Corporate & Securities Law Blog

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On March 21, 2022, the U.S. Securities and Exchange Commission (the “SEC”) published the proposed rule entitled the “Enhancement and Standardization of Climate-Related Disclosures” that would require registered public companies to disclose certain climate-related information in registration statements and periodic reports.[1] The proposed rule and amendments, “would provide investors with consistent, comparable, and decision-useful information for making their investment decisions, and it would provide consistent and clear reporting obligations for issuers,” said SEC Chair Gary Gensler.[2]
Continue Reading SEC Proposes Rules Requiring Climate-Related Disclosures from Registered Public Companies

On February 10, 2022, the U.S. Securities and Exchange Commission (the “SEC”) proposed amendments to accelerate the filing deadlines for Schedule 13D and Schedule 13G beneficial ownership reports, expand beneficial ownership reporting obligations to include the acquisition of certain derivative securities and clarify the standards for formation of a group that would be subject to beneficial ownership reporting obligations. The proposed amendments are intended to provide more timely information to meet the needs of the current financial markets. SEC Chair Gary Gensler stated, “These amendments would update our reporting requirements for modern markets, reduce information asymmetries, and address the timeliness
Continue Reading SEC Proposes Amendments to Schedule 13 Beneficial Ownership Reporting Requirements

The U.S. Securities and Exchange Commission (SEC) recently issued proposed amendments to the Securities Exchange Act [1] (the “Exchange Act”) that would significantly broaden the definition of “exchange” for purposes of regulation under the Exchange Act (“Proposed Rule”).[2] Designed to address a “regulatory gap,”[3] the Proposed Rule would cover “platforms for all kinds of asset classes that bring together buyers and sellers.”[4]  Under the Proposed Rule, communication protocol systems—trading systems that offer the use of non-firm trading interest and provide protocols to bring together buyers and sellers of securities—would have to register with the
Continue Reading SEC Proposed Amendments Could Significantly Impact DeFi Companies

Although the number of corporate mergers surged during President Biden’s first year in office, all signs point to a tougher regulatory environment for deals going forward.

In 2021, $5.8 trillion changed hands as a result of corporate mergers across the globe.[1]  This 64 percent increase over 2020 far surpassed the previous annual record,[2] and now the Biden Administration appears to be taking steps toward fulfilling the President’s goal of ramping up antitrust enforcement.[3]  One such measure includes taking a more critical approach when evaluating proposed mergers, and federal agencies have already filed several high-profile investigations.[4]
Continue Reading Looking Ahead to Tougher Merger Guidelines and Enforcement

  • Higher Thresholds For HSR Filings
  • On January 24, 2022, the Federal Trade Commission announced revised, higher thresholds for premerger filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The filing thresholds are revised annually, based on the change in Gross National Product (GNP) and after last year’s atypical decrease they have again increased.
    Continue Reading Higher Filing Thresholds for HSR Act Premerger Notifications and Interlocking Directorates Announced

    On December 27, 2021, the California Court of Appeal issued two decisions addressing whether claims arising from statements made in filings with the Securities and Exchange Commission (“SEC”) fall within California’s statute designed to deter “strategic lawsuits against public participation,” or “SLAPPs,” arising from protected speech.  In Sugarman v. Benett, No. B307753, 2021 WL 6111725  (Cal. App. Dec. 27, 2021) (“Benett”), and Sugarman v. Brown, No. B308318, 2021 WL 6111718 (Cal. App. Dec. 27, 2021) (“Brown”), the Court held that state law claims arising out of disclosures in federal SEC filings may be subject to California’s anti-SLAPP statute,
    Continue Reading California Court of Appeal Holds that SEC Filings May Be Protected Activities Under Anti-SLAPP Statute

    This December, the Delaware Supreme Court penned two decisions that shined the spotlight on purchase agreement provisions that are often afterthoughts in negotiations.  In Golden Rule Financial Corporation v. Shareholder Representative Services, No. 61, 2021, 2021 WL 5754866 (Del. Dec. 3, 2021) (ORDER), the Court reviewed the post-closing “true up” language and determined that “consistently applied” accounting principles in the post-closing true up does not necessarily mean “in the same manner as had been applied prior to closing.”  And in AB Stable VIII LLC v. MAPS Hotels and Resorts One LLC, –A.3d–, 2021 WL 5832875 (Del. Dec. 8,
    Continue Reading Delaware Supreme Court Shines Spotlight on Boilerplate Purchase Agreement Provisions

