SCA SUBSIDIARY TRANSITIONS Mazelle Attiya, SCA Corporate Treasurer Tom Hughes, SCA President 1.
Embed Size (px)
Transcript of SCA SUBSIDIARY TRANSITIONS Mazelle Attiya, SCA Corporate Treasurer Tom Hughes, SCA President 1.
SCA SUBSIDIARY TRANSITIONSMazelle Attiya, SCA Corporate TreasurerTom Hughes, SCA President*
AgendaWelcome and IntroductionsBackgroundTransition ProcessOpening New Bank AccountsReportingFrequently Asked QuestionsWrap Up and Conclusion*
Welcome and IntroductionsSCA PresidentMaster Sean oShaughnessyTom Hughes630-229-0926Email: firstname.lastname@example.org
Welcome and IntroductionsSCA Corporate TreasurerMaitresse Alysia Gabrielle de FougeresMazelle Attiya(901) 833-4263email: email@example.com*
BackgroundWhy is SCA forming Subsidiary Corporations?SCA was created in 1966.SCA, Inc. was formed in 1969 and has operated successfully ever since.SCA formed affiliate corporations in those countries requiring in country corporations for not-for-profit corporations.Forming US subsidiary corporations will reduce, if not eliminate, the cost of complying with new State laws covering not-for-profit organizations.
BackgroundIllinois transition has been completed$150,000 gross revenues threshold triggers audited financial statements estimated cost: >$150,000/year for all 700+ branches in US.Applies to all not-for-profits operating in Illinois.Boy Scouts, Girl Scouts, hospitals, etc. completed their transitions last yearSCA, Inc. had revenues of $4.5 million in 2007 (SCAs IRS Form 990).Need to structure corporation to less than $150,000 per year in revenues to avoid audited financial statement requirements.19 bank accounts in 18 local groups and 1 kingdom account at start of process.1 kingdom account moved out of state; 1 group dissolved; 17 groups created new bank accounts.
Background SCA-Illinois Milestones*
BackgroundWisconsin - Completed July 31, 2010West Virginia in processMichigan starting (2 kingdoms involved)New Jersey - starting*
Transition ProcessLessons learned from SCA-Illinois, Inc. TransitionPreparation at SCA Corporate levelPreparation at Kingdom and Regional levelsConverting or moving kingdom bank accountsTransitioning regional bank accountsTransitioning local branch bank accounts Communication is crucial!*
Transition ProcessWhat do we need to do?Form subsidiary as a wholly owned subsidiary of SCA, Inc. per Federal and State laws SCA Board of Directors.Complete Articles of Incorporation SCA attorneys.Complete By-Laws SCA attorneys.Apply for and receive Federal Taxpayer ID Number SCA Corporate Office after attorneys finish above documents.Make all documents available to local branch, regional and kingdom exchequers Society Exchequer.Close out existing bank accounts under SCA, Inc. local exchequers.Open new bank accounts local exchequers.
Transition ProcessNew banking requirements due to Patriot Act subsequent to 09/11/01Banks conduct more due diligence on new bank accounts, especially, not-for-profit accounts.Bank accounts opened prior to Patriot Act banking requirements implemented will require more documentation than banks have for current accounts.*
Opening New Bank AccountsSCA Corporate Documents:Articles of Incorporation for the subsidiary (created by SCA attorneys)By-Laws for the subsidiary (created by the SCA attorneys).Tax Payer Identification Letter (created by the US IRS).Resolution of the Board of Directors to open bank account (created by the SCA, Inc. Corporate Secretary (Vice President of the Corporate Office in Milpitas, California). Must be faxed or mailed directly from the Corporate office directly to the individual banks representative for the bank/checking account. Letter of Authorization specifies signatories on bank account of authorized named, specific individuals to a bank account. (created by the SCA, Inc. Corporate Secretary - Vice President of the Corporate Office in Milpitas, California). Must be faxed or mailed directly from the Corporate office directly to the individual banks representative for the bank/checking account.
