An In-Depth Look at the Impact of US Tax Reform on Mergers and Acquisitions

Skadden, Arps, Slate, Meagher & Flom LLP

On December 22, 2017, President Donald Trump signed into law the Tax Cuts and Jobs Act (TCJA), which includes numerous changes that will significantly impact mergers and acquisitions (M&A). Although the TCJA has rightly been described as the most far-reaching piece of tax legislation enacted since the Tax Reform Act of 1986, the new provisions generally serve as an overlay to existing tax law, rather than a complete rewrite of the prior Internal Revenue Code (Code).1 Particularly as it relates to M&A, the old rules largely remain. That said, the TCJA’s changes will have a significant impact on deal modeling, tax diligence and acquisition agreement negotiations. This memorandum discusses the changes to the Code most relevant to M&A and their potential impact. Overall, we expect that the reduction of the U.S. corporate tax rate to 21 percent will make the United States a more attractive jurisdiction for inbound M&A activity and also may increase the value of U.S. domiciled businesses. In addition, the changes to the international tax rules should allow many U.S. companies to access the cash of their foreign subsidiaries at a lower U.S. tax cost, which could provide them with liquidity to fund acquisitions.

Reorganizations and Other Corporate Transactions. The TCJA generally does not change the tax-free reorganization rules or the rules related to other types of corporate transactions, including spin-offs, corporate liquidations and incorporation transactions. For example, the same rules that previously determined whether a particular acquisition would qualify as a tax-free reorganization, such as the relative mix of stock and cash consideration, continue to apply following the enactment of the TCJA. Similarly, the requirements for a spin-off or split-off to qualify as tax-free to both the distributing corporation and its shareholders are unchanged.

While it is possible that the new corporate income tax rate of 21 percent will reduce the corporate-level benefit of structuring a transaction to be tax-free, it should be noted that the top capital gains and qualified dividend federal income tax rate for individuals was left unchanged at 23.8 percent (including the 3.8 percent Medicare tax on net investment income). Accordingly, in situations where tax-free treatment of shareholders is an important consideration, we would expect that the motivation to structure a transaction in a manner that is tax-free will largely remain unchanged. For example, the founder of a target corporation, who typically would have a low tax basis in his/her stock, would have the same incentives as before the TCJA to structure an acquisition of the target as a tax-free reorganization in order to defer recognizing taxable gain.

Reduced Value of Net Operating Losses and Section 382. The TCJA changed a U.S. corporation’s ability to offset taxable income with net operating losses (NOLs) arising in tax years beginning after December 31, 2017, and to carry such NOLs both forward and back to different tax years. Under pre-TCJA law and setting aside the special rules applicable to NOLs under the corporate alternative minimum tax (AMT),2 NOLs could offset 100 percent of taxable income, and unused NOLs could be carried back two years and forward 20 years. Under the TCJA, NOLs only can offset up to 80 percent of taxable income and cannot be carried back but can be carried forward indefinitely. Note, however, that NOLs arising in tax years that began on or before December 31, 2017, will remain subject to the two-year carryback and 20-year carryforward rule until their expiration and also will continue to be available to offset 100 percent of taxable income. As a result, corporations with pre-TCJA NOLs may be viewed as more valuable than corporations with newer NOLs.

In addition, Section 382, the complex provision that limits a loss corporation’s ability following a greater than 50 percent ownership change to offset post-change income with pre-change losses, survived the TCJA unchanged. With the lower 21 percent corporate tax rate and the new 80 percent of taxable income limitation for NOLs arising in tax years beginning after December 31, 2017 (and notwithstanding the indefinite carryforward), one can expect the value of NOLs to decline relative to pre-TCJA law, and, therefore, the NOL trafficking concern that originally motivated the enactment of Section 382 will be of lesser importance under the TCJA.

100 Percent ‘Bonus’ Depreciation. “Bonus” depreciation (an immediate write-off of an applicable percentage of the cost of newly acquired or constructed tangible property) is a concept that has been in the Code for many years. Congress has periodically changed the applicable percentage, but the basic rules (including the types of property that qualify) have largely remained the same. The rules in effect immediately prior to the amendments by the TCJA allowed a depreciation deduction of 50 percent of the cost of qualified property for the tax year in which the property was placed in service by the taxpayer. Under prior law, only the taxpayer that originally placed the property into service (generally, the first owner) would be eligible for the bonus depreciation (the “original use” requirement).

