In the past year, a number of companies have amended their bylaws to require that shareholder derivative lawsuits are resolved in the Delaware Chancery Court. This recent spike in the use of company-friendly forum selection clauses comes at a time when lawsuits challenging mergers are rampant. According to Reuters, such lawsuits have tripled from 107 in 2007 to 335 in 2010, despite a decrease in deal volume.
 Continue Reading The Benefits And Challenges Of Forum Selection Bylaws

In City of Pontiac General Employees’ Retirement System v. MBIA, Inc., 2011 U.S. App. LEXIS 3813 (2d Cir. Feb. 28, 2011), the United States Court of Appeals for the Second Circuit delineated the standard needed to asses how much information a reasonably diligent investor must have about the facts constituting a securities fraud violation before those facts are deemed “discovered” for purposes of triggering the statute of limitations for a claim under Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Securities & Exchange Commission (“SEC”) Rule 10b-5, 17 C.F.R. § 240.10b-5.In doing so, the Second Circuit addressed the gap left by the United States Supreme Court in Merck & Co. v. Reynolds, 130 S. Ct. 1784, 1796 (2010) [see blog article here], where the Supreme Court expressly declined to prescribe a list of the facts needed to constitute a securities law violation for purposes of triggering the statute of limitations.
 Continue Reading Second Circuit Clarifies Standard Regarding Knowledge Of Facts That Constitute A Securities Fraud Violation For Purposes Of Triggering The Two-Year Statute Of Limitations For Rule 10b-5 Claims

Update:

The IRS recently came out with a Notice (Notice 2011-18) stating that, for transactions occurring in 2011, penalties will not be imposed against issuers for missing the deadline to file a return or post the tax return on the issuer’s primary public Web site (which generally was required 45 days after the transaction), provided that the return is filed or the posting is made by January 17, 2012.Continue Reading New IRS Reporting Rules for Stock Splits, Mergers and Acquisitions

Say-On-Pay Blogs and Up-to-Date Voting Results

Please read our latest update on Say-on-Pay and frequency voting results, which includes summary results and detailed company-by-company results.  The results are sorted by the company’s SEC filer status and by the date on which the annual shareholder meeting was held.  We will be regularly updating this information as well as periodically posting new  blogs in this section so please check back to obtain the latest results and commentary.Say-on-Pay essentially provides public company shareholders with the ability to render an advisory vote on the compensation arrangements for their company’s named executive officers.  In addition, shareholders also can provide an advisory vote on the frequency that their company will conduct a Say-on-Pay vote.  The blogs in this section provide further information on this new and important topic.If you have any questions regarding Say-on-Pay, please contact Greg Schick at (415) 774-2988 or gschick@sheppardmullin.com.

Continue Reading — Up-to-Date Say-On-Pay Voting Results —

A recent decision by the Delaware Court of Chancery has provided a stark reminder that buyers, directors of target firms and financial advisors must be mindful that conflicts of interest affecting a target’s financial advisor will be closely scrutinized by the courts.
 Continue Reading Delaware Court Enjoins Merger Vote Citing Conflicts of Interest of Financial Advisor

The Internal Revenue Service announced on February 8, 2011 the creation of a second special voluntary disclosure initiative for U.S. taxpayers with undisclosed foreign bank and other financial accounts. This new program is a follow-on to the IRS’ original voluntary disclosure initiative that closed on October 15, 2009. The 2009 program reportedly attracted some 15,000 voluntary disclosures by taxpayers with previously undisclosed offshore accounts, and has been viewed within the government as a success in getting taxpayers "back into the U.S. tax system" by offering them the ability to avoid or significantly mitigate various the criminal and civil penalties that would otherwise have potentially applied had their failure to disclose been discovered by the IRS on audit.
 Continue Reading IRS Announces Second Special Voluntary Disclosure Initiative for Taxpayers With Undisclosed Offshore Accounts

On January 14, 2011, the Delaware Chancery Court issued an opinion in In re John Q. Hammons Hotels Shareholder Litigation that a merger transaction in which a controlling stockholder received consideration different than that received by the minority stockholders met the “entire fairness” standard. This opinion followed the Court’s determination in October 2009 that “entire fairness,” was the appropriate standard of review in this case.
 Continue Reading Delaware Chancery Court Provides Further Clarification as to When the “Entire Fairness” Standard of Review is Appropriate and How It Will Be Applied

As previously discussed in our August 17, 2010 blog posting “Registered Public Offerings Of Debt Securities And The Use Of Credit Ratings Information In SEC Filings After Dodd-Frank,” the practice of marketing registered public offerings of debt securities with credit ratings information and related disclosure of issuer credit ratings in SEC filings is undergoing changes mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). On February 9, 2011, SEC commissioners voted unanimously to propose new eligibility requirements for short-form registration of public offerings of debt securities and related communications that will no longer be tied to an issuer’s credit rating from a nationally recognized statistical ratings organization, or NRSRO. If adopted as proposed, eligibility for offerings of non-convertible debt securities using short-form registration will be satisfied if the issuer has issued at least $1 billion of non-convertible securities in transactions registered under the Securities Act, other than equity securities, for cash during the past three years (as measured from a date within 60 days of the filing of the registration statement) and satisfies the other relevant requirements of Form S-3 or Form F-3.
 Continue Reading New SEC Proposal To Modify Short Form Registration Statement Eligibility Requirements And Repeal Credit Rating-Based Eligibility For Public Offerings Of Non-Convertible Debt Securities


1.         New Thresholds For HSR Filings

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) imposes notification and waiting period obligations on parties to certain mergers, acquisitions, formations of joint ventures and unincorporated entities, and other transactions. Parties to an HSR-reportable transaction must notify the federal government and observe a waiting period, usually 30 days, before completing the transaction. A transaction is generally reportable if it meets a Size of Transaction test and a Size of Person test. Each “person” who is a party to an HSR-reportable deal must file an HSR notification with the Department of Justice Antitrust Division and the Federal Trade Commission. 
 Continue Reading New Filing Thresholds for HSR Act Premerger Notifications and Interlocking Directorates Announced