On September 9, 2019, the U.S. Department of the Treasury issued proposed regulations that would limit the ability of certain corporations to utilize prior year losses, potentially increasing the tax burden of such corporations.
Delaware law usually protects directors in making good faith business decisions. However, sometimes the failure of directors to oversee a company’s compliance with legal requirements will be so troublesome that this is not the case – providing the basis for a “Caremark claim.”
Merger agreements entered into by Delaware corporations commonly include fiduciary out provisions in order to satisfy director fiduciary duty requirements to secure the best value reasonably available to stockholders under the Revlon rule.
Most corporate lawyers and investment professionals are probably familiar with the reporting requirements that apply to large corporate mergers and acquisitions. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976...
By September 30, 2019, businesses with 100 or more employees must provide pay information categorized by race, ethnicity, and sex for calendar years 2017 and 2018. For many businesses, this means reviewing their internal systems and coordinating with vendors to collect requisite information ahead of the fast approaching deadline.
It is common for investors in venture capital and private equity transactions, and in other investment arrangements, as a condition to their investment, to have rights to appoint board observers when director representation is not available. An unanswered question has been the extent to which a board observer has liability exposure under Section 11 of the Securities Act of 1933, for example, when a company goes public.
On July 11, 2019, the Antitrust Division of the Department of Justice announced a substantial shift in its policy for incentivizing and rewarding the use of corporate compliance programs. For the first time, the Division will now consider the adequacy and effectiveness of a company’s antitrust compliance program in its charging decision—even when a company loses the race to be first under the Corporate Leniency Policy—and in appropriate cases will permit the use of deferred prosecution agreements instead of indictments or guilty pleas.
On July 29, 2019, the Delaware Court of Chancery dismissed an action against the directors of J.C. Penney Company, Inc. alleging failure of oversight because of the plaintiff’s failure to make a demand on the board before filing the derivative action.
In In re Towers Watson & Co. Stockholders Litigation, 2019 WL 3334521 (Del. Ch. July 25, 2019), the Delaware Court of Chancery applied the business judgment rule to dismiss a stockholder suit challenging the $18 billion merger of equals between Towers Watson & Co. and Willis Group despite allegations of imperfections in the merger negotiations.
Venture capital and private equity arrangements often include contractual provisions limiting the rights of investors, including drag-along provisions in connection with future transactions approved by controlling stockholders and sometimes express waivers of the right to assert appraisal rights.