What is ESG?
The term, which is widely used as ESG in practice, is the abbreviation of the initials of the English phrase “Environmental, Social and Governance”. ESG, which has developed as the concept of sustainability and social impact performance of an investment, covers one of the main the issues that investors should research and consider before making an investment decision.
The areas touched by ESG practices can be grouped as follows, without being limited thereto:
- Environmental: Pollution, Waste, Water, Natural Resource Management, Supply Chain Management, Emissions and Carbon Footprint, Land Use and Non-Destruction of Forests, Energy, Renewable Energy, Climate Change and Its Impacts
- Social: Health and Safety, Human Rights, Gender Equality, Consumer and Product Responsibility, Modern Slavery, Human Trafficking, and Child Labor, Employee and Customer Relations, Stakeholder and Community Engagement
- Governance: Anti-Bribery and Anti-Corruption, Anti-Money Laundering, Risk Management and Audit, Reputation Management, Crisis Management, Use of Sustainable and Green Finance Tools, Financial and Corporate Reporting, Gender Non-discrimination, Diversity and Inclusion in Employment, Managers and Management Duties and Responsibilities of Board Members, Data Protection, Cyber Security, Compliance with Legislation
Considering the titles above, it is a fact that environmental awareness, social relations, and corporate governance principles are the focus of ESG-oriented investments. In order to create a consistent and sustainable investment, the relations between ESG applications should be evaluated with a holistic approach.
Less than 20 years ago, ESG was launched as a social responsibility initiative by the United Nations which is now a global phenomenon with a growth rate of 34 percent worldwide since 2016, reaching more than US$30 trillion in assets at the start of last year[1]. However, ESG did not become a major focus all at once, nor was this development disconnected from the needs of the business world and the environment. Since the beginning of the 20th century, the social pressure created by various crises, claims, boycotts, and actions in the business world has given ESG its current meaning. Some researchers even trace the history of ESG, according to some sources, to those who, in the 18th century, opposed the slave trade, smuggling and luxury consumption and boycotted companies that produced liquor, tobacco, or allowed gambling[2]. As it can be seen, despite the advancement in the environmental, social, and governance aspects of the business world and capital, regardless of the consequences, took place with consumer demands, the main feature that distinguishes today’s ESG concept from similar social responsibility initiatives is that it has begun to be seen that ESG sensitive business strategies also have a positive effect on company profitability. Indeed, the main motivation for the adoption of this concept and the transition to fast and fundamental applications in this field is the deep need for a sustainable economy, the support of this need with government policies, the increasing awareness of ESG and the integration of ESG into the way companies do business has become an inevitable element both ethically and commercially.
Why is ESG Important?
The climate crisis, epidemics, social inequalities, and the reflections of the practices experienced in the global economy in connection with these situations, have inevitably increased the importance of ESG applications. The green economy, which has been growing for years, has continued to develop its unique tools. Especially in recent years, with the impact of the Covid-19, the International Monetary Fund (“IMF”) has repeatedly called for green recovery. The actors in the market realized that economic development and progress would not be possible with unsustainable growth models, therefore investment instruments such as green bonds or green lease certificates were given priority. While there was a slowdown in standard investment and borrowing activities due to the effect of the Covid-19, the sustainable bonds and loans market continued to grow. For example, the Turkish Capital Markets Board (“CMB”) recently observed that, taking into account the above-mentioned developments, regulatory and supervisory institutions like itself in the world have introduced regulatory frameworks for the healthy growth of these markets and the protection of investors within the framework of their public disclosure obligations. Thereupon, the CMB prepared a regulatory framework with Green Debt Instrument and Green Lease Certificate Guidelines Draft (“Guide”)[3] in accordance with the provisions of Article 1 and Article 128/e of the Capital Market Law, within the framework of the 11th Development Plan, the 2021 Economic Reform Package and the Paris Climate Agreement priorities and actions. Thus, with the Guide, the CMB has taken a concrete step towards increasing the issuance of green debt instruments and green lease certificates in the Turkish capital market, strengthening investor confidence in transparency and external evaluation (such as second-party opinion/verification) obligations and diversifying investment opportunities in projects that contribute to sustainable development. The Ministry of Treasury and Finance published the Sustainable Finance Framework Document (“Framework Document”)[4] on its website on 12 November 2021 to set the standards for green, social and sustainable transactions in financial markets. The Framework Document lays down the standards of sustainable finance instruments such as green, social or sustainable bonds, loans and debt instruments, and appropriate green and social projects. In the light of the developments in the world within the framework of the green economy, it is necessary to state that green debt instruments have emerged as a “result” and “mentality” beyond being a “tool” for the revival of green markets in Turkey. Because this is a reflex shown to ensure sustainable development and economy. The development of these instruments and the growth of their markets will contribute significantly to the climate crisis. In particular, the fact that this issue is subject to supervision by a regulatory and supervisory institution such as the CMB and that the treasury borrowings to be made in this field will lead the way for many companies to contribute to the development of the economy without sacrificing social and governance factors, as well as the fight against the climate crisis[5].
To avoid the devastating effects of the climate crisis, sustainable investment portfolios and private initiatives in the form of effective ESG investments have been developed as ways in which people, businesses and investors of all sizes can contribute to making the world a healthier place. These methods also provide investors with a transparent and comprehensive disclosure of climate-related financial risks. In this regard, it is possible to say that public-private cooperation has increased noticeably. The COP26 Summit is an international example of policies implemented to slow and ultimately reverse climate change[6].
In addition, considering that investments always have inherent risks, ESG investment instruments that provide long-term confidence in direct proportion to sustainability will be able to eliminate many risks, including reputational risks. ESG instruments can shape the market by finding its reflection not only in investor behavior but also in consumer behavior. For example, ESG investment tools have become the focus of consumers and therefore investors in a wide range from companies that adopt the Green IT[7] approach in their production and service delivery processes to energy-saving smart systems or from sustainable approaches in the textile sector to electric charging stations.
