Publications
-
07.2020/08.2020Accelerating Gender Diversity on Boards: Reviewing Legislative ActionArticlesFor the past generation, mainstream public companies in America have slowly increased the gender and racial diversity of their boards of directors to better reflect the faces of the American consumer and the shareholder base.
-
05.01.2020Conflicted Transactions: Cleansing Process Only Effective if Procedures Are Rigorously FollowedUpdatesIn today’s difficult economic environment, many companies—including those in the portfolios of private equity and venture capital funds—are struggling financially. For some, a transaction in which a private equity sponsor or a venture capital investor has a significant interest may provide a lifeline for the troubled company.
-
03.24.2020Board Oversight Is Critical in Crisis ManagementUpdatesThe coronavirus (COVID-19) outbreak and its possible impacts on corporations highlight the importance of the board of directors’ oversight function in times of crisis.
-
03.24.2020Public Disclosures and Securities Compliance to Address in a Time of CrisisUpdatesThe immediate and possibly severe financial and business impacts of the coronavirus (COVID-19) outbreak have resulted in public companies closely reviewing their public disclosures and related securities compliance.
-
11.2019 / 12.2019The Delaware Supreme Court’s Blue Bell Creameries Decision: Lessons on Risk Oversight and Independence From Marchand v. BarnhillArticlesIn its June 2019 Marchand v. Barnhill opinion, the Delaware Supreme Court provided guidance for directors (and their advisors) in two key areas—compliance and independence.
-
09.07.2017In re Martha Stewart Living Omnimedia, Inc. Stockholder Litigation: MFW Provides Recipe for Protecting One-Sided Controller TransactionsUpdatesIn its opinion in In re Martha Stewart Living Omnimedia, Inc. Stockholder Litigation, issued in August 2017, the Delaware Chancery Court addressed a question left open under Kahn v. M&F Worldwide.
-
10.14.2015Lessons from the $148 Million Fraud by Dole's GC and CEOArticles
Corporate Counsel
-
09.04.2015Delaware Court’s Finding of $148 Million Fraud by Dole CEO and General Counsel Offers Major Lessons in Take-Private DealsUpdatesThe Delaware Chancery Court ordered Dole Food Co. Inc. CEO David Murdock and General Counsel Michael Carter to pay Dole shareholders $148 million for fraud in connection with the company’s 2013 take-private deal. The August 27, 2015 decision is one of the largest awards ever to shareholders in a deal-related lawsuit.
-
09.24.2014Delaware Chancery Court Applies M&F Worldwide Six-Factor Test in Private Company Freeze-Out Merger and Grants Motion to Dismiss Claims Against Controlling StockholdersUpdatesIn a bench ruling in Swomley v. Schlecht, C.A. No. 9355-VCL (Del. Ch. Aug. 27, 2014), the Delaware Chancery Court relied on the six-factor test set out in Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014), to dismiss a challenge to a private company freeze-out merger at the pleadings stage.
-
03.25.2014M&F WorldWide: Delaware Supreme Court Upholds Business Judgment Review in Controlling Stockholder TransactionUpdatesWhen a controlling stockholder’s buyout of a company has been challenged by minority stockholders, Delaware courts have generally subjected the transaction to entire fairness review, the most rigorous standard of review in corporate law
-
06.21.2013Revlon “Ring-Fencing” Settlement: Greater Risk of SEC Enforcement Activity in Going Private Transactions?UpdatesOn June 13, 2013, the Securities and Exchange Commission announced the settlement of administrative proceedings against Revlon, Inc. In the settlement order, the SEC asserted that the company hid information regarding a 2009 “going private transaction” from its independent board members and minority shareholders in violation of Section 13 of the Securities Exchange Act of 1934 and Rule 13e-3 thereunder.
-
09.28.2012Delaware Safe Harbor for Controlling Stockholders in a Third-Party Merger: Pro Rata Consideration to All Stockholders and a Diligent Sale ProcessUpdatesWhen a company with a controlling stockholder seeks to sell itself to a third party, the rights of the controlling stockholder and its obligations to minority stockholders are not always clear, tempting plaintiffs to test the boundaries of the controlling stockholder’s duties.
-
08.26.2010Three + Three = Proxy Access for 2011: SEC Approves Rule Amendments, Generally Effective for the 2011 Proxy Season, to Allow Shareholders Right to Nominate DirectorsUpdatesAt yesterday's open meeting of the Securities and Exchange Commission (SEC), a split Commission approved rule amendments to permit shareholders to nominate directors for corporate boards.
