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Take charge of compliance: Ensure your business meets Federal Corporate Transparency Act reporting requirements

By Porter Wright on
The United States Capitol stands against a sunset.In 2021, Congress passed the Corporate Transparency Act (CTA) which will require many companies to report information about the company and its beneficial owner(s) to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). Regulations implementing the CTA became effective Jan. 1, 2024. Attorney Jack Beeler explains the new regulations and what businesses need … Continue Reading

The impact of efforts clauses in transactional documents

By Porter Wright on
Most transactional documents include effort clauses as covenants to require a party to perform a certain act or acts to achieve a stated goal. These terms generally include the following: Best efforts Reasonable efforts Commercially reasonable efforts There are no universally accepted definitions or standards for interpreting these terms. As a result, their use can … Continue Reading

New DOJ policies target corporate executives over companies

By Porter Wright on
The U.S. Department of Justice (DOJ) issued new policies Sept. 9. One requires that companies disclose all facts relating to individual misconduct discovered during internal investigations or be considered uncooperative. This places pressure on corporations to turn over evidence against their own executives. The policy comes after ongoing criticism of the DOJ’s failure to prosecute … Continue Reading

SEC proposed rules for compensation clawback policies

By Porter Wright on
The SEC has proposed rules that require the securities exchanges to adopt rules that in turn require listed companies to adopt, disclose and comply with a clawback policy for executive compensation based on erroneous financial statements. The new rules would apply to almost all companies listed on a securities exchange (such as NASDAQ and NYSE), … Continue Reading

SEC votes to propose executive compensation rules

By Bob Tannous on
On April 29, 2015, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Securities and Exchange Commission (SEC) voted 3 to 2 to approve a proposed amendment to executive compensation rules in Item 402 of Regulation S-K. The proposed amendment directs the SEC to adopt rules requiring registrants to disclose in … Continue Reading

Recent Delaware case questions ability of common stockholders to prospectively waive appraisal rights; strictly enforces notice requirement to use drag along right

By Porter Wright on
Drag along rights and an accompanying waiver by a minority stockholder of appraisal rights in connection with a change in control transaction approved by the majority stockholder are common features in stockholders agreements among majority stockholders and minority stockholders. The recent case of Michael C. Halpin, Et. Al. v. Riverstone National, Inc., No. 9796–VCG (Del. … Continue Reading

FINRA adopts rule to permit sharing of transaction based compensation to unregistered persons

By Porter Wright on
The Securities and Exchange Commission (SEC) has approved the Financial Industry Regulatory Authority’s FINRA Rule 2040, which will permit the payment of compensation, fees, concessions, discounts, commissions or other allowances to unregistered persons if a member firm determines the activities of the unregistered person in question do not require registration as a broker-dealer. Support for … Continue Reading

Once again, House takes up bill governing M&A brokers

By Porter Wright on
HR 686, The Small Business Mergers, Acquisitions, Sales & Brokerage Simplification Act, was introduced in the U.S. House of Representatives on Feb. 3, 2015. This bill is identical to HR 2274, which was passed unanimously in the U.S. House of Representatives in 2014, but was never acted upon in the U.S. Senate. HR 686 would … Continue Reading

Comment by Feb. 16 on proposed uniform state model rule for M&A brokers

By Porter Wright on
The Broker-Dealer Section of the North American Securities Administrators Association is seeking comments no later than Feb. 16, 2015, on a proposed uniform state model rule exempting certain merger and acquisition brokers from registration as brokers, dealers, agents or broker-dealers under state securities laws. The proposed uniform model rule represents the evolution among regulators and … Continue Reading

Bill governing M&A brokers should resurface in 2015

By Porter Wright on
During 2014, Congress has gained momentum toward creating an exemption from federal broker-dealer registration for “M&A brokers” who facilitate mergers, acquisitions, sales and similar transactions involving privately held companies. H.R. 2274 unanimously passed the U.S. House of Representatives, but the U.S. Senate did act on the bill. If passed, the measure would have permitted M&A brokers to … Continue Reading

Whistleblowers wanted; Holder seeks increased compensation for financial crime informants

By Porter Wright on
In the first major public comment about white collar crime in more than a year, the Department of Justice (DOJ) called for an increase in compensation for whistleblowers under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). Senior DOJ officials, in three separate speeches, appealed to whistleblowers to come forward with information about crimes … Continue Reading

Late Form 4s aren’t just embarrassing anymore

By Porter Wright on
Yesterday, the SEC announced penalties totaling approximately $2.6 million against directors, officers, beneficial owners and issuers for failure to promptly report information about holdings and transactions in company stock. The primary enforcement weapon for these types of failures historically has been public shaming: Rule 405 of Regulation S-K requires issuers to identify insiders who failed … Continue Reading

Merging? Making an acquisition? Be careful out there.

By Jay L. Levine and Porter Wright on
Almost 40 years ago, Congress passed the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). The HSR Act provided a mechanism pursuant to which parties to an acquisition of assets or voting securities would be required, if certain thresholds were met, to file a notification form with the antitrust enforcement agencies — the Federal … Continue Reading

First conflict mineral report filed on Form SD

By Porter Wright on
On April 24, 2014, Siliconware Precision Industries Co., Ltd. (Siliconware) earned the distinction of being the first registrant to file a conflict minerals report on Form SD. Here are links to Siliconware’s Form SD and its conflict minerals report. Although the filing deadline is not until June 2, 2014, this example gives registrants a glimpse … Continue Reading

Substantial risk of forfeiture guidance clarifies when Section 16 short-swing profit liability can defer taxation of equity compensation awards

By Greg Daugherty on
Legend had it at my law school that one day, a lost student walked into a torts class and asked the professor if this class was wills, trusts, and estates. The torts professor replied, “We haven’t gotten that far yet.” A dry sense of humor on the professor’s part? Perhaps. His point, however, was that … Continue Reading

Recent Delaware case reminds of importance of litigation expense advancement provisions in organizational documents

By Porter Wright on
Much to the chagrin of corporate lawyers, there are still some companies that do not have provisions in their articles of incorporation, bylaws or operating agreements that provide for advancement of litigation expenses to directors and officers. The recent case of White v. Kern, No. 7872-VCG (Del. Ch. Jan. 24, 2014) (Transcript) illustrates that courts … Continue Reading

FTC Revises HSR and Interlocking Directorate Thresholds

By Jay L. Levine on
HSR Revisions The Federal Trade Commission (FTC) recently announced the annual changes to the notification thresholds for filings under the Hart-Scott-Rodino Antitrust Improvements Act (HSR) as well as certain other values under the HSR rules. As background, the HSR Act requires that acquisitions of voting securities or assets that exceed certain thresholds be disclosed to … Continue Reading
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