United States: Section 457(f) Proposed Regulations – Not What We Expected (In A Good Way)

The very long awaited release of the new proposed regulations for Internal Revenue Code (the ''Code'') Section 457(f) plans arrived at the end of June and presents welcome and surprising new opportunities with respect to tax-exempt and governmental entities' ''ineligible nonqualified deferred compensation'' arrangements.

With the issuance of Notice 2007-62 (the ''Notice''), the Internal Revenue Service placed a chilling effect on executives of tax-exempt entities to electively defer compensation beyond the first point actual services or performance based goals were required. In very general terms, the Notice indicated that future IRS guidance surrounding Code Section 457(f) would (1) prohibit voluntary deferrals of compensation which would be subject to a substantial risk of forfeiture, and (2) conform the rules relating to substantial risk of forfeiture to those rules that are contained in Regulation Section § 1.409A-1(d) (which basically eliminated the ability to use a noncompetition restriction and limited the use of a rolling risk of forfeiture as a viable substantial risk of forfeiture). In response to the statements made in the Notice, the vast majority of tax-exempt entities ceased offering voluntary deferral programs under Code Section 457(f) plans and conservatively revised the underlying vesting provisions (which act as the substantial risk of forfeiture) to either a cliff-vesting schedule or alternatively, a pre-determined future retirement date.

Since that time, tax-exempt entities have relied simply on providing executives with elective deferrals only at the ''paltry'' amounts allowed under Section 401(k)/ 403(b) plans, e.g. $18,000 per year, and under Section 457(b) plans, e.g. $18,000 per year. The typical ineligible non-qualified deferred compensation plan, prior to the new proposed regulations, have commonly only provided for contributions that were 100% employerfunded. Effective immediately, tax-exempt entities are no longer so restricted and can move forward with confidence in providing tax favored deferred compensation for their executives and thereby placing them a little closer (but not identical) to the for-profit counterparts.

However, although the good news is that tax-exempt entities can now provide legitimate tax deferred compensation in more situations, the compliance aspects have morphed and require greater scrutiny with respect to drafting. Specifically, caution must be exercised with respect to adherence to not only the newly proposed Section 457(f) regulations (the ''Proposed Regulations''), but also with respect to Code Section 409A which regulates all deferred compensation arrangements, not just those of tax-exempt entities. Failure to comply with the rules of Code Section 409A can result in immediate taxation of vested amounts plus a twenty percent (20%) penalty tax on the service provider or employee. The Proposed Regulations make clear that Code Section 409A applies to Code Section 457(f) arrangements, but unfortunately do not provide an exact match in relevant definitions, making co-ordination between the two sets of rules challenging.

I. Basic Definition of Deferred Compensation for Section 457(f)-Short Term Deferrals and Substantial Services

In the for-profit world, the Department of Treasury and the IRS views deferred compensation as having some preliminary checks and balances. The taxable corporation is not entitled to a tax deduction until the deferred compensation is paid or otherwise made available to the executive. Therefore, for-profit corporations have some interest in limiting deferred compensation because the related delayed tax deduction impacts their bottom line. In the not-for-profit world, the ''tax deduction'' is not relevant because tax-exempt entities do not pay tax absent application of unrelated business taxable income. It was determined that requiring the taxation of the non-profit executive on a deferral of compensation under Code Section 457(f) when no longer subject to a substantial risk of forfeiture requirement would somewhat balance the scales in the tax-exempt arena.

Code Section 457(f) was designed to require immediate taxation of vested ''ineligible non-qualified deferred compensation'', which references deferrals other than those made under Code Sections 401(k), 403(b), and 457(b) qualified type deferred compensation arrangements. In general, a plan provides for a deferral of compensation if a participant has a ''legally binding right'' during a taxable year to compensation that, pursuant to the terms of the plan, is or may be payable in a later taxable year (Section 1.457-12(d)(1)(i)).

Similar to the Code Section 409A rules defining deferred compensation, the Proposed Regulations generally provide that a participant does not have a legally binding right to compensation to the extent that it may be unilaterally reduced or eliminated by the employer after the services creating the right have been performed (Section 1.457-12(d)(1)(ii)). Certain discretionary bonuses would fall in to this category.

