News & Analysis as of

Shareholders Dilution

Proskauer - Regulatory & Compliance

SEC Adopts New SPAC Rules

On January 24, 2024, the SEC adopted new rules that apply to SPAC transactions and the adopted rules largely track the agency’s proposals with some notable exceptions. The new rules will become effective 125 days after...more

Barnea Jaffa Lande & Co.

Intricacies of SAFEs (Simple Agreement for Future Equity)

Barnea Jaffa Lande & Co. on

A SAFE is designed to be short and straightforward. In essence, the investor provides cash now against a promise to receive shares in the future. The challenges of negotiating full transaction documents, including agreement...more

Sheppard Mullin Richter & Hampton LLP

Delaware Supreme Court Holds that Equity Dilution and Expropriation Claims May Only Be Brought Derivatively, Overruling Prior...

In Brookfield Asset Mgmt. v. Rosson, No. 406, 2020, 2021 Del. LEXIS 291 (Del. Sept. 20, 2021), the Delaware Supreme Court held that claims for wrongful equity dilution may be pursued only derivatively on behalf of the...more

Dechert LLP

COVID-19 Coronavirus: Fund Needs Cash? How about a Rights Offering?

Dechert LLP on

Key Takeaways - Rights offerings serve as an attractive capital-raising option for issuers in need of liquidity, particularly for closed-end funds and business development companies (“BDCs”), which generally cannot issue...more

Skadden, Arps, Slate, Meagher & Flom LLP

Valuation Challenges for Fintechs Highlight Legal Considerations in ‘Down Rounds’

In recent years, fintech has been an attractive sector for growth capital, as evidenced by robust investment and M&A valuations in the sector. While interest remained high in 2019, deal volumes began to level off early in the...more

Sheppard Mullin Richter & Hampton LLP

Delaware Supreme Court Confirms that Dilution Claims Typically Are Derivative and Are Extinguished After a Merger

Stockholder claims alleging wrongful dilution are typically considered to be derivative in nature. Several decisions out of Delaware, however, have created exceptions to this general rule allowing stockholders to sue...more

Morris James LLP

Court Of Chancery Explains When A Dilution Claim Is Direct

Morris James LLP on

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

Morris James LLP

Chancery Enjoins Board in Potential Stockholder Dilution Scheme

Morris James LLP on

Directors and officers of struggling corporations seeking capital or startups willing to trade equity for cash should read the Delaware Court of Chancery's recent transcript ruling in Elite Horse Investments Ltd. v. T3...more

King & Spalding

Delaware Court Opens the Door to Private Dilution Claims Against Venture Capital Firms

King & Spalding on

The Delaware Court of Chancery’s recent opinion in Carsanaro v. Bloodhound Technologies is a wake-up call to venture capital firms. In a nearly 40 page opinion, Vice Chancellor Laster held that VCs are not necessarily immune...more

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