If you’re following the DExit debate, you may be interested in this recent blog by Prof. Ben Edwards, which tracks the status of all 2025 public company Nevada reincorporation proposals. According to the blog, 12 of 14 proposals to move from Delaware to Nevada have passed, and the failure of the other two to pass was due to a large number of broker non-votes. Prof. Edwards notes that one vote in particular may be worth keeping in mind when it comes to the formula for success of future proposals:
One thing worth highlighting here is that Fidelity National succeeded on its second attempt to shift to Nevada. Previously in 2024, it secured 1110,277,692 votes in favor with 107,467,828 votes against. With about 27,000,000 broker non-votes, this wasn’t enough for the necessary majority. This year the votes were different with 147,059,505 votes cast in favor of the move and 74,874,567 votes cast against the move.
So what changed? As I covered in an earlier post, Fidelity National’s Nevada charter increased shareholder protections above the Nevada default threshold. This may have shifted some votes and makes it something to watch for future efforts.
The blog says that two proposals to move from Delaware to Nevada are currently pending, along with one proposal to move from New York to Nevada. Moves by public companies from Delaware to Nevada or other states are getting a lot of media attention, but let’s face it, 14 public company migrations during the current year with the possibility of two more isn’t exactly a reincorporation tidal wave.
My guess is that we’ll need to see whether, over time, IPO candidates are incorporating in places other than Delaware in order to assess just how big a long-term threat Delaware is facing. That’s because the data suggests that most Delaware public companies are unlikely to migrate, and some have argued that the bigger threat may be from private equity and venture capital investors who are persuaded that other jurisdictions will offer them a greater opportunity to keep calling the shots post-IPO than will the Delaware Chancery Court.
The latest issue of The Corporate Counsel newsletter has been sent to the printer. It is also available now online to members of TheCorporateCounsel.net who subscribe to the electronic format. The issue includes the following articles:
– Brace for Impact: Grappling with Economic Uncertainty
– The Staff Throws a Lifeline to Rule 506(c) of Regulation D
– Navigating Shareholder Engagement After the Staff’s February 2025 Schedule 13G Guidance
Please email sales@ccrcorp.com to subscribe to this essential resource if you are not already receiving the important updates we provide in The Corporate Counsel newsletter.
Yesterday, the SEC announced and posted a notice of formal withdrawal for fourteen notices of proposed rulemaking that were issued between March 2022 and November 2023. Not surprisingly, the list includes the 2022 proposal to amend Rule 14a-8, which would have modified three bases for excluding shareholder proposals under the rule — substantial implementation, duplication and resubmission.
This is the only withdrawn Corp Fin rulemaking proposal. The remaining thirteen relate to the Division of Investment Management and the Division of Trading and Markets.
1. Executive Compensation Decisions: Setting Compensation and Informing Investment and Voting Decisions
2. Executive Compensation Disclosure: How We Got Here and Where We Should Go
3. More on Executive Compensation Disclosure: How We Got Here and Where We Should Go
The panelists include a mix of outside and in-house counsel, investors, compensation consultants, and more – including our very own Dave Lynn and Mark Borges, and several other folks who will be familiar to members of our sites! Mark just shared a few observations relating to topic #1 on his “Proxy Disclosure Blog” on CompensationStandards.com – and Dave shared on LinkedIn his perspective on creating the “summary compensation table” and “compensation discussion & analysis” disclosure rules.
The roundtable will be held at the SEC’s headquarters at 100 F Street, N.E., Washington, D.C., from 1 p.m. – 5:35 p.m. ET. The event will be open to the public and webcast live on the SEC’s website. Doors will open at noon ET. For in-person attendance, registration is required. For online attendance, registration is not necessary – you can find the broadcast on the SEC’s website.
We expect to see more activity around comment letters and suggestions after the roundtable.
The latest issue of The Corporate Counsel newsletter has been sent to the printer. It is also available now online to members of TheCorporateCounsel.net who subscribe to the electronic format. The issue includes the following articles:
– Brace for Impact: Grappling with Economic Uncertainty
– The Staff Throws a Lifeline to Rule 506(c) of Regulation D
– Navigating Shareholder Engagement After the Staff’s February 2025 Schedule 13G Guidance
Please email info@ccrcorp.com to subscribe to this essential resource if you are not already receiving the important updates we provide in The Corporate Counsel newsletter.
