DealLawyers.com Blog

Tune in tomorrow for the webcast – “Top IP Pitfalls in Deals: How to Avoid Them” – to hear Karen Butcher of Morgan Lewis, Jose Estevez of Skadden Arps and Ryan Schneider of Troutman Sanders to hear the latest regarding how to spot and resolve intellectual property issues when doing a deal.

Recently, the “M&A Professor Blog” carried this interview with Delaware Chief Justice Myron Steele, which is culled from the Metropolitan Corporate Counsel. Among other topics, Chief Justice Steele addressed Chancellor Chandler’s decision in Airgas as well as the earlier Supreme Court opinion.

We have posted the transcript for the recent webcast: “Deals: The Latest Delaware Developments.”

Beth Young of The Corporate Library writes: An analysis of 2011 shareholder proposals shows companies yielding to activist pressure on takeover defenses. Since 2009, the prevalence of classified boards and poison pills in the S&P 500 has declined; the number of companies that deny their shareholders the right to call a special meeting has also fallen. As these defenses have become less common, the number of proxy proposals on these topics has gone down–probably both because activists see fewer targets, and because companies are more likely to settle with proponents before they print the ballot. Meanwhile, new energy is being directed to the right to act by written consent.

For more detail and statistics, download a free copy of “Proxy Season Wrap-Up: Successful Activism Dismantles Takeover Defenses.”

In this podcast, Carrie Darling of Callaway Golf Company shares her list of Top 5 surprises from spin-offs including:

– Work flow expectations and reality
– Culture (parent versus new co.)
– Restructurings

Tune in tomorrow for the webcast – “Deals: The Latest Delaware Developments” – to hear Rick Alexander of Morris Nichols, Stephen Bigler of Richards, Layton & Finger and Kevin Shannon of Potter Anderson discuss all the latest from the Delaware courts and legislature.

Subodh Mishra of ISS’s Governance Exchange reports:

The primary association for hedge funds, the London-based Alternative Investment Management Association, released new guidance on May 31 that includes recommendations on ways hedge funds can better govern themselves in line with institutional investor expectations. “A Guide to Institutional Investors’ Views and Preferences Regarding Hedge Fund Operational Infrastructures” was drafted by members of the investor community and encompasses five discrete sections covering governance, risk, investments, capital, and operations.

The governance section was authored by Luke Dixon of the Universities Superannuation Scheme and outlines the “fundamental importance of good governance, key constitutional documents and the role of boards of directors.” Kurt Silberstein of the California Public Employees’ Retirement System authored the section on investments, which discusses performance reporting, terms and conditions, control of assets, and transparency.

This May-June issue of the Deal Lawyers print newsletter was just sent to the printer and includes articles on:

– Appraisal Rights: The Complicated World of Corporate Law’s Consolation Prize
– The Deal Lawyer’s Guide to Hidden Employee Benefit Issues: An Update Regarding Successor Liability
– Delaware Case Highlights Need for Additional Due Diligence in Merger Acquisitions
– The Art of Written Consent Solicitations
– Helping Parties to Mergers Assess Risk and Negotiate Smarter Deals
– Proposed Reform of U.K. Takeover Regulation

If you’re not yet a subscriber, try a “half-price for rest of ’11” no-risk trial to get a non-blurred version of this issue on a complimentary basis.

Yes, breaking news. Delaware Chancery Court VC Leo Strine tapped as the new Chancellor and Sam Glasscock, a long-time court master, nominated for Strine’s VC slot. They now need to be confirmed by the Delaware State Senate. Here’s articles from:

– Delaware Online

– Bloomberg

– WSJ Law Blog

– NY Times Dealbook

From Steven Haas of Hunton & Williams:

Last Friday, the Court of Chancery issued an interesting decision in Goggin v. Vermillion, Inc. applicable to shareholder proposals and annual meetings. In denying a motion to enjoin a stockholders meeting, the court enforced an advance notice requirement for shareholder proposals that was set forth in the company’s 2010 proxy statement rather than its bylaws.

By way of background, the company’s 2010 proxy materials mailed last October provided that the advance notice deadline for shareholder proposals at the 2011 annual meeting was January 1, 2011. At the time, however, it wasn’t clear when the company’s 2011 annual meeting would be held. While the company traditionally had held its annual meetings in June of each year, it had filed for bankruptcy in 2009 and decided to hold its 2010 meeting in December–just weeks before the January 1, 2011, advance notice deadline disclosed in the proxy materials.

In February 2011, more than a month after the advance notice deadline had passed, the company announced that its 2011 annual meeting would be held on June 7, 2011. As a result, the January 1 deadline resulted in a 150-day advance notice requirement for the 2011 meeting–far more than the typical 90 or 120-day requirements found in many bylaws of Delaware corporations.

The court observed that Delaware law does not require that shareholders provide advance notice of proposals or of director nominations to be raised at an annual meeting. It also acknowledged that the company didn’t have an advance notice bylaw, although it had since adopted one applicable to its 2012 stockholders meeting. Nevertheless, the court held that “the Company set forth its notice requirement for the 2011 Meeting in the October 20, 2010 proxy and that the plaintiff was unlikely to prevail on the merits by showing that the advance notice requirement was unreasonably long or unduly restrictive of [his] franchise rights.”

The court seems to have been strongly influenced by the fact that 5 of the 6 directors were independent and there were no clear signs of entrenchment motives (e.g., the plaintiff did not signal his dissatisfaction with management until after the advance notice deadline had passed). Thus, the deadline was established on the “proverbial clear day” and conformed to the company’s pre-bankruptcy practices.

Still, many observers may be surprised to see the court enforce an advance notice provision that was not set forth in the company’s governing documents. It also is notable that shareholders had approximately 2½ months notice of the pending deadline (i.e., the time in between the mailing of the October 2010 proxy statement and the January 1, 2011, deadline), and that the deadline turned out to be 150 days before the then-unknown meeting date. In contrast, many advance notice bylaws provide that, if the date of an annual meeting significantly deviates from the prior year’s meeting date, shareholders can provide notice of proposals or director nominations within 10 days after the announcement of the meeting date.