Posts Tagged ‘Cleary Gottlieb’

The PCAOB Proposed Auditor’s Reporting Model

Posted by Alan L. Beller, Cleary Gottlieb Steen & Hamilton LLP, on Friday May 9, 2014 at 9:02 am
  • Print
  • email
  • Twitter
Editor’s Note: Alan L. Beller is a partner focusing on complex securities, corporate governance and corporate matters at Cleary Gottlieb Steen & Hamilton LLP. This post is based on Mr. Beller’s testimony at the Public Company Accounting Oversight Board’s (PCAOB) public hearing in Washington, D.C. on proposed enhancements to the auditor’s reporting model; the complete text is available here. The views expressed in his testimony are based on his knowledge and experience as both a government official and a legal advisor to private clients.

The proposed enhancements to the auditor’s reporting model would be the first change to the standards in more than 70 years. Furthermore, they could significantly impact the content and format of auditors’ reports; the treatment of that information by investors and other users of financial statements; and the relationship and structure of interactions among management, audit committees and auditors as they have developed since the enactment of the Sarbanes-Oxley Act of 2002.

…continue reading: The PCAOB Proposed Auditor’s Reporting Model

Rights Plans and Proxy Contests: Chancery Court Denies Activist’s Motion to Enjoin Sotheby’s Shareholder Meeting

Editor’s Note: Victor Lewkow is a partner at Cleary Gottlieb Steen & Hamilton LLP. This post is based on a Cleary Gottlieb memorandum by Benet J. O’Reilly and Aaron J. Meyers, and is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.

On May 2, 2014, the Delaware Chancery Court denied a motion to preliminarily enjoin Sotheby’s annual stockholder meeting based on allegations by an activist stockholder, Third Point LLC, that the Sotheby’s board of directors violated its fiduciary duties by adopting a rights plan (or “poison pill”) and refusing to provide a waiver from its terms in order to obtain an advantage in an ongoing proxy contest. Applying the two-prong Unocal test, Vice Chancellor Parsons held that the plaintiffs failed to demonstrate a reasonable probability of success on the merits of their claims. Notably, the Chancery Court accepted that the threat of “negative control” (i.e., disproportionate influence over major corporate decisions) by a stockholder with less than 20% ownership and without any express veto rights may constitute a threat to corporate policy justifying responsive action by a board, including the adoption and retention of a right plan.

…continue reading: Rights Plans and Proxy Contests: Chancery Court Denies Activist’s Motion to Enjoin Sotheby’s Shareholder Meeting

Schedule 13D Ten-Day Window and Other Issues: Will the Pershing Square/Valeant Accumulation of a 9.7% Stake in Allergan Lead to Regulatory Action?

Editor’s Note: Victor Lewkow is a partner at Cleary Gottlieb Steen & Hamilton LLP. This post is based on a Cleary Gottlieb memorandum by Mr. Lewkow and Christopher Austin that was issued on April 24, 2014.

As widely reported, a vehicle formed by Pershing Square and Valeant Pharmaceuticals acquired just under 5% of Allergan’s shares after Allergan apparently rebuffed confidential efforts by Valeant to get Allergan to negotiate a potential acquisition. The Pershing Square/Valeant vehicle then crossed the 5% threshold and nearly doubled its stake (to 9.7%) over the next ten days, at which point it made the required Schedule 13D disclosures regarding the accumulation and Valeant’s plans to publicly propose an acquisition of Allergan. The acquisition program has raised a number of questions.

…continue reading: Schedule 13D Ten-Day Window and Other Issues: Will the Pershing Square/Valeant Accumulation of a 9.7% Stake in Allergan Lead to Regulatory Action?

Forum Selection Clauses in the “Foreign” Court

Posted by Victor I. Lewkow, Cleary Gottlieb Steen & Hamilton LLP, on Saturday March 29, 2014 at 9:00 am
  • Print
  • email
  • Twitter
Editor’s Note: Victor Lewkow is a partner at Cleary Gottlieb Steen & Hamilton LLP. This post is based on a Cleary Gottlieb memorandum by Mr. Lewkow and Mitchell Lowenthal. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.

