At the end of this month, we are teaming up again with Steven “Deal Professor” Davidoff-Solomon of Berkeley Law School for a series of roundtables on Antitrust, IP, Board Processes, and M&A. Confirmed participants include senior FTC, DOJ and PTO officials and judges from Delaware Court of Chancery, the Federal Circuit and Federal District Court, as well as partners from the leading firms in the Bay Area and general counsels and senior inhouse lawyers.
Overstock.com, Inc. (“Overstock”) recently filed a shelf registration statement with the Securities and Exchange Commission (the “SEC”) allowing for the issuance of “digital securities.”[1] The SEC declared that registration statement effective on December 9, 2015. The digital securities described in Overstock’s registration statement will be evidenced only by entry into a publicly distributed ledger and transfers of the digital securities can only be effected on that ledger. They will not be evidenced by physical certificates or notes, recorded in book-entry system of the type typically used by issuers and transfer agents today, traded through a traditional securities exchange or cleared through an established clearing system. Instead, ownership of digital securities and trades will be reflected in a publicly distributed proprietary ledger maintained by an alternative trading system (“ATS”) run by Pro Securities LLC using the technology of tØ, a subsidiary of Overstock. In June 2015, Overstock completed the first placement of corporate bonds in the form of digital securities pursuant to Rule 506(c) of Regulation D using the technology of tØ. Continue Reading Bitcoins and Blockchain – The Use of Distributed Ledger Technology for the Issuance of Digital Securities
In a landmark decision in Cavendish Square Holding BV vs Talal El Makdessi, the UK Supreme Court recently overturned a Court of Appeal decision (discussed here), and substantially re-formulated the English law principles relating to contractual penalty clauses. Upholding the validity of provisions in a purchase agreement that forfeited deferred consideration upon breach of non-competition covenants by the seller, the Supreme Court held that the true test as to whether a clause was penal (and therefore unenforceable) was whether it imposed a secondary obligation on the contract breaker “out of all proportion to any legitimate interest of the innocent party” in enforcing the obligation breached. Continue Reading UK Supreme Court Substantially Re-Formulates Contractual “Penalty” Principles
On Friday, December 18, ISS issued new guidance on how a board implements a majority-supported shareholder proposal for a proxy access bylaw. The guidance is contained in its Frequently Asked Questions on U.S. Proxy Voting Policies and Procedures.
This guidance identifies situations in which ISS may recommend votes against a company’s individual directors, nominating/governance committee members, or the entire board, based on the specific provisions of a company’s enacted proxy access bylaw. Continue Reading ISS Releases Guidance on Proxy Access
The past few years have witnessed a resurgence in the mergers and acquisitions and initial public offering markets—particularly for health care. Many private companies have pursued a dual-track M&A/IPO process, in which the company simultaneously pursues an IPO and a confidential sale. The dual-track process has been growing in popularity among health care companies, since the IPO process can be helpful in generating momentum for a potential sale in a consolidating industry. Continue Reading Dual-Track M&A/IPO Gain Popularity in Health Care Sector
On December 11, 2015, the Securities and Exchange Commission issued a proposed rule on disclosure of resource extraction payments, over two years after a federal court vacated a prior version of the rule. The new proposal is similar in many ways to the SEC’s original rule, adopted in August 2012 – in large part because the SEC is implementing a detailed congressional directive contained in Section 1504 of the 2010 Dodd-Frank Act. However, in addition to addressing the deficiencies the court found in the original rulemaking, the SEC has made other notable changes to reflect global developments in transparency for resource extraction payments, particularly in the European Union and Canada. Continue Reading Resource Extraction Payments – The SEC Tries Again
In the latest turn in the long-running LBO-related fraudulent conveyance litigation brought in connection with the Lyondell bankruptcy,[1] on November 18, 2015, Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York (the “Court”) issued a decision (the “Decision”) on motions to dismiss the intentional fraudulent transfer claims and the state-law constructive fraudulent transfer claims brought by representatives for shareholders of Lyondell Chemical Company (“Lyondell”) against Edward Weisfelner (the “Trustee”), trustee of two trusts established for Lyondell’s creditors. In re Lyondell Chem. Co., No. 09-10023 (REG), 2015 WL 7272996 (Bankr. S.D.N.Y. Nov. 18, 2015). The Decision dismissed the intentional fraudulent transfer claims based on the failure to adequately plead the Lyondell Board’s intent to defraud the company’s creditors by entering into the leveraged buyout. However, the Court left in place the state-law constructive fraudulent transfer claims against former shareholders – notwithstanding securities safe harbors in the Bankruptcy Code that would generally preclude such claims – and, in the process, demarcated the boundaries between intentional and constructive fraudulent transfer claims. Continue Reading SDNY Bankruptcy Court Reaffirms Rigorous Pleading Standards in Lyondell LBO Fraudulent Conveyance Action
Equity Plan Scorecard Updates
Institutional Shareholder Services (ISS) implemented the Equity Plan Scorecard (“EPSC”) last year as a new means of evaluating and recommending votes in favor of or against equity plans submitted for shareholder approval. ISS evaluates a proposed equity plan under a number of different factors and assigns a score for each component, weighting components differently in accordance with its methodology. Plans that receive at least 53 points out of 100 possible will receive “for” recommendations. Continue Reading ISS Gearing Up for the 2016 Proxy Season: Revisions to the Equity Plan Scorecard, Soliciting Updates to Peer Groups, and Delayed Guidance on Proxy Access
A recent opinion [1] from the Delaware Superior Court addresses the not uncommon situation of a buyer of a business seeking to pursue remedies against the seller that are not specified in the purchase agreement based on allegations of fraudulent conduct by the seller or its representatives. Specifically, the buyer acquired the shares of a company that had a liability (an obligation to make an “earn-out” payment to the former owners of a previously acquired company) that became payable after completion of the acquisition. The buyer sued the seller alleging that the seller (and not the acquired company) should be responsible for satisfying the earn-out liability when it became due. Continue Reading Yet Another Reminder that “Boilerplate” Matters
Valeant’s hostile bid for Allergan was one of 2014’s most discussed takeover battles. The situation, which ultimately resulted in the acquisition of Allergan by Actavis plc, included a novel structure that involved a “partnership” between Valeant and the investment fund Pershing Square. In particular, a Pershing Square-controlled entity having a small minority interest owned by Valeant, acquired shares and options to acquire shares constituting more than nine percent of Allergan’s common stock. Such purchases were made by Pershing Square with Valeant’s consent and with full knowledge of Valeant’s intentions to announce a proposal to acquire Allergan. Pershing Square and Valeant then filed a Schedule 13D and Pershing Square then supported Valeant’s proposed acquisition. Ultimately Pershing Square made a very substantial profit on its investment when Allergan was sold to Actavis. Continue Reading An Update on Insider Trading and Tender Offers: The 14e-3 Claims from the Allergan/Valeant Takeover Battle Survive a Motion to Dismiss