Moreover, although corporate governance and corporate ethics have always been a part of good governance, especially after the global economic crisis that started in 2008, it has become a “must-have” condition for investors. Beyond where corporate social responsibility is regulated, investors also need to adopt ethical corporate governance practices. Because the actions of companies that lack these practices may have direct or indirect social effects. In this context, fundamental problems of companies such as lobbying, data privacy, tax transparency, fight against corruption and bribery are taken as indicators. ESG encourages investors to take a stand against companies that lack transparency towards each other (peer pressure). The driving force here is the risk of serious environmental, social, financial and human rights violations, which may occur due to the violation of the UN’s Sustainable Development Goals[8] and applicable due diligence laws, as well as the risk of reputational damage.
New Investment Approaches Within the Scope of ESG
Along with the concept of ESG, concepts such as responsible investment, socially responsible investor, and impact investing came to the fore.
Responsible Investment
Responsible Investment is defined as a strategy and practice that integrates ESG factors into all evaluation criteria, from the investment decision to the end of the investment.[9] First of all, it should be noted that socially responsible investments have different investment approaches such as ethical investing, social responsibility investing, or impact investing. These different approaches aim to combine financial return with moral or ethical considerations; therefore, responsible investment is an ESG-oriented investment strategy that can be implemented by investors whose primary aim is financial return in a sustainable manner in terms of ethical and social issues in business. In this context, responsible investment argues that ESG factors are not abstract concepts that only consider ethical and environmental principles, and companies that do not take these principles into account, in fact, have significant risks on the financial returns provided to investors. The development of this understanding includes i) greater recognition in the financial community that ESG factors often play an important role in determining risk and return; ii) increasing demand of transparency of the beneficiaries and investors about how and where their money is invested; and iii) increasing regulatory recommendations that integrating ESG factors as part of an investor’s duty to clients and beneficiaries. The growing number of academic studies support the idea that integrating ESG factors is not costly[10].
Socially Responsible Investment
Socially Responsible Investment (“SRI” – also known as Value-Based Investment or Ethical Investment) uses negative screening to avoid investing in companies that have negative impacts on the environment or society. Negative screening refers to the deliberate avoidance of investing in companies or organizations with activities that conflict with the investor’s non-financial values. After this screening, certain titles are removed from the investment options, and in this way, it is aimed to prevent the investment portfolio from causing negative results.
Impact Investing
The Impact Investing approach, similar to Responsible Investment and SRI, includes social and environmental factors in the investment analysis. However, it takes the responsible investment approach a few steps further by prioritizing investing in companies or funds that prioritize social or environmental impact over financial return. Impact investments are expected to have a positive impact. Thus, the purpose of impact investing is to help a business or organization achieve specific goals that are beneficial to society or the environment. While creating financial returns is the primary expectation in ESG-focused Responsible Investment and SRI strategies, Impact Investing puts financial concerns behind social impact concerns. Making a nonprofit investment in clean energy research and development projects, regardless of how successful they will be, can be given as an example of Impact Investing.
In addition to the aforementioned practices, thanks to the intense interest in ESG, the number of applications for other similar concepts such as sustainability investment instruments, responsible investment funds, and sustainability indices is increasing day by day.
ESG Applications in Turkey
While ESG investments and regulations in Europe are developing rapidly, although ESG investments in Turkey have started to attract attention, it is possible to say that Turkey is at an early stage in the establishment of ESG regulation. Prior to the publication of the Guide announced by the CMB above, the Office of the President of Turkey established a partnership with the United Nations Development Program (“UNDP”) in the preparation of two important reports. These reports were created under the titles of “Impact Investment Ecosystem in Turkey” and the “Turkey Sustainable Development Goals (“SDGs”) Investor Map”, and these reports took the UN SDGs as a benchmark to provide an overview of the current state of sustainable investment in Turkey. These developments are important proof that the regulatory authorities in Turkey also follow the global ESG developments regarding sustainability and will make regulations on ESG when they deem necessary.
Beyond these reports, Turkey’s incentive for ESG investments led to the creation of advisory legal regulations at the beginning. Accordingly, in October 2020, the CMB has amended the Communiqué On Corporate Governance[11]. In connection with this Communiqué, CMB has also published the Sustainability Principles Compliance Framework (“Framework”) for publicly traded companies[12]. According to the CMB, the main purpose of this text is to “encourage companies to take a larger share of global sustainable investment flows”[13].
The framework includes more than 50 principles that fall into four categories: (i) general principles, (ii) environmental principles, (iii) human and employee rights principles, and (iv) corporate governance principles. Enforcement of these principles is currently optional. However, the reporting obligation of all listed companies in Turkey according to the Framework is currently within the scope of the “Comply or Explain” principle. As a result, non-financial disclosures of publicly traded companies should now include explanations on whether or not sustainability principles are applied.
In terms of green and sustainable bonds, Turkish companies have reached an issuance size of approximately US$ 5 billion until this date[14]. A significant portion of these issuances were issued by banks or large companies called blue-chip. While a significant portion of the issuances are issued to foreign investors in eurobond format; a small portion was issued to domestic investors in the form of local bonds. Looking at the equity markets, it has been observed that some companies have received an ESG rating during the public offering phase, and through this rating, they aim to attract the attention of institutional investors with high ESG sensitivity.
ESG themed instruments in our country lag behind global practices both in terms of export frequency and size. Although Turkey lagged behind a bit in these processes, it is not left behind, and with increasing awareness, it is a candidate country to catch up with the level of developed countries in the shortest time.
A Rising Trend in Merger and Acquisition: ESG
Increasing ESG-focused investments have also made advanced ESG due diligence (“DD”) processes a growing part of merger and acquisition (“M&A”) negotiations. Indeed, the M&A market has started to see ESG as an important dynamic in Financial and Legal Due Diligence Reports (“DD Report”) in M&A projects, especially when it comes to investment in a global company or business idea, regarding value chains. Accordingly, companies are expected to include new provisions in their purchase agreements regarding their ESG profiles. In addition, as the legislation -which is likely to be developed and published- diversifies, examining the compliance process of companies with the relevant legislation in the field of ESG will also be considered as an important part of the DD Report.
