On September 25, 2012, NYSE and Nasdaq proposed rules to implement Dodd-Frank Act’s mandate that a listed company’s compensation committee consist entirely of independent directors and related matters.
On June 20, 2012, the SEC adopted final rules to implement Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
In this issue of Kirkland Governance Watch, partners Daniel Wolf and Robert M. Hayward, P.C., and associate Raymond F. Bogenrief discuss how recent revisions to the policies of SEC staff and RiskMetrics may create pitfalls in the 2010 proxy season.
In the inaugural issue of Kirkland Governance Watch, partners Robert M. Hayward, P.C., Carol Anne Huff, Theodore A. Peto and Daniel E. Wolf, and associate Sarah B. Gabriel summarize significant corporate governance developments in order for senior management and boards of directors to remain informed and begin to consider key planning implications and initiatives.
In-house counsel increasingly have become the focus of investigations and enforcement actions by both the Department of Justice and the Securities and Exchange Commission. The proliferation of white-collar cases focused on Fortune 1000 companies, however, has brought greater scrutiny on in-house lawyers based upon their knowledge of or role in business decisions.
This issue includes the article “PBGC Holds Private Equity Fund Liable for Portfolio Company’s Pension Underfunding,” which reports that private equity funds are now exposed to a greater risk of inheriting the pension fund liabilities of their portfolio companies.
This issue includes the article “New Rule 144 Amendments Relax Rules for Selling Restricted Securities,” which discusses the amendment’s attempt to facilitate capital raising by increasing the liquidity of restricted securities. Also featured is “New Restrictions on Investments in Sudan by Illinois Retirement Systems,” which discusses how recent Illinois legislation restricts the ability of Illinois state retirement systems to invest in Sudan.
This issue includes the article “Kirkland Partner Jack S. Levin Testifies to House Ways & Means Committee on Taxation of Private Equity, Venture Capital and Hedge Funds,” in which Jack Levin explains the reasons to continue long-term capital gain taxation of a general partner’s carried interest in partnership-level long-term capital gain. Also featured is “SEC Proposes Changes to Accredited Investor Definition and Certain Private Offerings Under Reg D,” and “SEC Adopts New Antifraud Rule Affecting Communications and Conduct of Managers of Private Investment Funds.”
In the recent case of In re: The Topps Company Shareholders Litigation, the Delaware Chancery Court, in a decision by Vice Chancellor Strine, held that the board of directors of The Topps Company most likely breached its fiduciary duties by misusing a standstill agreement with The Upper Deck Company. In this edition of M&A Notes, Kirkland partners Thomas Christopher and Jeffrey Symons discuss this ruling and it's significance for M&A practitioners.
A recent Delaware Chancery Court case found that a board of directors' and its special committee's decisions to contact only potential private equity buyers and to not contact any potential strategic buyers prior to entering into a "going private" merger agreement was likely to be found to be unreasonable. In this edition of M&A Notes, Kirkland partners Stephen Fraidin and William Sorabella discuss this recent finding.
This issue includes the article “Proposed Legislation Would Increase Tax on Publicly Traded Private Equity Management Partnerships,” which reports that a publicly traded partnership or LLC that derives income from investment adviser or asset management services would be taxed as a corporation under the proposed legislation.
This issue includes the article “Senate Finance Committee Convenes Panel to Discuss Private Equity Taxation; Kirkland Partner Jack Levin to Participate,” which reports that the panel is expected to review the capital gains treatment of carried interest income.
Partners Steve Tomlinson, David Patrick Eich and Nat Marrs co-authored this article regarding foreign investors' increased interest in the Chinese real estate market.
As more and more companies have been filing their proxy statements under the new SEC executive compensation disclosure rules, it has been interesting to observe how disclosures are interpreted and reported by the media. This alert discusses the reaction to these disclosures and best practices for companies filing under the new rules.
Paul Basta, Leonard Klingbaum and Joshua Sussberg co-authored this article on the subprime lending market.
Tefft Smith, Colin Kass and Scott Abeles co-authored this article regarding antitrust law.
Joint ventures are common in a number of fields, including the chemicals, pharmaceuticals and automotive industries. However, joint ventures frequently run into trouble when the owners' interests diverge. Problems with joint ventures often result in the owners' desire to sell or terminate the joint venture. This article, authored by Kirkland partners Thomas W. Christopher and Jeffrey Symons, and associate Adina Rosenthal discusses some issues that joint venture owners and their counsel should consider when contemplating a sale.
