November 1, 2006

Another Sample Related Party Transaction Policy

In our “Related Party Transaction” Practice Area, we have posted another sample policy with respect to related-person transactions. As you probably know, newly amended Item 404(b) of Regulation S-K requires companies to disclose their “policies and procedures for the review, approval, or ratification” of any related person transaction requiring disclosure under Section 404(a) of Regulation S-K – and Item 404(b) provides that the disclosure of the material features of such policies may include a statement as to “whether such policies and procedures are in writing and, if not, how such policies and procedures are evidenced.”

In addition, companies must identify any related person transactions reported under Item 404(a) that did not require review, approval or ratification under the policies and procedures or where such policies and procedures were not followed. So everyone should be busy creating such policies (and updating them if they already have them…

Shareholders: Interested in Director Election Results This Proxy Season

Clearly, investors will be watching director election results this proxy season more closely than ever with shareholder access “back on the table” and the majority vote movement going strong. Keith Bishop notes: Back in August, the Delaware Chancery Court addressed – in Accipiter Life Sciences v. Helfer – whether a company inequitably manipulated the election machinery by including the announcement of its annual meeting in press release largely devoted to financial results.

The primary reason why this opinion is interesting is because the plaintiffs apparently thought that they had enough of a shot at winning to file the lawsuit. In this case, a shareholder admitted that two of its employees actually read the press release, but somehow skipped the “hidden” paragraph announcing the annual meeting. Under the company’s advance notice bylaws, the plaintiff had ten days from the announcement to submit nominations. The plaintiff failed to meet the deadline and filed suit. The Delaware Chancery Court ruled for the defendants finding that nothing in the actual language, the placement of the disclosure in the press release, or the absence of headings obscured the disclosure so as to escape all notice.

The Art of Boardroom Etiquette and Confidentiality

Tomorrow, join us for the webcast – “The Art of Boardroom Etiquette and Confidentiality” – as Professor Charles Elson; Diane Frankle of DLA Piper; Carl Metzger of Goodwin Procter; and Richard Truesdell of Davis Polk discuss a myriad of legal issues (corporate, securities, privacy and listing standards) as well as sound governance practices in the context of boardroom leaks (both before and after a leak occurs).