Backdating can cause a party assuming unanticipated indemnity or other potential obligations.There have been cases where documents have purposely been backdated with a criminal intent or for a purpose of perpetuating a fraud or committing a crime.Another consequence is that the company underrepresents the real nature of an executive’s compensation, perpetuating the myth that options are performance-based incentive compensation.The backdating problem was first highlighted by Professor Erik Lie of the University of Iowa, who published his initial study in 2004.The backdating was considered to be part of the conspiracy to obstruct or frustrate the IRS's function of collecting and ascertaining income taxes even though the scheme didn't go into play.It's important to consider if backdating will contribute to or create the look of a conspiracy.Lawyers on Up Counsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.
There can be adverse consequences that the parties will want to be aware of.
Usually it would be the signing date, since an earlier date would mean the business is subjected to the confidentiality obligation before they even had the chance to advise their representatives it was subject to the obligation.
Backdating documents violates United States tax laws in the following situations: Other jurisdiction laws are similar.
Backdating documents occurs for several different reasons.
A performance or action listed in a contract may have been executed before the contract was dated, meaning it needs an earlier effective date.