Monthly Archives: February 2014

February 11, 2014

Broadridge’s Changes to Proxy Mechanics Called Off!

Very shortly after I blogged the below, I became aware that Broadridge reversed it’s position with this note: “Upon further internal review, Broadridge will not be implementing the change announced last week. Both sides of a proxy contest will continue to receive interim voting updates for their own and each other’s ballot.” Thanks to Sabastian Niles of Wachtell for the heads up!

This was my early morning blog: In this Davis Polk blog, Ning Chiu reports:

Broadridge has announced a new policy that during proxy contests, each party will only receive the interim results of votes cast for its own proxy card, reports the WSJ. Companies and dissidents can share voting information if both sign confidentiality agreements. This new policy could make it more difficult for solicitations, including determining whether an investor has not voted at all, or has instead voted for the other side.

A possible effort by the ABA to ask the SEC to shorten the period required to conduct broker search cards could also impact proxy contests. Currently, SEC Rule 14a-13 requires issuers to notify or “search” the banks and brokers at least 20 business days prior to the record date. A petition may seek to shorten that time to five days. Some argue that the lengthy period does not account for technological advancements, and a shorter period would facilitate the process for voting on major transactions and allow for a shorter period before annual meetings take place. Others, however, contend that the compressed broker search period would affect the time for activists and others aligned with their views to invest in the stock prior to the record date, or permit a competing offer for transactions.

February 10, 2014

Shareholder Activism as a Corrective Mechanism in Corporate Governance

With SEC Chair Mary Jo White recently recognizing “shareholder activism” as something different than what has been perceived in the past, the debate over whether activism is a “good thing” or not has never been hotter. Check out this new paper by Professors Rose & Sharfman entitled “Shareholder Activism as a Corrective Mechanism in Corporate Governance“…

February 6, 2014

Post-Great Hill Examples: Merger Provisions on Attorney-Client Privilege

In this blog, Ethan Mark of Stinson Leonard Street provides recent examples of merger agreements that deal with privilege in the wake of the Great Hill decision…

February 5, 2014

Private M&A Brokers: SEC Provides Broker-Dealer Relief

As noted in this memo by Jessica Forbes & Gregory Gnall of Fried Frank, in a significant departure from prior guidance, the SEC’s Division of Trading and Markets issued a no-action letter – entitled “M&A Brokers” – last week that permits a person giving advice on M&A deals to receive transaction-based compensation under certain conditions without having to register as a broker-dealer. Note that the no-action letter is subject to numerous conditions, some of which may limit its utility, including the limitation that it only relates to the sale of privately held companies and that the M&A broker may not directly or indirectly through its affiliates provide financing for an M&A transaction. Here’s some analysis from Keith Bishop…

February 4, 2014

Takeover Litigation in 2013

This blog by Kevin LaCroix provides a pretty good summary of the state of affairs. The shocking stat is that 97.3% of all takeovers in 2013 with a value of over $100 million experienced a shareholder lawsuit, which represents the highest litigation rate recorded.

And here’s Keith Bishop’s proposal for preventing M&A deals with being such a litigation burden. The proposal boils down to:

Certificates of mergers include an additional box that may be checked. If this box is checked, an additional fee will be imposed for filing the certificate but stockholders will forfeit all rights to sue in relation to the merger. The amount of the fee will be based on a percentage of the merger consideration. The fees will be allocated to any plaintiffs’ firm providing useful suggestions for enhanced disclosures. A further refinement might be to apply a multiplier randomly to some fees so that the economic windfall attributes of the current system are preserved.