Compliance Summit
February 4, 2025
La Concha San Juan Renaissance Resort
State of the Industry
Ramon Barquin, President, CUD
Puerto Rico
Kenneth Rivera, Vice President, Tax Affairs Committee, PR Chamberof Commerce
Luis G. Rivera-Marin, Of Counsel, Porzio, Bromberg & Newman, P.C.
TRUMPADMINISTRATION HEALTHCAREAGENDA
•Promote access to healthcare via market competition and transparency
•Enhance flexibility and choice in healthcare to states and individuals
•Focus on deregulation by reversing or modifying Biden-era policies
•Enhance national security with “America first” principles
“CHINAIS FIRED! PUERTO RICO IS HIRED!”
TRUMP ADMINISTRATION MANUFACTURING AGENDA
• Reinstitution and Expansion of Tariffs
• Incentives for Domestic Manufacturing
• Tax Policy Reforms
• Regulatory Reforms
• Trade Agreements and Supply Chain Realignment
GONZALEZ ADMINISTRATION ECONOMIC DEVELOPMENT
AGENDA
FOCUS:
•Aerospace Industry
•Knowledge Economy
•Supporting the National Supply Chain and Integration with Global Markets
•Blue Water Economy
•Fintech and Blockchain Industry
FOUNDATIONAL CHALLENGES: ENERGY AND PERMITTING
CHALLENGES & OPPORTUNITIES FOR PUERTO RICO
Questions?
WHAT YOUR CORPORATE/ TAX TEAM MAY NOT KNOW
The Interplay Of State
Distribution Licensing And
Corporate Transactions
Frank Fazio, Senior Vice President
Distribution and Licensing Services
Porzio Compliance Services
Presenter
Frank Fazio, RPH, JD
Senior Vice President
Distribution and Licensing Services
Porzio Compliance Services
AGENDA
• Introduction and Overview
• Types of Corporate Transactions
• Notifications/Applications and Timing issues
INTRODUCTION
Stock transfers, asset purchases, and internal corporate reorganizations can all carry state notification requirements which can impact the ability to ship or sell into various states. This session will outline the various types of transactions and what triggers notification requirements. It will also provide guidelines for business leaders, corporate, and tax on timelines and the importance of pre-planning to ensure continuity of post-close business operations.
Drug and device companies need various state licenses in order to ship or sell their products in the U.S. and its territories.As these licenses are generally not transferable in a change of ownership, it is important to understand what is a change of ownership and when you should consider that a particular transaction might require notifications and new applications.
Corporate Transactions
CHANGE OF OWNERSHIP
When should you consider that a corporate event might be a change of ownership?Any time there is a change to the ownership information included on the initial applications, you should consider that there might be a reportable change of ownership.
Questions to consider:
1. What type of transaction is occurring?
- Asset transfer
- Stock transfer
- Internal corporate reorganizations
2. At what level is the change occurring?
- Direct change
- Changes above the direct ownership (e.g., Grandparent, Above-grandparent)
3. What is the ownership structure? (Corporation, Partnership)
4. What percentage of the ownership is changing?
Asset Transfer
A company sells one facility, e.g., a manufacturing or distribution facility. The ownership of that facility is changing (along with the name, corporate officers, etc.).
Stock Transfers
These can take various forms: mergers, acquisitions, reorganizations, significant investments that may or may not result in a change of control.
•Mergers: May or may not be a change of ownership. You have to look at which company will survive.
•Stock acquisitions: It depends!
What
a change of ownership is varies by state
Although in most states the trigger is a majority/change of control, that is not always the case and many states have a trigger well below a majority change.
Many states have different triggers for different types of entities. Sole Proprietors
Partnerships
Corporations
Examples -Arkansas
•A change of ownership of a wholesale distributor, owned by a CORPORATION, is deemed to have occurred when:
• (i) An individual or business acquires or disposes of twenty percent (20%) of the corporation's outstanding shares of voting stock.
• (ii) The corporation merges with another business or corporation.
• (iii) The corporation's charter expires or is forfeited.
• (iv) The business is sold and the sale becomes final or the new owner assumes control of the wholesale distributor.
Example -Arkansas
A change of ownership of a wholesale distributor, owned by PARTNERSHIP, is deemed to have occurred when:
(i) There is an addition or deletion of one or more partners in a partnership to which a wholesale distributor's license has been issued.
(ii) The business is sold and the sale becomes final or the new owner assumes control of the wholesale distributor -- which ever occurs first.
Examples - Florida
“Change in Ownership” – means a majority (more than 50%) of the ownership or controlling interest changes. A change in ownership occurs when there has been any change in a partnership amounting to more than 50% of the ownership or controlling interest. For a publicly traded corporation, the changing of officers or directors is not a change in ownership nor is the change in ownership of a parent company provided that such change does not result in more than a 50% change in the ownership or controlling interest of any permitted establishment.
Examples - Tennessee
a) Transactions constituting a change of ownership include, but are not limited to, the following:
Two (2) or more corporations merge and the originally-licensed corporation does not survive;
(b) Transactions which do not constitute a change of ownership include, but are not limited to, the following:
Two (2) or more corporations merge and the originally-licensed corporation survives; and
Corporate stock transfers or sales, even when a controlling interest.
Examples - Louisiana
Changes in any information with regards to the owners of the licensee including the percentage of interest owned.
