Following our February 24 post, we learned that representatives of accounting firms sought advice from the SEC on whether they can rely solely on Section 205 Orders to confirm valid issuance of outstanding shares as to which there is uncertainty. We understand that they were informed by the SEC
Stanley Keller
Defective Corporate Action by Delaware Corporations with Multiple Classes of Common Stock
A number of Delaware corporations with two or more classes of common stock, especially SPACs (special purpose acquisition companies) that have completed deSPAC transactions, are discovering that they may not have properly approved charter amendments that increased their authorized shares of common stock. In Garfield v. Boxed, Inc. (Del. Ch.…
SEC Adopts New Restrictions on 10b5-1 Plans, Related Disclosure Requirements and Section 16 Filing Changes
On December 14, 2022, the SEC unanimously adopted cooling-off periods and other changes to how plans adopted under Rule 10b5-1 (“10b5-1 Plans”) will work going forward. Executive officers and directors of public companies frequently use 10b5-1 Plans to conduct sales of their company’s stock at a time when they have…
Recent Delaware and Other Decisions Relevant to the MBCA
This article describes two recent Delaware decisions relevant to the Model Business Corporation Act (the “MBCA”). One of those decisions relates to a board’s determination of the availability of surplus to support distributions to stockholders, and the other upholds, at the motion to dismiss stage, a claim that the…
Lessons From SEC Enforcement Actions Involving Corporate Lawyers
The Securities and Exchange Commission (“SEC”) has recently brought several enforcement actions that directly or indirectly involved lawyers. These actions provide reminders to lawyers of their professional responsibility in representing clients, including in connection with giving legal opinions and responding to auditors. The professional responsibility of lawyers has…
Delaware Now Permits Exculpation of Corporate Officers
The Delaware General Corporation Law (§ 102(b)(7)) has been amended, effective August 1, 2022, to permit exculpation of corporate officers, but in a more limited way than the exculpation of directors that has long been permitted. Unlike directors, officers may be exculpated by a provision in the certificate of incorporation…
Integration of Private and Public Offerings 2022
This outline reviews the SEC’s interpretations that relate to the integration of private and public offerings and the challenges they present for the capital formation process. The outline also describes current policies of the SEC staff that affect so-called “PIPE” offerings and “private equity lines.” It has been updated to…
Delaware Court Addresses De-SPAC Merger Claims
In an important decision, the Delaware Court of Chancery, in In re Multiplan Corp. Stockholders Litigation, 2022 WL 24060 (Del. Ch. Jan. 3, 2022), in denying the defendants’ motion to dismiss, addressed claims against the sponsor and other insiders of a special purpose acquisition company or “SPAC” for…
Delaware Clarifies That Statutory Appraisal Rights Can Be Waived
Controlling stockholders sometimes seek to limit the ability of new investors in their company to interfere with future exit transactions. They may do this by requiring the new investors to agree to vote in favor of a transaction proposed by the controlling stockholder (a “drag-along agreement”) or to expressly waive…
Delaware Clarifies Its Rules Governing Stockholder Derivative Actions
Derivative actions play an important role in policing corporate insider conduct and compliance by directors and controlling stockholders with their fiduciary duties. A derivative action enables a stockholder, upon satisfaction of applicable requirements, to bring litigation on behalf of the corporation challenging, for example, conflict of interest transactions, the adequacy…