A legal and compliance-oriented DD and the resulting DD report form the backbone of most merger and acquisition projects. Because the identification and measurement of risks and the management of these risks can only be realized after a careful examination. These risks may be legal, as well as commercial and financial risks on which the company builds its values. ESG risks, on the other hand, can take their place among the risks that may arise in almost every field and need to be managed. Many areas from climate change to human rights and modern slavery, from diversity to data privacy and corporate governance can be given as examples of ESG-based risks. In measuring these risks, the ESG Rating scores obtained as a result of the analyses made by the ESG Rating Agencies (although not standardized) are evaluated by making use of the developing technology[15]. It would be appropriate to emphasize that ESG-focused investments are an investment approach beyond purely profit-oriented. Because ESG investors are now asking questions that address their own value chains and looking for answers. In this direction, an investor wants to know which company he invested in, to know about it, to analyze customer relations, to see whether it has duly procured its financial resources, to understand how it behaves towards the environment and its employees and to monitor working conditions and compliance conditions. Although this behavior of the investor may result from his own will and the driving force of the market he is in, it should be emphasized that comprehensive and detailed ESG compliance laws are now being implemented on a global scale. It should not be ignored that ESG compliance will become a legal obligation beyond a business and investment model for many companies in the near future.
Conclusion
Today, ESG has become a criterion that significantly affects both the way of doing business and the behavior of investors. It is an inevitable fact that ESG criteria will become an “indispensable” evaluation criterion in the future for both investors and customers. While this reality is fed by the increasing awareness of individuals and companies; it concurrently becomes a basic principle that is supported by state policies and constructed on legal grounds day by day. These processes were first led by the European Union countries; Subsequently, this current spread to the USA and then to all other countries. Turkey has started to make significant progress in the field of ESG by taking the necessary steps under the leadership of regulators and well-known leading companies.
Investors are integrating more and more ESG criteria into their investment decision processes. The important reason for this integration is that investors want to do the right thing in terms of environmental, social, and governance issues, as well as avoid the negative effects of behaviors contrary to these principles on company profitability and investment returns. In other words, ESG-focused investments outperform other alternative investments. Investors who are aware of this pay attention to place ESG at the top of the evaluation criteria they use when making investment decisions in both capital markets and M&A markets. It is thought that some of the legal regulations summarized above will become mandatory in the very near future, taking into account the global ESG practices in Turkey. For this reason, first of all, increasing ESG awareness within the company in all areas, supporting this awareness with various company policies and objectives and most importantly, making ESG practices a principle by creating necessary strategies will make a great contribution to sustainable success.
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Keokuk City Hall has been at 501 Main St. for almost a year now, but the city still owns the property at 415 Blondeau, where the old city hall was located before it was heavily damaged by fire and then demolished.
At the regular city council meeting last week, City Administrator Cole O’Donnell told the council there was some interest from a resident in buying the property. That person, however, did not want to pay the recently appraised value of the property, which came in at $25,000.
The property consists of almost two lots, with a paved parking lot on some of the property.
O’Donnell said in order to dispose of the property for less than the appraised value, the city will need to open the lot up for bids. Written and sealed bids will need to be submitted before 2 p.m. on Friday, July 1 at Keokuk City Hall. The bids will be opened starting at 2:01 p.m. that same day.
The council will then hold a public hearing on the proposed property sale at 5:30 p.m. on Thursday, July 7, the next regular council meeting. If the high bid is accepted, the council will enter a final resolution authorizing the sale.
Special use permit change
The city took another step forward in changing the special use permit ordinance to add homeless shelters into the ordinance. The council also will hold a public hearing on that, with possible passage of the first reading at the next council meeting on Thursday, July 7.
The Keokuk Homeless Support Alliance with help from Tribulation and Trust Ministries made the request for the change as those entities are seeking to open a homeless shelter in town. It was found the city code did not have that as a special use, so the process was started to add that to the ordinance.
Syncing Main Street traffic signals
Was it 17 mph or 22 mph that a person had to drive to hit all the green lights on Main Street. Different people gave different answers, but in the last few years, that decades-old advice has gone out the window as the lights have been out of sync with some intersections being upgraded.
The old controllers manufactured decades ago were no longer going to have parts available to keep fixing them.
But when several intersections were upgraded, the city could not get the lights all on the same pattern. There was a discussion about taking out several more traffic signals downtown, instead of spending the estimated $70,000 to upgrade the controllers at Eighth, Ninth and 10th streets.
In the end, however, the city council decided it wanted those traffic signals to remain. Public Works Director Robert Helenthal told the council, once they are all upgraded, they should be able to get synced up like they used to be.
Last Thursday, he requested permission to go ahead and order the controller upgrades. The bill won’t come through until after the start of the fiscal year, due to the lead time for the order. He said costs continue to go up, so he wanted to get them ordered to lock in the price.
The estimated cost is now $70,539, which is $539 more than was budgeted for the project.
The council approved the purchase.
As elaborated in our previous article, significant amendments were introduced into the Bankruptcy and Enforcement Code numbered 2004 [“BEC”] on November 30, 2021. One of these changes was regarding entitling debtors to sell their own seized property by consent.
In this respect, the Regulation on Granting the Debtor Sale Authorization [“Regulation”] [available in Turkish only] entered into force after being published in Official Gazette No. 31849 on May 28, 2022. The Regulation sets forth procedures and principles of Article 111/a of the BEC entitled “Granting Sale Authorisation to The Debtor”.
Debtor Must Apply to Enforcement Office Within 7 Days
According to the Turkish BEC, sequestration officer determines the value of the seized property after seizing it. Registered properties, however, is appraised by experts authorized by the Ministry of Justice.
