Foreign Corrupt Practices Act Compliance Representation and Warranty

Summary

This template representation and warranty may be used in an underwriting agreement to state that neither the company nor any of its subsidiaries, directors, officers, and other employees have taken any actions in violation of the Foreign Corrupt Practice Act of 1977, as amended (15 U.S.C. §§ 78dd-1, et seq.) (FCPA). This template FCPA representation and warranty incorporates the standard representations of the issuer and can be customized to the particular facts and circumstances of the company and the underwriting agreement. This template includes practical guidance and drafting notes. The FCPA prohibits covered persons from bribing foreign government officials to obtain or retain business. The FCPA's anti-bribery provisions apply to three categories of companies: (1) issuers (i.e., any company that lists a class of securities on a U.S. national exchange or is required to file periodic reports with the U.S. Securities and Exchange Commission (SEC)), (2) domestic concerns (i.e., any company that has its principal place of business in the United States or is organized under U.S. law), and (3) other companies acting within the United States. To bring transparency to corrupt practices, the FCPA also requires companies that have reporting obligations under the Securities Exchange Act of 1934, as amended (Exchange Act), to comply with specific accounting requirements. Such companies are required to (1) prepare and retain books and records that accurately and fairly reflect their transactions and (2) create and maintain proper and adequate systems of internal accounting controls. Compliance with the FCPA is enforced by the U.S. Department of Justice (DOJ) and the SEC. Although these agencies have increased their enforcement efforts over the last several years and have charged and prosecuted corporations and individuals with bribing foreign officials, such enforcement has cooled under the current administration. Penalties can include both economic and criminal sanctions. A list of FCPA enforcement actions by year can be found on the SEC’s website at SEC Enforcement Actions: FCPA Cases. For more information about the FCPA, see Foreign Corrupt Practices Act (FCPA), Foreign Corrupt Practices Act Compliance Programs Checklist, Private Fund Compliance and the FCPA, Foreign Corrupt Practices Act (FCPA) Due Diligence Checklist, Securities Law Techniques § 82.04, Securities Law Techniques § 82.05, and Complying with the Foreign Corrupt Practices Act § 10.03. For a template of FCPA compliance policy, see Foreign Corrupt Practices Act (FCPA) Policy. For more on IPOs generally, see Initial Public Offerings Resource Kit. To assist businesses and individuals in complying with the FCPA, the DOJ and SEC published A Resource Guide to the FCPA U.S. Foreign Corrupt Practices Act. Additional information about the FCPA can be found on the website of the U.S. Department of Justice (DOJ).