On May 4, 2022 Delaware Senate Bill 281 was introduced and referred to the Judiciary Committee. In its present form, this bill contains no enactment clause and would therefore become effective upon its being signed into law. The text of the bill can be accessed here: https://legis.delaware.gov/json/BillDetail/GenerateHtmlDocument?legislationId=109437&legislationTypeId=1&docTypeId=2&legislationName=SB281.
Certain aspects of this bill appear to build upon the major changes undertaken via last year’s S 104. Specifically, the bill provides an additional record retention period that commences on the date that holders are provided with a notice of examination, or agree to enter into a voluntary disclosure agreement (a “VDA”). This corresponds with Delaware’s 2021 changes that explicitly tolled the state’s 10-year statute of limitations upon a holder’s receipt of a notice of examination, or agreement to enter into a VDA.
Additionally, this bill expands the situations under which the State Escheator may request a verified report from a holder, and the situations pursuant to which it may authorize a compliance review of a report. Under current law, a verified report may only be requested if the holder has failed to file a report or the State Escheator has reason to believe that the holder has filed an inaccurate, incomplete, or fraudulent report; and a compliance review may only be authorized if the State Escheator believes that a person has filed an inaccurate, incomplete, or fraudulent report. Under this bill, the State Escheator could request that a holder file a verified report or could request a compliance review at any time, without regard to whether the holder has filed a report and without any basis to believe that a filed report is deficient. Moreover, this amendment will then allow the State Escheator to conduct an examination if the holder does not complete or respond to the request for a verified report or a compliance review. This dovetails into the VDA invitation/examination process, in that it provides an additional avenue for the state to identify and enroll holders in examinations, but without also necessarily increasing the number of VDA program participants.
Other key features of the bill include the following:
1. Provides exemptions for:
a. Property due to any government outside of Delaware, including foreign, federal, state, or local governments; and
b. Payments or credits issued under the 2022 Delaware Relief Rebate Program.
2. Provides a process for the state to send notices to owners of escheated securities so that they are received prior to liquidation, and allows (but does not require) the state to take reasonable steps to update or correct a reported address prior to sending such notices.
3. Adds a provision deeming the date that notice was mailed by the State Escheator to the owner, for purposes of commencing the period within which the state must provide replacement of the security or market value upon a claim, to be 30 days after the report was delivered to the State Escheator if the date cannot otherwise be determined or if notice is not required (i.e. the value of the security is less than $50, or the State Escheator determines that the notice would not be received by the owner).
4. Allows the State Escheator to pay claims on a pro rata basis if it is determined that the amount remitted to it is less than the amount reported (for amounts reported prior to August 1, 2022), or if the property is paid from a bankruptcy proceeding.