On Monday, the DOJ announced the highly anticipated, updated Guidelines for Investigations and Enforcement of the Foreign Corrupt Practices Act (FCPA). In a Tuesday speech, the head of the DOJ’s Criminal Division summarized the updated guidelines, noting that they “provide evaluation criteria and a non-exhaustive list of factors to balance when deciding whether to pursue an FCPA case.” The listed, non-exhaustive factors (no one factor is necessary or dispositive) include whether the alleged misconduct:
– Deprived specific and identifiable U.S. entities of fair access to compete;
– Involves key infrastructure or assets;
– Bears strong indicia of corrupt intent tied to particular individuals and serious misconduct; or
– Is associated with the criminal operations of a Cartel or Transnational Criminal Organization.
He continues, “The through-line is that these Guidelines require the vindication of U.S. interests. People have speculated about the meaning of that phrase, but the DAG’s memo makes it clear. It is not about the nationality of the subject or where the company is headquartered. In plain terms, conduct that genuinely impacts the United States or the American people is subject to potential prosecution by U.S. law enforcement. Conduct that does not implicate U.S. interests should be left to our foreign counterparts or appropriate regulators.”
The updated FCPA Enforcement Guidelines also make clear that the DOJ is resuming foreign bribery investigations. However, the WSJ reported yesterday that the narrowed focus of enforcement on “matters that relate to U.S. strategic interests” has caused the DOJ to close “nearly half of its foreign-bribery investigations to align with new guidelines” — but, notably, they don’t “anticipate dismissing any more cases that have already been criminally charged.”
The Guidelines also include some procedural changes, described in this WilmerHale alert:
– First, the Guidelines state that the initiation of all new FCPA investigations and enforcement actions must be authorized by the Assistant Attorney General (or the official acting in that capacity) for the Criminal Division or a more senior Department official. The authority to open FCPA investigations formerly had been the provenance of the DOJ’s Fraud Section and the DOJ’s FCPA Unit.
– Second, the Guidelines explicitly direct prosecutors to consider the disruption to lawful business and the impact on a company’s business throughout an investigation—establishing the need to consider “collateral consequences” throughout an investigation and “not just at the resolution phase.”
– Third, the Guidelines also direct prosecutors to consider the likelihood that foreign regulators are willing and able to investigate and prosecute the misconduct, signaling deference to foreign authorities in the absence of compelling U.S. interests.
– In addition, the Guidelines state that “prosecutors shall focus on cases in which individuals have engaged in misconduct and not attribute nonspecific malfeasance to corporate structure.” During his remarks, Mr. Galeotti explained this aspect of the Guidelines as directing focus on “specific misconduct of individuals, rather than collective knowledge theories.” This language signals that the DOJ may take a stricter approach to the FCPA’s knowledge requirement in corporate cases.
The alert continues with these thoughts about FCPA enforcement going forward:
– Travel and entertainment cases and certain cases predicated on internal accounting control violations—both robust areas of enforcement over the years—may not present the severity of harm contemplated for DOJ enforcement under the Guidelines.
– Given the focus on cartels and TCOs, the next three years could see greater scrutiny of certain geographies—like Mexico—over other geographies that have more historically been at the center of FCPA investigations and resolutions.
– It remains to be seen how the SEC will fit into this new FCPA enforcement regime and whether the SEC will adopt the DOJ Guidelines, whether formally or informally, when considering its own FCPA enforcement.
It also includes these important reminders about the continued importance of compliance, including in areas that may not be highlighted in the Guidelines:
– Any abandonment or roll-back of FCPA compliance that some may have contemplated in the wake of the Executive Order would be unwise and ill-advised, particularly for non-U.S. entities who may find themselves competing with U.S. companies for business.
– Most importantly, as we noted in our client alert on the Executive Order, the FCPA remains U.S. law and carries a statute of limitations of five years (which may be extended far longer under certain conspiracy theories and when evidence is formally sought from overseas); FCPA violations committed today or in the next few years may be reviewed, and potentially prosecuted, under a different administration. It is important that companies remain vigilant to ensure that they have compliance programs in place that can prevent and detect violations of the statute and procedures in place to appropriately escalate and resolve issues when they do occur.
You may roll your eyes if you read the longer descriptions for the panels — I couldn’t help myself and had a bit of fun with the Las Vegas theme.
Anyway, our Conferences will be held Tuesday & Wednesday, October 21-22, at Virgin Hotels Las Vegas, with a virtual option for those who can’t attend in person. Reach out to our team to register by emailing info@ccrcorp.com or calling 1.800.737.1271.
