Last week, the Delaware Court of Chancery upheld the terms of an agreement requiring The Chemours Company to arbitrate a challenge to its spin-off from DuPont. In doing so, Vice Chancellor Glasscock rejected Chemours’ claims that the process DuPont followed in structuring and executing the spin-off rendered the terms of the spin-off unconscionable and thus Chemours’ consent to arbitration ineffective.[1] The Chemours decision is important as it recognizes that parent companies rely on the parent-subsidiary relationship in structuring spin-offs and in doing so need not follow an arm’s length process with its subsidiary as would apply to a transaction with an unrelated third party.
Continue Reading Don’t Bite the Hand that Feeds You: Delaware Court of Chancery Holds Spin-Offs Are Not Unconscionable
Deal Structuring
CFIUS Releases Proposed Rule on Filing Fees
On March 9, 2020, the U.S. Department of the Treasury published a proposed rule implementing the filing fee provisions of the Foreign Investment Risk Review Modernization Act. The Proposed Rule would assess tiered filing fees for all voluntary notifications to the Committee on Foreign Investment in the United States and is open for public comment…
EDPB Publishes Statement on Privacy Implications of M&A Transactions
By Emmanuel Ronco, Natalie Farmer & Edouard Burlet on
On February 19, 2020 the European Data Protection Board (“EDPB”) published its second statement on privacy in the context of corporate transactions.
The statement, the full text of which can be read here, highlights the existence of concerns related to the combination and accumulation of sensitive personal data and the possibility that such combinations could result in a high level of risk to the fundamental rights to privacy and the protection of personal data.…
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Federal Reserve’s Final Rule on “Control”: Observations and Analysis
By Cleary Gottlieb on
Posted in Corporate Law, Deal Structuring
On January 30, 2020, the Federal Reserve issued a highly-anticipated final rule amending its regulations governing when one company will be deemed to control another. The final rule will provide greater certainty and transparency by codifying and clarifying a number of principles for analyzing control that have never before been set out in a comprehensive…
The European Union Blacklists the Cayman Islands
By Cleary Gottlieb on
On February 18, 2020, the ECOFIN group included the Cayman Islands in the EU’s list of non-cooperative third country jurisdictions (the “EU Blacklist”). This action may (i) affect the tax treatment of income streams sourced in or flowing to the Cayman Islands; as well as (ii) trigger ad hoc reporting obligations.
In addition, because of…
Proposed CFIUS Regulations Expand Its Jurisdiction
Posted in Cross-Border M&A, Deal Structuring
On September 17, 2019, the Department of the Treasury proposed regulations implementing most of the remaining provisions of the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), which updated the statute authorizing reviews of foreign investment by the Committee on Foreign Investment in the United States (“CFIUS”).…
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Guidance on Navigating the Atlassian Term Sheet: Understanding the Substantive Implications Behind the Virtues of Standardization in M&A
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.” …
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Proposed IRS Regulations Would Largely Eliminate “Section 956 Deemed Dividends” for U.S. Multinationals and Expand the Range of Credit Support From Non-U.S. Subsidiaries That They Can Provide to Lenders
By Meyer H. Fedida, Yaron Reich & Rebecca Reeb on
Posted in Corporate Law, Deal Structuring
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…
CFIUS Introduces Pilot Program for Mandatory Declarations of Critical Technology Investments
Posted in Cross-Border M&A, Deal Structuring
On October 10, 2018, the Department of the Treasury issued interim regulations (“Interim Regulations”) for the Committee on Foreign Investment in the United States (“CFIUS”) to conduct a pilot program implementing provisions relating to critical technologies of the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), which recently amended the Exon-Florio amendments to the…
UK Government Proposes National Security and Investment Regime
By Cleary Gottlieb on
Posted in Cross-Border M&A, Deal Structuring
On July 24, 2018, the UK Government published proposals for legislative reform that would give it significantly greater powers to intervene in UK transactions on national security grounds.
This Alert Memorandum summarizes the proposals and the possible implications.