comfort letter

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comfort letter

a letter in business matters written to assure another party of the writer's intentions. It is essentially not supposed to be binding in law but can allow negotiations or commerce to continue. Examples are in relation to contract negotiations and in relation to the absence of permissions from local authorities.

A special instance is a communication from the commission of the European Union to the effect that an agreement submitted for an exemption under Article 81 (formerly Article 85) of the competition law does not infringe Article 81 or that if it does infringe Article 81 it still qualifies for an exemption. Following such a communication, the Commission will normally close its dossier. Comfort letters must be taken into account by national courts as important ‘indications’. A comfort letter rejecting the complaint and closing the file maybe the subject of an action since they have the content and effect of a decision.

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There are a number of tools in the tool box to deal with these potential liabilities, such as Reasonable Steps Letters or Comfort Letters, the Utah Voluntary Cleanup Program (VCP), a Utah Enforceable Written Assurance (EWA), Brownfields Programs, certain deal structures and even some creative approaches such as a surface easement coupled with the lease of air rights.
The findings, by the International Consortium of Investigative Journalists, are based on a trove of leaked documents that included 548 so-called comfort letters that the group said Luxembourg had provided to corporations seeking favorable tax treatment.
In addition, many CPA firms have begun offering comfort letters for the benefit of production companies and potential buyers of transferable credits.
In prior liaison meetings, TEI has voiced concern about the increasing time lag between the issuance of comfort letters and the adoption of remedial technical legislation.
While the audit of the historical financial statements remains the most visible service in this process provided by an accounting firm, CPAs also play an active role in the review of filing and disclosure documents, issuance of comfort letters to underwriters, future compliance with Sarbanes-Oxley Sec.
These requirements heighten the scrutiny applied during Rule 144A due diligence and reflect a more formalized process than that associated with typical private placements, in which comfort letters and disclosure letters are generally not rendered.
Since the entry of the present block exemption (Regulation 870/95/EC), the Commission has approved ten consortia under the opposition procedure, and in several other cases DG IV has sent comfort letters confirming that a notified agreement conforms with the block exemption.
To a lesser extent, guarantee variants such as keepwell, support and comfort letters are accepted based on the financial strength of the providing party and internal policies of the accepting party.
The American Institute of CPAs auditing standards board has published two statements on auditing standards relating to agreed-upon procedures engagements and one statement on standards for attestation engagements concerning requests for comfort letters.
The facts in case law reflect that comfort letters are written after vigorous negotiations wherein the letter writer was requested but refused to guarantee or otherwise secure the payment or performance of another party.
It is expected that the special committee established by the Board of Directors will complete its investigation of these 'wash trades' in September, after which, new auditors Ernst and Young, will be able to provide comfort letters on behalf of Consumers and PEPL, as well as a consolidated CMS opinion.