An ATM program can be an attractive alternative to a traditional underwritten offering for companies that have frequent capital needs but don’t need a large influx of capital in a short time. That’s especially true during prolonged periods of capital markets volatility when traditional offerings are especially challenging to execute. As John and Dave shared in the March-April 2023 Issue of The Corporate Counsel newsletter, ATM programs allow issuers to raise money quickly in amounts that can be digested by the market through normal trading activity without adversely affecting the trading price, they’re relatively inexpensive, they don’t require management to devote time to roadshows and they’re flexible, allowing issuers to take advantage of favorable market conditions.
This Goodwin alert notes that the popularity of ATM programs among REITs has surged in recent years, surpassing traditional underwritten offerings in volume. In the fourth quarter of 2024, REITs raised the largest quarterly total on record through ATM programs. The alert goes on to describe some recent developments in the use and structure of ATMs by REITs, some of which are applicable more broadly.
For example, the alert notes that sales syndicates are expanding — sometimes with up to 15 broker-dealers listed as sales agents on the ATM prospectus supplement cover, which helps issuers satisfy the relationship expectations of banks that serve as lenders in their debt syndicates and may motivate these banks to enhance research coverage. But a large syndicate can introduce complexity in an offering structure appreciated for its efficiency. The alert says that issuers often employ one or more of these solutions to address the operational complexity:
– Rotational execution schedules: Many ATM programs adopt formal rotation schedules (daily, weekly, monthly, or quarterly), assigning execution rights to different agents on a rolling basis. These schedules are often established up front (or managed by a lead administrative agent) to ensure equitable participation, reduce conflicts, and accommodate bank availability and investor flows.
– Lead administrative agent model: A lead bank can be designated as a de facto “administrative agent,” tasked with maintaining the rotation calendar, coordinating diligence bring-downs, and overseeing compliance procedures. Although not formally designated in the offering documents, this role somewhat mimics the administrative agent role in a loan facility.
– Coordination role of sales agent counsel: The role of counsel to the sales agents takes on a broader scope in multidealer ATM programs, where even modest changes (e.g., updating a risk factor or tax disclosure) can require iterative sign-off from multiple sales agents’ legal and compliance teams. Typically, a single law firm will represent all named sales agents and serve as the primary point of contact for the issuer and its counsel in managing diligence, documentation, and procedural workflows. This firm is responsible for gathering internal approvals and sign-offs from each participating broker-dealer, often requiring outreach to multiple deal teams and compliance personnel. In-house legal and regulatory staff at the individual banks are looped in on a need-to-know basis, preserving confidentiality and minimizing administrative burden on the issuer.
Some ATMs also include a form of revenue-sharing arrangement that “provides for all agents participating in the program to receive a portion of the sales agent commissions generated by trade executions, often irrespective of whether the particular agent was an executing agent.” This addresses issues that can arise when the list of sales agents is very long — in which case, some “back of the order” agents won’t get many opportunities to execute trades and may not have the same infrastructure and trading experience, particularly for forward sales, which are now a standard feature of ATM programs for many issuers.
Cornerstone Research recently published its latest report, Securities Class Action Settlements—2024 Review & Analysis. While securities class action settlements generally “continued at a pace typical of recent years,” median settlement amounts for securities class actions declined a bit from the 13-year high in 2023. The report identifies several potential reasons for this.
– Institutional investors served as lead plaintiff less frequently in 2024 settlements, with their involvement reaching the lowest level in 10 years. An institutional investor serving as lead or co-plaintiff has historically been associated with cases with larger settlements and higher plaintiff-style damages. Lower institutional investor involvement is consistent with lower median plaintiff-style damages.
– Issuer defendants had significantly smaller median total assets than in 2023, marking the lowest level observed since 2018. Additionally, a greater percentage of 2024 settlements involved issuers that had been delisted from a major exchange and/or had declared bankruptcy. Issuer defendant firm assets and issuer distress both have potential implications for the ability to fund a settlement, which is consistent with the smaller settlements in 2024.
– This was also the first year in which a large number of settled cases were related to SPACs. SPAC cases tended to settle for smaller amounts compared to non-SPAC cases. Commentators have suggested that D&O insurance coverage for SPAC cases was likely limited, which may have played a role in the lower SPAC-related settlement values.
The authors expect the proportion of SPAC-related settlements to continue for a few years. They also believe that the number of settled cases will continue at a similar pace, given recent filing trends, and settlement amounts may remain at relatively high levels, based on the data on potential investor losses reported by Cornerstone Research in its Securities Class Action Filings — 2024 Year in Review.