This issue includes the article “FTC Action Suggests Greater Antitrust Scrutiny of Private Equity Deals as Well as New Solutions,” which reports on the FTC allegations that a minority interest in a private equity fund’s portfolio company overlapped with another portfolio company.
This issue includes the article “SEC Proposes Stricter Accredited Investor Test for Private Equity, Hedge and Certain Other Funds,” which reports that the SEC proposes to narrow the class of individual investors who would be permitted to invest in many private funds. Also featured is “Changes in Luxembourg Corporate Law: Impact on Private Equity Investors in Europe,” which discusses how Luxembourg now permits commonly used legal entities to implement a two-tier board structure.
In the last few years there has been a significant increase in shareholder activism. This increase is largely due to the substantial increase in the size and number of hedge funds and their willingness to undertake various actions to effect corporate change. In this issue of M&A Notes, Kirkland partner Thomas W Christopher and associate Yi Claire Sheng discuss 10 rules for dealing with these activist shareholders.
In what has been described in some quarters as an early Christmas present to public companies, the Securities and Exchange Commission unexpectedly released interim final rules on December 22, 2006 that significantly change the reporting and disclosure of equity-based awards to named executive officers and directors. This alert discusses these new rules.
Thomas Christopher and Yi Sheng co-authored this article regarding the increase in shareholder activism.
Since acceding to the World Trade Organization in December 2001, China has undertaken a series of broad legal reforms required by the WTO accession commitments, among others. Many of such reforms materially affect foreign private equity investments in China, which have grown substantially over the same period. In this article, Kirkland Partners David Patrick Eich and Chuan Li discuss these reforms.
This issue includes the article “SEC Makes Tender Offer Rules More User-Friendly,” which states that compensation is now generally excluded in determining consideration paid to shareholders under the “best price” rule.
The U.S. Securities and Exchange Commission has amended Rules 13e-4(f)(8)(ii) and 14d-10(a)(2) promulgated under the Securities Exchange Act of 1934, which are generally referred to collectively as the "best-price rule." The best-price rule requires that all shareholders of a company that is subject to a tender offer receive the same price for shares tendered in the offer. In this edition of M&A Notes, Kirkland partners Thomas W. Christopher and Jeffrey Symons and associate Daniel S. Hoverman discuss discuss this amendment and its effects on tender offers.
Stephen Fraidin and Stefanie Wool co-authored this article on special committees and recommendations to ensure that their decisions withstand judicial scrutiny.
This issue includes the article “Justice Department Reportedly Initiates Antitrust Inquiries to Private Equity Firms,” which reports that it is important to involve antitrust counsel immediately if contacted (formally or informally) by any governmental authority regarding antitrust matters.
David Patrick Eich, Chuan Li and Tai Hsia co-authored this article on recent Chinese M&A and private equity reform.
This issue includes the article “New Rules For Chinese Company M&A Transactions Involving Foreign Investors,” which reports that China’s new M&A rules introduce some major changes that may impact Chinese M&A activity by foreign investors.
This issue includes the article “Congress Changes VCOC Rules for Private Equity, Mezzanine and Other Investment Funds,” which advises that the new pension law change may provide a welcome relief from VCOC rules to some PE funds.
This issue includes the article “Appeals Court Throws Out SEC Rule Requiring Registration of Hedge Fund Advisers,” which reports that the U.S. Court of Appeals for the District of Columbia Circuit struck down as “arbitrary” the new SEC rule requiring most hedge fund advisers to register as an investment adviser with the SEC. Also featured is “Amendments to the Publication Requirements for New York Limited Liability Entities,” which reports that recent amendments, effective June 1, 2006, have created additional specifications with respect to the publication procedures and added a requirement that such publication be certified.
This issue includes the article “Non-U.S. Public Offerings by Private Equity Funds — A New Chapter in Fundraising,” which reports that KKR Private Equity Investors’ May 3 sale of $5 billion of partnership units on Euronext (Amsterdam) marks a new chapter for private equity fundraising.
This issue includes the article “1200 New Targets: China’s New Foreign Strategic Investments Rules,” which announces that, for the first time, a broad group of non-Chinese investors can more freely acquire tradable shares of the 1,200-plus listed companies with securities traded on the Shanghai and Shenzhen stock exchanges.