Examples - Utah
•In accordance with Section 58-17b-614, except for changes in ownership caused by a change in the stockholders in corporations that are publicly listed and whose stock is publicly traded, a licensed pharmaceutical facility shall make application for a new license and receive approval from the Division no later than ten business days prior to any of the following proposed changes:
(c) ownership when one of the following occurs:
(i) a change in entity type; or
(ii) the sale or transfer of 51% or more of an entity's ownership or membership interest to another individual or entity.
Form of Notification & Timing
Notification by email
•Application
Timing:
•Pre-close
•At or about the time of close
•Post-close
Continuity: How do you make sure you can sell/ship on day one?
•Most states allow the entity to continue to ship/sell while the paperwork is being processed. But there are some states that will not let the company operate in the state until the new license has issued, e.g. Florida, Georgia, South Carolina
Porzio’s Puerto Rico Legal & Compliance Summit
Timing forApplications
Four Phases:
1. 30 days or more in advance
2. Less than 30 days in advance
3. Close to within 15 days post close
4. Beyond 15 days post close.
Application Submission Timing
The statutes and regulations do not tell the full story. Florida and Georgia have no specific deadline other than “in advance.” But as you need the new license you have to be aware of their normal processing times.
• Florida: 8-10 weeks in advance
• Georgia: 60 Business days in advance
Conclusion
•Any change of ownership at any level can be complex and disrupt the business if not handled properly.
•Yes, an internal reorganization counts even if there is no ultimate change in control.
•Any transaction should be assessed from a state licensing perspective several months in advance and a change notification project needs to begin 3 to 4 months in advance of the change.
•If managed properly, there should be no disruption to an entity’s ability to continue its business activities.
Questions?
Emerging Industries: Risks and Rewards
Héctor Jirau, Executive Director,
Parallel18
Felix M. Negron, Founder and CEO, NY Operations Consulting
Robert M. Schechter, Principal, Porzio, Bromberg & Newman, P.C.
Major Crypto Bankruptcies
Life Sciences Bankruptcies (20222024)
This chart refers to Chapter 11 filings where companies had over $100 million in liabilities.
Venture Capital Investments in Life Sciences
Questions?
Tax Incentives and Project Funding Opportunities
Cameron Garner, Chief Operating Officer, True Mountain Capital, LLC
Joseph Paparo, Principal, Porzio, Bromberg & Newman, P.C.
Colton Wandke, Co-Founder & Partner, DECA Analytics, LLC
IRS Investigations and TargetingACT
60 Recipients: Planning and Prevention
Francisco E. Colón-Ramírez, Of Counsel, Porzio, Bromberg & Newman, P.C.
Gavin George, Tax and Legal Practitioner, Tax Network USA
Isabel Hernández, Tax Partner, KevaneGrant Thornton
Giovanni Mendez, Tax, Corporate, and Blockchain Attorney, GEO Tax
Deirdre R. Wheatley-Liss, Principal, Porzio, Bromberg & Newman, P.C.
CJ Whisnant, Tax Attorney, Tax Network USA
Keynote Address
Donald F. McGahnII Partner, Practice Leader Government Regulation, Jones Day
Navigating theAI Maze:
Data Privacy Insights and Compliance Strategies
Crystal Allen, Chief Information Officer, LUMA Energy
Alfred R. Brunetti, Principal, Porzio, Bromberg & Newman, P.C.
Presenters
Crystal Allen
Chief Information Officer
LUMA Energy
Alfred R. Brunetti, Esq., CIPP/US, CIPM
Principal
Porzio, Bromberg & Newman, P.C.
Data Privacy is…
The use and governance of personal information
It manifests in:
Rights given to Data Subjects
Obligations placed upon Businesses
Attendant Risk Management
The Double-Edged Sword ofAI
•Transformative Force
•Inherent Risks
Regulation and Enforcement are Moving Targets
•The application, not the technology
•High Risk in the crosshairs
•Education is key
Don’t
Allow anAI solution to stay a Black Box
•Verification
for Authenticity
•Algorithmic Diversity
•Human Oversight
What to expect down the road…
•Elevate the Humanity
•Embedding ethical principles
•Cross Functionality of AI teams
Questions?
AView from Washington:A Regulatory and Legislative Outlook
Ted Lehman, Principal, Todd Strategy Group
Donald F. McGahnII, Partner, Practice Leader Government Regulation, Jones Day
Marco Santori, Chief Legal Officer, Kraken
Nick Uehlecke, Principal, Todd Strategy Group
Advancing Decentralized Organizations Through Foreign
Entities and Foundations:
Why Cayman Islands and Other Foreign Jurisdictions
Vito A. Gagliardi, Jr., Managing Principal, Porzio, Bromberg & Newman, P.C.
Alastair Lagrange, Counsel, Mourant Ozannes(Cayman) LLP
Jill M. Williamson, Principal, Porzio, Bromberg & Newman, P.C.
Crypto Exchanges and Compliance: From Investors to Listing Tokens, What Issues and Red Flags Must be Examined
Lauren Benjamin, Deputy Chief Compliance Officer & BSA/ AML Officer, PWI Kraken
Jill M. Williamson, Principal, Porzio, Bromberg & Newman, P.C
Raising Capital for Emerging Technology Companies
William J. Hughes, Jr., Principal, Porzio, Bromberg & Newman, P.C.
Scott Walker, Managing Member, DNA
Paul Weinstein, General Partner, COO, Azure Capital Partners
Jill M. Williamson, Principal, Porzio, Bromberg & Newman, P.C.
Thank You For Joining Us.
February 4, 2025
La Concha San Juan Renaissance Resort