TheCorporateCounsel.net

November 2, 2005

Survey Results: Disclosure Controls and Disclosure Committees

With such a focus on majority voting and tendering of director resignations these days, I thought it would be a good time to conduct a new survey on director retirement ages. Please take a moment and provide your input!

Here are the survey results from our last survey on disclosure controls and committees:

1. Does your company have a formalized, written set of “Disclosure Controls & Procedures”?
– Yes – 57%
– No, but the appropriate personnel know what these procedures are – 10%
– No, but the appropriate personnel know what these procedures are, and there are some written documents or checklists that are utilized – 32%

2. Have your company’s Disclosure Controls & Procedures been formally updated and revised in the last year?
– Yes – 56%
– No formal changes, but there have been some informal changes during the last year – 21%
– No, there have been no changes in the last year – 22%

3. Does your company have a Disclosure Committee Charter?
– Yes – 59%
– No – 39%
– We don’t have a formal Disclosure Committee – 2%

4. If there is a formal Disclosure Committee, who is the chairman of the Disclosure Committee?
– General Counsel – 11%
– Securities Counsel – 11%
– CFO – 20%
– COO – 1%
– Controller – 30%
– Corporate Secretary – 1%
– Other – 25%

PIPE Transactions Remain Under Scrutiny

According to this CFO.com article, the SEC has announced another Enforcement action in a PIPEs transaction. From what has been reported for a while, a number of market players have been dealing with the SEC’s Enforcement Division in connection with alleged fraudulent trading and reporting of private investments in public equities. These SEC actions will be among the many topics addressed in our upcoming webcast: “The Latest on PIPEs.” The webcast primarily will focus on the latest developments in PIPE mechanics and strategies.

2nd Circuit: Former Target Stockholder Can’t Bring Action for Lost Merger Premium

From the DealLawyers.com Blog: Some of you will recall the 2004 decision in Consolidated Edison v. Northeast Utilities by the US District Court for the SDNY holding that former shareholders of the target could bring an action for a lost merger premium as a result of the buyer’s wrongful repudiation of the merger agreement. Because such claim was vested in shareholders as of the date of the repudiation – and not the target or transferees of their shares – the target could not settle such claims (e.g., by amending or revising the terms of the original merger agreement).

Thankfully, the 2nd Circuit has overturned the decision on appeal concluding that, under the terms of the merger agreement between Consolidated Edison and Northeast Utilities, target stockholders become third party beneficiaries – with the right to enforce the buyer’s obligation to pay the contracted merger consideration, only upon consummation of the merger.

This important decision confirms that claims of wrongful repudiation of a typically constructed merger agreement will not deprive the principal parties of the ability to amend – or otherwise settle disputes – by vesting claims in the hands of target shareholders at the time of the breach. Thanks to Kevin Miller of Alston & Bird for the heads up!

[Iffy if I will be able to blog from the PLI Conference the next coupla days – should be a ringdinger. Last night at the NASPP Conference, Hootie & the Blowfish was a huge hit – should be mandatory for every major conference to have live music!]