Under the TCJA, qualified property acquired after September 27, 2017, and placed into service on or before December 31, 2022, generally will be eligible for 100 percent bonus depreciation (i.e., the purchase price for this property will be immediately deductible),3 with no “original use” requirement, which means that both new and used property are now eligible for 100 percent expensing.4 The availability of 100 percent bonus depreciation to buyers, as well as the lower 21 percent tax rate now imposed on corporate sellers, may make asset sales or stock sales subject to a Section 338(h)(10) election more attractive.

Bonus depreciation is unavailable for goodwill and other intangible property, which remains amortizable under the straight-line method (i.e., pro rata) over 15 years.5 Accordingly, buyers generally will have an incentive to allocate as much purchase price as possible to tangible, depreciable property eligible for 100 percent bonus depreciation,6 whereas sellers will continue to have an incentive to allocate purchase price to whichever assets have the highest tax basis and therefore produce the lowest taxable gain.7 In asset purchase and stock purchase agreements where a Section 338(h)(10) election is made, the buyer and seller often agree to finalize the purchase price allocation shortly after the closing of the sale. Given the potentially significant time value benefits of 100 percent bonus depreciation, it is likely that increased attention will be paid to establish a particular purchase price allocation (or at least guidelines for allocation) in asset purchase agreements in order to avoid purchase price allocation disputes after closing.

Limits on Interest Deductibility. In a sweeping change to prior law, the TCJA sharply limits the ability of businesses to deduct interest payments when calculating their taxable income, which could force a fundamental re-evaluation of the capital structure of every business that is subject to U.S. tax.

The new interest deduction limitation applies to:

  • every type of taxpayer, regardless of its form;8
  • every type of business except for small businesses9 and a few select businesses that were given the ability to elect out of the system;10
  • interest on related-party and third-party indebtedness; and
  • existing, as well as newly incurred, indebtedness.

Under the new limitation, a taxpayer’s allowable deduction for business interest expense in a particular tax year is limited to the sum of: (i) business interest income plus (ii) 30 percent of adjusted taxable income. “Adjusted taxable income” generally corresponds to earnings before interest, taxes, depreciation and amortization (EBITDA) for tax years beginning before January 1, 2022, and earnings before interest and taxes (EBIT) thereafter. The switch from EBITDA to EBIT in 2022 will reduce adjustable taxable income and will further limit the ability of taxpayers to deduct business interest expense. Any disallowed business interest expense is carried forward indefinitely (by being treated as business interest paid or accrued in each succeeding tax year). Excess interest expense carryforwards are not treated as an NOL, and, therefore, 100 percent of the carryforward is available in any tax year. However, such carryforwards are treated as "pre-change losses" for purposes of Section 382 and are potentially subject to limitation if the corporation with such carryforwards experiences an ownership change.

Prior to the TCJA, the interest deduction disallowance rules were more narrowly tailored to disallow certain interest payments made by a U.S. corporation to a related foreign affiliate or to a third party where a foreign affiliate guaranteed the debt, and where the U.S. corporation had a debt to equity ratio greater than 1.5-to-1 and net interest expense greater than 50 percent of EBITDA. These rules primarily affected U.S. corporations with foreign parent companies. The scope of the new disallowance rules is broader than the prior rules in virtually every respect.

We expect that the new interest deduction limitation could provide incentives for many businesses to raise capital through means other than debt, e.g., through leases, derivatives or equity issuances. It also could impact leveraged buyouts, both future deals and deals that already have closed. There is no rule that “grandfathers” existing debt incurred to fund consummated transactions or debt for pending acquisitions, even in situations where there is a binding acquisition agreement and lender commitment letter.

The New International Tax System

Dividend Exemption System. The TCJA introduced a dividend exemption system that, subject to a one-time transition tax described below and certain other limited exceptions, exempts from U.S. federal income tax dividends paid by foreign subsidiaries to their U.S. corporate parents. Under the new system, U.S. corporate shareholders that own 10 percent or more of a foreign corporation are entitled to a 100 percent dividends-received deduction for the foreign source portion of the dividends received from the foreign corporation, provided that a one-year holding period is met. Prior to the TCJA, the active business earnings of a foreign subsidiary generally were not subject to U.S. federal income tax until repatriated in the form of a dividend, at which point they would be subject to tax at the 35 percent corporate rate with a credit for any foreign taxes paid by the subsidiary on the income. The new dividend exemption system will allow U.S. corporations to access the cash on the balance sheets of their foreign subsidiaries at a significantly lower U.S. tax cost than under the previous worldwide tax system, which could provide fuel for additional acquisitions by U.S. corporations. As a practical matter, however, many U.S. corporations may find that very little of their foreign subsidiaries’ income will be eligible for the 100 percent exemption due to the application of the “GILTI” tax, discussed below.

