TheCorporateCounsel.net

May 4, 2005

Stock Option Problems in M&A Transactions

With M&A activity heating up, many problems continue to exist with how to deal with stock options. On DealLawyers.com, I have posted this interview with Mike Melbinger – of CompensationStandards.com blogging fame – on Stock Option Problems in M&A Transactions.

More on the Niagara 10-K Blog

A number of members responded to my blog yesterday regarding Niagara’s 10-K reference. Some pointed out that the only time that the words “Form 10-K” appear is in the Cautionary Statement re Forward Looking Statements on page 15 of their annual report, likely an oversight when they copied the statement from the prior year’s Form 10-K.

Sage Keith Bishop noted that even though Niagara is a Delaware corporation, California corporations and foreign corporations having their principal business office in California (or that are governed by Corp. Code Section 2115) are required to send an annual report to shareholders within 120 days after the close of the fiscal year (fyi, corporations with less than 100 shareholders may waive this requirement in the bylaws). The annual report must contain financial statements.

If the company is not subject to the Exchange Act’s reporting requirements – or exempted pursuant to Section 12(g)(2) – under Cal. Corp. Code Section 1501, the report must also contain information concerning transactions between the corporation and its officers and directors involving more than $40,000 and indemnification of officers and directors in the amount of $10,000 or more. Therefore, companies that “go dark” may still have an annual report requirement under California law.

Paul Roye Lands at Capital Research & Management

Paul Roye, who left as Director of the SEC’s Division of Investment Management in March, has been hired by the manager of the American Funds, the 2nd largest mutual fund with $670 billion in assets. Paul will start May 9th as a Senior Vice President at Capital Research doing compliance and legal work.

Paul will not be involved with an SEC investigation that reportedly surrounds portfolio trades at the firm. Federal ethics rules ban former SEC employees from representing private clients in SEC matters for two years after leaving the agency if the employee had direct involvement in the matters.