The registrar might assume your company isn’t carrying on business or in operation and take steps to strike it from the register.
If the registrar strikes a company off the register, it ceases to exist and its assets become Crown property.
The cascading litany of alleged charges is not likely to stop with the Brocade case.
Indeed, with more than 80 companies being reviewed by the SEC for potential illegal backdating practices, and one academic study claiming that more than 2,000 companies have engaged in the practice, civil and criminal charges will probably mushroom in the next few months. The purpose of backdating is straightforward: it gives options holders an immediate paper gain, and a real gain once the option is exercised.
If your company’s in operation, the company, its directors and any other officers could be prosecuted because they’re responsible for ensuring they submit the confirmation statement on time. The requirement to file a confirmation statement applies to all companies, including small companies such as flat management companies.
In-the-money options are different from performance-based compensation in the eyes of the Internal Revenue Service and the Financial Accounting Standards Board.
The stock plans of many public companies prohibit the granting of below-market options; other companies disclose in their SEC reports that stock options are granted at market and prepare their financial statements on that basis.
The term “backdating” refers to a number of option granting practices in which the reported grant date is different from the date on which the option is actually awarded, resulting in an option that is already “in-the-money” at the time of the grant.
The Corporate Library plans to clarify that not all of the people listed are directors of all the companies listed, the organization’s co-founder Nell Minow wrote in an E-mail sent to the public relations firm representing Novellus Systems, one of the companies mentioned prominently in the report.
Ninety-five percent of the people listed in the report are directors, estimates Paul Hodgson, The Corporate Library’s senior research associate, who worked on the report with two other researchers.