The dividend exemption system generally does not apply to sales of stock of foreign corporations, except to the extent the gain on such sales is treated as a dividend under Section 1248. Accordingly, U.S. tax advisers will still be required to provide input on how to structure efficiently sales of foreign subsidiary corporations.

U.S. corporate borrowers also should be aware that the TCJA did not include, as was widely anticipated, a repeal of Section 956 for U.S. corporations. Under Section 956, a U.S. shareholder of a controlled foreign corporation (CFC) is treated as receiving a deemed dividend from the CFC if it provides a guarantee or pledge of the U.S. shareholder’s debt, or if the U.S. shareholder pledges more than 66 2/3 percent of the stock of a first-tier CFC and provides certain negative covenants. As a result of retaining Section 956, such a “deemed” dividend from a CFC to a U.S. corporate shareholder may be subject to U.S. tax at the full 21 percent corporate rate, reduced by any available foreign tax credits, even in situations where an actual cash dividend of the same amount from the CFC would have been exempt under the dividend exemption system. Credit agreements entered into by U.S. borrowers thus will continue to need carve-outs for credit support arrangements from CFCs. It is hard to justify this result, and these rules have created a trap for the unwary.

One-Time Transition Tax. Upon moving to the new dividend exemption system, the TCJA imposes a one-time mandatory transition tax on the previously untaxed deferred foreign earnings of certain foreign subsidiaries accrued since 1986 at a rate of 15.5 percent for cash and cash-equivalent profits and 8 percent on other reinvested foreign earnings.11 The tax is not imposed on the foreign subsidiary but is imposed instead on U.S. shareholders that own 10 percent or more of the foreign subsidiary on the last day of the foreign subsidiary’s last tax year that began before January 1, 2018.12 The foreign subsidiaries of U.S.-parented multinationals often have a tax year that ends on November 30 or December 31 (though it is possible to have another fiscal year). U.S. shareholders that owned 10 percent or more of the stock of a foreign subsidiary with a December 31 tax year incurred the transition tax liability on December 31, 2017. With respect to a foreign corporation with a November 30 tax year, the 10 percent U.S. shareholders of that corporation will incur the transition tax liability on November 30, 2018. It is critical to note that the 10 percent U.S. shareholders on the last day of the foreign corporation’s relevant tax year generally are responsible for their pro rata share, based on their percentage ownership on that date, of the transition tax liability, even if they recently purchased their shares and the deferred earnings of the foreign corporation accrued prior to their acquiring their shares.13

Taxpayers may elect to pay the transition tax over eight annual installments (without interest). Presumably, most taxpayers will make the installment payment election given that it amounts to an interest-free loan from the government. The election and each installment payment must be made no later than the due date (without extensions) of the U.S. shareholder’s income tax return.

Going forward, it is crucial that acquirers of both U.S. and foreign companies analyze and quantify the potential transition tax exposure as part of their standard tax structuring and diligence. Anyone acquiring U.S. corporations with foreign subsidiaries should be mindful of the target’s potentially significant deferred U.S. tax liability when pricing the deal. If the target U.S. corporation elected to pay the transition tax in installments, the acquirer likely will want to avoid taking actions that could accelerate the installment payments and should ensure that post-acquisition integration transactions do not cause an acceleration. For example, it appears that a merger or liquidation of the target U.S. corporation into an affiliate, even an affiliate that is a member of the same consolidated group, in a typical post-acquisition legal entity rationalization could accelerate the entire transition tax liability.

