Virgin Islands Law Blog

Virgin Islands Law Blog

U.S. Virgin Islands law & politics

How Sound Estate Planning Benefits Your Business

Posted in Tax & Estate Planning

If you own a business or have an ownership stake in a corporation, you will need to account for these activities in your estate planning. You have likely spent years building up your business, so the last thing you want is for the estate tax or other issues to significantly reduce its value upon your death.

There are a few key ways in which good estate planning can benefit your business in the short and long term.

1. It ensures greater longevity for your business

When you have spent such a significant portion of your life building your business from the ground up, you almost certainly want to ensure it continues to thrive long after you are gone. Through estate planning, you can continue to pass along the ideas and designs you have developed with your company to future generations.

Estate planning allows you to plan your ownership transition in great detail so that when the time comes, it goes as smoothly as possible. Businesses with owners that do not take the time to plan how they will transition out are much more likely to struggle after their initial owners are gone.

2. It provides you with more long-term options for running your business

For example, with proper estate planning, you can take advantage of what’s called a buy-sell agreement. If your business has multiple co-owners, such an agreement will make sure the interest of any owners who pass away is automatically purchased by other owners in the agreement. This prevents beneficiaries of the deceased owner—such as children, spouses or other relatives or loved ones—from accidentally becoming owners of a company they do not want or are incapable of running themselves.

3. It helps you minimize potential estate taxes

There are several estate planning tools available to help minimize the potential tax impact your business would face upon your death. For example, you may transfer business assets to your children while still retaining some income through a grantor retained annuity trust (GRAT). As your business assets grow, the appreciation in value and equity for your business would not be subject to taxation.

4. It keeps you looking toward the future

As difficult a subject it can be, you can never know for sure when your time to pass has come, so you should always be prepared for all possibilities. A cohesive succession plan could take as long as a decade to really work well, so you should have the groundwork laid for it well in advance.

The estate planning tools and processes you use depends largely on the type of business you have and the value of your company and any business-related assets you have. To learn more about how to account for your business in your estate plan, contact a trusted attorney.

 

Steven K. Hardy is Chair of the Corporate, Tax and Estate Planning Practice Group at BoltNagi, a well-established and respected business and corporate law firm proudly serving clients throughout the U.S. Virgin Islands.

The Fiduciary Responsibilities of Running a Corporation

Posted in Corporate & Financial Services

In legal terms, a fiduciary is a person who acts in the best interests of another person. To that end, within a corporation, there are certain people who have “fiduciary responsibilities” to others. These may include promoters, officers, directors and, in some cases, shareholders.

Let’s take a quick look at the various fiduciary responsibilities associated with running a corporation.

Fiduciary responsibilities of promoters

A corporate promoter is responsible for finding and organizing investors. This person’s fiduciary relationship is to the corporation, investors and co-promoters.

Promoters must always be honest in their actions and work in the best interests of the corporation and its shareholders. For example, if a promoter finds out about a business opportunity because of his or her position, that person is legally forbidden from taking advantage of that opportunity at the expense of the corporation and shareholders. Otherwise, the promoter may be guilty of insider trading, a type of fraud.

Fiduciary responsibilities of directors

Directors have two main fiduciary duties: duty of care and duty of loyalty.

Duty of care requires a director to always act honestly and in good faith in a way that promotes the corporation’s best interests. For example, directors should keep up to date on all corporate matters, attend board meetings and act in a way that improves the corporation’s standing.

Duty of loyalty requires directors to place the interests of stockholders and the corporation above their own, much in the same way as promoters. They are not allowed to take advantage of their position or knowledge that would benefit them in any way that would be to the detriment of the corporation.

Fiduciary responsibilities of officers

Directors typically delegate various day-to-day tasks of running a corporation to officers. These officers, like directors, have a duty of care and a duty of loyalty as they carry out their tasks and responsibilities. They must act in good faith at all times, using care in their decision making to the same standard that a reasonably careful person would act. They also must avoid potential conflicts of interest.

