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Key Legal + Business Issues - Navigating Complexities in Doing Business in the U.S


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On Friday, May 1, Vinita Mehra and Cody Myers presented at Indo-American Chamber of Commerce’s Key Legal + Business Issues: Navigating Complexities in Doing Business in the U.S. webinar. The webinar covered a variety of topics including: drivers + trends of Indian outbound investments to the U.S., EDO incentive programming, negotiating contracts, protecting intellectual property, and impact of COVID-19 on Indo-U.S. businesses.

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Key Legal + Business Issues - Navigating Complexities in Doing Business in the U.S

  1. 1. President, IACC, NIC Dr. Lalit Bhasin
  2. 2. Chairman + Managing Director, Quatrro Raman Roy
  3. 3. Minister Counselor for Commercial Affairs, U.S. Embassy Aileen Nandi
  4. 4. Director, Leader Global Business Practice, Kegler Brown Hill + Ritter Vinita Mehra
  5. 5. Presented by Vinita Mehra, Esq. May 1, 2020 LEGAL OVERVIEW Doing Business in the USA
  6. 6. U.S.-India Trade At a Glance
  7. 7. World’s largest + most dynamic economy From 2018-2019, U.S. received $60 billion of investment and invested nearly $440 billion in various parts of the world USA continues to be the leading attractive destination for FDI The economic downtown (in other parts of the world), its effects and resulting policies (Tax Reform Act, Immigration), have created new risks and opportunities for companies planning to invest in America
  8. 8. Investments to India Information Technology Real Estate Health Care Manufacturing Education Services Investments from India Logistics + Distribution Manufacturing Financial Services Information Technology Pharmaceuticals
  9. 9. Drivers + Trends of India-U.S. Investments Innovation Natural Resources Value Added: Strategic Growth Low Valuation Expanding Existing Markets Financing for Expansion
  10. 10. Structures for INVESTMENTS Acquisitions Joint Ventures Technology Collaborations Greenfield/ Brownfield EB-5 Program i.e. Investor Visa Franchising
  11. 11. Government Incentives States have economic development organizations Focus is on job creation and economic development Help to navigate the process of acquiring and operating a foreign- owned enterprise
  12. 12. EDO Incentive Programming Illustrative Examples
  13. 13. Tax Credits + Abatements Job Creation Tax Credit Data Center Sales Tax Exemption Ohio Enterprise Zone Program JobsOhio Growth Fund Loan
  14. 14. Tax Credits + Abatements JobsOhio Workforce Grant Roadwork Development (629) Research + Development Investment Loan Innovation Ohio Loan Fund
  15. 15. Foreign enterprises may operate in USA through various legal forms: Corporation General Partnership Limited Partnership Limited Liability Company U.S. Branch Greenfield/Brownfield Entry Options for INVESTORS
  16. 16. Unlike India, U.S. has no federal company law, and the rules regarding formation, operation, and dissolution of business entities are defined by state law rather than federal law Greenfield/Brownfield Entry Options for INVESTORS
  17. 17. Common reasons to use separate legal entity are: Limited Liability accorded by state law to the owners of “qualifying entities” Improved ability to access capital markets for investment capital Greenfield/Brownfield Entry Options for INVESTORS
  18. 18. If a company will engage in interstate commerce, the choice on a state of incorporation should be based on: Consideration to annual state taxes Favorable incorporation laws Minimal restriction on corporate activities Greenfield/Brownfield Entry Options for INVESTORS
  19. 19. DELAWARE VS. OTHER STATES Structuring + Its Taxability General Corporation law of most states is advance and mature Example: Ohio is one of the best environments for corporation in terms of authority given to directors compared to liability they can have in other states
  20. 20. How to Protect Your BUSINESS
  21. 21. General Liability Insurance Workers’ Comp Insurance Directors’ + Officers’ Liability Insurance Professional Liability Insurance Product Liability Insurance