For the first time, the Proposed Regulations set up the basic definition of deferred compensation for Code Section 457(f) purposes and provide guidance on several important exemptions. Specifically, deferred compensation does not exist if it meets the ''short term'' deferral definition provided by Code Section 409A (Section 1.409A-1(b)(4)(i)), but substituting the new definition of ''substantial risk of forfeiture'' (Section 1.457-12(e)(1)) under the Proposed Regulations for that of the Code Section 409A risk of forfeiture. In this situation, the appropriate definition generally would be:

''A deferral of compensation does not occur if the plan under which a payment. . .is made does not provide for a deferred payment and the service provider actually or constructively receives such payment on or before the last day of the applicable 21⁄2 month period. . .The applicable 21⁄2 month period is the period ending on the later of the 15th day of the third month following the end of the service provider's first taxable year in which the right to the payment is no longer subject to a substantial risk of forfeiture or the 15th day of third month following the end of the service recipient's first taxable year in which the right to the payment is no longer subject to a substantial risk of forfeiture. . .

An amount of compensation is subject to a substantial risk of forfeiture only if entitlement to the amount is conditioned on the future performance of substantial services, or upon the occurrence of a condition that is related to a purpose of the compensation if the possibility of forfeiture is substantial (Section 1.457-12(e)(1)(i)).''

Prior to the Proposed Regulations, employees of tax exempt entities would have been taxable on any fully vested deferred compensation in the calendar year in which the deferred compensation vested, even if such deferred compensation was not paid out, including if it was paid out very shortly after the year in which vested. For example, an executive with a bonus that vested on December 31, 2016 would have been taxable on the bonus in 2016 even if such bonus was not paid until February of 2017. Now, given the synchronization of the definition of deferred compensation under the Proposed Regulations with the definition of what constitutes a ''short term deferral,'' an executive of a taxexempt entity who becomes fully vested in a bonus on December 31 of a calendar year need not pay tax on such amount during the vesting calendar year if such bonus is actually distributed no later than March 15th of the subsequent calendar year.

Challenge: This small ability to defer from one year to the next is welcome, but at the same time, the Proposed Regulations emphasize that a ''substantial risk of forfeiture'' based solely on a requirement to provide services, must be based on the provision of substantial services (Section 1.457-12(e)(1)(ii)). Note that the language of the Proposed Regulations for ''substantial risk of forfeiture'' quoted above is identical to the language used for Code Section 409A purposes.

The Proposed Regulations provide an example where a departing employee is required to provide consulting services for a period of time. The example concludes: ''The consulting services provided by the former employee do not constitute substantial services because they are insubstantial in relation to the payment.'' Because the consulting services required were not substantial in relation to the size of the payment, the executive is currently taxed under Section 457(f) on the payment (Section 1.457-12(e)(3)).

Solution: The substance of the deferred compensation structure is the key to satisfying all the requirements of the Proposed Regulations. Given the heightened compliance aspect of ensuring ''substantial services'' in order to achieve the additional one-year deferral, alternative structures may need to be explored which achieve the desired objective but also meet all the legal criteria.

Opportunity Presented: The synchronization of the definition of deferred compensation under the Proposed Regulations with the definition of a ''short-term deferral'' under Code Section 409A is very good news in that prior to the Proposed Regulations, even this one year deferral was impossible.

II. Increased Ability of Executives to Make Voluntary Deferral of Their Own Pay

In the Notice, the IRS indicated that ''a rational participant normally would not agree to subject a right to amounts that may be earned and payable as current compensation, such as salary payments, to a condition that subjects the right to the same payments to a real possibility of forfeiture.'' The Proposed Regulations reverse this position and provide the following parameters in which executives may defer annual base salary:

  • The deferral election must be made in writing before the beginning of the calendar year in which the services will be performed and the compensation will be earned;
  • The present value of the amount to be paid when the substantial risk of forfeiture lapses must be materially greater defined as more than twenty-five percent (25%) of the amount the executive otherwise would have received absent the substantial risk of forfeiture; and
  • The executive must provide substantial services for at least two (2) additional years or must agree not to compete for at least two (2) additional years.

The Proposed Regulations provide the following example:

''Example 3. Facts. On December 31, 2017, a participant enters into an agreement to defer $15,000 of the participant's current compensation that would otherwise be paid during 2018, with payment of the deferred amounts to be made on December 31, 2024, but only if the participant continues to provide substantial services until December 31, 2024. Under the terms of the agreement, the participant's periodic payments of current compensation are reduced, and a corresponding amount is credited (with a 30% employer match) to an account earning a reasonable rate of interest. The present value of the amount payable on December 31, 2024 is 130% of the present value of the amount deferred. Conclusion. The amounts deferred are subject to a substantial risk of forfeiture because the plan satisfies the requirements of paragraphs (e)(2)(ii) through (v) of this section.''

