The Delaware General Assembly recently adopted amendments to the Delaware General Corporation Law (the “DGCL”), effective as of August 1, 2022.  Among other changes, the amended DGCL provides for exculpation of officers from liability for breaches of the duty of care and also expands the ability of boards to delegate authority to members of management in connection with the issuance of shares of common stock and options.  The change with the most potential for far-reaching impact is with respect to officer exculpation.  For existing corporations, a charter amendment is required to take advantage of the new officer exculpation, and it is an open question as to whether shareholders (and proxy advisory firms) will support extending exculpation to officers.

Continue Reading 2022 Amendments to the Delaware General Corporation Law

Aiding and abetting claims against a buyer for a target’s breach of fiduciary duties are meant to be rare, given the “long-standing rule that arm’s-length bargaining is privileged and does not, absent actual collusion and facilitation of fiduciary wrongdoing, constitute aiding and abetting . . .”[1] (emphasis added). Yet to survive a motion to dismiss, plaintiff must show only that it is “reasonably conceivable” that buyer “knowingly participated” in the breach of fiduciary duties.[2] This may explain why there were at least three cases last year in which aiding and abetting claims against buyer survived a motion to dismiss.[3]

Continue Reading Buyers Beware – Aiding and Abetting Claims Based on Target’s Proxy Disclosure

Milbank LLP Environmental partner Matt Ahrens, Global Project, Energy & Infrastructure Finance partner Allan Marks and associates Allison Sloto (Environmental) and Pinky Mehta (Global Risk & National Security) recently co-authored a chapter titled “ESG Considerations in Project, Energy and Infrastructure Finance” in the International Comparative Legal Guide: Environmental, Social & Governance Law 2022, Second Edition. Global Corporate partners Iliana Ongun and Neil Whoriskey also contributed.

Continue Reading Milbank Attorneys Co-Author Chapter on ESG Considerations in ICLG: Environmental, Social & Governance Law 2022

A universal proxy card, listing both company and activist nominees on a single proxy card, will be mandatory for shareholder meetings with contested director elections occurring after August 31, 2022. This will allow shareholders to “split the ticket,” making their own ad hoc selection of board members. By contrast, under the current proxy rules, holders voting by proxy card (rather than in person) must vote for the entire slate proposed by the company or by the activist.

Continue Reading Key Takeaways from New SEC Universal Proxy Card Rules – Major Changes Make Activism Easier, Cheaper and Probably More Chaotic

As a result of the SEC’s most recent Staff Legal Bulletin[1] (“SLB”), shareholder proposals that focus on a “significant social policy” will not be excludable simply because the policy issue is not, in fact, “significant” to the company receiving the proposal. The SEC has decided it will no longer “focus on the nexus between a policy issue and the company.”  Previously, shareholder proposals that did not raise a “policy issue of significance for the company” were excludable under the “ordinary course of business” exception to Rule 14a-8.[2] The new Staff Legal Bulletin is a departure from past SEC practice, and led the SEC to simultaneously rescind three previous Staff Legal Bulletins on the same subject.

Continue Reading SEC Guidance on Shareholder Proposals – Staff Legal Bulletin 14L – Is This the Way to Regulate Climate Change?

At the beginning of the COVID outbreak in the US, The Williams Companies adopted an unusually protective poison pill to thwart any activist campaigns that might arise in the then existing market conditions. Vice Chancellor McCormick struck down the pill in a decision published February 26. The Vice Chancellor’s decision is important in at least two regards.
Continue Reading Chancery Court Strikes Down The Williams Companies “Activist Pill”

Just before year end, the Department of Labor finalized its new rules on ESG investing and voting for retirement and pension funds.  The rules sharply restrict the ability of the fiduciaries of retirement and pension funds to make investments based on ESG factors, or to vote shares held by such funds in favor of ESG issues.  The rules are unlikely to prove popular with the Biden administration, but regardless of how long they survive, the rules currently apply to trillions of dollars of investments, and raise interesting questions about who will ultimately control the placement of a huge amount of the public’s investment capital and the voting on ESG matters of shares held by fiduciaries. 

Continue Reading The Department of Labor, ESG and All Those Undirected Votes