Standardization can be a virtue and one that M&A lawyers, likely due to self-interest and ego, sometimes resist. If venture financing and derivatives practices can have widely accepted forms of legal documentation as a starting point, why should M&A be an exception? Ironically, agreements for takeovers of publicly traded companies – once revered as a rarified realm that only an elite group huddled in skyscrapers in Manhattan could navigate – has evolved considerably toward standard forms thanks to enhanced attention to these publicly filed agreements and an effort by Delaware courts to draw clearer guidelines about precisely what will and will not fly in the world of “public M&A.” Continue Reading Guidance on Navigating the Atlassian Term Sheet: Understanding the Substantive Implications Behind the Virtues of Standardization in M&A
On August 21, the Securities and Exchange Commission (“SEC”) adopted (1) guidance on the proxy voting responsibilities of investment advisers under the Investment Advisers Act and related rules (the “Advisers Guidance”) and (2) interpretation and guidance on the applicability to proxy voting advice of the rules on proxy solicitation under the Securities Exchange Act (the “Solicitation Guidance”). Continue Reading In its Highly Anticipated Guidance on Proxy Advisory Firms, the SEC Proceeds With Caution
Monday’s Business Roundtable Statement on the Purpose of a Corporation is significant, mostly because it opens the door for more discussion of the idea of “corporate purpose”. While there are many ways that conversation could go, there are good reasons to believe the discussion will lead to a shift in corporate governance towards more authority and responsibility for corporate boards. Specifically, boards will be expected to lead on corporate social responsibility issues. Continue Reading The Purposes of a Corporation and the Role of the Board
Last week, the Securities and Exchange Commission issued another in its series of rule proposals to revise the disclosure requirements applicable to reporting companies. Its August 8, 2019 proposal addresses simplification of three items in Regulation S-K that have not been revised for more than 30 years. We also provide a link in the attached to our new Disclosure Simplification Explainer, which maps and provides live links to each of the SEC releases addressing disclosure simplification.
Please click here to read the full alert memorandum.
Cleary Gottlieb’s “2019 Mid-Year Developments in Securities and M&A Litigation” discusses major developments from the first half of 2019 and highlights significant decisions and trends ahead.
In Lorenzo, the most significant securities decision in 2019 so far, the Supreme Court clarified the scope of “scheme liability” under Rule 10b-5(a) and (c). The Court also declined to rule on several significant issues arising from the Ninth Circuit, including whether plaintiffs must show that the defendant acted with scienter when bringing claims under Section 14(e), whether Morrison extends to unsponsored American Depositary Receipts, and the standard for establishing loss causation. Looking ahead, we will be watching for a potential grant of certiorari from the Tenth Circuit’s decision in Scoville, which held that the Dodd-Frank Act permits the SEC to bring fraud claims or claims under Section 17 of the Securities Act based on sales of securities that do not constitute domestic transactions within the meaning of Morrison. With respect to M&A litigation, the Delaware Supreme Court continued to clarify its jurisprudence with respect to appraisal methodology as well as the protection MFW affords to controlled transactions. The Court also released important opinions pertaining to oversight duties for boards of directors and the fiduciary duties of activist investors.
On July 18, 2019, The Conference Board and Cleary Gottlieb Steen & Hamilton LLP hosted a panel discussion on the 2019 proxy season highlights and trends, including the considerations companies have been evaluating during engagement with investors. The panel also discussed the continuation of significant governance issues for companies, such as in the areas of board composition, diversity, environmental issues and the interrelationship between shareholder issues and those in the news cycle. The panelists were Pamela Marcogliese, Partner, Cleary Gottlieb, Elizabeth Bieber, Associate, Cleary Gottlieb and Theresa Molloy, Vice President, Governance and Shareholder Services, Prudential Financial. The panel was moderated by Paul Washington, the new Executive Director of ESG Center at The Conference Board. Continue Reading Cleary Gottlieb Participates in Panel Discussion on Highlights of the 2019 Proxy Season
In late July 2019, U.S. federal and state regulators announced three headline‑grabbing data privacy and cybersecurity enforcement actions against Equifax and Facebook. Although coverage of these cases has focused largely on their striking financial penalties, as important are the terms the settlements imposed on the companies’ operations as well as their officers, directors, and compliance professionals—and what they signal about potential future enforcement activity to come. Continue Reading July 2019 Privacy and Cybersecurity Enforcement: Lessons for Management and Directors
Institutional investors are howling for US public companies to focus more on the long-term. This is unsurprising. Long-term focused companies produce significantly better results over time, reporting far greater revenue growth with less volatility, far higher levels of economic profit, and greater total return to shareholders. So if you are holding stock for a long time, a long-term focus for your portfolio companies is critical. Continue Reading Finding Friends is Hard: Long-Term Investors’ Relationship with Proxy Advisors, Activists and Long-Term Private Equity Funds
After the Delaware Supreme Court’s recent Aruba decision, many commentators predicted that, going forward, the Court of Chancery would not rely on the target’s unaffected market trading price to determine fair value in appraisal cases, other than as a “check” on other valuation methodologies. It may therefore come as a surprise that in a decision issued last Friday, the Court of Chancery determined fair value to be equal to the target’s unaffected trading price. See In re: Appraisal of Jarden Corporation, Consolidated C.A. No. 12456-VCS (Del. Ch. July 19, 2019). Although still subject to appeal, this decision is also notable because the fair value determination came out 18% below the deal price despite the petitioners having some success in attacking the target board’s sale process, which involved no pre- or post-signing market check. Continue Reading Appraisal Update: Unaffected Market Price Makes a Comeback
Last week, the Delaware Supreme Court reversed the Delaware Court of Chancery’s dismissal of a Caremark claim that arose out of the Blue Bell ice cream listeria outbreak in the mid-2010s. See Marchand v. Barnhill, No. 533, 2018 (Del. June 18, 2019). The Delaware Supreme Court’s opinion in this closely watched case provides useful guidance to directors on the proper role of the board in overseeing risk management. Continue Reading Not So Sweet: Delaware Supreme Court Revives <i>Caremark</i> Claim, Provides Guidance On Directors’ Oversight Duties