July 15, 2016

Schedule 13G: Corp Fin Issues “HSR Passive Investment Exemption” CDI

Yesterday, Corp Fin issued a CDI – CDI 103.11 of the Regulation 13D-G CDIs – to clarify that just because someone is disqualified (due to efforts to influence management) from relying on HSR’s “passive investment” exemption doesn’t necessarily preclude that shareholder from being eligible to file a short-form Schedule 13G rather than the longer Schedule 13D. In other words, the HSR test is applied differently than the similar one for 13G/13D. The CDI notes that control intent – as analyzed through the relevant fact & circumstances – is key.

Before providing three examples of this analysis in operation, the CDI notes that the determination might hinge on the subject matter of the shareholder’s discussions with management – with the context in which the discussions occur being “highly relevant.”

Interestingly, this CDI came out on the same day that the DOJ – as noted in these memos posted on – announced a record fine of $11 million that ValueAct paid to settle allegations that it had violated the HSR’s “passive investment exemption”…

Model Business Corporation Act: Exposure Draft

Six years in the making, the ABA Corporate Laws Committee has published for comment an “Exposure Draft” of the 2016 Revision of the Model Business Corporation Act. This Revision represents the first top to bottom revision of the Act since publication of the Revised Model Business Corporation Act in over 30 years! Since 1984!

The Revised Act has served as the basis for the organic corporation law in more than 30 jurisdictions, with portions embedded in the corporation law in several others. The 2016 Revision represents a compilation of all of the amendments to the Act since 1984, including several adopted within the last three years following publication for comment in The Business Lawyer, as well as a thorough review and revision of the Act and its Official Comment. The 2016 Revision also incorporates the basic terminology and concepts contained in the Uniform Business Organizations Code, adopted by the Uniform Law Commission in 2011.

Comments are encouraged & must be delivered to Corporate Laws Committee Chair Karl Ege before August 15th…

More Indictments In Proxy Solicitor/ISS Bribery Scandal

This Reuters article provides news about the latest in the bribery scandal between a former ISS staffer and current & former members of Georgeson, a proxy solicitor. The former ISS staffer – the seller of the information – was sentenced a while back. Also see this WSJ article

Broc Romanek