On 1/27/06, the SEC published proposed rules that completely overhaul the disclosure rules with respect to executive and director compensation (both in terms of persons covered and the compensation disclosed), related party transactions, director independence and other corporate governance matters. This alert discusses these changes.
The decision of Vice Chancellor Strine in In Re Cox Communications, Inc Shareholders Litigation (Del.Ch., Cons. C.A. No. 631-N, 6/6/05) is important in that it changes the well-established legal landscape in an attempt to discourage the filing of lawsuits brought merely to coerce settlements by majority shareholders and award substantial legal fees to plaintiff's counsel. In this edition of M&A Notes, Kirkland partner Stephen Fraidin discusses the effects of this ruling and its implications regarding going private transactions.
In May 2005, the Delaware Supreme Court in VantagePoint Venture Partners 1996 v. Examen, Inc. held that Delaware law, not California law, applied when determining the required vote for a merger involving a Delaware corporation having significant ties to California. In this edition of M&A Notes, Kirkland partner Eva Davis comments on the implications of this ruling.
In two Delaware cases dealing with "dead hand" and "slow hand" poison pills, the Delaware Chancery Court made clear the unacceptability of "continuing director" (or existing director) provisions in poison pills. But in CalPERS v. Coulter, the Delaware Chancery revisited the continuing director concept in a different context and did not reject it. Kirkland partner Stephen Fraidin comments on these developments in this edition of M&A Notes.
In a recent decision, the California Court of Appeals held that a plaintiff who alleged that a law firm prepared a disclosure schedule to a merger agreement, knew of material, negative information that should have been disclosed on the schedule and failed to include it on the schedule sufficiently alleged a claim for fraud against the firm. In reaching its decision, the appellate court held that a fraud claim against a lawyer is no different than a fraud claim against anyone else. In this issue of M&A Notes, Kirkland partner Thomas W. Christopher and associate Laura B. Mutterperl comment on this decision and what it means for corporate attorneys nationwide.
It has been extraordinarily rare in the past for directors of publicly traded companies to suffer personal liability in their capacity as directors. Now, certain of the outside directors of WorldCom and Enron have made personal out of pocket settlement payments arising out of cases brought by shareholders of those companies. This edition of M&A Notes offers some observations regarding these settlements from Kirkland partner Stephen Fraidin.
NASD recently requested comment on whether it should propose rules to regulate the identification and disclosure of conflicts of interest of investment banks rendering fairness opinions and to require investment banks to follow specified procedures when rendering fairness opinions. In this issue of M&A Notes, Kirkland partners Thomas W. Christopher and R. Scott Falk, and associate William B. Sorabella offer their views on these matters.
The SEC, on September 23, 2004, entered a cease-and-desist order against the former general counsel of Electro Scientific Industries, Inc., the first "up the ladder reporting" case brought against an attorney. This alert examines the circumstances surrounding this matter and its implications.
The "American Jobs Creation Act of 2004" signed by the President on October 22, 2004, imposes strict new tax rules on nonqualified deferred compensation. This alert examines the new rules and their implications for affected businesses.
This alert highlights two important changes in the laws governing employee benefits. First, the American Jobs Creation Act of 2004, signed by President Bush on October 22, radically alters the income tax rules for deferred compensation, generally effective January 1, 2005. Second, the Department of Labor issued final regulations on a safe harbor for plan sponsors to select providers and investments for mandatory rollovers from qualified plans to individual retirement accounts.
In what is apparently a case of first impression, the United States Court of Appeals for the Second Circuit found that a stockholder opposing a merger cannot mail to the subject company's other stockholders a duplicate copy of the company's proxy card without complying with the proxy rules of the Securities Exchange Act of 1934. In this edition of M&A Notes, Kirkland partners Thomas W. Christopher and Andrew E. Nagel, and associate William B. Sorabella discuss this ruling and its implications.
The Delaware Chancery Court recently refused to dismiss a complaint against directors of a company which failed to disclose secret merger negotiations while a company sponsored odd-lot stock purchase program was in effect.
Faced with a special committee process that could hardly have been more poorly structured, Justice Jacobs (sitting by designation as Vice Chancellor) reached a number of extraordinary conclusions in the recent Delaware case, In re Emerging Communications, Inc.
