South Carolina Business Law Blog

Two recent decisions confirm the broad alternative apportionment authority granted by S.C. Code § 12-6-2320 , and recognize that alternate apportionment methods can be used by the South Carolina Department of Revenue (SCDOR) and the taxpayer to determine corporate income tax liabilities. S.C. Code Ann. § 12-6-2320 gives the SCDOR or the taxpayer the ability to use “any method” that equitably allocates and apportions a taxpayer’s income in the event that the standard allocation methods within the South Carolina Income Tax Act “do not fairly represent the extent of the taxpayer’s business activity” in South Carolina. Media General Communications, Inc., et al. v. South Carolina Department of Revenue, Opinion No. 26828 (S.C. Sup. Ct. June 14, 2010) (“Media General”) . Multistate corporations (taxpayers) sought contested case review before the South Carolina Administrative Law Court ("SCALC") of a determination by the SCDOR employing the standard income apportionment met...

Two recent developments may affect securities transactions and securities arbitration taking place in South Carolina. Dodd-Frank Amends Definition of "Accredited Investor" S.C. Code of Regulations R. 13-205 exempts from the registration and filing requirements found in the South Carolina Uniform Securities Act those sales of securities to "accredited investors." R. 13-205 references the definition of "accredited investor" found in 17 C.F.R. 230.501(a) promulgated pursuant to the the Federal Securities Act of 1933. Until earlier this month, the definition of "accredited investor" in the C.F.R. included an investor with a net worth of at least $1 million, and contained no exclusion for the value of that investor's primary residence in calculating net worth. As described in the Sheppard Mullin Corporate & Securities Law Blog , the recent Dodd-Frank Wall Street Reform and Consumer Protection Act, which became effective on July 21, 2...

By Jessie King On June 11, 2010, Governor Sanford signed into law S452, a bill amending the South Carolina Surface Water Withdrawal and Reporting Act, §49-4-10 et seq. (Supp 2008) (the “Act”). The law takes effect on January 1, 2011. The amendments to the Act are designed to stop the taking of water from South Carolina in unlimited quantities, protect existing water users, and maintain seasonal river water flows. The amended Act creates a regulatory permitting system for water withdrawal. The need to regulate water withdrawals came to a head recently after recurring droughts, legal battles with neighboring states over shared water supplies, and population growth. Prior to the amendment, persons wishing to take millions of gallons of water out of South Carolina rivers and lakes needed only to “register” with the South Carolina Department of Health and Environmental Control (DHEC) , report the quantity of water withdrawn and the method for measuring the quantity, and notify D...

Governor Sanford recently signed three bills making changes to the South Carolina Probate Code . Summaries of these bills, provided by JP Lee , are set out below. H3803(Signed by the Governor on June 7, 2010), full text here Colloquially known as the “Summons Bill” among South Carolina trust and estate practitioners, the new law makes certain procedural amendments to the South Carolina Probate Code, and clarifies that petitions required or authorized by the Probate Code now require a summons in addition to the actual petition. Previously many sections in the South Carolina Probate Code, such as the petition for allowance of a creditor’s claim at South Carolina Code §62-3-806, required only a “petition”, with no mention of a summons. This caused confusion among laypersons and practitioners, as some Probate Judges required the serving of a summons when a petition was filed, despite no express statutory requirement for same. The new law clarifies that effective June 7, 2010, peti...

Governor Sanford has signed a bill recently passed by the SC General Assembly making several notable changes to the SC Textiles Communities Revitalization Act ("Act"). The Act provides tax credits for expenditures related to the rehabilitation of buildings in South Carolina previously used as textile manufacturing facilities. The amendments address several concerns raised by tax credit investors and others in the tax credit industry. Most notably, it makes the credits easier to specially allocate among partners in a partnership or limited liability company, adds transition rules for projects that were acquired or commenced prior to previous amendments in 2008, and allows the credits to be used against SC insurance premium taxes. The text of the bill (S728)is available here . Thanks to Chris Rogers for bringing this legislation to the Blog's attention.

The South Carolina Supreme Court determined that an appraiser report lacking "normalization adjustments" failed to meet the valuation standards agreed to by the parties, and warranted reversal of the trial court's order approving the valuation. In Blackburn v. TKT and Associates , two corporate shareholders filed a dissolution action alleging that two other shareholders were inappropriately taking the profits of the corporation in the form of excessive salaries. Following a bench trial, the trial court agreed that the defendant shareholders had "improperly drained the assets" of the corporation, determined that the defendant shareholders should pay plaintiff shareholders the fair value of their shares, and ordered an appraisal. The parties chose an appraiser, and selected the "income approach" method for valuing the corporation. The terms of the appraiser's engagement further provided that the appraisal would be done in accordance with the S...

In Poynter Investments v. Century Builders , the South Carolina Supreme Court continued a line of cases holding that the "restrictions in a non-compete clause cannot be rewritten by a court or limited by the parties' agreement, but must stand or fall on their own terms." In addition, the Court clarified that there is no separate "balancing the equities" requirement for the issuance of a preliminary injunction (modifying five South Carolina Court of Appeals opinions including such a "requirement"). Appellant Rector sold his business to Poynter in 2007, and the parties entered into an "Employment and Non-Competition Agreement" containing a four year non-competition clause, and preventing Appellants from competing in a defined geographic area ("Restricted Territory") during that time period. Poynter sued Appellants in 2008 alleging violations of the non-competition agreement. The trial judge granted Poynter a preliminary injuncti...