At this stage, debtor wishing to be authorized for sale must submit their request to the enforcement office within seven days after receiving notice of valuation. Then, bailiff issues a certificate of authorization for debtor’s sale of their seized property. But first, the valuation procedure needs to be finalized.
Debtor Must Sell the Property Within 15 Days
The certificate allowing debtor to sale is valid for 15 days after delivery of the respective document to the debtor. Within this time frame, debtor must provide information on buyer’s identity to enforcement office, and buyer must deposit the agreed price to the bank account provided by the enforcement office.
The sale price must not be less than the total of (i) all costs made during the enforcement proceedings and (ii) higher of 90% of the appraised value or the total amount guaranteed with the property in question and the amount of privileged receivables.
Enforcement Court’s Approval Is Needed for The Sale to Be Finalized
The bailiff decides whether the consensual sale requirements have been met after the sale price has been deposited to the enforcement office. If the bailiffs’ assessment is affirmative, they forward the case to the enforcement court for finalization of the sale, and delivery of the property.
After examining the document, the enforcement court makes a definitive decision within ten days to approve or deny the consensual sale of debtor, without having a hearing. If court decides to accept the sale, buyer becomes the new owner of the property, and enforcement office transfers and delivers the property to the buyer. If court decides to reject the sale, enforcement office returns the sale price to buyer within three days.
Status of Seizures on Property
It should be underlined that the transfer and delivery of the property for sale occur free of any seizures. Accordingly, enforcement office lifts such encumbrances in accordance with the enforcement court’s ruling.
In principle, transfer and delivery costs belong to the buyer. The sum deposited by the buyer is paid to the creditors after the subject of sale is delivered to the buyer or after it is prepared for delivery.
Importance of the Regulation
The reason for motivating debtor to sell their property consensually rather than the property being sold through the enforcement channel is that the property can be sold for a higher price that way. Otherwise, the property could be sold in an auction for even half of their assessed value. By selling the seized property by consent, the debtor will be able to pay off a bigger portion of their debt since the price will be at least 90% of the estimated value. As such, both debtor and creditors will benefit from this new opportunity given that a greater portion of receivables would be paid.
CONNEAUT LAKE — After a split vote, the Municipal Authority of Conneaut Lake is moving forward with possibly selling bulk water to a potential housing development in Sadsbury Township.
Conneaut Lake Properties LLC of Wexford wants to build a more-than-100-unit mixed-use housing development in the township called Reflections on Conneaut Lake.
It would have 22 single-family homes, 37 carriage homes and 44 townhouses on a 75-acre site near Pymatuning Avenue and Aldina Drive, about a mile north of the borough.
The company wants to have the municipal authority sell it water in bulk rather than drill its own water wells and have its own water system on the property.
Authority members split the vote Monday 2-1, with one abstention and one member absent from the vote, to go forward with preparations of a developer’s agreement between the authority and Conneaut Lake Properties on the sale of bulk water.
Under Pennsylvania case law, the vote counted as approval as there was a quorum of members for the vote and a majority of those present voted in favor.
Board members Mario DeBlasio and Jim Tigri voted having the authority’s attorney, Brian Cagle, and engineer Steve Halmi, of Deiss & Halmi Engineering, start work on a proposed agreement while Chairman Carl McLean voted against it, saying the matter was unclear at this point.
Rob Golenburke abstained after previously having asked for the matter to be tabled pending more information.
Alan Baldarelli was in attendance at the meeting, but had left prior to the vote which took place about 8:45 p.m. Monday.
Prior to his departure, Baldarelli expressed a number of concerns to Joseph Katzfey, a representative of Conneaut Lake Properties.
Baldarelli said he was concerned that the authority only has two water wells and that one of those only is operating at 50 percent of its capacity. Baldarelli said he couldn’t vote for a bulk water sales agreement until the authority had well improvements or a new well to add capacity
Prior to the vote, DeBlasio pointed out the developer has put $8,000 toward paying for staff time to develop a potential agreement.
The agreement would look at things like capacity, cost, and its impact on rate payers on the system.
“They’ve been here twice, spent money on it,” DeBlasio said. “We should do what they’re asking. If it turns out it’s not good for the rate payers, we should stop and not do anything. The one thing we should not do is drag our feet for months and months and months.”
Cagle pointed out Sadsbury Township would be required to approve any bulk water agreement between the authority and Conneaut Lake Properties if water lines were to go into the township. However, Sadsbury would not be required to be a partner to the agreement itself, he said.
DeBlasio said he knew of no circumstance where the authority could move forward if Sadsbury were to object to a bulk water sale.
Conneaut Lake Properties prefers to get a bulk water sales agreement from the authority, but could drill its own water wells onsite if needed to have the project move ahead, Katzfey told the authority.
SUNBURY — City Council members approved the first reading of the much-debated commercial property ordinance in Sunbury after giving the public a chance to raise concerns Monday night.
Mayor Josh Brosious led the public meeting for commercial property owners to discuss any concerns before City Council members met to vote on the first reading, which will now require commercial property owners to be inspected by an outside agency every three years.
“The inspections required under this ordinance will be carried out utilizing the IMPC 2015, (International Property Maintenance Code), by the city’s designated licensed inspector, by North East Inspection Consultants,” Solicitor Joel Wiest said.
Wiest said the ordinance does not require current code compliance and standards. It is intended to provide a standard for the maintenance of equipment, systems, devices and safeguards required by this code or a previous regulation or code under which the structure or premises was constructed, altered or repaired shall be maintained in good working order.
“This ordinance will require that the safety systems already in place in a commercial building be in working order, and that minimum structural safety standards are met,” said Wiest.
The cost for each inspection will be $200, and inspections will be required on a three-year basis, according to the ordinance.
The inspections will not become mandatory until Jan. 1, 2023, so that business owners have time to prepare for the fee, according to council members.
Brosious said the ordinance is for the good of the city and the safety of people who are entering the structures.