Fiduciary responsibilities of shareholders

Although shareholders typically do not have any fiduciary responsibility, as they do not have any oversight capacity, there are some circumstances in which shareholders may become members of the board of directors. In this situation, the shareholder would have the same fiduciary responsibilities any other director.

The level of liability directors, officers and promoters assume can vary, but it’s important for business leaders to have at least a basic understanding of how fiduciary responsibility works. For further information and guidance on this important issue, consult a skilled corporate planning attorney serving U.S. Virgin Islands businesses.

 

Steven K. Hardy is Chair of the Corporate, Tax and Estate Planning Practice Group at BoltNagi, a well-established and respected business and corporate law firm proudly serving clients throughout the U.S. Virgin Islands.

Issues to Consider Before Sharing Office Space with Another Business

Posted in Labor & Employment

Many small businesses rent out office space in commercial buildings, likely sharing that space with various other businesses and organizations. Before you decide you are going to rent shared office space, however, it’s important to conduct the proper due diligence to ensure it’s the right move for your company.

In most cases, it’s in your best interest to share space with other businesses similar to yours. For example, a couple of law firms focused on different areas of practice might choose to share a floor of a large office building, or several doctors could have small practices in the same building. Any business that sees clients or patients may especially benefit from this arrangement, as it otherwise can be costly to maintain offices with reception areas or private meeting rooms.

The following are a few issues you will need to consider if you decide to share office space with another business or organization:

  • Each company’s responsibilities for the space: Who is going to have primary responsibility for the workspace? This likely depends on who owns the building. If one of the business owners also is the owner of the building and is simply renting it out to other similar companies, then that entity will likely be responsible for maintenance and other issues. If you have joined with other companies to find a place to share, then you may need to split these responsibilities.
  • Decisions on how to use the space: You will need to decide how you are going to make decisions regarding the use of your shared office space. This could include anything from the types of business activities allowed to how you will decorate the property. Depending on ownership of the building, some of these decisions may or may not under your control.
  • Division of costs: No matter who owns the shared office space, you must come to an agreement regarding who is responsible for making various payments. If the use of the space is not equal, you will have to design a payment arrangement that is fair to all parties sharing the space. Make sure these arrangements are flexible so you can easily change them if one tenant’s needs change or if a new company moves in.
  • Use of common space: If there is any common space included with your shared office, you should determine how it will be used. This could include warehouses, kitchen facilities, separate conference rooms, office equipment, administrative areas or anything else that does not fall in one company’s assigned space. How will you keep these spaces clean? How will you split costs for these spaces? These issues and more deserve some thought before you sign a lease.

If you could use assistance with this or a wide range of other issues related to your company’s success, meet with a skilled and knowledgeable corporate and business law attorney in the U.S. Virgin Islands.

 

Steven K. Hardy is a member of the Corporate, Tax and Estate Planning Practice Group at BoltNagi, a well-respected and established corporate law firm proudly serving clients throughout the U.S. Virgin Islands.

21st Century Cures Act Offers More Health Insurance Options to Employers

Posted in Labor & Employment

Small businesses dealing with health insurance-related challenges received some welcome news in December with the passage of the 21st Century Cures Act, a new federal law that allows employers to expand their use of qualified small employer health reimbursement arrangements (QSEHRAs).

While the law contains numerous provisions, the ones most relevant to small businesses allow those with fewer than 50 employees to reimburse for qualifying healthcare expenses, such as premiums for coverage purchased independently. To be eligible, a business cannot offer any type of group healthcare plan to any of its employees. Those receiving the reimbursements also may not apply QSEHRA funds to health savings accounts established through their spouses.

The 21st Century Cures Act provides much-needed relief to small employers, who have been in a state of limbo over whether or not they would be able to continue their existing health reimbursement arrangements. These arrangements had been prohibited under the Patient Protection and Affordable Care Act, although the Department of Labor had issued several extensions to allow businesses to continue them for limited periods of time. Thus, the new law offers a more permanent solution.