-
02.25.2010SEC Proposes Amendments to the Stock Repurchase Safe Harbor and Requests CommentsUpdatesThe Securities and Exchange Commission has proposed amendments to clarify and modernize Rule 10b-18 of the Securities Exchange Act of 1934 that governs public companies' repurchases of their common stock. The SEC is accepting comments to these proposed amendments through March 1, 2010. This Update summarizes the key issues in the proposed amendments and alerts you to the opportunity to make comments on the proposal.
-
09.08.2009In a Leveraged Buyout With a Controlling Stockholder, Loyal Directors Must Actively Negotiate: Louisiana Municipal Police Employees' Retirement System v. FertittaUpdatesA recent decision by the Delaware Court of Chancery reinforces the responsibility of a board of directors to assertively defend the interests of the noncontrolling stockholders when negotiating with a controlling stockholder in order to satisfy the board's duty of loyalty.
-
06.23.2009Ready or Not? Widespread Regulation of Hedge Funds and Other Private Pools of Capital Could Be ComingUpdatesThe Obama Administration has proposed sweeping new regulations that would overhaul the U.S. financial regulatory system, including a proposal published June 17, 2009 that would require investment advisers of hedge funds and other private pools of capital whose assets under management exceed some unspecified, but modest, threshold to register with the Securities and Exchange Commission under the Investment Advisers Act of 1940.
-
04.29.2009Lyondell Chemical Corp. v. Ryan: Delaware Supreme Court Holds Board's Accelerated Process for Sale of Company Did Not Constitute Bad Faith Breach of Revlon DutiesUpdatesIn Lyondell Chemical Corp. v. Ryan, C.A. 3176 (Del. Mar. 25, 2009), the Delaware Supreme Court, acting en banc, reversed the decision of the Delaware Court of Chancery and granted summary judgment to Lyondell's board of directors, dismissing the claim that it failed to act in good faith in conducting the sale of its company through an accelerated negotiation process. The Court reaffirmed important principles governing a board's Revlon duties in connection with the sale of a company and directors' good faith performance of those duties.
-
03.23.2009Delaware Supreme Court: Corporate Officers Have Same Fiduciary Duties as Corporate Directors; Common Law Shareholder Ratification Clarified: Gantler v. StephensUpdatesIn Gantler v. Stephens, C.A No. 2392, 2009 WL188828 (Del. Jan. 27, 2009), the Delaware Supreme Court affirmed a principle of corporate law that had been implied in prior decisions: officers of Delaware corporations owe the same fiduciary duties of care and loyalty to the corporation and its shareholders as directors owe. The Court also resolved contradictory prior opinions on the common law doctrine of shareholder ratification by limiting the doctrine to approval of board action that is not otherwise required to be approved by shareholders in order to be effective.
-
02.13.2009Proxy Season Reminder: Public Companies Should Consider Updating the Advance Notice Provisions in Their BylawsUpdatesProxy statement preparation and planning for annual meetings of stockholders are in full swing. Along with proxy season comes the possibility that stockholders may submit proposals or nominations for consideration at the annual meeting.
-
10.16.2008Hexion v. Huntsman: Delaware Court of Chancery Interprets "Material Adverse Effect" and "Knowing and Intentional Breach" of Merger AgreementUpdatesIn a decision that amplifies how Delaware courts analyze material adverse effect clauses in merger agreements and examines what constitutes bad faith by a buyer, the Delaware Court of Chancery in Hexion Specialty Chemicals, Inc. v. Huntsman Corp., C.A. No. 3841-VCL, 2008 WL 4457544 (Del. Ch. Sept. 29, 2008), dealt the buyer, Hexion Specialty Chemicals, Inc., a stunning blow.
-
10.01.2008Corporate Minutes: Best Practices Create Best EvidenceUpdatesA greater emphasis on corporate record keeping under the Sarbanes-Oxley Act of 2002 and related regulations, shareholders’ heightened expectations of directors and the intense scrutiny of director conduct in litigation, including option backdating cases, are increasingly placing corporate minutes in the spotlight.
-
02.14.2008The SEC Speaks in 2008: Our Top 10 TakeawaysUpdatesAt the annual SEC Speaks conference in Washington, D.C., last week, senior staff of the U.S. Securities and Exchange Commission reviewed significant SEC actions from the previous year and identified their top priorities for the year to come.