It is now clear that, for Delaware companies, a charter or by-law forum selection clause (FSC) is a valid and promising response to the problems posed by multi-jurisdictional disputes involving claims based upon internal corporate affairs (such as M&A litigation and derivative actions). Three recent rulings by “foreign” courts—courts located outside of the forum selected in the charter or by-law (which is usually Delaware). In each case, the “foreign” court granted motions to dismiss based upon an FSC that selected Delaware as the exclusive forum. Still, as we have previously advocated, [1] the better course would be to include with an FSC a consent to jurisdiction and service provision for stockholders who commence the foreign litigation that would permit the defendants in the foreign case to enforce the forum selection clause in Delaware. [2]

…continue reading: Forum Selection Clauses in the “Foreign” Court

Recommendations from Conference Board Task Force on Corporate/Investor Engagement

Posted by Charles Nathan, RLM Finsbury, and Arthur H. Kohn, Cleary Gottlieb Steen & Hamilton LLP, on Wednesday March 19, 2014 at 9:37 am
  • Print
  • email
  • Twitter
Editor’s Note: Charles Nathan is partner and head of the Corporate Governance Practice at RLM Finsbury. Arthur H. Kohn is a partner at Cleary Gottlieb Steen & Hamilton LLP. This post relates to a report from The Conference Board Task Force on Corporate/Investor Engagement, one of three related publications released by The Conference Board Governance Center as a result of its year-long multifaceted study of corporate/investor engagement.

The 2008 financial crisis and the slow recovery that has followed has brought further evidence tending to support the view that the structure of our corporate sector needs adjustment, and that its faults affect the competitiveness of our economy. The crisis has resulted, as would be expected, in a raft of new rules and regulations, which as usual have been implemented before there emerged any consensus about the nature of the problems. There has also been a vigorous competition of ideas over causes and remedies.

…continue reading: Recommendations from Conference Board Task Force on Corporate/Investor Engagement

Selected Issues for Boards of Directors in 2014

Posted by Alan L. Beller, Cleary Gottlieb Steen & Hamilton LLP, on Saturday February 1, 2014 at 9:00 am
  • Print
  • email
  • Twitter
Editor’s Note: Alan L. Beller is a partner focusing on complex securities, corporate governance and corporate matters at Cleary Gottlieb Steen & Hamilton LLP. This post is based on a Cleary Gottlieb memorandum.

Over the past year, boards of directors continued to face increasing scrutiny from shareholders and regulators, and the consequences of failures became more serious in terms of regulatory enforcement, shareholder litigation and market reaction. We expect these trends to continue in 2014, and proactive board oversight and involvement will remain crucial in this challenging environment.

During 2013, activist investors publicly pressured all types of companies—large and small, high-flyers and laggards—to pursue strategies focused on short-term returns, even if inconsistent with directors’ preferred, sustainable long-term strategies. In addition, activists increasingly focused on governance issues, resulting in heightened shareholder scrutiny and attempts at participation in areas that historically have been management and board prerogatives. We expect increased activism in the coming year. We also expect boards to continue to have to grapple with oversight of complex issues related to executive compensation, shareholder litigation over significant transactions, risk management, tax strategies, proposed changes to audit rules, messaging to shareholders and the market, and board decision-making processes. And, as evidenced in recent headlines, in 2014 the issue of cybersecurity will demand the attention of many boards.

…continue reading: Selected Issues for Boards of Directors in 2014

Fed Outlines Proposals to Limit Short-Term Wholesale Funding Risks

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday January 3, 2014 at 9:00 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Derek M. Bush, partner at Cleary Gottlieb Steen & Hamilton LLP, and is based on a Cleary Gottlieb memorandum by Mr. Bush, Katherine Carroll, Hugh C. Conroy, Jr., Allison H. Breault, and Patrick Fuller.

On November 22, 2013, Federal Reserve Board Governor Daniel Tarullo delivered a speech at the Americans for Financial Reform and Economic Policy Institute outlining a potential regulatory initiative to limit short-term wholesale funding risks. [1] This proposal could increase capital requirements for and apply additional prudential standards to firms dependent on short-term funding, with a focus on securities financing transactions (“SFTs”)—repos, reverse repos, securities borrowing/lending and securities margin lending.

