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Controlled Foreign Corporations: The Deemed Dividend Dilemma

(194 reviews)

Produced on October 20, 2017

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Course Information

Time 62 minutes
Difficulty Intermediate

Course Description

When advising a borrower incorporated or formed in the United States, one of the many characteristics of the borrower that a finance lawyer needs to consider is its client’s foreign subsidiaries. In particular, there are tax considerations to be aware of if a borrower has any foreign subsidiaries that are so-called controlled foreign corporations (CFCs).

The potential consequences of any missteps in advising corporate borrowers with CFCs can be significant. This was recently put into stark relief when a borrower sued its law firm for legal malpractice as a result of an unanticipated $463 million tax bill the client incurred as a result of the way the firm had drafted the credit agreement.

This course will explain the significance of CFCs, set out the purpose of Section 956 of the Internal Revenue Code and describe how this section impacts foreign subsidiaries of a US borrower in cross-border finance transactions. The aim of the course is to provide the legal practitioner with tools when drafting credit documentation to protect borrowers with foreign subsidiaries.

The session will be led by Gabriel Yomi Dabiri, an attorney in the Finance & Projects group of Morrison & Foerster LLP. Mr. Dabiri is admitted to the New York State bar and qualified as a solicitor of the Supreme Court of England and Wales.

Learning Objectives

  1. Discuss the recent case of Overseas Shipholding Group, Inc., 130 A.D.3d 415 (2015)

  2. Recognize how to identify a CFC

  3. Understand how CFCs are impacted by Section 956 of the Internal Revenue Code

  4. Consider suggestions for dealing with deemed dividends in finance documentation when CFCs are involved

  5. Examine recent developments as they pertain to Section 956 of the Internal Revenue Code

Credit Information

This course is pre-approved for CLE credit in the following states. If your state is not listed, contact support for more information on how to receive credit


Gabriel Yomi Dabiri


Overview Gabriel Yomi Dabiri is the Practice Co-Leader for the Direct Lending and Alternative Finance practice and Practice Co-Leader for the Cross Border Finance practice. Gabriel is a dual-qualified attorney, admitted to practice law in New York and in England and Wales. He advises clients on a variety of sophisticated finance transactions, debt restructuring and bankruptcies. Prior to practicing in the United States, Gabriel practiced law in the United Kingdom and in Asia, advising clients on complex domestic and cross-border transactions.

Gabriel represents commercial banks, investment banks, credit funds, hedge funds, business development companies, private equity sponsors, borrowers and guarantors on transactions related to: Direct lending and alternative finance Senior, mezzanine and subordinated lending Secured and unsecured lending Leveraged finance Acquisition finance Cash flow, asset and real estate finance The issuance of public, private and sovereign debt


  • Selected as “Rising Star” in Super Lawyers Magazine, 2015- 2018, for work in Banking, Securities and Corporate Finance.
  • Named in the “2017 Top 100” by The National Black Lawyers

Key Matters

  • Represented leading global alternative asset manager in US $292 million and CAD $26 million unitranche term loan credit facilities to private equity sponsor in connection with acquisition financing of scaffolding company.
  • Represented leading global alternative asset manager in US $250 million senior secured second lien term loan facility to distressed energy company.
  • Represented global banking and financial services institution in acquisition financing by an energy and power-focused private investment firm. The financing consisted of a US $170 million term loan facility and a US $25 million revolving credit facility.
  • Represented global banking and financial services institution in the origination and syndication of term loan credit facilities in aggregate amount of US $140 million to a real estate investment trust that owns a diversified portfolio of luxury hotels.
  • Represented leading global alternative asset manager in US $50 million senior secured second lien term loan facility to a business automation software company.
  • Represented manufacturing company in voluntary Chapter 11 reorganization and subsequent emergence from bankruptcy.
  • Represented information technology company in Chapter 11 bankruptcy process, which included US $45 million debtor-in-possession financing.


Joseph H.

Good speaker and handouts

Ralph P.

good presentation

Mary F W.

Excellent organization for presentation and materials; I appreciated the manner in which he walked us through the analysis.

Wayne G.

For a topic with which I was only vaguely familiar but which impacts me, this was extremely beneficial.

Hilary J.

Good effort by the speaker.

Ian H.

One of the better presenters I've seen on LawLine.

Larry Wayne C.

Very effective speaker

Megan A.

Excellent job

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