Council also thanked the Degenstein Foundation for matching a grant the city applied for. The city applied for a grant for the S.W.E.E.P project, and received $125,000. The Degenstein Foundation matched the grant.
“We are very thankful to them and continue to help and support the city of Sunbury,” Brosious said.
Brosious said the project will be beneficial to the city and surrounding areas.
It was a perfect June day at the Salt Kettle Rest Area on I-74. It was the day the Vermilion County Museum Society was reopening the trail to the Pioneer Cemetery at the site.
It had been closed several months due to a windstorm that downed a number of trees and broke off others. Several of them fell on the trail and others surrounded an informational sign. Patty Marano, who managed the rest area, and others spent a lot of volunteer time and effort restoring the trail.
A little dog was barking at a Canadian goose that was defending other geese near the rest area pond that day. The shrill voice of the tiny creature probably annoyed the large gander. It was not hard to figure out what he might have been thinking. “Really, little guy, you want to do this?” He had his neck extended and was stalking the little fellow when the lady walking him pulled him away and strolled back toward her car.
A man was fishing in the pond with a large metal disk attached to a heavy line. He said he was searching for metal items that might rest at the bottom of the pond. The metal disk he was casting and drawing slowly back through the water was a strong magnet. He was curious about the Pioneer Cemetery.
Like others I had visited with over the years at the rest area, he was surprised to learn there was a little cemetery nearby. I told him about Edward Wilson, the man who came to America from Ireland in 1802 at the age of 17. He fought as a member of the Maryland Militia in 1814 in the Battle of Baltimore. Francis Scott Key was also present at that battle and was inspired to compose the words that became the national anthem.
Wilson came to Vermilion County in 1832 and began purchasing land. He bought 17 tracts of government land. His large holdings included the area where the rest area is and the Pioneer Cemetery where he was laid to rest.
Edward was a wealthy man when he died in 1840, and in the next decade Abraham Lincoln represented his children in court. It was an interesting case that saw Lincoln bringing suit against his good friend Rev. Enoch Kingsbury of Danville. The two men remained friends despite the lawsuit and Lincoln appointed Kingsbury postmaster of Danville when he became president. A prenuptial agreement Edward Wilson had with his second wife, Caroline Searl, was witnessed by Isaac Walker, who later became one of the first United States senators from Wisconsin. Details of the trial and outcome are available at the Vermilion County Museum.
The trail through the woods to the Pioneer Cemetery was established in the autumn of 2012. It was opened to the public in the spring of 2013 after the cemetery was renovated. In the last nine years, people from all over the United States and from foreign countries have walked the trail to visit the handful of stones, They read about Wilson and the history of the area on the informational boards at the rest area and the cemetery.
After visiting with the treasure hunter, I moved on to the woodland trail. After a little trimming and moving a few fallen small trees from the trail, the barrier that blocked it was moved and it was reopened on June 4, 2022. While it was closed, someone had placed a small American flag at the grave of Edward Wilson for Memorial Day. The veteran has been resting in the woodland setting for more than 180 years, but he has not been forgotten.
TRAVERSE CITY — Local realtor Camille Campbell said the specifics of a new kind of right-to-list contract a Florida broker is offering some homeowners in northern Michigan has her feeling uneasy.
“My concern isn’t about getting a listing or not, it is about the choices people may be giving up when they sign one of these agreements,” Campbell said.
MV Realty of Delray Beach is offering contracts — called the Homeowner Benefit Program — that pay up front money to homeowners whether or not they have plans to sell their home, information on the company’s website states.
“MV spends substantial time and resources to ensure that it always operates in a way that is consistent with the law,” the company said in a statement provided Thursday.
“With regard to Grand Traverse County, MV has only entered into five Homeowner Benefit Agreements in the county, all of which were signed by the homeowners knowingly and voluntarily before a notary, and after those individuals had spoken to a licensed agent about the program.”
The contracts are not listing agreements, but rather a contract between two parties — a homeowner who makes a promise and MV Realty which pays the homeowner a set amount of money in exchange for that promise, the statement said.
The specifics are this: In exchange for between $300 and $5,000, homeowners sign an agreement stating if they decide to sell, MV Realty has the exclusive right to list their home on commission, generally six percent, as spelled out in the agreement.
Campbell and other local real estate professionals say what they find problematic is not the up-front money, but the length of the agreement, which company documents show lasts 40 years.
In contrast, a standard listing agreement from a licensed realtor in Michigan typically lasts three, six or 12 months, said Chris Lambert, co-owner of Northern Title Agency.
Additionally, the Homeowner Benefit Program agreement states if the homeowner defaults on the agreement during that 40 years, whether by losing the home through foreclosure, listing the home with another realtor or listing it for sale by owner, the homeowner would owe MV Realty an early termination fee equal to three percent of the property’s fair market value.
Homeowners also waive their right to be party to a class action lawsuit, agree to allow MV Realty to use photographs of them in company marketing materials and agree MV Realty can delegate some or all of its obligations to others, a copy of the agreement states.
“If at any point during the next 40 years, they decide to sell, MV wants to work with its customers to successfully sell their home,” the MV Realty statement reads. “Once the property is sold under the terms of the MV agreement, the HBA terminates.”
Local filings
Staff with Antrim, Benzie and Leelanau county Register of Deeds offices searched for MV Realty listing agreements and reportedly found none listed.
Grand Traverse County Register of Deeds Peggy Haines said as of early June, four such agreements have been filed with her office, three of which she recorded and one she rejected for a notary error.
“My concern with these documents is whether or not people fully understand what they are signing,” Haines said. “And, maybe they’re not worth the amount of money property owners would be getting up front.”
Calls to three of the four local homeowners who records show signed these agreements went unreturned.
The fourth, James Leurck, Sr., said he did recall signing a real estate agreement, though did not immediately recall it was with MV Realty.
His son and namesake, James Leurck, said his dad was approached by MV Realty, though he wasn’t sure how the company got his father’s name. Leurck said MV Realty offered Leurck Sr. approximately $1,500 up front, and in January sent a notary public to the family’s Peninsula Drive home.