…continue reading: Fed Outlines Proposals to Limit Short-Term Wholesale Funding Risks

Nasdaq Proposes Tweaks to Compensation Committee Independence Requirements

Editor’s Note: Arthur H. Kohn is a partner at Cleary Gottlieb Steen & Hamilton LLP. This post is based on a Cleary Gottlieb memorandum by Michael Albano, Mary Alcock, and Jonathan Reinstein.

On November 26, 2013, the Nasdaq Stock Market filed a proposal to amend its listing rules implementing Rule 10C-1 of the Securities Exchange Act of 1934, governing the independence of compensation committee members. [1] Currently, Nasdaq Listing Rule 5605(d)(2)(A) and IM-5605-6 employ a bright line test for independence that prohibits compensation committee members from accepting directly or indirectly any consulting, advisory or other compensatory fees from the company or any subsidiary. The requirement is subject to exceptions for fees received for serving on the board of directors (or any of its committees) or fixed amounts of compensation under a retirement plan for prior service with the company provided that such compensation is not contingent on continued service.

…continue reading: Nasdaq Proposes Tweaks to Compensation Committee Independence Requirements

Enhancing the Promise of Exclusive Forum Clauses

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Wednesday August 21, 2013 at 8:52 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Mitchell Lowenthal, partner at Cleary Gottlieb Steen & Hamilton LLP, and is based on a Cleary Gottlieb memorandum. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.

The multiplicity of cases brought on behalf of the same stockholder group (or as derivative actions) against the same defendants, based on the same conduct and asserting the same fiduciary duty claims is now well documented. The benefits of consolidating such litigation in a single forum have also been well established.

Most such litigation takes place in state courts, particularly where the litigation concerns transformative corporate events like mergers. Within the federal system, there is a specialized tribunal—the Judicial Panel on Multidistrict Litigation—charged with allocating business among the different federal district courts when the same or similar cases are pending in several such courts. There is nothing similar, however, in the state court systems that can allocate cases among courts of different states.

…continue reading: Enhancing the Promise of Exclusive Forum Clauses

Final Capital Rules Adopted

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Wednesday July 24, 2013 at 9:24 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Hugh C. Conroy, Jr., counsel at Cleary Gottlieb Steen & Hamilton LLP, and is based on the overview of a Cleary Gottlieb memorandum by Allison H. Breault, Mr. Conroy, and Patrick Fuller. The complete publication, including footnotes, is available here.

On July 2, 2013, the Board of Governors of the Federal Reserve System (the “Federal Reserve”) issued a final capital rule that overhauls its existing capital adequacy rules and implements both the Basel III Capital Framework issued by the Basel Committee on Banking Supervision (the “Basel Committee”) in 2010 and certain requirements imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). While the Final Rule consolidates and largely adopts unchanged the three proposals issued by the federal banking agencies (the “agencies”) last June, the rule contains several significant burden-reducing modifications adopted in response to comments from community banking organizations. By contrast, the rule provides little relief for the approximately 18 banking organizations subject to the advanced approaches capital rules (“advanced approaches banking organizations”), and increases the burden on these organizations in certain significant respects—most notably by expanding the application of the Collins Amendment Floor to the capital conservation and countercyclical capital buffers.

On July 9, the Federal Deposit Insurance Corporation (the “FDIC”) also voted to adopt the Final Rule, and was the first of the three agencies to issue an interagency notice of proposed rulemaking that would amend the Final Rule to significantly increase the supplementary leverage ratio requirement applicable to the eight U.S. banking organizations that have been identified as global systemically important banks (“G-SIBs”) by the Financial Stability Board (the “FSB”) (the “Supplementary Leverage Ratio Proposal”). Under the Supplementary Leverage Ratio Proposal, the eight U.S. G-SIBs would effectively be subject to a 5% supplementary leverage ratio minimum at the parent level and a 6% supplementary leverage ratio minimum at the level of each bank subsidiary—each of which represents a significant surcharge above the current Basel III 3% minimum leverage ratio applicable from January 1, 2018 to all advanced approaches banking organizations under the Final Rule.

…continue reading: Final Capital Rules Adopted

Next Page »
 
  •  » A "Web Winner" by The Philadelphia Inquirer
  •  » A "Top Blog" by LexisNexis
  •  » A "10 out of 10" by the American Association of Law Librarians Blog
  •  » A source for "insight into the latest developments" by Directorship Magazine