January 7, 2016

D&O Questionnaires: Whether to Address the Clayton Act?

A lot of responses to my blog yesterday about the newly posted model annotated D&O questionnaire. Goodwin Procter’s John Newell gave me a nice add for the “D&O Questionnaire Handbook” and my section on page 24 about “Whether to Obtain Competition-Related Information.” In that section, I noted that it’s possible that some companies include a question about the Clayton Act depending on their questionnaire philosophy – but that we hadn’t seen one. John sent me one:

Do you, or have you at any time on or after the beginning of the company’s most recent completed fiscal year, served as either a director or an officer of any business other than the Company, including non-public businesses, that had (a) total liabilities and stockholders equity (i.e., net worth as shown on its balance sheet) in excess of $29,945,000 as of the end of that business’s most recently completed fiscal year and (b) revenues of $2,994,500 or more attributable to business operations that could be viewed as competing with the Company because of the nature of the other business’s business operations and the geographical markets in which the other business operates? If so, please provide the name of the business in the space below.

And John notes that the trick is that the FTC updates the dollar thresholds annually – but not until the second or third week of January, so anyone who uses this question before that date gets the prior year’s dollar amount.

And then another member sent me this example that doesn’t need to be updated every year:

Do any of the companies for which you serve as an officer or director (whether publicly-traded or privately-held) compete, directly or indirectly, with any of the company’s businesses?


If YES, please identify below the company and provide an estimate of its total annual sales for its last completed fiscal year and an estimate of its annual sales which are competitive with the company.

OTCQX Strengthens Listing & Governance Requirements

As noted in this blog by Duane Morris’ David Feldman, the OTCQX has increased their listing and governance requirements effective January 1st. The QX is the highest tier of trading among the OTC options. There will now be a higher initial bid price of $0.25 to trade on the OTCQX U.S. tier. US companies on the QX will have to keep a price above $0.10. International companies will be required to meet new initial and ongoing minimum bid prices of $0.25 and $0.10 to trade on the OTCQX International tier. Both US and international companies will have higher initial and ongoing market capitalizations of $10 million and $5 million, respectively. All companies now will be required to have at least two market makers.

In addition, there are new minimum corporate governance requirements for American companies on the QX. These are: a minimum of two independent directors on the board of directors; an audit committee composed of a majority of independent directors; and they must conduct annual shareholders’ meetings and submit annual financial reports to shareholders at least 15 calendar days prior to such meetings. They also added even more stringent new requirements for the higher level “premier” tier on the QX.

Also see this excellent recap of smaller companies regulation by David – and this recap of the year for crowdfunding by Anthony Zeoli…

Can In-House Counsel Have Sexual Relations With a Client?

Sound advice from Keith Bishop in this blog – perhaps a little late now that the holiday party circuit is over…

Broc Romanek