MV Realty said in their statement, the company only reaches out to individuals who have submitted inquiries requesting information either to MV directly or through third party websites, which are then directed to MV from whom the consumers consent to receive information.
Leurck said the notary who met with them at their home explained the paperwork and notarized Leurck Sr.’s signature on a Homeowner Benefit Program agreement.
The home is not for sale and James Leurck said he and his father understood the terms of the agreement. His father signed it with that understanding.
“As far as I know, they have rights for whatever amount of time but only if we decide to sell the house,” James Leurck said. “It’s totally up to us if and when we decide to sell.”
The MV Realty agreement documents filed with the Register of Deeds office aren’t the full agreement, Haines said, but rather a referencing document called a “Memorandum of MVR Homeowner Benefit Agreement,” which alerts an interested party — say a bank, a mortgage company, a title company or a beneficiary — that an underlying agreement exists.
‘Runs with the land’ for 40 years
The two-page memorandum and the multi-page full agreement both include the 40-year timeframe, records show, and state obligations in the agreement “run with the land.”
That is a real estate contract term, Haines said, that means the homeowner’s obligation to list with MV Realty lives on with beneficiaries, in the event the homeowner who signed the agreement dies during that 40-year timeframe.
Traverse City real estate and municipal law attorney Scott Howard also pointed to the length of the agreement as unusual.
“Forty years is an extraordinarily long period of time for you to commit to a single realtor or real estate agency,” Howard said. “I have been doing this work since 1997 and I have yet to see an agreement like this one.”
Neither Howard, Lambert nor Campbell have worked with a client who signed a Homeowner Benefit Program agreement, they said.
“As realtors, the challenge is we wouldn’t know about these agreements until after the fact because my understanding is they go direct to the homeowner,” Campbell said.
Lambert said title companies, too, would likely first become aware of the agreement after they were signed by the homeowner.
“These are agreements that are being signed without title companies,” Lambert said. “We’re not involved until people go to refinance or sell. This is new. I’ve never seen anything like it before.”
Lambert said he cannot give advice on whether homeowners should or should not enter into such an agreement, though did say if a client asked his opinion, he might respond with some questions of his own.
Such as, whether or not the client had seen an MV Realty “For Sale” yard sign in northern Michigan — meaning, would the company have a presence here in the event the homeowner decided to sell, and MV Realty was responsible for marketing and selling the property.
MV Realty said if a homeowner under contract decided to sell, that’s when a more traditional listing agreement would be signed.
Transaction broker vs. seller’s agent
At least some Homeowner Benefit Agreements state MV Realty would be the property owner’s listing agent, but would act “strictly as a transaction broker” — a legally neutral third party who doesn’t work for the buyer or the seller but assists with coordinating details of a transaction.
The Michigan Realtors Association calls these brokers “transaction coordinators” and a policy document states transaction coordinators can introduce buyers and sellers, but cannot list a property for sale in the state’s Multiple Listing Service or be involved in price negotiations — only a seller’s agent can do that.
Michigan realtor Mary Doa, based in Howell, is listed on MV Realty’s website as the company’s Michigan agent. Doa declined comment on whether she would be the seller’s agent and referred a reporter’s questions back to the corporate office in Florida.
“MV will only operate its business if it is complying with all applicable laws, at all times,” the company said in its statement. Records show the HBA includes a three-day right-to-rescind option.
Haines in Grand Traverse County said she is alarmed enough by the lengthy term of the agreements to send a letter to homeowners whenever an MV Realty agreement is filed with her office.
“It appears that this document may be placing a 40-year lien on your property,” Haines’ letter states. “If you were not aware of this being recorded and have any questions regarding this document, please contact me.”
The Better Business Bureau has logged 25 complaints against the company in the past three years, records show, with complainants expressing concerns about what they called deceptive practices, among other issues. The BBB also gave the business an “A” rating, though notes customer reviews are not used when calculating the rating.
MV Realty representatives have responded to most if not all of these complaints in writing, sometimes at length, with details on how potential clients are identified and contacted.
Records in various state courts show civil lawsuits have been filed in relation to the Homeowner Benefit Program, either by homeowners seeking to vacate the agreement or by MV Realty seeking to enforce its terms or attach a lien to a foreclosed property.
Nationwide plan to ‘securitize’
A federal lawsuit between MV Realty and an investment firm, however, show plans for a grander purpose beyond real estate sales, was part of the company’s initial foray into right-to-list contracts.
U.S. District Court filings show Innovatus Capital Partners, a New York-based investment advisor and portfolio management firm, approached a shareholder of MV Realty in 2017, with what one attorney described as a new and novel business opportunity.
“The opportunity was to join with Innovatus to be the first in the market in the United States to sign forward right-to-list contracts with real estate owners and to then, if a sufficient number of these contracts were signed, securitize them,” said attorney Leo George Kailas.
Kailas was arguing on behalf of Innovatus, during a 2019 oral argument in front of the U.S. Court of Appeals for the Second Circuit.
In a nutshell, MV Realty would produce right-to-list contracts and Innovatus would securitize them, court filings show. Federal court filings by MV Realty state as of 2018 or 2019, the company had generated “well over” 10,000 right-to-list contracts in the U.S.
Innovatus, according to court filings, spearheaded the idea that bundling large numbers of listing contracts could closely mirror residential real estate appreciation and be attractive to investors.
The relationship between the two entities was short-lived, however, and in 2018 Innovatus filed a federal lawsuit against some MV Realty shareholders and officers for breach of non-disclosure agreements, court records show.
MV Realty disputed these claims, as well as the relief sought by Innovatus, and counter-sued.
A federal district court judge dismissed some of Innovatus’ claims, Innovatus appealed, a U.S. Appeals Court panel heard arguments and remanded portions of the case back to the U.S. District Court for the Southern District of New York.
