Covering a company’s compliance with regulations

Every business faces some level of regulatory scrutiny. How much will depend on the type of business it is, the type of business activities it is participating in and the local and state rules. No matter what the business though, records held by regulating agencies can be a great source of information about a company. This guide discusses the major regulations in most locales.

Local

The most common regulation at the local level is the requirement that many cities and counties have for businesses to hold a business license. It may be referred to as a peddler’s license or a privilege license. This license is generally a public record and can be obtained from the issuing body. It should contain the name and an address for the business’s principal owner.

At the city or county level there may also be other regulations based on the type of business. For example, many communities require door-to-door salespeople to have a special license. Restaurants typically have to comply with local health department codes and are subject to random inspection by the health department. The reports of those agencies are public records.

Reporter’s tip: Many good stories come from comparing what businesses tell local officials and customer versus what they tell investors. Compare press releases with reports on file with the SEC.

State

At the state level there are two main areas where reporters might find public records about a specific business.

The first is at the state agency that oversees corporations. When a business partnership is formed — whether it’s publicly or privately held — the principals have to file incorporation papers with the state. (More information on incorporation can be found above.) In addition, out-of-state companies are sometimes required to file with the secretary of state if they set up shop in another state.

There are a number of regulatory agencies at the state level that can provide public documents about particular businesses. Many are industry specific, such as licensing boards for attorneys, doctors, architects, accountants, nurses and barbers. (More on this is also above.) There are broader regulatory agencies at the state level, too, that may contain information about specific companies, such as whichever department oversees rules issued by the federal Occupational Safety & Health Administration.

Additionally, the Uniform Commercial Code has resulted in the most significant state laws relating to commercial transactions. The UCC is a model code created by noted business attorneys at the American Law Institute and the National Conference of Commissioners on Uniform State Laws. Like all “model codes,” its purpose is to provide guidance for state legislatures and to create consistency in the law from state to state. The UCC has been passed, with some slight variations, in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Guam.

Understanding the UCC can be useful for business reporters because the states’ UCC laws make several documents publicly accessible when companies take certain actions, regardless of whether the business is public or private. When one business sells something to another business on credit, a UCC filing is typically filed at the secretary of state’s office. Some states also maintain searchable online databases for them.

The filing will show what has been put up for collateral and how much credit has been extended. Filings are also created when terms of a loan agreement are changed, whether it’s terminated, extended or altered. These documents allow businesses to understand the financial health of other businesses. So if Company A is considering giving Company B a loan, it can find out how much debt Company B already has before entering the agreement.

Federal

The type of federal regulation a business encounters depends on the type of work it does. Agencies such as the Environmental Protection Agency, the Occupational Safety and Health Administration, Equal Employment Opportunity Commission and Patent and Trademark Office can all have public records on specific companies. There are also numerous industry-specific regulatory agencies, such as the Mine Safety and Health Administration for mining, the Federal Communications Commission for broadcasting, and the Federal Railroad Administration for railways.

Reporter’s tip: Sometimes federal regulators are unhappy with lax state regulators. This can be a great chance to get them to talk about industry problems.