On March 11, 2004, the SEC adopted amendments to Form 8-K promulgated under the Securities Exchange Act of 1934. The amendments were originally proposed in June 2002 and are responsive to the "real time issuer disclosure" requirements of Section 409 of the Sarbanes-Oxley Act of 2002. These amendments significantly expand the number and type of events that must be reported on Form 8-K, accelerate the time in which these events must be reported, create a limited safe harbor from liability for failure to timely file certain of the required Form 8-K reports and make other related changes to the form.
In what is apparently a case of first impression, a federal district court recently held that a stockholder opposing a merger can mail to the subject company's other stockholders a duplicate copy of the company's proxy card, together with instructions as to how to use the card to vote against the merger, without complying with the proxy rules of the Securities Exchange Act of 1934. This decision makes it possible for a stockholder that opposes a proposed merger or other transaction requiring stockholder approval to facilitate a vote by other stockholders against the transaction without complying with these proxy rules.
A court may be reluctant to give full effect to an exculpatory provision in a corporation's charter which purports to limit the personal liability of a director for monetary damages for breach of fiduciary duties. Directors must be aware of their duty to act in good faith, and should not rely too heavily on exculpatory charter provisions. Kirkland partners Stephen Fraidin, Daniel J. Eisner and David D. McCusker discuss this issue in the February 4, 2004 edition of M&A Notes.
An unsigned acquisition agreement may be held to be binding on the parties absent an explicit written statement to the contrary. Kirkland partners Stephen Fraidin and Thomas Christopher discuss this issue in the first January 2004 edition of M&A Notes.
Shareholders with large voting positions that seek to increase their holdings may trip up state control share acts which deny shares their voting rights when certain ownership thresholds are crossed. Kirkland partner Stephen Fraidin and associate Natalie Silver discuss these issues in the December 2003 edition of M&A Notes.
On October 14, 2003, the U.S. Supreme Court let stand a Third Circuit decision that stock reclassifications are not categorically exempt from Section 16(b) of the Securities Exchange Act of 1934. New York partner Stephen Fraidin comments on this decision and its implications for companies with complex capital structures in this issue of M&A Notes.
Two recent Federal Court Decisions raise serious questions regarding the enforceability of certain important "boiler plate" provisions in the typical confidentiality agreements used in the proposed sale of the stock of a company and in merger agreements. Kirkland partners Stephen Fraidin and Yosef J. Riemer comment on these developments in the first issue of M&A Notes. This publication is in pdf format, which requires Acrobat Reader.
Carter Emerson and Robert Hayward offer their expertise on corporate governance reforms. This article is in pdf format, which requires Acrobat Reader.
Kirkland lawyers Gerald Nowak and Stephanie Liang wrote this article about corporate governance. It is the first in a series of six and examines the audit committee's historical relevance.
Los Angeles corporate attorneys Eva H. Davis and Juliette M. Harrhy have written this informative article on the whys, hows, benefits and risks of strategic alliances. This article appeared in the Spring 2001 issue of The Venture Capital Review. This is a PDF file which requires Acrobat Reader.
In this article, four partners in our Chicago office, Jack S. Levin, Jeffrey T. Sheffield, Donald E. Rocap, and William R. Welke, discuss the changes in federal income tax law that grant two important tax benefits to an individual who owns stock of a qualified small business. The article appeared in the Fall 2000 issue of The Venture Capital Review. This is a PDF file which requires Acrobat Reader.
In this article, corporate partner Jack S. Levin describes the key elements on which a private equity or venture capital professional should focus in structuring the buyout of an existing company. The article appeared in the Fall 1999 issue of The Venture Capital Review. This is a PDF file which requires Acrobat Reader.
Chicago partners Jack S. Levin and William R. Welke describe five tax developments important to every private equity investor. The article appeared in the Spring 1999 issue of The Venture Capital Review. This is a PDF file which requires Acrobat Reader.
In this article, Chicago partners Jack S. Levin and William R. Welke explore ways to structure a private equity fund's leveraged buyout of a target in order to obtain the benefits of "recap" accounting. The article appeared in the Spring 1998 issue of The Venture Capital Review. This is a PDF file which requires Acrobat Reader.
As the number and size of fund formations have escalated, the interrelated tax, SEC, economic, and negotiating issues encountered in structuring a private equity fund have both changed and multiplied. Chicago partners Jack S. Levin, Bruce I. Ettelson and Donald E. Rocap review five important developments in structuring a private equity fund. The article appeared in the 1997 issue of The Venture Capital Review. This is a PDF file which requires Acrobat Reader.