The EU Taxonomy Regulation, which entered into force on 12 July 2020, introduces an EU-wide taxonomy (or combined glossary and classification system) of environmentally sustainable activities, as well as new disclosure requirements for certain financial services firms and large public interest entities.

In short, the Taxonomy Regulation is intended to provide certain businesses and investors with a common language to identify the extent to which an investment may be considered environmentally sustainable – and more broadly yet, which economic activities can be considered environmentally sustainable (or “green”).

This alert memorandum provides an overview of the Taxonomy Regulation (including as to status, scope and conceptual and technical framework), explores the upcoming regulatory implications of this initiative for European companies (and, in particular, financial sector firms), and provides a comparative analysis of similar regulatory developments in other jurisdictions.

The 2020 ‘perfect storm’ of global economic fallout caused by the COVID-19 pandemic, renewed global political focus on the Black Lives Matter movement and the workers of the gig economy, plus the pall of smoke from unprecedented wildfires on five continents, is reinvigorating scrutiny from consumers, regulators and employees on ecological and social sustainability considerations, providing fresh impetus to sustainable finance.

Regulatory developments are moving in tandem, particularly with respect to ESG labelling and transparency obligations, which the ever-growing pool of sustainable investors rely on to determine the extent to which financial products and investee companies meet their predetermined ESG investment criteria.

Against this backdrop, Cleary is launching a series of thought leadership pieces that will focus on recent and ongoing developments in the regulations that govern sustainable finance and ESG reporting by financial firms, with a particular focus on European regulatory efforts.

Please click here to read the full alert memorandum.

On November 11, the UK Government proposed a new national security screening regime that would allow the Government to intervene in “potentially hostile” foreign investments that threatened UK national security while “ensuring the UK remains a global champion of free trade and an attractive place to invest.”

If approved by Parliament, the National Security and Investment Bill would introduce a mandatory and suspensory CFIUS-like regime. We expect the new regime will come into force in the first half of 2021, assuming it receives Parliamentary approval. Given its broad scope and retrospective application, foreign investors considering transactions that may raise national security issues should already consider engaging with the Government and taking account of the new regime in deal negotiations and transactional documents.

Please click here to read the full alert memorandum.

Over the weekend, former Vice President Joseph R. Biden, Jr. was declared the winner of the U.S. presidential election. Although President Trump has yet to concede and press reports suggest he will continue to make his case in court, thoughts have turned to what the Biden administration will mean for federal regulation of business and finance.

In many ways, the future will depend on whether the centrist, coalition-building Biden of yesteryear will show up, or if he will embrace the more progressive wing of the Democratic party that has since grown in influence. Below we lay out our initial reactions on how the Biden presidency is likely to reshape the corporate landscape. Continue Reading What to Expect From the Biden Administration

Special purpose acquisition companies or “SPACs” are an increasingly popular way for an existing private company to become publicly traded without undergoing a traditional initial public offering, and for investors in public markets to invest in growth-stage companies. There can be generous returns for SPAC sponsors, but they should be aware of the liability risk in connection with their role. Indeed, litigation arising from several recent SPAC acquisitions, most prominently against Nikola Corporation, underscores the risks for SPAC sponsors. They therefore should be mindful of steps they can take to mitigate these risks in the reverse merger process.

Please click here to read the full alert memorandum.

Late last week – for the first time in 40 years – the SEC announced a settlement of an internal controls case against an issuer arising from its repurchase of its own shares. The SEC found that Andeavor bought back $250 million of stock without first engaging in an adequate process to ensure that the company did not have material non-public information (MNPI) related to on-again, off-again takeover negotiations with Marathon Petroleum Company. Andeavor, now a subsidiary of Marathon, was ordered to pay a $20 million penalty and to cease and desist from future violations of the Securities Exchange Act’s internal controls provisions.

This case is a wake-up call – particularly in the current environment where stock buybacks are frequent market occurrences – that the SEC will be monitoring such activity, scrutinizing companies’ controls and decision-making when the buyback coincides with market-moving events, and bringing cases with potentially meaningful penalties even where there is no finding that the company violated the federal securities laws’ antifraud provisions by actually trading on the basis of MNPI.

Please click here to read the full alert memorandum.

Between July 28, 2020 and September 1, 2020, the National Venture Capital Association (NVCA) released updates to its model legal documents for use in venture capital financing transactions. This memorandum will explain the changes to these model forms and some of the reasons for, and implications of, such changes.

As background, the NVCA is an organization based in the U.S. whose members include venture capital firms, investors and professionals involved in investing private capital in early-stage companies. In an effort to promote consistent, transparent investment terms and efficient transaction processes, the NVCA has created model legal documents for venture financing transactions, and these models have been widely used in the U.S.

This update to the model forms has been driven by developments in: (i) CFIUS rules and other applicable laws, (ii) market practice in venture capital financing and (iii) “best practices” in the industry.

Please click here to read the full alert memorandum.

On September 23, the SEC voted 3-2 to amend certain of the procedural requirements for the inclusion of shareholder proposals in a company’s proxy statement under Exchange Act Rule 14a-8. The amendments were adopted substantially as proposed in November 2019, except for the so-called “momentum” provision, which would have permitted companies to exclude shareholder proposals that have decreasing shareholder support.

Please click here to read the full alert memorandum.

On September 15, 2020, the U.S. Department of the Treasury published a final rule (the “Final Rule”) significantly changing the scope of the Committee on Foreign Investment in the United States (“CFIUS”) mandatory notification requirements for foreign investments in U.S. critical technology businesses and expanding it to investments in all industries.  The Final Rule, which is basically the same as (but does resolve some ambiguities in) the May 2020 proposed rule, eliminates the current limitation of mandatory critical technology notifications to targets active in specified industries and instead focuses on whether the target develops, tests, or manufactures technologies that would require a license for export—whether or not the technologies are in fact exported or sold to third parties (e.g., proprietary manufacturing technologies)—to the jurisdiction of the investor and any entity in its chain of ownership, effectively creating different mandatory notification requirements for different countries.  The Final Rule also clarifies the ownership rules used to determine when an investor linked to a foreign government is required to file with CFIUS for an investment in a sensitive U.S. technology, infrastructure, or data business.  The Final Rule applies to all transactions entered into (i.e., binding agreement signed, public offer launched, proxies solicited, or options exercised) after October 15, 2020.

Please click here to read the full alert memorandum.