With a stroke of the pen, the Delaware Court of Chancery invalidated commonplace provisions in scores of stockholder agreements relating to public corporations and likely many more relating to private corporations. In West Palm Beach Firefighters’ Pension Fund v. Moelis & Company (“Moelis”)[1], Vice Chancellor J. Travis Laster, struck down an entire package of stockholder veto rights and held that provisions in a stockholder agreement purporting to restrict the size of the board of directors, requiring the board to recommend in favor of a stockholder nominee, requiring the board to fill any vacancy on the board with a stockholder nominee or to include a stockholder nominated director on committees of the board, are all facially invalid as a matter of Delaware law. Vice Chancellor Laster noted that many of these provisions would have been valid if set out in the corporation’s certificate of incorporation, rather than in the stockholder agreement.Continue Reading Delaware Court of Chancery Invalidates Common Provisions in Stockholder Agreements
Adam Fleisher
AI May Do Wonders for Your Business, But What About Your Risk Profile?
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.
Artificial intelligence (AI) was the biggest technology news of 2023. AI continues to revolutionize business in big and small ways, ranging from disrupting entire business models to making basic support functions more efficient. Observers have rightly focused on the plentiful value-creation opportunities this new technology affords. Less attention has been given to the risks AI creates for boards and management teams, which call for sophisticated governance, operational and risk perspectives. This article identifies key areas of risk and offers suggestions for mitigation on the road to realizing the enormous benefits AI promises.Continue Reading AI May Do Wonders for Your Business, But What About Your Risk Profile?
Going Public: A Guide to U.S. IPOs for Founders, Officers, Directors, and Other Market Participants
We are pleased to bring you a substantial update to “Going Public: A Guide to U.S. IPOs for Founders, Officers, Directors and Other Market Participants,” which provides a complete overview of the U.S. IPO process for these and other market participants.
This edition expands on developments relating to:
- Environmental, Social, and Governance (ESG) trends
- Direct
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SEC Proposes a Significant Change in Reporting by Institutional Investors
On July 10, 2020, the Securities and Exchange Commission (the “SEC”) proposed changes that would substantially reduce the number of investors required to file quarterly reports showing their holdings of U.S.-listed equities on Form 13F. The SEC’s proposal would increase the 13F reporting threshold 35 fold — from $100 million to $3.5 billion — and…
SEC Expands Ability to “Test the Waters” to All Issuers
Last week, the Securities and Exchange Commission adopted a rule under which any issuer can “test the waters” for a securities offering before or after filing a registration statement. This new rule extends an accommodation previously available only to emerging growth companies.
Please click here to read the full alert memorandum.
Cleary Partners Participate in Panel Discussion on Private Investment in Public Equity
On May 8, 2018, partners Benet O’Reilly and Adam Fleisher participated in a panel co-hosted by The Conference Board and Cleary Gottlieb to discuss Private Investment in Public Equity (PIPE) transactions, both for capital formation and strategic purposes.
Moderator Doug Chia, executive director of The Conference Board, Benet and Adam outlined the framework for a…
Between Contractual and Fiduciary Duties: ODN Holding and the Rights of Preferred Stockholders
Investors frequently negotiate for a redemption right to ensure at least some return on preferred stock investments in a “sideways situation”—where the target company is neither a huge success nor an abject failure. Continuing a consistent theme in recent Delaware jurisprudence, the Delaware Court of Chancery declined to dismiss a complaint alleging directors breached their duty of loyalty in taking steps to satisfy an investor’s redemption request.
Continue Reading Between Contractual and Fiduciary Duties: ODN Holding and the Rights of Preferred Stockholders