-
07.18.2007New Tools Will Help Companies Comply With Sarbanes-Oxley Act Section 404 Internal Control Over Financial Reporting: SEC Guidance and Proposed PCAOB Auditing StandardUpdates
The SEC recently published an interpretive release providing guidance on compliance with Section 404 of the Sarbanes-Oxley Act of 2002. The SEC separately finalized rule amendments relating to internal control over financial reporting and defining the term “material weakness.” The guidance became effective on June 27, 2007, and the amendments to the rules will be effective August 27, 2007. The SEC also proposed a new definition for the term “significant deficiency.”
This Update summarizes key highlights of the SEC's interpretive guidance, the SEC's new and proposed rules and PCAOB Auditing Standard No. 5.
-
01.24.2007Who Is Your Constituency? Pending Washington State Bill Could Impact Fiduciary Duties of Directors of Washington CorporationsUpdatesRecently introduced Washington House Bill 1111 and its Senate counterpart, Senate Bill 5294, would add Washington to the list of states with so-called "constituency statutes." If adopted, these bills will significantly change the standards of conduct that apply to directors of corporations organized in the State of Washington.
-
07.28.2006Decision in Washington Derivative Case Highlights Benefits of Good Governance PracticesUpdatesIn a decision generally protective of directors and officers, a Seattle federal district court recently held that shareholders who seek to bring derivative claims under Washington law must meet requirements similar to those imposed under Delaware law. In re Cray, Inc., 431 F. Supp. 2d 1114 (W.D. Wash. 2006).
-
06.21.2006Delaware Supreme Court's Disney Decision Affirms the Business Judgment Rule and Endorses Compensation Committee Best Practices — "Quantify. Discuss. Document."UpdatesIn the Delaware Supreme Court's recent opinion in the Disney case, Justice Jacobs provided better "best practices" advice for compensation committee decision making (and by analogy, board and other board committee decision making) than we may have seen in decades. The court also rejected the argument that making a decision in the absence of adequate information and deliberation amounts to bad faith.
-
01.11.2006SEC Proposal Exempts Compensation Arrangements From the Tender Offer Best-Price RuleUpdatesThe Securities and Exchange Commission recently proposed amendments to its tender offer "best-price rule," which it adopted in 1986 to prevent discriminatory tender offers by requiring that the highest price paid to any security holder in a tender offer must be paid to all other tendering security holders. Several court decisions interpreting the SEC's best-price rule have created uncertainty about whether compensatory and other arrangements made with a target company's officers, employees, directors and shareholders in an acquisition structured as a tender offer will be deemed tender offer consideration that is subject to this rule.
-
08.26.2005Delaware Court — Disney Directors Breached "Aspirational Ideals" of Good Corporate Governance, but Not Their Fiduciary DutiesUpdatesIn early August 2005, the Delaware Court of Chancery issued its opinion after a widely publicized three-month trial in In re The Walt Disney Company Derivative Litigation, absolving Disney's directors of liability in connection with the 1995-1996 hiring and firing of former Disney president Michael Ovitz. Ovitz received a severance package of approximately $140 million after his unsuccessful 14-month tenure at Disney.
-
02.11.2005Board Self-Evaluations: Do the Benefits Outweigh the Potential Pitfalls?UpdatesNew York Stock Exchange listing standards require boards of listed companies to conduct self‑evaluations at least annually to determine whether the board and its committees are functioning effectively. Although Nasdaq Marketplace Rules are silent on board self‑evaluations, a growing number of companies are considering such evaluations as a matter of best practices.
-
02.08.2005Sentencing Guidelines on Compliance Programs – A "Silk Purse" for Corporate DirectorsUpdatesWhat is a director's duty for corporate legal compliance? Recent amendments to the United States Organizational Sentencing Guidelines can help directors and their advisors answer that important question.
-
01.19.2005Happy New Year? Recent Securities Litigation Settlements Highlight Increasing Risks to Corporate DirectorsUpdatesThe Sarbanes-Oxley Act and recent changes in Securities and Exchange Commission and stock exchange requirements have imposed ever greater responsibilities on corporate directors. As these additional responsibilities expose directors to increasing risks, companies have struggled to attract and retain qualified candidates to serve as independent directors.
-
10.13.2004SEC Demands Full Disclosure of Executive CompensationUpdatesAn SEC enforcement action against General Electric and an ongoing SEC investigation of Tyson Foods reflect increased SEC scrutiny of disclosure relating to executive compensation. This Update summarizes the enforcement action and the pending investigation and offers practical guidance.
