Shareholder Rights

News & Analysis as of

The Financial Report - Volume 3, No. 14 • July 24, 2014 (Global)

Discussion and Analysis - Monday of this week was the fourth anniversary of the signing of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Like all anniversaries, it is a time for looking back. As would...more

Texas Ruling Highlights the Need for Shareholder Agreements in Closely Held Corporations

On June 20, 2014, the Texas Supreme Court issued a landmark decision that brings to light the importance of every corporation, especially closely held corporations, having a comprehensive shareholders' agreement that...more

Governance & Securities Law Focus: Europe Edition

In this issue: - EU DEVELOPMENTS - Statutory Audit Directive and Regulation Published in Official Journal - Council Adopts Intra-Corporate Transferees Directive - ESMA Publishes Consultation and...more

The Resilient Rights Plan: Recent Poison Pill Developments and Trends

Shareholder rights plans were developed more than 30 years ago to fend off opportunistic hostile offers and other abusive takeover transactions. Rights plans deter unauthorized stock accumulations by imposing substantial...more

"Navigating Today’s Shareholder Activism Landscape: What Companies Should Consider"

Shareholder activism is the corporate topic du jour, be it in boardrooms, the media or Washington, D.C. While corporate boards and management need to understand the current environment and how we got here, their top priority...more

Possible Offshore Deferrals for Hedge Fund Managers – IRS Confirms That Certain Stock Options and Stock Appreciation Rights Are...

The Internal Revenue Service (the "IRS") has issued Revenue Ruling 2014-18 (the "Ruling"), which generally confirms that a stock-settled stock option or stock appreciation right that is granted with an exercise/base price of...more

Shareholder Activism in Germany Following Takeover Announcements

Over the past few years there has been a noticeable increase in the frequency of activist investors building up considerable stakes in German listed companies in the context of public takeovers. One reason for this...more

Court Upholds Poison Pill in Response to Activist Accumulations

The Delaware Court of Chancery on May 2 rejected a request by Third Point to enjoin Sotheby’s annual stockholder meeting, scheduled for May 6, because of a “poison pill” stockholder rights plan adopted by Sotheby’s board....more

In a Decision of First Impression, Delaware Court of Chancery Denies Third Point's Motion to Enjoin Sotheby's Novel Poison Pill

On May 2, 2014, Vice Chancellor Donald Parsons of the Delaware Court of Chancery issued a significant decision in the litigation brought by Daniel Loeb's hedge fund, Third Point LLC, challenging Sotheby's stockholder rights...more

Third Point LLC V. Ruprecht; Two-Tiered Poison Pill Withstands Judicial Review

In Third Point LLC v. Ruprecht, et al., C.A. No. 9469-VCP (Del.Ch. May 2, 2014), the Delaware Chancery Court denied a preliminary injunction challenging Sotheby’s stockholder rights plan, or so-called “poison pill,” which...more

M&A Update: Delaware Court Upholds Sotheby’s Poison Pill Defense Against Activist Citing “Negative Control” As A Corporate Threat

In a May 2, 2014 ruling relating to activist hedge fund Third Point LLC’s proxy battle with auction house Sotheby’s, the Delaware Chancery Court found that Third Point was not likely to succeed in its argument that the...more

EU Commission Proposes to Amend Shareholder Rights Directive

The proposal covers shareholder votes on remuneration policies and related party transactions and greater transparency obligations on certain market participants. The European Commission (EU Commission) recently...more

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

California’s RULLCA Impossible Pleading Requirement For Derivative Suits

California’s Revised Uniform Limited Liability Company Act requires a member of a domestic or foreign LLC to include two specific allegations in any complaint brought in the right of the company. Failure to include these two...more

Dissenter Rights Create Trend of Investors Driving Higher Prices and Gaining Interest

Two recent high-profile shareholder rights cases in the Delaware Chancery Court have received a lot of attention due to the money that is at stake and the individuals in the disputes. These two cases, along with several other...more

Shareholders Have an Absolute Right to an Auditor and to Audited Financial Statements - Financial Hardship is Irrelevant, Says...

In a decision released on January 29, 2014, the B.C. Court of Appeal ruled that companies incorporated under the Canada Business Corporations Act must, by operation of law, appoint an auditor, and thereafter produce annual...more

On Closer Inspection, This CII “Best Practice” May Be Neither Good Nor Legal

The Council of Institutional Investors has adopted what it describes as ”a comprehensive body of corporate governance best practices”, including Policies on Corporate Governance. I question, however, whether some of these...more

Minority Shareholder Rights in Virginia

In August 2012, Judge Jane Marum Roush, sitting by designation in the Circuit Court of Buckingham County, issued a comprehensive letter opinion in Colgate et al. v. The Disthene Group, Inc. The opinion reassessed a...more

Update on UK Employee Shareholder Provisions

The new provisions are now in force and allow UK employees to give up certain employment rights in return for shares in their employer (or its parent), but important questions remain unanswered. On 1 September, the new...more

Trustees Holding Interests in the Family Business: Intersection of Shareholder and Member Rights and Fiduciary Duties

Trustees holding interests in family enterprises may have conflicting duties to the beneficiaries as well as unrelated shareholders and members of the business. ...more

Court Strikes Down Shareholder Suit Challenging Compensation Disclosures

On August 2, 2013, a California Superior Court struck down a putative class action brought by shareholders challenging compensation disclosures in a proxy statement in connection with an advisory “say-on-pay” vote....more

Delaware’s Evolving Equity Dilution Standing Rules

In a recent decision from the Delaware Court of Chancery, Vice Chancellor J. Travis Laster provided what seems to be an important step towards reconciling two strands of Delaware law, addressing the distinction between direct...more

"Amendments to Delaware General Corporation Law to Facilitate Short-Form Mergers in Two-Step Transactions"

On August 1, 2013, new Section 251(h) of the Delaware General Corporation Law (the DGCL) becomes effective, which will allow consummation of second-step mergers without stockholder approval following a tender or exchange...more

Restricting Shareholders’ Ability to Challenge Corporations: Delaware Chancery Court Upholds Companies’ Right to Select Forum for...

The U.S. state of Delaware’s courts, particularly the Court of Chancery, are usually thought of as doughty protectors of shareholder rights. But some recent decisions have, in fact, narrowed such rights. Following close upon...more

Must Designated Directors Keep A Secret?

Yesterday’s post concerned the attorney-client privileged issues in Vice Chancellor J. Travis Laster’s recent decision in Kalisman v. Friedman, 2013 Del. Ch. LEXIS 100 (April 17, 2013). I found another statement in the...more

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