On December 14th, the Delaware Supreme Court provided some welcome news to dealmakers by reversing the lower court decision in Dell v. Magnetar Global in which the lower court ignored the deal price in determining fair value of stock in an appraisal action brought by investors who opposed a management led buyout to Michael Dell and a large private equity firm. In doing so, the Court furthered its recognition of the deal price as indication of fair value when the transaction is the result of an arm’s length, robust process. (more…)
More Autonomy For Boards to Decide Whether a Shareholder Proposal Should Go on a Corporate Ballot? SEC’s New Guidance on Shareholder Proposals Taken to Test
By: Jamie Yang
As public companies were getting ready for the 2018 proxy season, on November 1, 2017, the staff (the “Staff”) of the Division of Corporation Finance of the Securities and Exchange Commission (SEC) released Staff Legal Bulletin No. 14I (SLB 14I) on shareholder proposals. This new guidance suggests greater deference to a board’s assessment on whether to exclude certain shareholder proposals. A short 20 days after the guidance was released, on November 20, 2017, Apple Inc. filed a “no-action” letter request related to the exclusion of a shareholder proposal from the company’s proxy for its 2018 annual shareholder meeting, citing SLB 14I to support its request.
By: George Morrison
During the past weeks, the news has featured allegations of sexual harassment against various public officials, celebrities, and others. These headlines should serve as a reminder to all employers of the importance of developing and enforcing written anti-harassment policies. An effectively written policy will typically address zero tolerance, examples and definitions of prohibited conduct, the duty to report, retaliation, complaint procedures and confidentiality.
SEC’s Government-Business Forum on Small Business Capital Formation Goes on Tour, Bringing Diverse Voices to the “Rock Star” of Small Business Cities
By: Melissa Pang
On November 30, 2017, the Securities and Exchange Commission (SEC) partnered with the Herb Kelleher Center for Entrepreneurship, Growth, and Renewal at the McCombs School of Business at The University of Texas at Austin to host the SEC’s 36th annual Government-Business Forum on Small Business Capital Formation. This was the first time since 2005 that the forum was hosted outside of Washington, D.C., and several of the panelists had local ties to Texas, bringing a diverse viewpoint to discussions. (more…)
By: Josh Galante
Attorneys and their clients often refer to a contract becoming enforceable once it has been “fully executed,” but what does that phrase actually mean? Like most legal questions, the short answer is: “It depends.” It depends on several factors, including the type of contract, the parties involved, the course of dealing between those parties, and other facts and circumstances.
Failure to Plead Non-Exculpated Claims and Well-Functioning Special Committee Shield Against Delaware Derivative Suit
In a recent case, the Delaware Court of Chancery made clear the value of implementing a proper special committee to address the influence of a self-interested controlling party on a transaction as well as the requirements for satisfying demand futility for purposes of derivative actions.
A controlled foreign corporation (CFC) is a foreign corporation that is more than 50% owned by shareholders who: (a) are U.S. citizens or residents, domestic entities, or U.S. trusts and estates; and (b) own 10% or more of the foreign corporation’s voting power. Under current law, a pledge of a CFC’s assets in certain loan transactions triggers a deemed distribution to the U.S. shareholders of the CFC for U.S. income tax purposes. This rule applies whether the pledge of the CFC’s assets is direct or indirect, meaning that a pledge of CFC stock could implicate a deemed distribution. Under a safe harbor rule, however, a pledge of less than two-thirds of the CFC’s stock (measured by voting power) will not be considered an indirect pledge of the CFC’s assets.
By: George Morrison
On November 7, 2017, the U.S. House of Representatives passed the Save Local Business Act. While the fate of the legislation is uncertain in the Senate, if passed into law, the Act would substantially rein in the National Labor Relations Board’s (NLRB’s) and Fourth Circuit’s “joint-employer” rules. These rules vastly expanded the circumstances under which businesses could be held jointly liable for workplace violations involving employees of their independent contractors and franchises, as well as contract and temporary employees provided by or through staffing firms.
By: William Hussey
Since the release of Republican tax reform principles on September 27th by the so-called “Big Six,” both the U.S. House of Representatives and Senate have passed budget resolutions which clear a path forward for federal tax reform. As was widely anticipated, the House adopted the Senate budget resolution on October 26, 2017, and thus avoids the need to go to conference to work out the differences between the two chambers’ versions. The now joint resolution allows Congress as a whole to pass tax reform measures along party lines with a simple majority vote. The resolution also allows for tax cut measures to add up to $1.5 trillion to the federal deficit over a decade. However, the details of specific tax reform measures remain shrouded in a fog of ambiguity.
By: Gwenn Barney
As the deadline nears for exchanges to report all stock and option trades to the Consolidated Audit Trail (CAT) database of the Security and Exchange Commission (SEC), calls are increasing for the launch of the planned massive inventory of equity and options markets activity to be delayed.
- Delaware Supreme Court Rejects the Trial Court’s Statutory Appraisal Analysis in Aruba Networks
- Tax Freedom Day
- Delaware Chancery Court Opens Discussion of Enhanced-Independence Director Deference for Controller Transactions
- JPM Coin and the Future of Commercial (and Maybe Consumer) Transactions
- New Amendment to NJ Law Against Discrimination Renders Common Employment Agreement Provisions Unenforceable