Acquisitions of foreign corporations by U.S. acquirers will require particularly careful attention for the remainder of 2018. If the foreign target has a November 30 tax year or if a U.S. target has significant foreign subsidiaries with a November 30 tax year, then, as previously discussed, the U.S. owner of the foreign corporation’s shares on November 30, 2018, will be responsible for 100 percent of the transition tax, regardless of how recently it acquired the shares. U.S. acquirers that enter into acquisition agreements in 2018 should take into account the possibility of this tax exposure in the event their acquisition closes on or before November 30, 2018, because they would own the foreign target on the date the transition tax is incurred. This could be addressed in a few ways, including through an up-front purchase price reduction or a tax indemnity that allocates the economic responsibility for the transition tax to the target’s shareholder(s). The parties will need to discuss whether an election to pay in installments will be made and who is entitled to the time value benefit. If the transition tax is material and paid in installments, acquirers also will want to consider whether an escrow or other security arrangement should be used to ensure that the funds are available to pay the installments (or to make a lump sum payment if the liability is subsequently accelerated).

In the case of an S corporation with foreign corporate subsidiaries, each of the S corporation’s shareholders may elect to defer payment indefinitely until the occurrence of certain triggering events, at which point the S corporation’s shareholders generally can elect to pay the tax over eight annual installments (without interest). Triggering events include the termination of S corporation status, the liquidation or sale of substantially all of the assets of the S corporation, the S corporation ceasing to exist or a transfer of any share of stock in the S corporation by the taxpayer (including upon death). Although the transition tax liability is imposed on the shareholders of the S corporation, the S corporation itself is jointly and severally liable for any transition tax liability for which a deferral election is made. Accordingly, an acquirer of such an S corporation could be forced to bear the selling shareholders’ transition tax liability absent adequate contractual protection. In addition, the acceleration of the transition tax liability will create a disincentive for S corporation shareholders to sell unless they are compensated for the cost.

GILTI. The new “global intangible low-tax income” (GILTI) tax has been advertised as a global minimum tax on the income of CFCs derived from their use of intangibles, which, like the transition tax, is imposed on the 10 percent or greater U.S. shareholder(s) of the CFC and not the foreign corporation itself. In reality, the GILTI tax is significantly broader and is not limited to income derived from the use of intangible assets. Instead, a CFC’s total net income, regardless of whether attributable to intangible or tangible property, over a 10 percent “routine” return on the CFCs’ aggregate tax basis in its tangible, depreciable property, is subject to the GILTI tax. U.S. corporations are entitled to a deduction against their GILTI that is intended to result in their paying tax on this income at an effective rate of 10.5 percent for tax years prior to 2025 and 13.125 percent for tax years after 2025, reduced by 80 percent of their foreign tax credits. Accordingly, any CFC with a low tax basis in its tangible, depreciable assets could attract a GILTI tax, regardless of whether the CFC’s business utilizes intangible assets. In practice, this could mean that very little of the foreign earnings of many CFCs are eligible for the 100 percent dividend exemption because the earnings will instead be subject to the GILTI tax.14 For these CFCs, the GILTI tax, in effect, will result in an end to the deferral of U.S. tax on much of their foreign business income. Because a CFC’s tax basis in its tangible, depreciable assets provides a “cushion” against the GILTI tax, offshore acquisitions treated as asset acquistions for U.S. tax purposes may become increasingly attractive to U.S. parented groups relative to stock acquisitions. Prospective U.S. acquirers of foreign corporations holding meaningful tangible, depreciable property will want to consider structuring the acquisition as an asset purchase or stock purchase with a Section 338(g) election.

'Inverter' Penalties. A recurring theme of the TCJA is that so-called “inversions” (i.e., acquisitions by foreign corporations of U.S. corporations in which, following the acquisition, the former shareholders of the U.S. corporation own, or are treated as owning, at least 60 percent and less than 80 percent of the stock of the foreign acquiring corporation) are strongly discouraged, particularly for the next 10 years.

First, individual shareholders of foreign acquiring corporations that first complete an inversion after the enactment of the TCJA (even if pursuant to a binding agreement entered into before such date) are permanently ineligible for the qualified dividend income rate of 23.8 percent (including the 3.8 percent Medicare tax on net investment income) on dividends received from such foreign corporation. Instead, such dividends would be taxed at ordinary rates (currently, 40.8 percent taking into account the maximum 37 percent federal rate applicable through 2025, at which point it returns to 39.6 percent, and the 3.8 percent Medicare tax on net investment income).

