Corporate Governance

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

On July 28, 2021, Securities and Exchange Commission (“SEC”) Chair Gary Gensler, speaking at a webinar titled “Climate and Global Financial Markets,” set forth certain considerations to guide his staff in developing a rule that will require mandatory disclosure on climate risks by the end of 2021.

Up until now, SEC guidelines on climate disclosure were voluntary, resulting in inconsistent disclosure among public companies. In March 2021, the SEC solicited comments from the public on climate change disclosures and, according to Chair Gensler, more than 550 unique comment letters were submitted, three-quarters of which supported mandatory climate disclosure rules. Chair Gensler believes that “consistent, comparable, decision-useful disclosures” would be beneficial to companies and investors alike.…

Continue Reading SEC Chair Outlines Rulemaking Considerations for Potential New Climate-Related Disclosure Requirement

On June 15, 2021, within hours of her Senate confirmation as a Federal Trade Commission (FTC) Commissioner, 32-year-old Lina Khan was appointed by President Biden to serve as the youngest FTC Chair in history.
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Continue Reading What Does Lina Khan’s Appointment as FTC Chair Mean for Your Business?

SPACs, or “blank check” Special Purpose Acquisition Companies, have surged over the past two years, raising over $75 billion (about half the total US IPO market) last year alone. Recent SEC statements add complexity to accounting and disclosure rules for SPACs and could chill the market. Even so, De-SPAC (the merger of a SPAC into a private company, taking it public) transactions will trigger more M&A and PIPE deals at least through 2022.
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Continue Reading SPACs Fuel Hot M&A and IPO Markets – Will SEC Cool the Fire?

On April 15, 2021, U.S. President Joseph Biden signed an executive order (the “Executive Order”) that establishes a new authority for imposition of additional sanctions targeting the Russian Federation in response to Russia’s “continued and growing malign behavior.” …
Continue Reading U.S. Announces Expanded Sanctions Targeting Russia

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”

Any General Counsel who has been through a renewal of the company Directors and Officers Liability Insurance policy in the past couple of years has experienced a highly distressed market, with dramatic increases in prices, and challenges with respect to availability in many cases. I sat down (virtually) with Michael Welling, a partner at Meridian Risk Management to discuss the state of the market and strategies going forward.
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Continue Reading D&O Insurance: State of the Market

On February 4, 2021, the US Federal Trade Commission (“FTC”) and the US Department of Justice (“DOJ”) jointly announced that they would immediately suspend the common practice of granting “early termination” of the initial 30-day waiting period under the Hart-Scott-Rodino Act (“HSR Act”). …
Continue Reading FTC & DOJ Announce Temporary Suspension of HSR Act “Early Termination” and New HSR Act Thresholds

In AB Stable VIII LLC v. MAPS Hotels and Resorts One LLC et al., the Delaware Court of Chancery, held for the first time that reasonable measures aimed at combatting COVID-19 can violate the ordinary course of business covenant in a sale agreement if those measures “materially change [the] business or business practices” of the target company.  In connection with the attempted sale by AB Stable VIII LLC ( “Seller”) of a subsidiary holding 15 hotels to MAPS Hotel and Resorts One LLC ( “Buyer”), the Court held that by temporarily closing two hotels, limiting the capacity and amenities in others, and by furloughing and laying off workers in light of the COVID-19 pandemic, the Seller materially breached its covenant to operate in the ordinary course of business between the signing and closing of the transaction.  Accordingly, the Buyer was not required to complete the transaction.…
Continue Reading Reasonable COVID-19 Preventative Measures Can Breach Ordinary Course of Business Covenant

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