Opening New Bank AccountsIn order to get a Resolution of the Board of Directors to open bank account, local branches must send the following information to the Society Exchequer who verifies accuracy and completeness and send request to SCA Corporate:Name of the local SCA groupModern names of the signatories (This must include kingdom and/or regional exchequer as a signatory on the account)Bank nameBank addressName of bank contact/to whom the paperwork should be sentBank's fax numberContact phone number and/or e-mail address with the Modern name of the Group Exchequer in case of bank communication problems
Opening New Bank AccountsExchequer and all bank account signatories fill out bank required forms and present following to the bank:Articles of IncorporationBy-LawsFederal Taxpayer ID letter from IRSSCA VP of the Corporate Office, Renee Signorotti, will fax Resolution of the Board of Directors to open bank account to bank point of contactExchequers and co-signatories:Transfer funds from old bank account to new bank account suggest that local branches use same bank for old and new accounts and change banks later if they want to change banksClose out old bank account with bank managerDeposit all funds from old bank account into new bank accountRetain bank statements for both old and new accounts
Exchequer ReportingContinue reporting all income and expenses on SCA, Inc. until subsidiary formed and transitioned. Report donation to another 501c3 from SCA, Inc. to subsidiary to close out old bank account.Begin reporting all income and expenses on subsidiary after transition completed. Report donation from from SCA, Inc. to subsidiary to open new bank account.At end of quarter and year, exchequers prepare quarterly and Domesday reports for both old bank account showing zero balance and new bank account!*
Exchequer ReportingNew State specific exchequer workbooks have been developed and are currently being verified.New State specific exchequer workbooks will be available for third quarter 2010.Kingdom exchequer will prepare consolidated Kingdom Domesday report including, subsidiary and prepare a separate Domesday for subsidiary.*
Frequently Asked QuestionsWhat is the procedure for transitioning to subsidiary corporations?Standard Operating Procedure for the Formation Of and Transition To Subsidiary Corporations Of SCA, Inc.
FAQsWhy is this necessary? The SCA, Inc. needs to register as a foreign corporation in all states in order to do business legally. Some states have restrictions and/or requirements for corporations registered as foreign corporations that the SCA, Inc. cannot satisfy. Setting up a subsidiary corporation allows the SCA, Inc. to register and do business in that state without some of the unwieldy restrictions and/or requirements. Please note, foreign corporation simply means a corporation that is not based in that particular state.*
FAQsWhy isnt registration with the state sufficient? Registering with a state is sometimes not as simple as filling out a form and paying a fee every year. Some states require foreign corporations to file state income tax returns. Even though we may not pay state taxes, we will still have to file tax returns. Some states also have financial auditing requirements, including formal audits of branches where the corporation is sufficiently large. Multiple states fall into this category at this time.*
FAQsWho makes this decision? The SCA, Inc. Board of Directors, the SCA President, and the SCA Treasurer make the decision to create subsidiary corporations. Who is responsible for implementing this? The SCA Treasurer, the Society Exchequer, the Kingdom Exchequer and all branch Exchequers within the state are responsible for implementing the transition to subsidiary corporations. The Seneschal equivalents at all those levels must assist in this for several reasons. Most of the seneschals are also signatories and bank accounts and the seneschals continue to ensure that the SCA meets all of its legal obligations.*
FAQsHow is this different from affiliation like SCA Australia and other affiliates? Affiliated organizations are subject to different civil laws in their countries, and so their corporate documents are not the same. Their Boards of Directors are completely different people. The only thing affiliate organizations share with the SCA, Inc. is Corpora. A subsidiary company is one whose controlling interest is owned by another company. Subsidiaries use the same corporate documents except for those that specifically apply to the state. So SCA, Inc. and SCA-IL, Inc. share not only Corpora, but the Corporate Policies and any other governing documents that do not have a specific SCA-IL, Inc. version.*
FAQsWhy do this? Several states require that corporations having over different threshold gross income submit to (and pay for) formal audits of all included branches. The SCA, Inc. is well above that income limit. If the SCA, Inc. itself was to register in states, we would not have enough money to pay for the formal audits of all US SCA branches even once. The branches in individual states together do not come close to the annual income amount, so creating a subsidiary and registering that subsidiary sin will allow us to operate within without those costly audits for a while. *
FAQsIs my state first? No. Illinois was the first state in this situation. Like Illinois, the local groups in many states all fall under the same Kingdom making it simple to convert. Those states with multiple kingdoms will require a little more work for the Society Exchequer but not the local branches. Will other states need to do this too? There are other states in similar situations that will need to go through this process. States containing more