Topic: Corporate Governance

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 any appraisal rights because those rights can create uncertainty ‎for an exit transaction.

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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 of consideration in a merger or the board’s attention to the corporation’s legal compliance.

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Locke Lord QuickStudy: SEC Signals Heightened ESG Focus

On September 22, 2021, the SEC released its Sample Letter to Companies Regarding Climate Change Disclosure (“Letter”). The Letter is not only important for what it will seek, but for what it portends. The Letter invokes the 2010 Climate Change Guidance[1] (“Guidance”) which provided an overview of potential disclosure obligations related to climate change, including the impact of climate change legislation and rulemaking, business trends, and physical impacts.

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Nasdaq Introduces Board Diversity Requirements

On August 6, 2021, the U.S. Securities and Exchange Commission approved Nasdaq’s proposed rule regarding diversity of boards of directors.[1] The approved rule requires that most companies listed on Nasdaq (i) “[p]ublicly disclose board-level diversity statistics using a standardized template,” and (ii) “[h]ave or explain why they do not have at least two diverse directors.”[2]

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Charges Against Nikola Founder Provide Reminder to Use Caution in All Public Statements and Offer Governance Lessons

On July 29, 2021, both the SEC and the U.S. Attorney for the Southern District of New York announced charges against Trevor Milton, the founder, former CEO and former executive chairman of Nikola Corporation, a company engaged in the development of electric trucks. The complaint and indictment allege a series of misleading and inaccurate public statements by Milton on social media and elsewhere leading up to and after the company’s merger with a special purpose acquisition company (SPAC) through which Nikola became a public company, which included related private placements (PIPEs).

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ISS and Glass Lewis Announce Flexibility In Corporate Governance Policies During COVID-19 Crisis

ISS and Glass Lewis have issued guidance on their corporate governance voting policies that ‎adds flexibility to reflect the realities of the impact of the COVID-19 crisis and the challenges in ‎responding to it. Public companies will want to consider this guidance since many institutional ‎investors are influenced in their voting by the positions taken by these leading proxy advisory ‎firms.‎

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Update: SEC Extends 45-Day Filing Relief Through July 1, 2020

On March 25, 2020, the SEC modified its March 4th order described here, which allowed extended filing deadlines for disclosure reports due between March 1 and April 30, 2020.  The modified order covers all filings due on or before July 1, 2020.

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Delaware Supreme Court Upholds Federal Forum Selection Provisions

The Delaware Supreme Court, on March 18, 2020, in Salzberg v. Sciabacucchi, reversed the decision of the Court of Chancery and upheld the validity of a forum selection provision in the certificate of incorporation of a Delaware corporation requiring claims under the Securities Act of 1933 to be brought in federal courts.

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