Stipulations of QSEHRAs for small businesses

It is important to understand that QSEHRAs come with a number of requirements, including the following:

  • All employees must receive access to reimbursements on the same terms. Some exceptions apply for those who have been with a company fewer than 90 days, part-time and seasonal workers and other exempt employees.
  • Only employer contributions may fund the QSEHRA, with no withholdings from employee paychecks allowed.
  • Employers may only contribute up to $4,950 for HRAs covering one employee, or up to $10,000 for family HRAs.
  • To receive reimbursements, employees must provide documentation for all healthcare expenses, including insurance premiums, doctor’s visits, prescription costs and other qualifying expenses.

Federal law requires employers that plan on offering a QSEHRA to provide written notice to all qualifying employees at least 90 days prior to the start of the plan year or the date the employee becomes eligible for the reimbursement. This notice must include the maximum yearly amount available to the employee and any relevant tax or Affordable Care Act-related issues the employee may need to know before receiving HRA funds. For example, an HRA could impact an individual’s ability to receive tax credits from the federal government to pay for health coverage.

The rules and regulations surrounding healthcare coverage for employers are incredibly complicated—and there are likely more changes on the way with the incoming administration in Washington, D.C. To learn more about your options and to ensure you remain in compliance with federal and U.S. Virgin Islands law, consult a knowledgeable labor and employment law attorney.

 

Ravinder S. Nagi is Assistant Managing Attorney and Chair of the Labor and Employment Law Practice at BoltNagi, a widely respected and established labor law firm proudly serving businesses and organizations throughout the U.S. Virgin Islands.

New Administration Could Bring Changes to US Employment Law

Posted in Labor & Employment

With President-Elect Donald J. Trump set to take office this Friday, January 20, there may be numerous changes to U.S. labor policy on the horizon.

Trump, who during his campaign pledged to roll back regulations on businesses, will have the benefit of Republican majorities in both houses of Congress, potentially enabling him to take quick action on a number of policy items. Although it’s difficult to say for sure what this will look like, it appears likely that the incoming president will push back against some of the more worker-friendly policies of current President Barack Obama.

In December, Trump nominated Andrew Puzder, a former fast food industry executive, as his Secretary of Labor. Puzder has been a vocal opponent of movements like the push to raise the minimum wage, and he generally believes that businesses are over-regulated across the United States.

One of the more immediate impacts we are likely to see in a Trump administration is the complete suspension of the overtime exemptions that had been set to take effect back in December. The Department of Labor’s new exemptions were supposed to nearly double the minimum salary required for white-collar employees to qualify for overtime pay. However, in late November, a federal judge issued a temporary injunction on the rule’s implementation.

The rule, which would impact more than 4 million workers throughout the United States and its territories, could be suspended or completely reversed under a Trump administration.

Equal pay and immigration issues in question

One interesting development to watch with the new administration will be pay equity. While Trump has expressed support for legislation that would require employers to provide equal pay for equal work, Vice President-Elect Mike Pence and other top Republicans have publicly opposed these measures. The question thus becomes whether the president will push back against his own party to support pay equity.

When it comes to immigration, Trump has signaled that he would push for a national E-Verify program, which is now only required of private employers in 20 states. It may also become more difficult for businesses to secure H1-B visas for highly skilled workers, and I-9 audits could become more commonplace. All this has businesses that employ large numbers of immigrant workers concerned about their ability to hire and retain staff members in the near future.

This is certainly a time of upheaval in the world of immigration and employment law in the United States and its territories. We will continue to monitor these issues in the months to come, and advise our numerous clients on how they should prepare for and react to policy changes as they occur. If you have any questions about these issues and how they could impact your business or organization, be sure to contact an experienced attorney.

 

Ravinder S. Nagi is Assistant Managing Attorney and Chair of the Labor and Employment Law Practice Group at BoltNagi, a well-established and respected labor law firm serving clients throughout the U.S. Virgin Islands.

