After years or even decades at the helm of a business, all business leaders must eventually pass the torch to someone else. For business leaders who are also parents, the “someone else” is very often a son or daughter. Unfortunately, despite the idealistic image many mothers and fathers have of passing their business on to a daughter or son, the reality of planning a business succession strategy is far more complicated.
By: Carl Koerner
Client issues often arrive like schools of fish – rapidly and in huge numbers. Sometimes this is the result of external events such as tariffs, shifts in the credit market, constraints on supply or falling demand. But sometimes there are no external events and I am left to conclude that it is just something in the air (cue Phil Collins), karma perhaps. Lately, I have been working with several clients who have been grappling with the challenges that come when business enterprises of different cultures combine. (more…)
The Long Arm of the Law Lengthens: What the U.S. ex rel. Medrano v. Diabetic Care RX, LLC Settlement Means for Private Equity Investors
In March 2018, White and Williams issued an alert covering the Department of Justice’s (DOJ) intervention in the False Claims Act (FCA) case United States ex rel. Medrano v. Diabetic Care RX, LLC, No. 15 Civ. 62617 (S.D. Fla.). We noted at the time that this case “should put private equity firms and their partners on notice of possible expansion of regulatory scrutiny in FCA complaints,” because, in an unprecedented move, the DOJ for the first time named a private equity (PE) owner in an FCA complaint-in-intervention alongside the portfolio company accused of making false claims.
Delaware Court Of Chancery Extends MFW Framework to Board Decisions on Controlling Party Compensation
It is a basic precept of Delaware corporate law that a corporation is managed by its board of directors. One of the board’s key managerial functions is the determination of executive compensation levels – a decision typically entitled to great judicial deference. When the board’s decision as to executive incentive compensation is submitted to stockholders for approval, and such stockholder approval is given, the decision is entitled to even greater deference. However, in Tornetta v. Musk, et al., C.A. No. 2018-0408-JRS, decided September 20, 2019, The Court of Chancery highlights an important exception to the general rule when the recipient of the compensation package is also a controlling stockholder.
Delaware Supreme Court Clarifies That a Response to a Books and Records Demand Is Not Presumptively Confidential
By: Marc Casarino
Section 220 of the Delaware General Corporation Law permits stockholders to request inspection of a corporation’s books and records. This access is not unlimited. For example, the stockholder must demonstrate a proper purpose, such as valuing its investment or investigating mismanagement. Further, Section 220(c) provides that “the Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other or further relief as the Court may deem just and proper.” Therefore, beyond the statutory access restrictions, corporations often seek limitations on the disclosure and use to which the stockholder may put the information learned from the inspection. The most frequent limitation is a confidentiality order. Indeed, confidentiality orders have become so ubiquitous that a presumption of confidentiality pervades Section 220 inspections. (more…)
A recent decision by the U.S. Court of Appeals for the Third Circuit offers an important reminder of the distinction between the roles (and exposure to liability) of corporate directors and board observers. In a precedential opinion on a matter that previously lacked judicial guidance, the appeals court held that as a matter of law the functions of the defendant nonvoting board observers were not “similar” to the functions of board directors for purposes of imposing liability under Section 11 of the Securities Act of 1933.
The Federal Communications Commission (FCC) recently took another significant step on the path towards expanding the availability of connected healthcare for certain underserved communities. Through the creation of a Connected Care Pilot Program (CC Pilot Program), the FCC aims to increase access to remote healthcare for patients who do not live near physical facilities, low-income urban patients and veterans, thereby promoting quality care and better outcomes. (more…)
When prospective buyers conduct legal due diligence in merger and acquisition transactions the main focus is typically on the traditional items, such as financials, debt instruments, major contracts and other key metrics customarily analyzed. These items, among others, remain critical to evaluating a business. However, with technology continuing to advance at an exponential rate and hackers successfully breaching company information systems more frequently, as seen with Target, Equifax and many others, it is critical that prospective buyers thoroughly consider the risks associated with the target’s cybersecurity practices or lack thereof. (more…)
Summer is usually the best time of year for ice cream companies, but the season is off to a rough start for Blue Bell Creameries, USA, Inc. The Delaware Supreme Court, in Marchand v. Barnhill, held on June 18 that a suit brought by a stockholder of Blue Bell, in part accusing the company’s directors of violating their duty of loyalty to stockholders in their handling of a listeria outbreak in 2015, could continue based on adequate pleading of facts demonstrating bad faith. The ruling was a reversal of a Court of Chancery decision. (more…)
By: Stephen Bowers
On June 24, 2019, President Trump issued the “Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First” (the Order). The Order directs several executive agencies to issue regulations, primarily surrounding issues related to price transparency and controlling healthcare costs. The Order indicates that the intent is to increase consumer engagement and improve the “shoppability” of certain healthcare services. Although parts of the Order are directly aimed at healthcare providers, the text suggests that some of these changes will be more broadly relevant. (more…)
- Corporate Transparency Act and Implications for Entity Formation and Transaction Structures
- Nasdaq’s Giant Leap Towards Diversity on the Board
- The Marijuana Opportunity Reinvestment and Expungement Act of 2019
- IRS to Allow “Workaround” to Deduction Limits for State and Local Income Taxes
- Finders May Finally Be Keepers: SEC Proposes Rules Allowing for Unregistered Broker-Dealers to Participate in Capital-Raising Transactions Under Certain Circumstances