As noted above, the arrangement met the requirements for an elective deferral and therefore, the timing of taxation was deferred until distribution (Section 1.457-12(e)(3)).

Challenge: The challenge will be to structure the deferral so that it is ''materially greater.'' The tax-exempt entity is not permitted to easily accomplish this by simply providing an annual investment return which exceeds twenty-five percent (25%) per year. Unreasonable rates of returns are subject to immediate taxation under the Proposed Regulations (Section 1.457-12(c)(iv)(B)).

Solution: It is foreseeable that the manner in which the more than one hundred twenty-five percent (125%) increase is to be achieved is for the employer to provide some type of corollary employer contribution (such as a more than twenty-five percent (25%) matching contribution as provided in the above example), on the amount electively deferred by the executive to ensure the present value of the amount to be paid meets the ''materially greater'' criteria.

Opportunity Presented: Since executives have not been able to defer their own compensation in any significant capacity, all deferred compensation was provided by the tax-exempt entity above and beyond the executive's regular compensation. Here, the Proposed Regulations allow the tax-exempt entity to restructure their executive arrangements to not only provide deferred compensation but to ensure that the executive has some ''skin in the game'' by placing their own money at risk to achieve a greater gain at the end of the employment relationship. In essence, the same overall compensation position can be provided, but requiring executive voluntary deferrals in exchange for certain employer provided amounts will provide the taxexempt entity more leverage in these situations than currently available.

III. Use of Rolling Risk of Forfeiture as a Substantial Risk of Forfeiture

The Notice also indicated that ''the addition of any risk of forfeiture after the right to the compensation arises, or any extension of a period during which compensation is subject to a risk of forfeiture (sometimes referred to as a ''rolling risk of forfeiture''), is generally disregarded for purposes of determining whether such compensation is subject to a substantial risk of forfeiture.'' The Proposed Regulations now clarify that rolling risks of forfeiture can be utilized as a substantial risk of forfeiture in the following situations:

  • The present value of the amount to be paid when the substantial risk of forfeiture lapses must be materially greater defined as more than twenty-five percent (25%) of the amount the executive otherwise would have received without the substantial risk of forfeiture extension;
  • The executive must provide substantial services for at least two (2) additional years or must agree not to compete for at least two (2) years; and
  • The extension of the substantial risk of forfeiture is made in writing at least ninety (90) days before the existing substantial risk of forfeiture lapses.

Compared to the situation in which a substantial risk of forfeiture is being added where none existed previously (e.g., in the case of a deferral of current compensation), the above requirements are identical except for the timing of the election - for rolling risks which are an extension of the current vesting date the election must be made ninety (90) days before the compensation would have vested whereas for an initial deferral the written agreement must be entered into before the beginning of the calendar year in which the services generating the compensation will be performed.

Challenge: Similar to the challenge above under the voluntary deferrals discussion, the challenge will be to not only structure the extension so that the present value of the compensation paid at a later date is ''materially greater'' but to also ensure procedures are in place so that each event date on which a substantial risk of forfeiture will lapse can be tracked by the tax-exempt entity such that sufficient notice is provided to any executive for purposes of making a permissible advance ninety (90) day election, if the tax-exempt entity chooses to permit redeferrals. The internal procedures for presenting each executive with a timely election period in which to extend a deferral period are critical in cases where redeferral opportunities were promised. If the tax-exempt entity inadvertently does not timely notify the executives or does not provide ''windows'' in which to elect such changes, the executives will be claiming ''foul'' and demanding some type of ''fix'' for their subsequent deferral loss. Keep in mind that the Proposed Regulations do not require the tax-exempt entity to ensure the executives are provided an redeferral election window, but if redeferrals will be permitted, executives will inherently expect to be advised of any relevant timing issues such that they can comply with if they choose to.

Solution: Administratively speaking, less is more. The more streamlined the subsequent deferral elections can be made, the less errors will occur with respect to missed subsequent deferral opportunities. For example, assuming the ''materially greater'' requirement is satisfied, the Proposed Regulations do provide flexibility on when (i.e., what date) the subsequent deferral date can be pushed to (subject to the minimum additional two (2) year requirement). As such, if all executives can choose different future dates and the Code Section 457(f) plan has many participants, the Code Section 457(f) plan can quickly become an administrative nightmare in terms of tracking all of the various event dates on which a substantial risk of forfeiture will lapse and then ensuring the advance ninety (90) day notice election is timely provided to each executive based on the varying event dates. However, if, for example, the Code Section 457(f) plan provides that all subsequent deferral dates have to occur on any future January 1st that is at least five (5) years out, then internal controls can be put in place such that subsequent deferral election notifications are first provided to all impacted executives on each July 1st with the submission date for those subsequent deferral elections being due to the plan administrator no later than each October 1st. Streamlining options under a Code Section 457(f) plan to simplify the rolling risk of forfeiture administration will ensure greater likelihood of compliance.

