Boards of directors have a duty to exercise oversight and to monitor the company’s operational viability, legal compliance and financial performance during this COVID-19 pandemic. In Marchand v. Barnhill,[1] the Delaware Supreme Court held that the alleged facts relating to an outbreak of listeria raised a reasonably conceivable inference that the company’s directors failed to adopt a reporting and monitoring system sufficient to ensure they remained informed about food safety issues, which resulted in the company recalling all of its products, shutting down production, and laying off over a third of the workforce.[2]
Continue Reading COVID-19 Directors’ Duties of Oversight: Reporting and Monitoring

In the wake of the COVID-19 pandemic, reductions in hours, furloughs and temporary closures are becoming an increasingly common and unavoidable occurrence.  Employers can expect to encounter questions with respect to employee benefits offered to affected employees.  While the facts and circumstances of each case will vary, common themes exist, a few of which are mentioned below.

Coronavirus, employers
Continue Reading Critical Employee Benefit Issues in a Pandemic – Can Employees Take Their Money out of Plans?

As part of the federal government’s efforts to soften the economic effects from the Covid-19 pandemic, on Wednesday the IRS issued Notice 2020-17 announcing that federal income tax payments for the 2019 tax year otherwise due on April 15th may be postponed until July  15th 2020 without incurring interest or penalties on the amount due.  In addition, the Notice also postponed to July 15th the due date for quarterly estimated federal income tax payments otherwise due on April 15th.  Earlier statements by government officials had not indicated that the due date for quarterly estimated tax payments would also be extended.
Continue Reading Updated: Treasury and IRS Extend Time to both File and Pay Federal Income Taxes to July 15th; States Taking Their Own Approaches on Income and Similar Taxes

In Sciabacucchi v. Salzberg, No. 346, 2019, 2020 WL 1280785 (Del. Mar. 18, 2020), the Delaware Supreme Court reversed a Delaware Court of Chancery (Laster, V.C.) decision declaring invalid a federal forum selection provision in a Delaware corporation’s charter or bylaws.  The federal forum selection provision was intended to require claims by investors under the Securities Act of 1933 (“1933 Act”) to be brought solely in federal court, thereby avoiding the likelihood of defending duplicate, concurrent state and federal court 1933 Act claims.  The Delaware Supreme Court’s decision provides clear guidance to companies preparing for securities offerings for implementing a tool to limit the cost of defending duplicative 1933 Act litigation.
Continue Reading Delaware Supreme Court Confirms That Federal Forum Provision Is Facially Valid, Reversing Court of Chancery

On March 12, 2020, the U.S. Securities and Exchange Commission (the “SEC”) adopted amendments to the definition of “accelerated filer” and “large accelerated filer” definitions in Exchange Act Rule 12b-2, which amendments will be effective 30 days after publication in the Federal Register and will apply to annual report filings due on or after such effective date.
Continue Reading SEC Amends Definitions of “Accelerated Filer” and “Large Accelerated Filer” and Provides Relief to Small Issuers from Auditor Attestation Requirements

The World Health Organization declared the outbreak of the novel coronavirus disease (COVID-19) a pandemic, prompting numerous public and private organizations and agencies to accelerate their contingency plans so as to mitigate continued transmission. The responses to this public health concern have also introduced additional uncertainty and complexities into the process and administration of merger and acquisition transactions. Below is a list of considerations for pending and prospective acquisitions during this time of uncertainty that could help mitigate potential adverse effects.
Continue Reading Impacts of Covid-19 on Closing M&A Transactions

The COVID-19 (“coronavirus”) public health crisis has caused unprecedented business disruptions and uncertainty for existing contractual obligations.  While many are focused on whether a force majeure clause will be triggered by the recent events, contracting parties should also consider the doctrine of “Frustration of Purpose.” Under California law, the frustration of purpose doctrine may be invoked where:

  1. Performance remains possible;
  2. but the fundamental reason of both parties for entering into the contract has been frustrated by an unanticipated supervening circumstance; and
  3. it destroys substantially the value of performance by the party standing on the contract.[1]

However, to excuse nonperformance of a contract on the ground of commercial frustration, the frustration must be so severe or substantial that it is not fairly to be regarded as within the risks that were assumed under the contract.[2]
Continue Reading Frustration of Purpose – Do I Have a Defense?

The World Health Organization has labelled novel coronavirus (COVID-19) a pandemic and the global number of confirmed cases of COVID-19 has surpassed 150,000.  Companies suffering losses that they believe are attributable to COVID-19 or desiring to seek insurance to potentially cover losses resulting from COVID-19, should discuss these issues with their insurance broker(s) and risk manager(s) to assess the extent of coverage available.  While the exact legal duties owed by insurance brokers to their clients vary from state-to-state, brokers are typically required to use at least reasonable care, diligence and judgment in procuring the insurance coverage requested by an insured.
Continue Reading Insurance Considerations for Companies Impacted by Coronavirus

The Securities and Exchange Commission (the “SEC”) recently proposed amendments to modernize and simplify specific financial disclosure requirements in Regulation S-K as part of the SEC’s Disclosure Effectiveness Initiative. The proposed amendments are designed to eliminate duplicative disclosures and modernize, in particular, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”).
Continue Reading SEC Proposal to Modernize Financial Disclosure Requirements in Regulation S-K

The coronavirus (COVID-19) outbreak has impacted publicly traded companies that have to provide information to trading markets, shareholders and to the Securities and Exchange Commission (SEC) in a number of ways. The SEC has been particularly active in acknowledging the challenges that the outbreak poses to such companies and has provided conditional relief and has issued guidance as the outbreak has developed. The SEC Enforcement Division is also on high alert for COVID-19 scams.
Continue Reading Coronavirus and Considerations for Publicly Traded Companies