MV Realty attorneys have repeatedly argued the relief sought by Innovatus — that MV Realty be prohibited from pursuing right to list contracts of any kind, anywhere, for six years — is a boundless and unenforceable restriction.
The company stopped executing the original right-to-list agreements in 2018, court records show, and subsequently trademarked its Homeowner Benefit Program.
This action was not a breach of non-disclosure agreements, MV Realty stated in court filings, as these kind of agreements have long been in the public domain.
Court filings do not state plans by the company to securitize the Homeowner Benefit program agreements, records show.
Local realtors polled informally said exclusive right-to-list agreements are common, and that many realtors use them frequently, though payment of up-front money to a seller by a realtor or real estate company is unusual or even non-existent — as is the 40-year timeframe — at least in Michigan.
The Homeowner Benefit Program agreement is something new in the state, said Haines, who added she will continue to record the documents if legally in order, and will then respond with her letter to homeowners.
On Wednesday, a fifth Homeowner Benefit Program agreement memorandum was submitted to her office, Haines said.
SUNBURY — The much debated commercial property ordinance in Sunbury will be discussed again on Monday prior to a City Council meeting.
According to solicitor Joel Wiest the city will hold a public meeting on Monday at 5:30 p.m. in council chambers at City Hall, relative to changes to and implementation of its commercial property inspection ordinance.
“The inspections required under this ordinance will be carried out utilizing the IMPC 2015, (International Property Maintenance Code), by the City’s designated licensed inspector, by North East Inspection Consultants,” Wiest said.
“The IPMC is a maintenance document intended to establish minimum maintenance standards for basic equipment, light, ventilation, heating, sanitation, and fire safety. Responsibility is fixed among owners, operators and occupants for code compliance.”
Wiest said he wanted people to understand the ordinance.
“To be very clear, this ordinance does not require current code compliance and standards, it is intended to provide a standard for the maintenance of equipment, systems, devices and safeguards required by this code or a previous regulation or code under which the structure or premises was constructed, altered or repaired shall be maintained in good working order,” he said.
“So basically, this ordinance will require that the safety systems already in place in a commercial building be in working order, and that minimum structural safety standards are met.”
A few examples of things the inspections will cover are clear ingress and egress from the building, emergency lighting, exit signs, smoke/carbon monoxide detectors, fire extinguishers, sanitation, required GFI receptacles, properly installed electrical and plumbing fixtures, and structural soundness,” Wiest said.
“This ordinance is being implemented solely to ensure the health and well-being of the patrons, employees, and other users of commercial buildings in the city of Sunbury,” he said.
There has been much discussion of the implementation of fair and recognizable exclusions from this ordinance. To be clear, at this time, the only buildings which will be excluded will be those which have been properly inspected under the IPMC 2015 within the previous three year period. Owner occupied structures, unused structures, and others will be required to obtain inspections due to the impossibility of ensuring that the same are used only by the legal owners thereof, and given the fact that even if solely owner occupied said buildings could impact neighboring structures.”
The cost for each inspection shall be $200, and inspections will be required on a three year basis, according to the ordinance.
However, due to the public interest in cost hereof, the inspections will not become mandatory until Jan. 1, 2023, so that business owners have time to prepare for the fee, Wiest said.
“Any business owners who wish to immediately undergo the inspections required under this ordinance may do so immediately upon passage of the new ordinance. Further, local, state, and federal government buildings not inspected within the prior three years will be inspected, but not charged by the city for said service,” he said.
Sunbury Mayor Josh Brosious said the ordinance was implemented to ensure the safety of the owners and residents.
Council meets at 6 p.m. on Monday.
Commercial disputes in the UAE are resolved either through litigation or arbitration. While arbitration is fast growing as an effective alternative dispute resolution mechanism, litigation before the courts remains the primary channel of dispute resolution in the UAE.
Court System in the UAE
The UAE follows a civil law system. The UAE has also established several free zones – the most popular being Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM). That said, criminal laws of the UAE and the concerned Emirates continue to be applicable to the free zones.
DIFC and ADGM have their own legal framework, which is based on English or common law. Both free zones have specialized commercial courts, which enforce this law, which hear commercial disputes on and pass judgements based on common law principles. The court proceedings are conducted in English.
In contrast, court proceedings in onshore UAE are conducted in Arabic. All documents have to be submitted in Arabic and if the documents are not in Arabic, these must be translated and legalized in accordance with the regulations.
The juridical system in the UAE is at two levels – federal level and local level. At the local or Emirate level, there is the court of first instance, then the court of appeal and finally the court of cassation. At the federal level, court of first instance is followed by the court of appeal which is followed by the Federal Supreme Court.
Many Emirates in the UAE follow their own local judicial system, including Dubai, Abu Dhabi and Ras Al-Khaimah, whereas Emirates of Sharjah, Ajman, Fujairah and Umm Al Quwain follow the federal judicial system.
Limitation Period for Commercial Disputes
In simple terms, limitation period is the period of time during which a lawsuit can be filed before the relevant courts. If the claim is not brought within the specified time, the party may lose its right to pursue the claim.
In accordance with Federal Law No 5 of 1985 (Civil Code), generally, a claim should be brought within 15 years, post which it becomes time barred, unless otherwise specified by a statute. That said, many statutes provide for a shorter period of time for bringing a claim depending on the nature of the claim.
Commercial Litigation in the UAE – Steps
Federal Law No 11 of 1992 (Civil Procedures Law) governs the procedure for hearing commercial disputes in the courts, including appeals and execution of judgements. Typically, the steps followed for a commercial civil dispute is as follows.
- Filing a Case
Proceedings have to be initiated by the plaintiff before the court of first instance, which has jurisdiction to hear the matter, by submitting a statement of claim. The claim should contain all the details relevant to the case, including the names of the parties, subject matter of the lawsuit, demands and grounds for the claims and the court before which the lawsuit is filed. On filing of the statement of claim, the defendant is notified of the claim. The defendant is required to submit the memorandum of defense.