Opportunity Presented: As noted above, the rolling risk of forfeiture does provide executives with an opportunity and some flexibility to set their own future event date on which the substantial risk of forfeiture lapses with respect to their nonqualified deferred compensation. However, the drawback in providing this flexibility likely means the tax-exempt entity will be required to provide additional contributions in order to meet the more than one hundred twenty-five percent (125%) materially greater test. Notwithstanding this, the rolling risk of forfeiture feature may provide some usefulness and planning advantages in the retention bonus area. Retention bonuses to be paid as a result of working to a specified date could have those specified dates extended to a later date, if warranted, by simply increasing the retention amount to be paid to a minimum of one hundred twenty-five percent (125%). The ability to further extend the retention period (which must be a minimum of two years) might provide taxexempt entities some maneuverability in the area of hiring new executives (and evaluating their effectiveness) and well as in succession planning timelines for longterm exiting executives.

IV. Use of Noncompetes as a Substantial Risk of Forfeiture

Finally, and the trickiest of the new rules, the Notice had also unfavorably indicated that ''an amount is not subject to a substantial risk of forfeiture merely because the right to the amount is conditioned, directly or indirectly, upon refraining from the performance of services.'' This was generally thought to be addressing the use of noncompetes as a substantial risk of forfeiture. Again, in response to this, many tax-exempt entities eliminated noncompetes as their substantial risk of forfeiture and implemented a simple time or performancebased vesting schedule. On a surprise note, the Proposed Regulations now clarify that noncompetes can be utilized as a substantial risk of forfeiture in the following situations:

  • The executive's right to the compensation must be specifically conditioned in writing on the refraining from performing future services and the noncompete must be enforceable under applicable law (e.g., California holds noncompetes unenforceable in this context so a noncompete used in California would not be an appropriate substantial risk of forfeiture);
  • The tax-exempt entity must make reasonable efforts to verify the executive's compliance with the noncompete; and
  • Regardless of any other factors, the facts and circumstances must demonstrate that the tax-exempt entity has a ''bona fide interest'' in ensuring that the executive is prevented from performing services and that the executive has a ''bona fide interest'' in his/her ability to engage in performing services.

The Proposed Regulations provide a great example of the use of a covenant not to compete to delay the timing of taxation to the executive:

''Example 4: Facts. Employee A is a well-known college sports coach with a long history of success in a sports program at University X. University X reasonably expects that the loss of Employee A would be substantially detrimental to its sports program and would result in significant financial losses. Employee A has bona fide interest in continuing to work as a college sports coach and is highly marketable. On June 1, 2020, Employee A and University X enter into a written agreement under which Employee A agrees to provide substantial services to University X until June 1, 2023. The parties further agree that University X will pay $500,000 to Employee A on June 1, 2025 if Employee A has not performed services as a sports coach before that date for any other college or university with a sports program similar to that of University X. The agreement is enforceable under applicable law and University X would be reasonably expected to enforce it. Conclusion: The $500,000 payable under the agreement is subject to a substantial risk of forfeiture until June 1, 2025, and includible in Employee A's gross income on that date'' (Section 1.457-12(e)(3))

First, the agreement is in writing and enforceable under applicable law. Second, based on the coach being ''well-known,'' University X can easily verify his compliance with the noncompete. Finally, University X has a ''bona fide interest'' in the successful coach not providing similar services to another college or university that has a comparable sports program to University X and therefore, directing attention and support away from University X.

Note that most State's rules governing noncompetes require the noncompete to be of a reasonable duration, limited in geographic area, and not operate to completely prohibit any form of employment by the departing executive.

Challenge: The challenge will be to develop procedures to appropriately monitor and document executive activities post-termination. Additionally, the ''bona fide interest'' requirements may further pose a new challenge with respect to aging executives, as it may be harder to demonstrate that older executives have a legitimate interest in continuing to work (depending on their age when they terminate employment) or have a true financial need to work.

