Corporate Securities Law Blog

The U.S. Sarbanes-Oxley Act of 2002 ("SOX") requires audit committees of public companies to establish procedures for the anonymous submission by employees of that company of concerns related to accounting and financial matters. Multinational corporations, however, have to be careful to consider data protection, labor and human rights legislation in the EU and other countries in the design of their whistleblower programs. 

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Creators of original works protected by copyright, patent, and trademark allow others to use those works by way of license agreements. An IP license agreement may grant the licensee the right to distribute goods and services to the public under the licensor's mark, or the right to utilize certain technology or software. The licensor may have concerns about an opposing party in litigation, or a competitor, acquiring the licensee, thereby gaining access to the licensed rights. To address these concerns, many license agreements prohibit the transfer of the licensed rights without the permission of the licensor. At present, however, many jurisdictions have no clearly controlling authority which establishes whether a merger transaction, and in particular the widely used reverse triangular merger, results in a transfer of licensed rights which would be prohibited by a typical anti-assignment clause.  Continue Reading Questions & comments

On June 8, 2006, the Delaware Supreme Court upheld the lower court’s decision in favor of the directors of The Walt Disney Company. Plaintiffs had claimed that the directors had breached their duty of care in approving an employment agreement with Michael Ovitz, which permitted Ovitz to receive a $140 million severance payment just 14 months after he joined the company. The lower court concluded that the defendant directors who had approved the terms of Ovitz’s employment agreement “did not act in bad faith, and were at most ordinarily negligent,” which was insufficient to constitute a breach of the duty of care. The Supreme Court held that the lower court’s “factual findings and legal rulings were correct and not erroneous in any respect.”

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On May 2, 2006, we reported that the Mexican Tax Administration Service ("SAT") issued a three-month suspension of taxpayer's external auditor's license to certify financial statements.  In Mexico, taxpayers of a certain size are required to submit electronically certain financial and tax information to the SAT.  An independent certified public accountant ("CPA") must include a declaration with this information regarding the tax compliance of its client.  This includes transfer pricing and contemporaneous documentation which the CPA must retain in its files.

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A California court has affirmed California's established policy against covenants not to compete. In Kelton v. Stravinski, the court limited a non-compete agreement between two partners to only those specific business activities described in the partnership agreement. Continue Reading Questions & comments