Second, if the transition tax applies to a U.S. corporation that participates in an inversion within 10 years following the enactment of the TCJA, then the U.S. corporation's transition tax is recomputed at a 35 percent tax rate (the maximum marginal corporate income tax rate in effect prior to the enactment of the TCJA) and the U.S. corporation must pay as part of its income tax liability for the year it participates in the inversion transaction the difference between the recomputed transition tax at the 35 percent rate and the amount of transition tax it originally paid at the reduced 8 percent and 15.5 percent rates. This transition tax recapture rule applies only to “new” inversions that occur after the enactment of the TCJA, in which neither party to the transaction had engaged in an inversion transaction prior to its enactment.

Finally, new rules apply under Subpart F that make it more difficult to engage in post-inversion tax planning (even with respect to U.S. corporations that inverted prior to the enactment of the TCJA). In addition, certain disadvantageous rules apply to corporations that complete a tax inversion after November 9, 2017, under the new Base Erosion & Anti-Abuse Tax (BEAT). The BEAT is an alternative tax intended to mitigate erosion of the U.S. tax base by corporations that make deductible payments to related non-U.S. parties. The BEAT is the amount by which a U.S. corporation’s income tax liability, computed without taking into account certain deductible “base eroding” payments and using a 10 percent rate, exceeds the U.S. corporation’s regular income tax liability. Base eroding payments generally include deductible payments made to related foreign parties, such as interest, payments for services and royalties, but generally do not include cost of goods sold. In addition, depreciation and amortization deductions attributable to property purchased from related foreign parties are disallowed in computing the BEAT. U.S. corporations that participate in an inversion transaction, or are or become affiliated with a corporation that participated in an inversion transaction, after November 9, 2017, also are subject to the BEAT on payments made to related foreign parties for cost of goods sold.

________________________

1 All section references are to the Code.

2 The corporate AMT was repealed under the TCJA effective for tax years beginning after December 31, 2017.

3 The bonus depreciation will be phased out 20 percentage points a year over five years beginning in 2023.

4 To be eligible for 100 percent bonus depreciation, the property generally must be acquired from an unrelated party by purchase.

5 As under prior law, qualified property continues to include: (i) tangible property that has a recovery period of 20 years or less, (ii) certain computer software and (iii) water utility property. Under the TCJA, qualified property now also includes certain qualified film, television and live theatrical productions.

6 There may be circumstances where 100 percent bonus depreciation would not be advantageous for a buyer. For example, if the immediate purchase price deduction put the buyer into a significant NOL position, the use of that NOL in future years would be subject to the 80 percent limitation previously described.

7 Non-corporate taxpayers and taxpayers with expiring capital losses should consider the consequences of depreciation recapture, which would treat gain as ordinary income to the extent of prior depreciation deductions.

8 In the case of partnerships and S corporations, the rules generally apply at the partnership or S corporation level, with complex rules beyond the scope of this discussion.

9 The small businesses that are exempt are generally taxpayers that have an average of $25 million or less in annual gross receipts over the previous three tax years.

10 Real estate (including REITs), farming and public utilities businesses are permitted to elect out of the interest limitation.

11 For U.S. C corporations, the transition tax also can be reduced by the full amount of any pre-existing foreign tax credit carryforwards from prior tax years and by 80 percent of the foreign tax credits made available by the transition tax income inclusion.

12 S corporations, U.S. partners in U.S. partnerships and U.S. individuals who own 10 percent or more of a foreign corporation also are subject to the transition tax if the foreign corporation is a CFC or there is at least one U.S. C corporation that also is a 10 percent shareholder of the foreign corporation.

13 The earnings of the foreign corporation that accrued during periods when the foreign corporation was not a CFC and did not have a 10 percent or greater U.S. corporation as a shareholder are not subject to the transition tax. As a practical matter, it may be very difficult to track the precise ownership of a foreign corporation since 1986. In addition, a U.S. shareholder’s transition tax liability is reduced by dividends paid by the foreign subsidiary during the foreign subsidiary’s relevant tax year to other shareholders not subject to the transition tax.

14 Additionally, U.S. taxpayers are required to allocate their interest expense between their U.S. and foreign source income. Any interest expense allocated against GILTI could limit a U.S. corporation’s ability to use foreign tax credits against this income.

Download pdf

Written by:

Skadden, Arps, Slate, Meagher & Flom LLP
Contact
more
less

Skadden, Arps, Slate, Meagher & Flom LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.