduces the SB13, SS 1 SB 79 and provides guidelines to be considered by Holders entering into the SOS VDA Program.


Program Update

DOF Regulations were finalized on October 1, 2017, becoming effective ten days after publication on October 11, 2017, see below.

Pursuant to 12 Del. C. § 1176(b), eligible Holders have 60 days following the adoption of the DOF Regulations to convert to the SOS VDA Program. The conversion period for the SOS VDA Program is open until December 11, 2017, by which date Form NOI CONV must be received by the Department of State to be eligible.

SOS VDA Estimation Regulations were finalized on July 1, 2017, becoming effective ten days after publication on July 11, 2017, see below.

The enrollment period for the SOS VDA Program is open. See Steps to VDA for enrollment procedures.

 


Regulations

Pursuant to Delaware Code § 1176 (b), on October 1, 2017, the Department of Finance finalized the regulations, entitled “104 Department of Finance Abandoned or Unclaimed Property Reporting and Estimation Manual” (“DOF Regulations”). DOF Regulations become effective ten days after publication on October 11, 2017. From that date, Holders will have a 60 day period to submit Form NOI CONV, which has been executed by an officer of the company, to request a conversion. Form NOI CONV must be received by the Department of State by December 11, 2017 to be eligible for conversion.

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Regulations related to the administration of the SOS VDA Program have been finalized.  Regulations provide an overview of the estimation methodology expected under the SOS VDA Program and other VDA matters.  These regulations are only applicable to SOS VDA Submissions.

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Implementing Guidelines:

On July 28, 2014 an addendum to the SOS VDA Program’s February 12, 2014 Implementing Guidelines was published. The Implementing Guidelines define the expectations of the SOS VDA Program.

The Implementing Guidelines

The Implementing Guidelines above are in the process of being updated to account for the changes in Delaware’s Abandoned or Unclaimed Property statutes. Materially the Implementing Guidelines will be similar. Once the Implementing Guidelines have been updated they will be communicated to Holders and Advocates and posted on the SOS VDA Program website.

The Implementing Guidelines are applicable only to the SOS VDA Program. Companies that are being audited by the Delaware State Escheator, either currently or in the future, should not rely on the SOS VDA Program Implementing Guidelines.

 


Legislative Updates

Senate Substitute 1 for Senate Bill No. 79 — This Act was signed into law on June 29, 2017 by Governor Carney which provides clarity and changes to Senate Bill No. 13.

Changes in SS 1 SB 79 include:

  • Section § 1148 defines new due diligence procedures.
  • Section § 1153 defines state to include any foreign jurisdiction.
  • Section § 1155 provides guidance for early reporting of property.
  • Section § 1185 provides State Escheator the authority to waive interest and penalties in various circumstances.

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Conversion from DOF Audit to SOS VDA Program

Holders that received an examination notice from the Department of Finance on or before July 22, 2015 may convert its Department of Finance examination into the SOS VDA Program.  Form NOI COV must be received by the Department of State by December 11, 2017 for the submitting Holder to be eligible for conversion.  Holders undergoing a securities examination, however, in which estimation is not required, may not convert.  Eligible Holders will also have the option to participate in an expedited audit.

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Senate Bill No. 13 — This Act was signed into law on February 2, 2017 and continues the reforms enacted over the past 4 years by restructuring Chapter 11 of Title 12, and adopting in substance many provisions from the 2016 Revised Uniform Unclaimed Property Act promulgated by the Uniform Law Commission. In addition, this Act adopts certain recommendations from the Delaware Unclaimed Property Task Force formed under Senate Concurrent Resolution No. 59 of the 147th General Assembly, and makes significant changes to the State’s unclaimed property law to bring greater predictability, efficiency, and fairness to the State’s unclaimed property reporting process and compliance initiatives.

More specifically, these changes include reducing the look-back period of all voluntary disclosure agreements and audits to 10 report years, and creating a 10 year statute of limitations for the State to seek payment of unclaimed property due to the State. In addition, this legislation aligns the State’s record retention requirement for companies with the statute of limitations and look back period, which brings State law into conformity with a majority of other states.

This Act also offers any company currently under audit prior to July 22, 2015, the opportunity to convert their audit into a voluntary disclosure agreement by entering into the SOS VDA Program. All companies who received a notice of examination and are currently under audit as of the effective date of this Act will have the opportunity to engage in an expedited audit review process. Finally, this Act mandates that interest be assessed on any late-filed unclaimed property, as a means to incentivize voluntary compliance.

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Senate Bill No. 141 — This Act was signed into law by Governor Markell on July 22, 2015 and extends the SOS VDA Program. The amendment changes the look back period for all current and future enrollees in the SOS VDA Program to 1996, and starting in 2017, creates a rolling 19 year look back for new VDAs. In addition, the Act requires, generally, that Holders be offered the option of enrolling in the SOS VDA Program prior to being audited, and reinstates interest on late filed unclaimed property at the rate of 0.5% per month with a cap of 25% of the amount due. In the SOS VDA Program, interest is waived for Holders that work in good faith to complete the SOS VDA Program.

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Senate Bill No. 228 — This Act was signed into law by Governor Markell on June 30, 2014 and codifies the longstanding practice of the Department of Finance and the Secretary of State to hold as confidential the financial information obtained during the course of examinations, settlements, or voluntary self-­disclosure agreements that are conducted pursuant to Title 12, Chapter 11 of the Delaware Code.

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House Bill No. 2 — 147th General Assembly passed Act (January 15, 2013) to amend Title 12 of the Delaware Code relating to abandoned or unclaimed property. This bill creates additional incentives for Holders of abandoned property to report such property to the state and promptly resolve such claims. The bill expands the new Voluntary Disclosure Agreement Program administered by the Secretary of State and enacted by the 146th General Assembly to further incentivize participation in the program.

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Senate Bill No. 258 — The 146th General Assembly passed Act to amend Title 12 of the Delaware Code relating to abandoned or unclaimed property.

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Delaware Code

Title 12, Chapter 11 — Statute Governing Escheats. Access complete Code, including Subchapter II regarding Abandoned or Unclaimed Property.

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Legal Disclaimer: The materials contained herein are intended to provide information in regard to the subject matter covered. The Delaware Department of State is not engaged in rendering legal, accounting, or other professional services. If legal advice or other professional assistance is required, the services of a qualified professional should be sought.

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