TheCorporateCounsel.net

We’ve posted the transcript for our recent webcast – “Director Independence: Recurring Issues and Recent Developments.” Skadden’s Caroline Kim, Gunster’s Bob Lamm, Davis Polk’s Kyoko Takahashi Lin, and Morris Nichols’ Kyle Pinder joined Meredith to discuss a variety of topics relating to director independence. Here’s an excerpt from Kyle’s discussion of some of the independence implications of Delaware’s SB 21, which became law on Tuesday:

Amended Section 144 also lessens the burden or heightens the presumption of independence for directors of public companies. For a public company director, if the board determines he or she is independent for stock exchange purposes from the company, then that presumption is only rebuttable if a stockholder can allege substantial and particularized facts showing that the director is actually interested or not independent. Where the transaction involves a controlling stockholder, the board needs to determine that the director is independent from the controlling stockholder under the exchange rules, but you treat the controlling stockholders as if it were the issuer for applying that analysis.

One other change that provides clarity is that in all cases, just being a designee or a nominee of a person does not render you not independent of them. There has been Delaware case law going both ways on that.

Then the last big point on Senate Bill 21 is that it would set an ownership floor for determining whether a stockholder or a group is a controlling stockholder. As amended, a stockholder or group of persons cannot be deemed to be a controlling stockholder or a control group unless they have equity ownership of one-third or more of the total outstanding voting power of the company.

– John Jenkins