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    Chelsea Anderson’s practice focuses on advising both established and emerging companies on mergers and acquisitions, corporate finance, public and private securities offerings and general corporate matters.  Chelsea ...

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.

For any questions, feel free to contact Chelsea Anderson at or at 206.816.1312.

Japanese Emperor Akihito, who is 82 and reportedly in failing health, gave a rare speech this Monday that suggested much more than what he actually said.  Emperor Akihito has served in the symbolic position for 27 years and has battled various health issues, including cancer.  During his speech, he expressed doubt that he would be able to continue fulfilling the duties of the emperor as he ages, but refrained from suggesting that he may leave the Chrysanthemum Throne.  So why can’t he just abdicate?  The answer is a unique interaction between the terms of Japan’s constitution and its post-war history.  After Japan surrendered to the Allies in August 1945, the Emperor’s father, Emperor Hirohito, renounced his divine status and agreed to a new constitution that removed all political power from the Chrysanthemum Throne and required that an emperor serve until death.  These changes to the authority of the emperor were extraordinary given the impressive power Emperor Hirohito had wielded prior to and during World War II.  But Emperor Hirohito took seriously the new ceremonial role, and Emperor Akihito has strictly followed that post-war tradition.  Today, Japan’s constitution binds Emperor Akihito to serve until death, but any suggestion that parliament should change the constitution could violate the Emperor’s careful avoidance of interference in the political affairs of Japan.  And so, Emperor Akihito hinted as strongly as possible in his speech that he would like to abdicate after his long years of service.  The next move belongs to parliament.

China economyAs China continues to grapple with a slowing economy, its banks are facing an increasing number of overdue loans.  Companies large and small, particularly in the industrial sectors, are finding themselves heavily indebted and dealing with substantial overcapacity issues.  In this climate, a new strategy has recently emerged that may provide some relief to both banks and companies: paying off overdue debt with company equity.  However, while banks and companies may see short-term benefits from improvements to their balance sheets flowing from such arrangements, some experts are predicting that banks taking equity interests in struggling companies will only put off hard choices and ultimately prevent a necessary, long-term reorganization of the economy.  Read more at The New York Times DealBook.

LLCThe State of Washington’s new Limited Liability Company Act became effective on January 1, 2016. The new Act significantly alters several aspects of Washington law governing LLCs. To see what you should be aware of moving forward under the new Act (including potential changes to current LLC agreements), please feel free to refer to our white paper on the subject here.

Asian man in suitJapan’s recent revisions to the Worker Dispatch Law came into effect as of Oct. 1, 2015, despite objections from labor unions and other opponents. These revisions form part of a larger effort by Prime Minister Shinzo Abe to loosen labor laws in a country known for long-term relationships between employers and their employees. Here are three important changes to the temporary workers system that those doing business in Japan should note:

  1. Time Limit – The time limit restricting the use of temporary workers has effectively been lifted. Previously, most industries could only employ a temporary worker in a given position for a maximum of three years. That three-year limit now only applies to a specific temporary worker, so a company may continue to employ temporary workers in a given position so long as no individual worker holds that position for more than three years. This three-year limit may be reset if the employing company asks the opinion of either a labor union or other representative of the majority of employees. Notably, the new three-year limitation will also apply to individuals not previously covered by the three-year term limit, including those working in 26 industries deemed to require special skills, such as translators, software developers, and interior designers. The former temporary worker may be assigned a new job and continue to work for the same company for more than three years, but not in the same capacity, without full-time employment.

  1. Governmental Permission – Temporary staffing agencies must now receive governmental permission to operate. Such agencies also must request that a company hire a temporary worker as a permanent employee when such a worker has completed a three-year position, and must hire the workers themselves or introduce them to alternative firms if the company declines to permanently hire that worker. These changes are a significant departure from the previous law, under which a company employing a temporary worker in a given position for three years was required to offer that temporary worker a permanent position. These new measures are intended to stabilize employment for temporary workers within the revised scheme.

  1. Reporting and Benefits – Firms using temporary workers should also be aware of several new requirements. Such firms now must provide temporary staffing agencies with information detailing the pay and benefits it pays permanent workers, as well as information on vacancies for permanent positions. Temporary workers must be allowed access to relevant trainings and “welfare facilities” made available to permanent workers, including dorms, cafeterias, recreational and other facilities. Similarly, temporary staffing agencies are also now required to provide career training and counseling to their temporary workers.

These changes and others are expected to shake up the temporary worker system is significant ways, although their likely impact on Japan’s broader economy is not yet clear. However, we can certainly expect to see more important legislation as Prime Minister Abe’s economic reforms move forward.

iStock_000010019633_LargeAs The Associated Press recently reported, U.S. alcohol producers are increasingly interested in brewing sake, the traditional Japanese rice wine. Producers believe that there is a strong untapped market among U.S. consumers for premium sake that is accessible, in terms of both price and language.

Read more here:

This trend could make progress in the state of Washington, which is reported as having the most craft distilleries of any state and continues to have a strong craft brewing industry. The laws and regulations surrounding the interstate transportation of liquor tend to favor homegrown production, and Washington lawmakers have recently altered the state’s laws to make distilling in this state easier and, potentially, more profitable. Cheers to that!

iStock_000018278465_FullThe last few weeks have been busy for developments on the Asian Infrastructure Investment Bank (“AIIB”), a project spearheaded by the People’s Republic of China (PRC), that is expected to provide loans for infrastructure development in Asia.  The PRC has accused the International Monetary Fund and the World Bank, both common institutional investors in developing countries and based in Washington, D.C., of being overly exposed to Western influences and attaching too many conditions to the loans they issue. With an active AIIB, we would expect to see new opportunities created in underdeveloped areas that have, until now, had limited access to credit for ambitious projects.  In recent news:

The effects of these membership choices remain to be seen, but many of the prospective founding members will be candidates for management positions within the AIIB.  Such positions could have significant impacts on which infrastructure projects are funded first and on what terms.

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About Us
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. 
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