What to Do if Your Business is a Victim of Cybersquatting

Posted in Labor & Employment

Imagine you have a great idea for a business and have picked out the perfect name. You rush to GoDaddy to register it, only to find that some other party has already purchased it and is apparently doing nothing with it. Unfortunately, it’s an issue many entrepreneurs face across the globe.

Known as cybersquatting, this practice involves individuals or organizations registering numerous domain names attached to various trademarks, with the intention of cashing in if and when those trademarks get sold. These squatters try to purchase as many domain names as possible that are closely linked to a high-profile individual or business, profiting by association. They might, for example, register domain names with slight misspellings to get people who enter typos into their web searches.

There are a few ways you can tell if you have been the victim of a cybersquatter. Your first step should be to check to see if the domain name you wish to register has been claimed by someone else. If so, visit the website and see if it’s legitimate. If it is a functional site that’s related to the domain name, then you were probably not the victim of a squatter. You should probably look at other domain name options.

However, if any of the following factors apply to the site, then you could very well be looking at a squatter-owned site:

  • The website is perpetually under construction, likely for at least a year or more
  • Your browser is unable to find the website or displays an error, despite evidence showing that someone owns the domain name
  • The website has no relation to the domain name in question

Although these indicators do not necessarily mean someone is squatting your domain, they are certainly enough evidence to provide reasonable suspicion.

What to do if you suspect a squatter

If you have reason to believe the person is cybersquatting, you have several strategies available to you. First, you can visit www.whois.com to look up the information of the domain name registrant, and then directly contact that person to determine the purpose of the domain. In many cases, it is far cheaper to pay for the domain name, as litigation can be costly and take up a lot of time. This is, of course, what the squatter is counting on.

However, you are able file a civil claim under the “Anti-Cybersquatting Consumer Protection Act” (ACPA). If you win the suit, the cybersquatter will receive a court order to transfer the domain name to you, and potentially pay you damages.

Here’s what it takes to be successful in this type of lawsuit:

  • Proof that you had a distinctive trademark when the domain name was registered;
  • Proof the domain name registrant registered the domain in bad faith with intent to profit;
  • Proof the registered domain is identical or at least reasonably similar to your trademark; and
  • Proof your trademark is protectable under federal law

If the registrant is to successfully defend against the claim, they must prove there was a reason for them to register the domain other than to eventually sell it.

To learn more about the issue of cybersquatting and to determine if you need to take legal action, consult an experienced corporate law and intellectual property attorney who is up to date on the latest in cybersecurity.

 

BoltNagi is a well-established civil litigation and business law firm proudly serving clients throughout the U.S. Virgin Islands.

How to Best Protect Your Customers’ Data and Other Sensitive Information

Posted in Labor & Employment

In an age when so much happens online, businesses must be willing to commit to digital security to best protect the sensitive data and information of themselves and their customers. In fact, some estimates indicate that the global market for cybersecurity will surpass $80 billion next year, indicating just how important this issue has become.

To help your business start to address this complex issue, the following are a few best practices for protecting sensitive data on your networks.

  • Invest in a dedicated server: Many small businesses use shared servers to host their files. While this can be a cheaper option, it also means that multiple parties may have access to that server. If another website on the server has weak security, your site could be vulnerable, as well. A dedicated server can be worth the extra expense for the peace of mind it provides.
  • Encrypt all your data: You should never keep sensitive information and records unencrypted. If your network is somehow compromised, unencrypted information is an easy target for cyber criminals.
  • Always monitor for malware: Establish programs monitoring your website’s security at all times so you can be alerted instantly to the presence of any malware. As soon as your site has been infected or has the potential to be compromised, you will be able to address the problem before it gets out of control.
  • Keep access restricted: Access to sensitive files containing personal customer information should be on a “need to know” basis only. Keep all files in a single, centralized location, whether they are digital files in one server location or physical files in a filing cabinet in a locked room.
  • Regularly shred paper documents: If you keep physical copies of the information you store online, be sure to properly dispose of it. Shred or burn any sensitive customer data—simply throwing it in the trash or recycling is not good enough.
  • Permanently delete digital files: Simply moving a file to the trash bin on your computer does not wipe it from your files. There are still traces of the file that allow it to be recovered. There are a variety of programs that make it easy to permanently delete these files when you are ready to do so.
  • Always have a response plan ready for a breach: You need to be prepared in the event a breach does occur. This should include isolating the problem, notifying any customers who may have been affected and resolving the situation as soon as possible. You should never attempt to conceal a breach from your customers—be as open and honest as you can be.