- Hearing of the Case
The pleadings are generally held in public, with the plaintiff having the right to put his case first along with the evidence. The defendant would then present its defense and submit relevant evidence.
- Expert Report
The court is entitled to assign one or more experts for their expert opinion in civil and commercial disputes as provided under the evidence law of UAE, Federal Law No 10 of 1992. The experts are generally those registered in the schedule of experts in the Ministry of Justice. The experts are required to comply with the procedure as mentioned in the Evidence Law.
The expert will call for the appearance of the parties to the litigation, prepare an initial report of his work, share it with the parties for their comments and responses, and submit the final report to the court. The report will set out the result of the expert’s work, their opinion and reasons for the opinion. The expert’s opinion is not binding on the court and if the court issues a judgment which is not in line with the expert’s opinion, the reasons for deviating from the expert’s opinion would need to be stated in the judgement.
- Judgment
Once the pleadings are completed, the court will adjudicate the case by pronouncing judgment. The judgment would include the name of the court of issuance of judgement, date and venue, type of case, and the names of the judges, amongst other things. The judgment will set out the grounds on which the decision is based.
- Enforcement
Once the judgment has been received, the relevant party will file an application for the execution of the judgement. The court may, as part of execution proceedings, attach or seize the movables, debts of the debtor, stocks, bonds, shares, real estate and impose bankruptcy proceedings. An arrest warrant may also be issued against the debtor. The court can also issue a travel ban against the debtor.
- Appeal
Generally, judgments can be appealed. However, if a person has accepted the sentence or judgment implicitly or expressly, such matters cannot be appealed.
The judgment of the first instance courts can be appealed before the court of appeal.
Appeals from the court of appeal may be submitted before the cassations appeal based on specific grounds, for instance, if the appealed judgment was based on breach of law, or mistake in application or interpretation, or if there’s nullity in the judgment or in the procedure which has affected the judgment.
Judgments from court of first instance can be appealed within a period of 30 days from the date of issuance of the judgment, unless a statue stipulates otherwise. The time limit to appeal to cassation is 60 days.
Commercial agency is one of 04 commercial intermediary activities of a trader regulated by Vietnamese laws (along with trader representative, commercial brokerage, purchase, and sale of goods by mandated dealers). What is a commercial agency and what are notes about a commercial agency under Vietnamese laws?
Through this article, BLawyers Vietnam would like to answer the above question.
I. Commercial agency and scope of the commercial agency
According to Article 166 of Commercial Law 2005, a commercial agency means a commercial activity whereby the principal and the agent agree that the agent acting in name of the principal to purchase goods or sell goods for the principal or provide services of the principal for customers to receive remuneration.
In which, the principal is a trader who delivers goods to the agent to sell or gives money for the purchase of goods to a buying agent, or is a trader who authorizes the performance of services to a service-providing agent. The agent is a trader who receives goods to act as a selling agent, receives money for purchase to act as a buying agent, or is an authorized party to provide services. The Commercial Law also clearly stipulates that the traders include legally-established economic organizations and individuals conducting commercial activities independently, regularly, and with business registration.
Thus, the scope of a commercial agency is the commercial activities that the agent performs under the authorization of the principal to enter a contract with a third party.
II. 03 notable issues about the commercial agency
1. Regarding the form of the commercial agency
Currently, Vietnamese law only mentions the 03 most common types, however, including:
- Off-take agency: This is a form of agency in which the agent sells or purchases a specific quantity of goods or provides a full service for the principal.
- Exclusive agency: This is a form of agency in which, within a given geographical area, the principal only assigns an agent to buy or sell one or more items or to provide one or more certain types of services.
- General agent for the purchase and sale of goods and services: This is a form of agency whereby an agent organizes a system of affiliated agents to carry out the purchase and sale of goods and provide services for the principal.
2. Regarding the agency contract
An agency contract must be made in writing or another form with equivalent legal validity. This is an important issue, that affects the validity of the contract, so the parties in the contract need to pay attention.
In addition, the contract should stipulate the rights and obligations of the principal and the agent to determine the scope of work of the parties and mitigate risks of dispute.
In case one party wants to terminate the agency contract, they must notify the other in writing with a statutory notice period. In case of terminating the agency contract, the agent shall have the right to request the principal to pay compensation for the period during which it has acted as an agent for such principal unless otherwise agreed by both parties. In case the agency contract is terminated at the request of the agent, the agent shall not have the right to request the principal to pay compensation for the period during which it has acted as an agent for the principal.
In addition, the agent receives an agency remuneration paid to the agent in the form of commission or price difference.
3. Tax issues for the agency contract
(i) Value added tax under the deduction method
For activities of distribution and supply goods agency, wholesale, and retail of all kinds of goods, VAT must be paid when receiving money from selling agent goods to buyers according to the law with the VAT rate of 10% (except for the tax-free goods and services, or the goods and services, which are subject to 0% or 5% tax). Currently, according to Resolution No. 43/2022/QH15 and Decree No. 15/2022/ND-CP, the VAT rate is being reduced to 8%.
For the enterprises that are agents selling at the earned commission price, they are only subject to VAT when receiving agency remuneration at the VAT rate of 8%. In addition, the enterprises are also subject to the CIT according to regulations.
(ii) Value added tax under the direct revenue method
For the activities of distribution and supply goods, wholesale, and retail of all kinds of goods (except for the value of agent goods selling at the earned commission price), the tax rate is 1% and for the activities of agents selling at the earned commission price will be subject to a tax rate of 5%.
(iii) Personal income tax for business
Particularly for individuals and business households that are agents, when performing activities of distribution and supply of goods, wholesale, and retail of all kinds of goods (except for the value of agent goods selling at the earned commission price), they shall declare and pay the VAT tax rate of 1% and the PIT tax rate of 0.5%.
In summary, the commercial agency in Vietnam is not a brand-new commercial intermediary activity in Vietnam but there have been lots of notable regulations.