News & Analysis as of

Lead Director Networks: Viewpoints - April 2014

Dealing with shareholder activism - On March 4, 2014, Lead Director Network (LDN)1 members met in New York City to discuss shareholder activism. Ralph Whitworth, founder, principal, and investment committee member of...more

Concurrent ‘Alter-Ego’ Claims: Oklahoma Leads the Nation in Extending Protection to Shareholders, Officers and Directors

During the past several years, practitioners have devoted significant attention to the fate of the Oklahoma Legislature’s efforts at, and the Oklahoma Supreme Court’s response to, legislative tort reform. However, few noticed...more

Plaintiff’s Attorney’s Fees in Shareholder Suits Subject to Heightened Scrutiny (In re Theragenics Case)

It’s virtually inevitable: Within hours (or less) of a press release announcing a merger or acquisition involving a public company, a group of shareholders will file a class action lawsuit against the public company target’s...more

Boardroom Perspectives: Three Practical Steps to Stay Ahead of Shareholder Activism

Activist investors continue to shape corporate governance. Last year saw more than 300 activist proxy campaigns, proposals and contests. Activism-focused funds manage over $100 billion in assets. In this climate, no...more

Inside M&A - Winter 2014

Delaware Court of Chancery Upholds Forum Selection Bylaws - In recent years, virtually every merger and acquisition (M&A) transaction of significant size involving a U.S. public company has been challenged in court. ...more

Millien v. Popescu, C.A. No. 8670-VCN (Del. Ch. Jan. 31, 2014) (Noble, V.C.)

In this decision, the Court of Chancery considered whether to appoint a custodian for Boston Technologies, Inc. (the “Company”) based on allegations of director and stockholder deadlock. The Court held that the petitioner...more

Delaware Supreme Court: No Duty to Buy Out Minority Shareholders in Closely Held Corporations

The Delaware Supreme Court recently considered whether the directors of a closely held corporation had a duty under common law fiduciary principles to repurchase a minority shareholder’s shares. The court also considered...more

The Ropes Recap: Mergers & Acquisition Law News - Recap of Fourth Quarter 2013

In this issue: *News from the Court: - Guidance from Delaware Chancery Court for Notice Provisions and - Survival Periods - Privileged Pre-Merger Attorney-Client Communications Belong to Surviving...more

King v. DAG SPE Managing Member, Inc., C.A. No. 7770-VCP (Del. Ch. Dec. 23, 2013) (Parsons, V.C.)

In this memorandum opinion, the Court of Chancery dismissed an action under Section 220 of the Delaware General Corporation Law brought by a former director to inspect a corporation’s books and records. The Court found that...more

SEC Update

PROXY SEASON PREVIEW - Say-on-Pay and Equity Compensation Plans - Although say-on-pay votes are only advisory in the United States, they will likely continue to be a focus for many companies in the upcoming 2014...more

In re Rural Metro Corp. S’holder Litig., C.A. No. 6350-VCL (Del. Ch. Dec. 17, 2013) (Laster, V.C.)

In this memorandum opinion, the Court of Chancery declined to reopen the trial record and granted a plaintiffs’ motion to exclude post-trial evidence proffered by a defendant. In reaching its conclusion, the Court found that...more

Pfeiffer v. Leedle, C.A. No. 7831-VCP (Del. Ch. Nov. 8, 2013) (Parsons, V.C.)

In this memorandum opinion denying defendants’ motion to dismiss, the Court of Chancery held that plaintiff alleged particularized facts showing a board of directors breached its fiduciary duty of loyalty by approving the...more

Court Confirms Board of Directors’ Discretion to Implement Executive Compensation Plan and Duty of Shareholders to Demand Action...

Under California and Delaware law, a shareholder lawsuit against a corporation requires that a plaintiff show efforts to demand action from the corporation’s board of directors prior to filing the lawsuit. This pre-suit...more

Delaware Court of Chancery Finds Board Did Not Breach Fiduciary Duties in Merger Where Common Shareholders Received Nothing

In a lengthy opinion following trial, Delaware Court of Chancery Vice Chancellor J. Travis Laster found the decision by the directors of a venture capital-backed company to approve a $60 million merger was fair, even though...more

Should Your Board Adopt an Exclusive Forum Bylaw?

Exclusive forum charter and bylaw provisions limit certain types of shareholder litigation to the corporation’s jurisdiction of incorporation, and so potentially reduce or eliminate the cost and strategic difficulties of...more

In re MFW Shareholders Litigation: Business Judgment Rule Applicable to Freeze-Out Mergers with Built-in Protections for Minority...

On May 29, 2013, the landmark decision of In re MFW Shareholders Litigation (MFW), issued by Chancellor Strine of the Delaware Chancery Court, held the business judgment rule standard of review is applicable to freeze-out...more

Proxy Season Brings a Third Wave of “Gotcha” Shareholder Litigation

Proxy season is upon us and the plaintiffs’ bar is demonstrating its resourcefulness by bringing a third wave of shareholder litigation. This new wave, which has not crested yet, consists of a return to derivative shareholder...more

Defending Section 162(m) Executive Compensation Derivative Suits in the United States

Decisions regarding executive compensation fall squarely within the discretion of a public company’s board of directors. Recently, however, plaintiffs’ firms have been trying to invade the board’s purview by bringing...more

Delaware Supreme Court Affirms Denial of Attorneys' Fees Relating to Corporate Waste Claim Based on a Board's Decision to Forego...

On January 14, 2013, the Delaware Supreme Court affirmed a trial court's denial of attorneys' fees in connection with a corporate waste claim filed against corporate board members for the board's decision to pay certain...more

The First Circuit Court of Appeals Articulates a Stricter Independence Standard for Fund Directors When Evaluating Demand...

The U.S. Court of Appeals for the First Circuit, in Unión de Empleados de Muelles de Puerto Rico PRSSA Welfare Plan, v. UBS Financial Services Inc. of Puerto Rico, No. 11-1605, --- F.3d ----, 2013 WL 49818 (1st Cir. Jan. 4,...more

In re Novell, Inc. S’holder Litig., C.A. No. 6032-VCN (Del. Ch. Jan. 3, 2013)

In this memorandum opinion, the Court of Chancery denied defendants’ motions to dismiss with respect to Plaintiffs’ bad faith claims. The Court’s decision was based on its finding that the complaint stated a “reasonably...more

Delaware Court Permits Shareholder Damages Suit Against Novell Inc. Board To Continue - Alleged Lack of Board Impartiality in...

In a January 3, 2013 decision, the Delaware Court of Chancery declined to dismiss a shareholder class action lawsuit that claimed the Board of Novell Inc. breached its fiduciary duty in allowing a $2.2 billion sale of Novell...more

Delaware Law Update — Delaware Court Applies Heightened Scrutiny to Director Compensation

In an era of intense investor scrutiny and SEC rulemaking regarding executive compensation, a recent decision by the Delaware Court of Chancery raises questions as to the protections afforded to directors when granting...more

Corporate Communicator - Winter 2013

In This Issue: - 2013 Annual Meeting Season - Dealing with ISS and Other Proxy Advisory Firms this Proxy Season - SEC Update - Other NYSE/NASDAQ Developments - Delaware Law Update — Delaware Court Applies...more

Does A Lawyer Who Files A Derivative Action Have An Attorney-Client Relationship With The Corporation?

Because the California Corporations Code requires that the business and affairs of a corporation be managed by or under the direction of its board of directors, any decision of whether a corporation should bring suit on...more

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