August 30, 2012
Chancery arbitration procedure ruling handed down
A Federal District Court in Philadelphia just handed down a ruling in the challenge to Delaware's Chanery arbitration procedure, which I wrote about some months ago (November Post: More Thoughts on the Chancery Arbitration Procedure). The court ruled in favor of the Delaware Coalition for Open Government's position that the public has a qualified right of access to proceedings of the public courts. Arbitration conducted before Delaware chancellors pursuant to the Chancery arbitration procedure is sufficiently like a non-jury trial as to implicate that right notwithstanding the legislation creating the procedure and the wishes of the parties.
Short version: the confidential arbitration procedure falls.
Here's the opinion: DCOG v Strine, et al Opinion.
The ABA Journal is generating its annual 100 Best Legal Blogs list. It all starts with a nomination and for some reason, they are opposed to self-nomination. If you are so inclined, please nominate the M&A Law Prof Blog here: Blawg 100 Amici.
Brazilian premerger notification
You want to know why the HSR guy down the hall sighs and slumps his shoulders every time you burst into his office with the great news that you just signed a deal to acquire a company with big operations in Brazil? This is why:
Under the legislation, the [Brazilian] antitrust authority known as Cade has said it will take no more than 330 days to review a proposed merger. Previously, companies filed requests to review a deal after an accord had already been closed, allowing operations to be integrated before approval from Cade, which took as long as two years in some cases.
Brazil is proposing to revise its premerger notification system to speed up approvals from two years following closing to 330 days. I guess that's better, but still ... ugh. I don't know if this change is necessarily an improvement. Previously, you had to file post-closing and then let it sit for years -- with the risk that antitrust authorities might require you to 'unscramble the eggs' at some point. Now, you will be required to file within 15 days of signing, but then you have to sit for as long as 330 days (240 days, plus an additional 90 days in "complex" cases), not 30 days like in the US (The Economist).
August 28, 2012
Faculty Opening at the University of Richmond
The University of Richmond School of Law is looking to fill a tenure-track corporate/transactional law position. Their announcement:
The University of Richmond School of Law is looking to fill a tenure-track position in the area of corporate and transactional law. Entry level candidates should have outstanding academic credentials and show superb promise for top-notch scholarship. Lateral candidates should have a superb record of scholarship and teaching. Applications and inquiries may be directed to Professor Corinna Lain, Chair of Faculty Appointments, at email@example.com.
I have been to Richmond and it is quite a charming city.
Exclusive forum provisions and proxy adviser policies
Over at Corporate Counsel, they've posted a useful update on the current state of exclusive forum provisions. One change over the past year of note has been the change in stance of ISS with respect to such provisions. They have moved from a qualified vote against recommendation to a "case-by-case" approach shareholder questions with respect to such provisions. Glass Lewis continues to recommend against such provisions. Of interest, CC notes that in 2012 none of the shareholder resolutions against exclusive forum provisions passed notwithstanding recommendations against by both Glass Lewis and ISS.
Empty-voting and hidden ownership
Jordan Barry and his co-authors weigh in on the question of empty-voting in their new paper, On Derivative Markets and Social Welfare: A Theory of Empty Voting and Hidden Ownership.
Abstract: The prevailing view among many economists is that derivatives markets simply enable financial markets to incorporate information better and faster. Under this view, increasing the size of derivatives markets only increases the efficiency of financial markets.
We present formal economic analysis that contradicts this view. Derivatives allow investors to hold economic interests in a corporation without owning voting rights, or vice versa. This leads to both empty voters — investors whose voting rights in a corporation exceed their economic interests — and hidden owners — investors whose economic interests exceed their voting rights. We show how, when financial markets are opaque, empty voting and hidden ownership can render financial markets unpredictable, unstable, and inefficient. By contrast, we show that when financial markets are transparent, empty voting and hidden ownership have dramatically different effects. They cause financial markets to follow predictable patterns, encourage stable outcomes, and can improve efficiency. Our analysis lends insight into the operation of securities markets in general and derivatives markets in particular. It provides a new justification for a robust mandatory disclosure regime and facilitates analysis of proposed substantive securities regulations.