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 directors breached their fiduciary duty by not taking action in response to a stockholder’s demand. In addition, this article describes recent decisions in MBCA states addressing the meaning of “fair value” and the application of director liability shields to exculpate directors from monetary liability. The MBCA is the basis for the corporation statute of at least 36 states.

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.‎

Earlier this week, the SEC announced proposed rules (Release No. 33-11042) for new, climate-related disclosures. The proposals dramatically expand the requirements of the SEC’s 2010 guidance on climate-related disclosures.  While most large companies have been providing some climate-related information as part of ESG reporting in CSR or Sustainability Reports outside of their SEC filings, these rules, if adopted, will necessitate a significant overhaul of companies’ climate-related analysis, procedures, and reporting and will subject any climate-related disclosure to stricter securities law liability standards.

The SEC has proposed rules (Release No. 33-11038) that would require new cybersecurity disclosures. If adopted the rules would codify and build upon the Commission guidance on cybersecurity risks and incidents.

Last week, the SEC proposed new rules that would shorten the time periods for filing a Schedule 13D or 13G after acquisition of beneficial ownership of 5% or more of the voting stock of a public company from 10 days to 5 days.

Companies often make distributions to their stockholders as dividends and stock buybacks. For private equity-backed companies, it is not unusual to see leveraged recaps in which the company borrows money and makes distributions to the private equity investors.