Solution: Since many executives receiving severance pay are likely subject to noncompetition restrictions anyway, the tax-exempt entity can piggyback off of these prior procedures, but strengthen them for Code Section 457(f) compliance purposes. Periodic written verification from the executives will be critical, but independent monitoring by the tax-exempt entity beyond this will likely be necessary as proof of reasonable efforts (e.g., monitoring Facebook pages, Google searches, etc.).

Opportunity Presented: The ability to continue tax deferral post-termination is viewed as valuable by many executives (notwithstanding that they are an unsecured creditor of the tax-exempt entity) and when coupled with nonpayment of deferred amounts for violation of the noncompete does provide significant leverage for the tax-exempt entity. Because the substantial risk of forfeiture will not lapse until the end of the noncompetition period, it offers a significant reprieve period following an executive's departure. Further, the ability to utilize a noncompete as a substantial risk of forfeiture. instead of a time-based vesting schedule will potentially provide longer deferral periods with respect to the compensation instead of requiring periodic taxation events which occur with time-based vesting.

V. Section 409A Overlap with Section 457A

The Proposed Regulations set forth the rules for income inclusion under Code Section 457(f) but additionally confirm that such income inclusion is required to be coordinated with income inclusion where there has been a Code Section 409A failure, if any (Section 1.457- 12(d)(5)(iii)). Income inclusion under Code Section 457(f) occurs for executives of tax-exempt entities where there is no longer a substantial risk of forfeiture under an ineligible deferred compensation arrangement and if the deferred compensation arrangement is exempt from Code Section 457(f), income inclusion occurs generally only at distribution (Section 1.457-11(a)).

Unlike Code Section 457(f) which controls the timing of taxation, the reasoning behind Code Section 409A is to regulate the manner that deferrals are made. Initial and subsequent deferral elections must be timely made and distributions must be made only upon a prespecified date, death, disability, separation from service, or severe financial hardship. A Code Section 409A violation occurs where elections or distribution are not made properly pursuant to these Code Section 409A rules (Section 1.457-12(d)(5)(ii)) and the income inclusion occurs where there has been a violation of Code Section 409A based on the deferred compensation value at year end (Section 1.457-12(d)(5)(iii)).

Below is a chart which reflects whether a particular arrangement is generally ''subject to'' or ''exempt from'' Code Sections 457(f) and 409A, followed by a chart detailing the differences in defined terms between the two Code Sections. If an arrangement is not exempt from Code Section 409A, the arrangement must be carefully designed to comply with the timing rules required for such plans.

One of the most significant differences between Code Section 457(f) and Code Section 409A is that a risk of forfeiture based on a covenant not to compete is respected for Code Section 457(f) purposes, but not Code Section 409A. If a rolling risk of forfeiture based on a covenant not to compete is made for a two year period with a more than twenty-five percent (25%) employer matching contribution, income inclusion will not occur for Code Section 457(f) purposes, but that extension will not be respected for Code Section 409A purposes. Therefore, if distribution occurs two years after the originally scheduled date, a Code Section 409A violation will have occurred. The solution would be that the risk of forfeiture extension could be a minimum of two years but then any subsequent distribution would need to wait for an additional three years in order to satisfy the Code Section 409A subsequent deferral rule requiring a minimum five (5) year delay. This structure would be permitted by Code Section 409A without violation, but that would also mean that to avoid income inclusion under Code Section 457(f) the risk of forfeiture is for a prolonged period of time.

Note also as the charts below illustrate, that exempt involuntary severance pay plans for Code Section 457(f) allow two years of compensation to be paid, but for Code Section 409A purposes, the permitted severance pay is limited to a dollar amount referencing taxqualified retirement plan contribution limits under Code Section 401(a)(17). What this means is that a taxexempt entity can have an involuntary severance pay plan with an unlimited level of salary paid out as long as it is not more than two years, but to comply with Code Section 409A, the payment schedule would need to be hardwired as the severance pay plan, or at least the part in excess of the Code Section 409A limits for such severance pay plans, would be considered a deferred compensation plan subject to the Code Section 409A distribution rules. This anomaly is similar to restructures that had to occur under the Code Section 409A regulations where the involuntary severance arrangement would pay out an amount that would exceed twice the Code Section 401(a)(17) limit and therefore, public companies (subject to the six month delay on certain deferred compensation payments) had to break the amounts into two pieces – one covered by the Code Section 409A severance exemption and the other piece payable but restructured to comply with the Code Section 409A distribution rules.

To read this article in full, please click here.

Reproduced with permission from Pension & Benefits Daily, 176 PBD, 9/12/16. Copyright _ 2016 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.