Meredith Kotler and Paul Tiger are partners and Marques Tracy is an associate at Freshfields Bruckhaus Deringer LLP. This post is based on their Freshfields memorandum and is part of the Delaware law series; links to other posts in the series are available here.
In a 94-page opinion issued last Thursday, Vice Chancellor Laster denied defendants’ motion to dismiss in In re Dell Technologies Inc. Class V Stockholders Litigation, [1] finding that the complaint alleged facts that made it “reasonably conceivable” that the safe harbor established by Kahn v. M&F Worldwide Corp. (“MFW”), 88 A.3d 635 (Del. 2014), would not apply and thus that entire fairness could be the operative standard of review, rather than the more favorable business judgment standard. While the facts in Dell are unique, the opinion offers helpful guidance to boards seeking the benefit of MFW, particularly on issues relating to establishment of a special committee, its role in negotiations, potential threats or coercion, and director independence.
Background
In 2016, Dell Technologies (“Dell” or the “Company”) acquired EMC Corporation with a combination of cash and newly-issued shares of Class V stock. A critical feature of the Class V shares was the existence of a conversion right: if the Company listed its Class C shares on a national exchange, then the Company could forcibly convert the Class V shares into Class C shares pursuant to a pricing formula that the Court characterized as “superficially simple” and that commentators had suggested could be influenced to the disadvantage of the Class V stockholders by the existence of the conversion right itself.
SEC Should Mandate Disclosures on COVID-19 Risks and Responses
More from: Carter Dougherty, AFR
Carter Dougherty is Communications Director at Americans for Financial Reform. This post is based on a joint letter to the U.S. Securities and Exchange Commission from 98 investors, state treasurers, public interest groups, labor unions, asset managers and securities law experts.
June 16, 2020
The Honorable Jay Clayton Chairman
U.S. Securities and Exchange Commission 100 F Street, NE
Washington, DC 20549
Re: Comprehensive disclosure requirements to allow investors and the public to analyze companies during the COVID-19 pandemic.
Dear Chairman Clayton,
Investors and the general public are struggling to understand how the COVID-19 pandemic is impacting the economy and the financial markets. At the same time, the federal government is distributing trillions of dollars in financial support to mitigate the economic impact of the pandemic. We urge the Securities and Exchange Commission to institute new disclosure requirements to allow investors and the public to analyze how companies are acting to protect workers, prevent the spread of the virus, and responsibly use any federal aid they receive.
Companies who sell their stock to the public must register with the SEC and fulfill periodic disclosure obligations, as defined by the Commission. These disclosures are available to investors and the general public and help contribute to the public understanding of a company’s financial performance and the risks and opportunities that might go along with investing in that company.
READ MORE »