The CEOs of 150 major US public companies recently pledged to act for all of their “stakeholders” – customers, employees, suppliers, communities and yes, even stockholders.[1] Much commentary ensued. But before we get too excited about whether these CEOs are grasping the mantle of government to act on behalf of the citizenry and other people who aren’t paying them, there is the prior question of whether, as a matter of Delaware law, they can.
Continue Reading

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

I. The Transparency Register – A Recap

The 4th EU-Money-Laundering Directive (2015/849), which entered into force in mid-2015, required national legislators of EU Member States to establish, in each jurisdiction, a register for information on the beneficial owners of companies and other undertakings located in such jurisdictions (“Transparency Register”).  Echoing Justice Louis D. Brandeis’ famous metaphor of publicity as a remedy for social and industrial diseases, the Directive states that information on the beneficial ownership of companies is a key factor for tracing criminals who might otherwise hide their identity behind corporate structures.
Continue Reading

On January 1, 2019, the German Act on the Strengthening of Company Pensions (Betriebsrentenstärkungsgesetz) leading to an amendment of the German Company Pensions Act (Betriebsrentengesetz), including its provisions regarding deferred compensation (Entgeltumwandlung), entered fully into force.

Deferred Compensation

Under the German Company Pensions Act, each employee is generally entitled to request from the employer that a certain part of the employee’s gross salary (up to an amount equal to 4% of the social security contribution ceiling (Beitragsbemessungsgrenze), i.e., currently EUR 3,216 per year) is used as deferred compensation for company pension purposes.  According to the newly implemented changes, employers are now obliged to provide their employees with an employer-paid top-up to the employees’ contributions to the deferred compensation. 
Continue Reading

The German Federal Court of Justice (Bundesgerichtshof) recently had the opportunity to clarify a number of important practical questions of corporate law in connection with asset disposals, the allocation of responsibilities among directors and transactions concluded with board members. We summarize the three relevant decisions from 2018/2019 below.
Continue Reading

On January 1, 2019, the “Act on Further Development of Part-Time Employment Law” (Gesetz zur Weiterentwicklung des Teilzeitrechts) entered into force in Germany.

The new legislation implements considerable changes to the German Part-Time and Fixed-Term Employment Act (Teilzeit- und Befristungsgesetz ) and introduces (i) an entitlement to work part-time on a temporary basis, coupled with (ii) an entitlement to return to full-time employment (so-called “Bridge Part-Time Work” (Brückenteilzeit)).
Continue Reading

The market reaction to reports of harassment and misconduct in the wake of the #MeToo movement has led to a re-evaluation of the materiality of these complaints from a due diligence perspective, both in the context of mergers and acquisitions (M&A) and securities offerings. Companies and lawyers therefore need to re-examine the due diligence process,

The German Government published a draft legislation which would facilitate the dismissal of so-called “risk takers” in the German financial sector.  This is one of various measures by which the German Government intends to address upcoming Brexit challenges and to increase the attractiveness of Germany as business location for financial institutions currently based in the UK.

Current Legal Situation

German employees are benefitting from extensive protection against dismissal.  Under German labor law, the termination of an employment relationship requires a valid justification (e.g., redundancy or misconduct) for which the German labor courts have set high standards.  Therefore, the affected employee is often in a good position to challenge the validity of the termination and claim the continuation of the employment relationship before court.


Continue Reading

Under proposed regulations issued yesterday (October 31), U.S. multinationals would generally be relieved from the “Section 956 deemed dividend rules” that have significantly limited their ability to provide lenders with credit support (for example, in the form of guarantees and collateral) from their non-U.S. subsidiaries. In general, under the proposed regulations, the credit packages provided

On May 14, 2018, certain members of the CBS board filed suit in Delaware seeking authorization to issue a special dividend intended to dilute the voting control of NAI, CBS’s controlling stockholder. Shortly after NAI filed a countersuit on May 29, 2018, NAI moved to compel the production of certain communications involving CBS’s outside and in-house counsel, including privileged documents concerning the decision to declare the dilutive dividend. NAI’s motion raised important issues regarding the rights of board members to access privileged communications with company counsel, which we discuss in our latest post.
Continue Reading