    FinCEN has issued a notice of proposed rulemaking (NPRM) regarding how the agency is planning to implement the Corporate Transparency Act (CTA).  The NPRM came out on December 8, 2021, accompanied by an explanatory factsheet.  Congress passed the CTA on January 1, 2021 in order to require U.S. companies to disclose beneficial ownership information.
    Continue Reading FinCEN Issues Notice of Proposed Rulemaking for Corporate Transparency Act

    Environmental, social, and governance factors (“ESG”) have pushed to the forefront of the SEC’s attention in recent years.  In September, building on prior guidance, the SEC’s Division of Corporate Finance released a sample comment letter that requests additional information from companies related to climate change.  The letter does not create new substantive law, but it illustrates the SEC’s increased interest in ESG and climate-related disclosures under the Biden Administration.
    Continue Reading SEC Publishes Sample Letter to Companies on Environmental Disclosures

    In United Food & Commercial Workers Union & Participating Food Industry Employers Tri-State Pension Fund v. Zuckerberg, No. 404, 2020, — A.3d –, 2021 WL 3433261 (Del. Sept. 23, 2021), the Delaware Supreme Court adopted a new three-pronged test for determining whether pre-suit demand by a stockholder plaintiff would have been futile.  This new test builds up and refines the Aronson and Rales demand futility tests for derivative claims.  The Court’s decision comes on the heels of Brookfield Asset Mgmt. v. Rosson, where the Court clarified derivative standing by overruling the oft-criticized direct-and-derivative “dual-natured” claim under Gentile v.
    Continue Reading Delaware Supreme Court Adopts New Three-Prong Test for Demand Futility

    In Brookfield Asset Mgmt. v. Rosson, No. 406, 2020, 2021 Del. LEXIS 291 (Del. Sept. 20, 2021), the Delaware Supreme Court held that claims for wrongful equity dilution may be pursued only derivatively on behalf of the corporation and not directly.  Brookfield is noteworthy because it overruled Gentile v. Rossette, 906 A.2d 91 (Del. 2006), which previously permitted stockholder plaintiffs to assert direct claims for equity dilution where a controlling stockholder orchestrated a dilutive equity issuance that expropriated both economic value and voting power from the minority stockholders.  The Delaware Supreme Court revisited the Gentile rule, in part,
    Continue Reading Delaware Supreme Court Holds that Equity Dilution and Expropriation Claims May Only Be Brought Derivatively, Overruling Prior Precedent

    Last week, Coinbase Global Inc. (“Coinbase”) headed off confrontation with the Securities and Exchange Commission (“SEC”) by announcing it was shelving a much ballyhooed digital asset lending product, Lend.  The announcement came two weeks after Coinbase revealed that it had received a Wells notice from the SEC warning the company of its plans to sue over Coinbase’s planned October Lend launch.
    Continue Reading A September to Remember: Coinbase Avoids SEC Clash by Dropping Crypto Lend Product

    In Manti Holdings, LLC v. Authentix Acquisition Co., Inc., No. 354, 2020, 2021 WL 4165159 (Del. Sept. 13, 2021), the Delaware Supreme Court issued an important opinion affirming the use of stockholders agreements by and among Delaware corporations and its stockholders to waive stockholders’ rights of appraisal under Section 262 of the Delaware General Corporation Law.  The Manti Holdings decision further solidifies Delaware’s strong policy preference of freedom of contract and private ordering, and confirms that Delaware corporations can have its stockholders waive appraisal rights.  Note, however, that not every appraisal waiver may be valid.  It also raises the
    Continue Reading Delaware Supreme Court Affirms the Use of Stockholders Agreements to Waive Appraisal Rights

    The American Rescue Plan Act (“ARPA”) requires the full cost of COBRA premiums to be subsidized for COBRA continuation coverage during the period from April 1, 2021 through September 30, 2021 (“Subsidy Period”) of certain assistance-eligible individuals (“AEI”) whose COBRA qualifying event was due to an involuntary termination or reduction in hours. Our prior blog post, COBRA Premium Assistance Under the American Rescue Plan Act of 2021 – What Employers Should Know, provides information about the ARPA COBRA subsidy and associated notice requirements. ARPA also required employers to comply with certain notice obligations, first at the outset of the
    Continue Reading Reminder: ARPA COBRA Subsidy Expiration Notice Due by September 15