Cyber security must be a crucial component of your company’s digital operations. Be sure to consult an information technology professional to establish a plan for your business, and speak with a knowledgeable intellectual property attorney to ensure you are covering all your legal bases.

 

Tom Bolt is Managing Attorney of BoltNagi, a widely respected and well-established intellectual property law firm serving businesses and organizations throughout the U.S. Virgin Islands.

The Different Types of Commercial Insurance and How They May Apply to Your Business

Posted in Labor & Employment

With all the risks that come with running a small business, it’s critically important for owners and entrepreneurs to have proper insurance coverage to protect against unexpected catastrophes. There are many different forms of commercial insurance available to cover a variety of risks.

Property insurance policies

Property insurance is a category encompassing a variety of insurance policies that cover losses and damages to real or personal property. Examples of these policies include:

  • Debris removal: This covers any costs associated with clearing and removing debris after your business has been damaged by a flood, fire, tornado or other natural disaster. Before you can start rebuilding and repairing your property, you must be able to remove all the debris, making this coverage extremely useful.
  • Builder’s risk: This type of insurance covers buildings during their construction. If, for example, a windstorm takes down part of a building during the construction process, those losses would be covered.
  • Boiler and machinery: Boiler and machinery insurance protects you in the event of an accidental breakdown of equipment, such as boilers and other crucial building machinery. It will cover both property damage and business interruption losses.
  • Business interruption: This type of policy covers losses you suffer because of interruptions to your businesses due to natural disasters or property damage.
  • Crime: Crime insurance covers various property crimes such as vandalism, theft, robbery and burglary of products, money and stock by customers, employees or other parties.

Other forms of insurance

Outside of the property insurance umbrella, there are numerous other forms of insurance coverage that can protect your company. The following are a few examples:

  • Liability insurance: Any damage you cause to third parties is covered under liability insurance. For example, if someone files a personal injury or premises liability claim against you, the cost of resolving and defending that claim would be covered under your policy.
  • Malpractice insurance: Also known as professional liability insurance, this type of policy protects you if your conduct falls below a certain standard of care for your profession, resulting in injuries or losses to another party.
  • Car insurance: Commercial auto insurance covers any company vehicles you have that you use specifically for business purposes.
  • Workers’ compensation insurance: This policy covers you if any of your employees suffer injuries on the job, regardless of whose fault those injury were.

These are just a few of the many forms of commercial insurance available for business owners in the U.S. Virgin Islands. For further guidance on this important, consult an experienced business law attorney.

 

BoltNagi is a widely respected and established business and corporate law attorney serving clients throughout the U.S. Virgin Islands.

Cybersecurity: What Today’s Business Owners Need to Know

Posted in Corporate & Financial Services, Labor & Employment

Author_Hariom_Chaudhary_Advance_Ethical_Hacking_and_Cyber_Security_Boot_Camp_at_Delhi,_IndiaWhen you own or operate a small business, you may feel as if you need to understand and manage a never-ending list of issues and concerns just to ensure the safe, secure and effective operation of your business.

There may be one more you need to add to the list: cybersecurity. As technology continues to advance around us, so too does the sophistication by which cybercriminals attempt to access sensitive information from online networks.

There are several main types of cyberattacks that all business owners should be aware of. Let’s start with the most common.

Viruses

Viruses are the form of malware with which most people have at least some level of familiarity. A virus is either a program or a piece of code that gets delivered to your device without your knowledge, typically packed into other downloads or deceptive email attachments. Depending on the virus, it could have any number of devastating effects on your computer or business network. For example, some viruses seek out and delete certain files, while others shut down computers and networks completely.

