Higher Filing Thresholds for HSR Act Premerger Notifications and Interlocking Directorates Announced

1. Higher Thresholds For HSR Filings

On January 21, 2016, 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 and will be effective thirty days after publication in the Federal Register. Publication is expected within one week, so the new thresholds will likely become effective in late February 2016. Acquisitions that have not closed by the effective date will be subject to the new thresholds. Continue Reading

What You Need to Know About Mergers and Acquisitions Involving Government Contractors and Their Suppliers

Volume 1 – The Structure of the Deal and Government Consent

With today’s posting, we begin a ten-part series on unique issues that arise in connection with the acquisition or disposition of a company that performs government contracts or subcontracts. These issues obviously come into play when the target company fits the bill as an established “government contractor,” replete with all of the infrastructure, systems, and processes that one normally associates with that term.  They also come into play, however, in connection with companies that sell standard commercial items to the Government under the auspices of the General Services Administration’s schedule contracts and companies that operate at all tiers within the Government’s supply chain.  They apply whether such companies are selling specialized products manufactured  to Government specifications or commercial items adopted or adapted for use, ultimately, by the Government. Continue Reading

FAST Act Speeds-Up Raising Capital

On December 4, 2015, President Obama signed into law the Fixing America’s Surface Transportation Act, or FAST Act. Although primarily a transportation bill, the FAST Act also made changes to the federal securities laws as described below. Overall, the FAST Act’s changes to the securities laws will help facilitate raising capital. Continue Reading

IRS Announces Inflation-Adjusted Amounts for 2016

The IRS recently announced the inflation-adjusted items for 2016, including gift, estate, and generation-skipping transfer tax amounts. The following adjustments should be considered in your estate and gift planning:

  • The gift tax annual exclusion for 2016 remains $14,000 (and is increased to $148,000 for gifts to a non-U.S. citizen spouse).  Married couples who elect gift splitting may give $28,000 per donee in 2016.
  • The gift, estate and generation-skipping transfer tax exemption amount is increased to $5,450,000 in 2016.
  • Direct payments of qualified tuition and medical expenses remain gift-tax free in unlimited amounts.

A complete copy of the Revenue Procedure 2015-53 announcing the inflation-adjusted items for 2016 can be found here.

The European Commission’s New Pandora’s Box – Reopening Final Tax Rulings as a Form of “State Aid”

In Short

The European Commission (Commission) has adopted a decision on 21 October 2015 on the tax rulings – also referred to as “comfort letters” – granted by Luxembourg to Fiat Finance and Trade (FFT) and by The Netherlands to Starbucks. Rejecting the decisions of domestic authorities in Luxembourg and The Netherlands, the Commission concluded that these rulings artificially reduced the tax burdens for the two companies awarding them selective advantages, which constitute State aid. Continue Reading

Justice Friedman Allows Breach of Fiduciary Duty Claim to Proceed Against Corporate Directors Under Delaware Law

In AP Services, LLP v. Lobell et. al, No. 651613/2012, 2015 NY Slip Op 31115(U) (N.Y. Sup. Ct. June 19, 2015) (argued Feb. 21, 2014), Justice Friedman, applying Delaware Law, denied a motion to dismiss plaintiff AP Services, LLP’s first cause of action alleging breach of fiduciary duty against the defendants, former directors of Paramount Acquisition Corp., while granting dismissal of the second cause of action against them for allegedly aiding and abetting the breach of fiduciary duty. Continue Reading

Pay to Play: Appellate Division Upholds Ruling that Payment is Required to Qualify for Champerty Safe Harbor Provision

In Justinian Capital SPC v. WestLB AG, etc. et al., 2015 N.Y. Slip Op. 04381 (1st Dep’t May 21, 2015), the Appellate Division affirmed the February 25, 2014 decision of the New York County Supreme Court, Commercial Division (Kornreich, J.), 43 Misc. 3d 598, holding that actual payment for the transfer of rights to a legal claim is required in order to qualify for the champerty doctrine’s safe harbor provision. Continue Reading

Delaware Supreme Court Reinforces Importance of Clear and Precise Bylaw Provisions and Specifically Drafted Notices of Annual Meetings

In Hill International, Inc. v. Opportunity Partners L.P., No. 305, 2015, 2015 WL 4035069 (Del. July 2, 2015), the Delaware Supreme Court affirmed the Court of Chancery’s grant of injunctive relief as it recognized the plaintiff stockholder’s — as opposed to defendant corporation’s — interpretation of a bylaw as its plain meaning interpretation.  In so holding, both courts reinforced the importance of clear and precisely drafted corporate charter and bylaw provisions, as well as specifically drafted notices of annual meetings of stockholders. Continue Reading

“Dead Hand Proxy Puts” Garner Increased Stockholder Scrutiny In Delaware

A ruling last fall by the Delaware Chancery Court has prompted a wave of 8 Del. C. § 220 books and records inspection demands on (and threatened litigation against) Delaware corporations that have entered into credit agreements containing so-called “dead hand proxy put” provisions.  A “dead hand proxy put” provision allows the corporation’s lenders to demand immediate payment of all outstanding debt if, within a specified measuring period, a majority of incumbent board members is replaced in a threatened or actual contested election.  In Pontiac General Employees Retirement System v. Healthways, Inc., C.A. No. 9789-VCL (Del. Ch. Oct. 14, 2014) (transcript ruling), the Court declined to dismiss a breach-of-fiduciary-duty challenge to a “dead hand proxy put,” even where the exercise of the provision was not imminent.  The Court held that the complaint adequately alleged facts showing the provision had caused a present injury to the corporation’s stockholders by deterring a possible stockholder-led proxy contest.  Other than the facts alleged, the ruling left uncertain the attendant circumstances needed to state a mature “dead hand proxy put” claim.  As a result, all public company boards with credit agreements containing “dead hand proxy puts” now face Section 220 books and records inspection demands, and potential litigation. Continue Reading

Second Circuit Narrows Scope of SLUSA Preclusion

In In re Kingate Management Ltd. Litigation, No. 11-1397, 2015 U.S. App. LEXIS 6725 (2d Cir. Apr. 23, 2015), the United States Court of Appeals for the Second Circuit held that in order for the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”), 15 U.S.C. § 78bb(f), to preclude state law claims that fall within the anti-falsity provisions of the Securities Act of 1933 and Securities Exchange Act of 1934, (1) the claims must allege that the defendant, not some third party, engaged in the requisite false conduct and (2) the allegation of false conduct must be necessary to liability under the state laws alleged.  The Court also held that SLUSA does not require that an entire complaint be dismissed if only certain claims or parts of claims are precluded.  Those claims which are not covered by SLUSA must be allowed to proceed.  This decision clarifies the scope of SLUSA preclusion. Continue Reading

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