  22. 22. Written CONTRACTS Protecting your business often means shifting risk to someone else Contracts are risk allocation tools Written agreements are much easier to enforce
  23. 23. Minimum Wage REQUIREMENTS Non-tipped employees $8.30 Tipped employees $4.15 Federal Minimum Wage $7.25
  25. 25. Litigation ISSUES Federal Jurisdiction Litigation Costs
  26. 26. IPASSETS Patents (federal law) Copyrights (federal law) Trademarks (federal + state law) Trade Secrets (state law)
  27. 27. Protect anything But you have to keep it a secret Governed by state law
  28. 28. TOP TIPS for Doing Business in the USA
  29. 29. Due Diligence on Prospective U.S. + India Partner 1
  30. 30. Only Allow Trusted Employee to Handle Setting Up Your U.S. Company + IP Filings 2
  31. 31. Identify + Acknowledge Cultural Differences 3
  32. 32. OPPORTUNITIES to Indian Businesses Could be more foreign direct investment in India if tax on repatriated profits is cut in the U.S. as result of a grand bargain infrastructure/tax reform deal The U.S. may look to grow its relationship with India as its trade relationship with China deteriorates on account of China’s alleged currency manipulation, labor costs and the trade surplus in China’s favor – common themes during Trump’s campaign Conclusion
  33. 33. Legal Advice This presentation is designed to provide an overview of a number of legal principles and considerations. As each legal issue is fact dependent, this presentation should not be used or viewed as legal advice, and your legal counsel should be consulted on the application of your particular factual situation to the current law. Copyright: 2019 Kegler, Brown, Hill + Ritter Co., L.P.A.
  34. 34. Vinita Mehra Director + Co-Leader, Global Business Kegler Brown Hill + Ritter 614-255-5508
  35. 35. Associate, Kegler Brown Hill + Ritter Cody Myers
  36. 36. Current Government RESTRICTIONS Vary from state to state Stay-at-home orders have been in effect since mid-March Restrictions on social gatherings Sllowing “essential businesses” to remain open Reopening efforts have began in several states
  37. 37. Cash Access STRATEGIES
  38. 38. In place prior to the PPP 500 or fewer employees $2M limit EIDL Overview No requirement to take entire amount 30 years: 3.75%/2.75% interest rate
  39. 39. Enacted March 27, 2020 as part of the CARES Act Small business concerns or those with not greater than 500 employee having a principal place of residence in the U.S. Loan amount: 2.5x applicant’s average monthly obligation for payroll costs No collateral or personal guaranty required PPP Overview
  40. 40. Enacted March 27, 2020 as part of the CARES Act Affiliation rules apply except for franchises and businesses having an NAICS code beginning with 72 May be forgiven based on payroll levels over 8-week period compared to historical period, if not it becomes a loan to be repaid at 1.0% over 2 years PPP Overview
  41. 41. +
  42. 42. + Borrowers may take both so long as purposes are not duplicative Key is the broader uses allowed under EIDL A business can have many operating costs cover under both programs Best case: have a portion of operating expenses covered by an effective grant Worst case: have all operating expenses covered by favorable loan terms
  43. 43. ELIGIBILITY of Foreign-Owned Companies SBA standard or fewer than 500 employees 500 or fewer employees, U.S. residence Count will include employees of affiliates Affiliation exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses
  44. 44. Principal Place of RESIDENCE
  45. 45. 26 CFR 1.121-1(b)(2) Factor test that depends on the circumstances 1 Place of employment 3 Addresses listed on tax returns, driver’s license, etc. 2 Principal abode of family members 4 Mailing address 5 Location of religious organizations or banks
  46. 46. COMPANIES with Adequate Liquidity SBA + U.S. Treasury Department have recently issued a warning to companies having access to capital “Current economic uncertainty makes necessary to support ongoing operations” This has resulted in many larger companies returning the funds What does “necessary” mean? Public relations concerns come into play here
  47. 47. Cody Myers Associate Kegler Brown Hill + Ritter 614-462-5495