The Practical Corporate & Securities Law Blog

By Broc Romanek

Go to TheCorporateCounsel.net

 
The Delaware courts have been amazing busy issuing opinions over the past few weeks that appear to be dramatically changing the corporate governance landscape - the latest is from the Delaware Supreme Court in Krasner v. Moffett.

This opinion reverses the dismissal of a stockholder class action challenging the merger of Freeport-McMoRan Sulphur and McMoRan Oil & Gas into McMoRan Exploration Co. The Chancery Court granted the defendants' motion to dismiss on the grounds that the merger, which did not involve a majority stockholder, had been negotiated by a special committee of independent directors and, therefore, the business judgment rule applied. The Supreme Court reversed on the ground that it was reversible error to dismiss the complaint under Rule 12(b)(6) at the pleading stage - and that a factual record needed to be developed to determine what standard of review applies (i.e., whether the business judgment rule or entire fairness standard applies). The Supreme Court reached this conclusion even though the plaintiffs did not plead facts establishing that the special committee members were not independent.

I blog this as i prepare to take a week off in Yellowstone (my first time) and am happy to note that Sharon Hendricks from the Venture Law Group will be our guest blogger for next week. I'm sure Sharon will give you the "skinny" on how mandatory Section 16 e-filing fares in its first few days. Enjoy!
posted by broc at 3:49 PM

 
The July issue of Eminders is up at http://www.thecorporatecounsel.net/E-minders/.

To help kick off a special offer of a subscription to TheCorporateCounsel.net - $250 for the rest of 2003 (for a single user - multiple user pricing is half price for rest of 2003) - we have launched a new website called AccountingDisclosure.com. Learn more about the special offer at https://www.thecorporatecounsel.net/subscribe/CCNET_NEW/login.asp.

This website is devoted to accounting and auditing issues - and is a "one-stop" site that provides a host of resources to help you grapple with an increasingly complicated area that derives its guidance from dozens of sources. This site is yet one more benefit of subscribing to TheCorporateCounsel.net (non-members pay $395/yr. for access to AccountingDisclosure.com). Learn more about what is on AccountingDisclosure.com at http://www.accountingdisclosure.com/Misc/More.htm.

For TheCorporateCounsel.net subscribers, we have posted the transcript of last week's webcast "Burden of SOX on Mid- and Small-Cap Companies" at http://www.thecorporatecounsel.net/member/audio/06_17_03_transcript.htm.
posted by broc at 6:51 PM

 
The 11-Ks are starting to roll in - and almost all of them now contain a 906 certification (although in various forms and signed by a variety of officials).

In Congress, the Senate and House passed the Accountant, Compliance, and Enforcement Staffing Act of 2003, which should help streamline the SEC's efforts to add more accountants, economists and examiners to its staff. The new law will allow the SEC to hire accountants, economists and securities compliance examiners under the excepted service authority (lawyers already can be hired on under this authority) - rather than under the federal competitive service process.

Under excepted service authority, the hiring process can be completed in a few weeks' time as opposed to the months-long time frame often necessary under competitive service requirements. However, the expedited process doesn't really help if there are no accountants to hire! See http://www.sec.gov/news/press/2003-76.htm.

For Section16.net subscribers and NASPP members, today is the "Nuts and Bolts of Section 16 Electronic Filing" featuring Alan Dye and Herb Scholl of the SEC, among others. This program will walk you through the complicated process of making a filing on the SEC's new system that is mandatory next Monday - see http://www.section16.net/Webcast/0603-b.htm.

posted by broc at 11:17 AM

 
Late Friday, the NYSE told listed companies that its revised listing standard requiring shareholder approval of equity compensation plans - and prohibiting the use of broker nonvotes for those votes - will become effective as of June 30th (and will let its pilot program expire on that date). Now, the SEC must approve the NYSE's final rule by June 30th - otherwise the following is subject to change.

The transition is as follows: plans adopted before June 30th are not subject to shareholder approval unless they are materially revised - with the exception of special transition rules that apply to “formula plans” and “discretionary plans” (at a minimum, all pre-existing plans may be used for a limited transition period ending on the first to occur of (1) the company’s next annual meeting at which directors are elected that occurs on or after December 27, 2003, (2) June 30, 2004, and (3) the expiration of the plan). For broker nonvotes, the final rules are effective for any shareholders meeting that occurs on or after September 28, 2003.

The final rules are slightly different than the proposed rules. For TheCorporateCounsel.net subscribers, we have posted the NYSE's final rules at http://www.thecorporatecounsel.net/member/Memos/Misc/06_20_03_NYSERules.pdf.

We have also posted an interview with Marc Trevino of Sullivan & Cromwell on the Disney Opinion and Personal Liability for Directors at http://www.thecorporatecounsel.net/member/InsideTrack/06_23_03_Trevino.htm.
posted by broc at 9:53 AM