Make sure you have antivirus software on your company’s computers and network and keep them updated at all times so you can perform regular virus scans and maintain your digital security.

Spyware

Spyware is a form of malware that collects information, such as credit cards, Social Security numbers and passwords, off your computer. Even if spyware is not being used for theft, spammers and marketers may leverage it to learn more about your browsing habits in unethical ways. Anti-spyware programs are available online and often come packaged with antivirus tools.

Phishing

Phishing involves fake emails or websites designed to take advantage of users who are not careful with their browsing habits. These email messages or sites typically try to trick you into entering your personal information or passwords. Spam filters should block most phishing attempts that come via email, but it’s best to make sure everyone in your workplace knows not to open suspicious-looking emails—just in case a few get through.

Browser security has also been updated to the point to which most of today’s web browsers are able to catch suspicious sites and block users from accessing them.

Trojans 

Trojans, bots, key-loggers and a variety of other applications are designed to appear harmless or even useful, prompting users into downloading and opening them. However, they carry various forms of malware that could be damaging to your computer and your overall data security. Make sure you have policies in place regarding the files your employees may download.

Cybersecurity has become one of the most pressing issues for modern businesses. Be sure to keep tabs on your company’s processes and ensure you’re not jeopardizing the data and information of you, your employees or your customers.

 

BoltNagi is a well-established and widely respected business and corporate law firm serving clients throughout the U.S. Virgin Islands.

Legislature Approves Bill that Would Eliminate Customs Duties in US Virgin Islands

Posted in Government Relations

The Legislature of the Virgin Islands recently approved Bill No. 31-0398, a new bill eliminating customs duties in the Territory. These duties generate approximately $12 million every year, but for more than 10 years, the U.S. Customs and Border Protection has taken almost all of it to cover the costs of collecting it. As a result, the duties reached the point where negligible funds actually received by the U.S. Virgin Islands were not worth the trouble and cost focused on collecting them.

The Revised Organic Act of the Virgin Islands It defines the powers of the Territory and its authority to take up to 6 percent duties on any goods brought from other lands into the Territory. U.S. Customs and Border Protection had taken a portion of the duties to cover its costs, but that portion became significantly larger—almost the entire value of the funds—after the establishment of the federal Department of Homeland Security in 2003.

Previous solutions proved ineffective

In December 2014, the administration of Governor John deJongh, Jr. signed an agreement with the stated goal of resolving this problem. At the time, U.S. Customs and Border Protection agreed it would fund pre-departure clearance for air passengers with federal funds and would work to limit reimbursement from these local customs duties. This agreement also called for greater transparency in reporting the funds that were collected, why they would be retained and how they would be used.

Reports from various U.S. Virgin Islands officials revealed that U.S. Customs and Border Protection had essentially ignored the agreement from the beginning, only remitting $1 million since it was signed. CBP kept more than 90 percent of all the funds earned in customs duties in 2015 and has not returned any 2016 funds, according to US Virgin Islands  Finance Commissioner Valdamier Collens.

The original purpose of the customs duties was to provide additional funding to the territory. With how little money was actually coming back to the US Virgin Islands  under the arrangement, the Government of the Virgin Islands decided to put an end to the practice altogether.

The decision to remove the customs duties was not met without resistance. The St. Croix Chamber of Commerce, for example, did not agree with the changes. In a written statement, it said “the federal government could easily refuse to fund these services and remove the convenience of local customs clearance.” However, the majority of elected officials who passed the amended bill were of the mindset that money going to CBP should come from federal funding—not local money.

The passage of Bill No. 31-0398 could have an impact on businesses throughout the U.S. Virgin Islands. It will be interesting to see if upon approval of Governor Kenneth E. Mapp, it will open up any new opportunities for commerce in the Territory in the years to come.

 

BoltNagi is a respected and established business and corporate law firm proudly serving clients throughout the U.S. Virgin Islands.