Despite the rapid rise in Chinese investment in the U.S. in recent years, there has been some early speculation that the Trump Administration would not allow the level of Chinese investment to continue at the same rate.
Proposals to limit Chinese investment continue to be floated in Congress. Recent developments suggest however that these concerns are overblown. Prospects for Chinese investment remain bright. At the same time, the Committee on Foreign Investment in the U.S. (CFIUS) retains considerable discretionary authority to block foreign direct investments from China and elsewhere, or to dictate changes to the terms of the deal. Threats to U.S. national security, including the safety of our country’s infrastructure, remain key criteria for CFIUS in its scrutiny of inbound transactions.
Anyone forming contracts with Japanese businesses or consumers beware: The Civil Code in Japan is likely to face the largest reforms since it became effective in 1898. On April 14, 2017, sweeping reforms to the Civil Code were approved by the Japanese Parliament’s Lower House. Although they must still be approved by the Upper House, and they might change in the process, pundits expect approval without change.
What is the International Entrepreneur Parole?
On January 17, 2017, the United States Department of Homeland Security (“DHS”) formally released the final rule to allow International Entrepreneurs to legally remain and work in the United States in a Parole status. The rule will become effective on July 16, 2017.
The long anticipated and new option for International Entrepreneurs was first introduced by U.S. Citizenship and Immigration Services (“USCIS”) in August 2016. The new rule, included in 8 CFR 212.19, is aimed at providing an alternative method for those entrepreneurs who can meet the requirements to enter and remain in the U.S. for start-up employment. The rule provides automatic work authorization for those international entrepreneurs who are paroled into the U.S. for a start-up business. The advantage of making the rule is that it doesn't need to be first approved by the U.S. Congress, but by USCIS. International entrepreneurs may be allowed to enter the United States more easily and stay for a longer period of time for up to 30 months initially.
With no fanfare and minimal notice, the government has significantly increased the penalties that can be assessed for a variety of offenses related to the Employment Eligibility Verification Form I-9.
Now, a “mere” error on the paperwork, such as failure to check a box or confirm that the employee dated the document, can result in a penalty of between $216 and $2,156. Previously, the penalty ranged from $110 to $1,100. This almost doubling of the penalty range is significant because penalties for paperwork errors can be the largest aspect of government fines, even for the best of employers.
It’s early days in the administration of President Trump, but already public reporting companies are considering how best to capture potential risks to their businesses as they draft their annual reports on Forms 10-K and 20-F. Risk factors are an important part of an annual report that help a company to communicate potential risks to its shareholders and prospective shareholders. Risk factors can also give a company some protection from suit in the event of unwelcome occurrences or unfavorable market conditions. Generally speaking, broader risk factors can help limit surprises, but the more specific a risk factor, the more protection it is likely to give a company. Although risk factors are required in all annual reports of non-smaller reporting companies, they must also be updated in quarterly reports to reflect any material changes since the last annual report.
At this early stage of the new administration, it is somewhat difficult to say which specific risks might require disclosure for any given company. However, some strong trends are emerging. Companies that are reliant on the Affordable Care Act should certainly consider including a risk factor related to the recent legislation preparing to repeal the Act. Similarly, companies with manufacturing and other supply chains or trade arrangements outside of the United States should likely consider adding or supplementing a risk factor on the potential impacts of new import/export legislation and revisions to existing treaties, particularly with regard to NAFTA. Such current event-driven reporting is not new, and many reporting companies have recently noted Brexit and climate change-related issues in their risk factors. But, given the amount of significant economic changes proposed by President Trump both before and after the election, and the overall uncertainty surrounding how those proposals might be achieved, reporting companies should be extra careful in monitoring and updating their risk factors in 2017.
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Over the last year, the Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ) together closed more than 50 enforcement actions under the Foreign Corrupt Practices Act (FCPA) against businesses engaged in commercial activity beyond the borders of the United States. Those investigations netted fines and penalties of nearly $2.5 billion—the most substantial transfer of corporate wealth under the auspices of the FCPA in any year since its inception. Another 17 senior officers and directors were charged individually with federal offenses or faced civil fines, while a host of other employees lost their jobs as a result of their involvement in suspect business transactions abroad. And we now know that the greatest number of enforcement actions across the history of the FCPA program have arisen in connection with business activities in China, surpassing Nigeria, the next most common venue, by a considerable margin.
Over the past six months, as Chair of the American Bar Association, Section of International Law, I’ve traveled to destinations from Washington, D.C., Chicago, San Francisco and Ottawa to Istanbul, Rome, Tokyo, London, Budapest, Bogota, and Munich. My experience has been a constant and vibrant engagement with the international legal community on a wide variety of matters. I have had a front row seat to history being made at the conclusion of Colombian peace talks, listened to the personal account of a North Korean dissident, learned about the differences between other legal systems and our own, discussed the changes and challenges occurring in the practice of law, and grappled with impediments to fair and accessible legal systems for all. The Section has proved to be an amazing platform – both from which to support those seeking justice and to work toward a healthy and fair legal system for future generations.
The article was first published in Duff on Hospitality Law blog.
November 2016 held more than one shock for many in America. Not only did the presidential election cycle come to a dramatic close, but the government introduced its new Form I-9, Employment Eligibility Verification.
First introduced in 1986, the “Form I-9, Employment Eligibility Verification,” must be completed for every new employee. Over time, it has been expanded from one page to two. And its instructions have grown from less than a page, to six pages for the 2013 edition to 15 pages of Instructions – more than four for the employee section alone – for the 2016 edition in English and in Spanish.
China has been quite successful in encouraging foreign investments since the Sino-Foreign Equity Joint Venture Enterprise Law was promulgated in the beginning of the country’s economic reform in 1979.
With the passage of time, the Chinese government has recognized the limitations of the old case-by-case approval regime which is typically time-consuming and burdensome for foreign investors. The government has sought to test various reform measures as seen through the establishment of several Free Trade Zones and new rules that only applied within the boundaries of these Free Trade Zones.
Almost everyone approaching the U.S. consumer market has heard nightmares about lawsuits and read damaging headlines from consumer claims. These range from industry wide antitrust investigations to criminal indictments for racketeering to class actions for deceptive advertising.
In May this year, U.S., Canadian and Mexican government officials met to discuss cooperation in enforcing antitrust laws in an increasingly global market place, suggesting even greater cooperative activity in the antitrust arena relating to global markets.
The International Practice Group of Garvey Schubert Barer is a cross-disciplinary group of attorneys practicing in areas ranging from business transactions, immigration, maritime, government regulatory work, transportation and logistics, and estate planning. The group members include bilingual and multicultural attorneys who are well-versed in handling these subject matters in a cross-border context. The firm’s attorneys have been actively practicing in the international arena since the early 1970s.