-
04.20.2004Recent NASD Rule 2790 Restricts the Purchase and Sale of Securities from Initial Public Offerings by MembersUpdatesWhile the Securities and Exchange Commission and self-regulatory organizations like the stock exchanges and Nasdaq have been preoccupied over the past two years with disclosure and governance reforms mandated by the Sarbanes-Oxley Act of 2002, a recently adopted National Association of Securities Dealers rule, Rule 2790, is designed to help reform the initial public offering market, which is showing increasing signs of life. The new NASD rule generally prohibits NASD members from selling equity securities from IPOs to any account in which NASD members, broker-dealers or other "restricted persons" have a beneficial interest. Compliance with the rule became mandatory on March 23, 2004.
-
12.08.2003SEC Proposes New Rules Granting Shareholders Greater Opportunity to Nominate DirectorsUpdatesThe Securities and Exchange Commission has proposed a highly controversial set of rules granting shareholders greater ability to nominate directors through a company's proxy process by requiring a company to include in its proxy materials information on director candidates nominated by eligible shareholders. Many commentators immediately criticized the proposed rules, citing the potential to turn annual meetings into contested elections, divert management's attention and corporate resources from the company's business, and allow special interest groups to elect directors who may not represent the best interests of all the company's shareholders.
-
09.16.2003Silence - and a Poker Face - are Golden: SEC's Schering-Plough Enforcement Action Shows SEC's Enforcement Focus on Nonverbal CuesUpdatesThe SEC has followed through on its promise to continue to focus enforcement efforts on Regulation FD and selective disclosure with its September 9, 2003 charges against Schering-Plough Corporation and its former CEO, Richard J. Kogan. In the most subtle of its FD enforcement actions, the SEC brought charges arising from both verbal and nonverbal selective disclosure of material, nonpublic information about Schering's earnings.
-
06.26.2003Delaware Court Warns Directors and Officers on Oversight of Executive Compensation: In re The Walt Disney Company Derivative LitigationUpdatesOn May 28, 2003, the Delaware Court of Chancery issued a ruling that could expose directors of The Walt Disney Company (Disney) to personal liability for asserted breaches of their fiduciary duties in the hiring and subsequent termination of Michael Ovitz as Disney president—decisions that resulted in an alleged $140 million payout for a year's work.
-
01.06.2003SEC Proposes Amendments to Rule 10b-18 Stock Repurchase "Safe Harbor"UpdatesThe Securities and Exchange Commission has proposed amendments to the timing, price and volume conditions of Rule 10b-18, the Exchange Act rule that governs public companies' repurchases of their common stock. The proposed changes provide companies with more flexibility in their stock buybacks, especially in times of extreme market disturbance.
-
09.05.2002NYSE Files Proposed Final Corporate Governance Rules With SECUpdatesThe Board of the New York Stock Exchange (NYSE) submitted its proposed final listing and corporate governance rules to the Securities and Exchange Commission (SEC) on August 16, 2002, following a two-month comment period in which NYSE received more than 300 comment letters. NYSE's Board largely adopted the final recommendations of its Corporate Accountability & Listing Standards Committee, with some refinements to reflect the Sarbanes-Oxley Act and comment letters received during the comment process.
-
07.15.2002Listing Standards and Requirements of the BBX v. OTCBB v. NASDAQ SmallCap MarketUpdatesThe NASD, acting through its subsidiary, The Nasdaq Stock Market, Inc. ("Nasdaq"), recently filed a proposal with the Securities and Exchange Commission to transform the OTC Bulletin Board Service ("OTCBB") from a dealer-driven quotation service into a marketplace of listed stocks called the Bulletin Board Exchange ("BBX").
-
07.01.2002SEC Proposes to Restructure Form 8-K and Accelerate Form 8-K FilingsUpdatesFor the first time in 25 years, the Securities and Exchange Commission plans to significantly restructure Form 8-K. Under the SEC's June 17, 2002 proposal, a reporting company would be required to disclose many events on Form 8-K that currently are not required to be disclosed or are included only in annual or quarterly reports. If adopted, the new rules would require Form 8-K disclosure of the following events:
Presentations
-
10.07.2015 - 10.09.2015The Society’s Essentials Express Seminar and Western Regional ConferenceSeminarsThe Society of Corporate Secretaries & Governance Professionals / Seattle, WAWe are very pleased to announce that Perkins Coie partner Evelyn Cruz Sroufe will moderate the panel, “Directors Speak: The Changing Dynamics of the Boardroom” on October 9th, and that on October 9th, Perkins Coie partner, Sue Morgan, will participate in the panel, “Proxy Season: 2015 Review and 2016 Preview”.