News & Analysis as of

Navigating Derivative Lawsuits Against Mutual Funds After Northstar

The Ninth Circuit Court of Appeals this spring held that mutual fund shareholders could maintain direct claims against the fund’s trustees for breach of their common law fiduciary duties. Before Northstar v. Schwab, such...more

IRS Adds Certain Spin Transactions to the “No Rule” List

Treasury and IRS announce that certain “cash rich” and REIT/RIC conversion spin-offs are under study and are added to the “no rule” list. On September 14, 2015, the United States Treasury Department (the Treasury) and...more

Australian Superannuation Update: Independent Directors Superannuation Governance Bill

On Wednesday, 16 September 2015, the government tabled legislation that, if passed, will impose, in the case of corporate trustees, a requirement that one third of directors be independent from the trustee with an independent...more

In re Appraisal of Dell Inc., C.A. No. 9322-VCL (Del. Ch. July 13, 2015) (rev'd July 30, 2015) (Laster, V.C.)

In this memorandum opinion, the Delaware Court of Chancery granted a defendant’s motion for summary judgment, holding that the continuous holder requirement set forth in Section 262 of the General Corporation Law of the State...more

Court Of Chancery Explains When A Dilution Claim Is Direct

It is often said that when a majority stockholder issues more stock to himself at an unfair price that is a direct claim and not derivative. But as this decision points out, that is a little too simplistic....more

Simplified Rights Offering Rules Announced By Canadian Securities Administrators

The Canadian Securities Administrators (CSA) have announced that a revised rights offering regime for reporting issuers will come into force on December 8, 2015 (the New Rules). The New Rules will benefit reporting issuers...more

In re Riverbed: The Beginning of the End for Disclosure-Only Settlements in M&A Cases?

The past decade has seen an incredible rise in M&A litigation. According to Cornerstone, in 2014, a whopping 93% of announced mergers valued over $100 million were subject to litigation, up from 44% in 2007. As Delaware...more

SEC Proposes Liquidity Risk Management Rules for Open-End Funds

In the second step of its five-part plan to enhance registered funds regulations, the SEC has proposed new requirements on portfolio liquidity, risk monitoring, and board oversight. At an open meeting held on September...more

Compliance Fatigue — A Dangerous Concept

I have a lot of pet peeves, especially when it comes to lawyers and compliance professionals. Do not worry this is a not a column about all of my pet peeves; I would never bore you with all those issues....more

Still a Target: Court Certifies Bank Class Claims Against Retailer Following Data Breach

Although Target has tentatively settled consumer data breach class action claims, the retailer remains in the crosshairs of the plaintiffs’ class action bar. On September 15, a Minnesota federal district court certified a...more

Court Of Chancery Signals Limits On M&A Settlements

This decision has been widely reported as signaling the Court of Chancery’s intention to cut back on the wave of suits filed over almost every merger. First, the Court held that the scope of any release will be affected...more

Defectively Issued Stock Declared Valid After Section 205 Analysis

Corporations are operated by humans, at least until the rise of Skynet (infamous as a primary antagonist in the Terminator movie franchise). As humans are prone to err, corporate acts may also be executed in error. In 2014,...more

Reduction of the Minimum Number of Shareholders in French Privately Held Stock Corporations

Effective September 12, 2015, the minimum number of shareholders in a French stock corporation (société anonyme or SA) has been reduced from seven to two. This modification is only applicable to privately held SAs, publicly...more

Proxy Access: Round 2 Begins

Shareholder proponent James McRitchie, who was successful in persuading the SEC to reconsider its no-action position with Whole Foods on proxy access, has hinted at his intentions for the upcoming proxy season, or at least...more

Blog: Trinity Wall Street Files Cert Petition: Will SCOTUS Delve Into The “Ordinary Business Operations” Exclusion For Shareholder...

You might recall Trinity Wall Street v. Wal-Mart Stores Inc, a case involving a shareholder proposal requesting that Wal-Mart’s board of directors develop a policy regarding the sale of high-capacity firearms, such as the...more

SEC Proposes Rules to Require Funds to Adopt Liquidity Risk Management Programs; Allow “Swing Pricing”

At an open meeting on September 22, 2015, the SEC proposed new rules and amendments to existing rules to require open-end investment companies to adopt comprehensive liquidity risk management programs. The rules would also...more

The SEC Releases the First Distribution-In-Guise Enforcement Action Concerning Fund Assets Used to Pay For Marketing and...

The SEC’s order provides significant guidance on how the SEC staff will scrutinize the propriety of payments made pursuant to commonly occurring agreements between mutual funds and their service providers and with respect to...more

Gatekeeper Liability of Inside Asset Management Attorneys "Appearing" Before the SEC

This article addresses the liability of inside attorneys at asset management companies— mutual fund sponsors, investment advisers, broker-dealers, life insurance companies—as gatekeepers under rules of the US Securities and...more

Treasury and IRS Issue New Temporary Treasury Regulations

On September 2, 2015, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued new temporary Treasury regulations addressing the application of Internal Revenue Code Section 956 to certain...more

2015 Guide to Acquiring US Public Companies

This guide summarizes certain important considerations for acquiring a publicly traded US-based target corporation through a negotiated (i.e. “non-hostile”) tender offer, exchange offer or merger. US public companies are...more

New IRS Guidance Limits Tax-Free Spin-Off Rulings – Implications for REIT Spin-Offs

On September 14, 2015, the Internal Revenue Service (“IRS”) issued Notice 2015-59 (the “Notice”) and Revenue Procedure 2015-43 (the “Rev Proc”; together with the Notice, the “Spin-Off Guidance”). Under the Spin-Off Guidance,...more

The Stockholders Agreement: a Key Item in the Startup Toolbox

Last week’s post laid out a checklist of legal documents and concepts that are important to early stage companies, and provided a brief summary of each. This post is the first in a series that will examine those documents in...more

Preliminary Planning for the 2016 Proxy Season

Some will want to start preliminary planning for the 2016 proxy season. It has been a bewildering year of developments, but most will be thankful that there are relatively few new rules that must be implemented at this time....more

Florida Appellate Court Adopts Test to Distinguish Direct Shareholder Actions From Derivative Actions

Addressing what it acknowledged was a “murky question” under Florida law, Florida’s Fourth District Court of Appeal recently outlined the test for determining when shareholders may maintain a direct action against a...more

Delaware District Court Explains Securities Law Pleading Rules

This decision is an excellent primer for what must be plead to state a claim under various sections of the federal securities laws. The pleadings rules to establish a claim well enough to avoid a motion to dismiss are...more

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