Season-End Summary of Challenges under Rule 14a-8

Posted by Neil McCarthy, James Palmiter, and Markus Hartmann, DragonGC, on
Thursday, June 5, 2025
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Neil McCarthy is Co-Founder and Chief Product Officer, James Palmiter is CEO and Co-Founder, and Markus Hartmann is Chief Legal Development Officer at DragonGC. This post is based on a DragonGC memorandum by Mr. McCarthy, Mr. Palmiter, Mr. Hartmann, G. Michael Weiksner, Jennifer Carberry, and Nicholas Sasso.

The SEC has just completed its oversight role for the 2024/2025 season over challenges brought by companies to exclude proposals submitted by their shareholders per Rule 14a-8. What follows is a summary of the results for this season with comparisons to prior seasons.

Under Rule 14a-8, companies generally must include shareholder proposals in their proxy statements to be considered at the annual meeting. The rule, however, provides several bases for exclusion, including 13 substantive requirements that proposals must comply with to avoid exclusion – Rule 14a-8(i)(1) to (i)(13) – as well as procedural requirements for when and how they must be submitted to the companies by shareholders. The rule has a process for how companies can seek to exclude these proposals by submitting a challenge to the SEC to obtain a favorable ‘no-action letter.’ READ MORE »

What Newly Amended DGCL §144 Says (and Does Not Say) about Controlling Stockholder Transactions

Posted by Marcel Kahan (New York University School of Law) and Edward Rock (New York University School of Law), on
Thursday, June 5, 2025
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Marcel Kahan is the George T. Lowy Professor of Law and Edward B. Rock is the Martin Lipton Professor of Law at New York University School of Law. This post is part of the Delaware law series; links to other posts in the series are available here.

After a pitched battle, Delaware’s SB21 amended DGCL § 144 and became effective on March 25, 2025.  As the rhetoric recedes, we should leave the battle over its enactment behind us and look to the future: What does amended DGCL § 144 now say about controlling stockholder transactions? And to what extent does it change prior law?  The actual language of the new section, which we will call the Safe Harbor Provision, does not reflect either its proponents’ dreams nor its opponents’ nightmares.  It instead draws a distinction between statutory controllers and common law controllers and leaves Delaware’s law on the latter untouched .

The legislative synopsis for SB21 makes clear that the goal was to create “safe harbors” for interested director and controlling shareholder transactions: “Section 1 of this Act amends § 144 of Title 8 to provide safe harbor procedures for acts or transactions in which one or more directors or officers as well as controlling stockholders and members of control groups have interests or relationships that might render them interested or not independent with respect to the act or transaction.”  Law firm memos by, among others, Morris Nichols and Richard Layton and Finger, sound the same theme.  Governor Matt Meyer, in his request to intervene in the Dropbox litigation in the event that the Delaware Supreme Court accepts the certified question on the constitutionality of SB21, focuses on the same language in the original synopsis: “[A]mended Section 144 ‘provides safe harbor procedures’ for certain acts or transactions under specified circumstances.”

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Court Finds Up-C Reorganization Claim Derivative

Posted by Shannon Eagan, Patrick Gibbs, and Sarah Lightdale, Cooley LLP, on
Thursday, June 5, 2025
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Shannon Eagan, Patrick Gibbs, and Sarah Lightdale are Partners at Cooley LLP. This post is based on a Cooley memorandum by Ms. Eagan, Mr. Gibbs, Ms. Lightdale, and Bingxin Wu and is part of the Delaware law series; links to other posts in the series are available here.

On April 10, 2025, the Delaware Court of Chancery granted a motion to dismiss in a breach of fiduciary duty action arising from BGC’s conversion from an Up-C corporation to a traditional full C corporation. While multiple fiduciary duty cases involving Up-C reorganizations have been filed recently in the Delaware Court of Chancery, very few have been dismissed at the pleading stage. In dismissing the case, the court held that the plaintiff’s claim – which was styled as a direct, putative class action – was in fact derivative, and thus failed because the plaintiff neither made a demand nor attempted to plead demand futility.

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Why Women CEOs Leave Sooner – and How Boards Can Help All CEOs Thrive

Posted by Margot McShane and Hetty Pye, Russell Reynolds Associates, on
Wednesday, June 4, 2025
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Margot McShane and Hetty Pye are Co-Leaders of the firm’s Board & CEO Advisory Partners at Russell Reynolds Associates. This post is based on a Russell Reynolds memorandum by Ms. McShane, Ms. Pye, Dana Krueger, and Leah Christianson.

Women CEOs’ tenures are, on average, three years shorter than men’s. Why?

Russell Reynolds Associates has reported extensively on the common obstacles many women leaders face on their journeys to the top. Yet these obstacles don’t disappear once women make it there. This is perhaps best illustrated by data from RRA’s CEO Turnover Index, which found that, since 2018, women CEOs hold the role for an average of 5.2 years, while their male counterparts served for an average of 7.9 years—equating to men spending more than 50% longer in seat.

While there are many different reasons and contributing factors leading to a CEO’s departure, research shows that four overarching themes rise to the surface READ MORE »

An Eras Tour of Delaware Law

Posted by Hon. J. Travis Laster, Delaware Court of Chancery, on
Wednesday, June 4, 2025
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The Honorable J. Travis Laster is Vice Chancellor at the Delaware Court of Chancery. This post is based on his recent paper and is part of the Delaware law series; links to other posts in the series are available here.

In September 2024, the Journal of Corporation Law hosted a symposium in honor of the fiftieth anniversary of its founding. That happy event provided an opportunity for a keynote speech that looked back across the history of Delaware corporate law. A forthcoming article—An Eras Tour of Delaware Law—builds on those remarks.

Since Delaware became a state in 1776, there have been nine eras of Delaware corporate law: the Antecedent Era, the Charter-Mongering Era, the Quiet Era, the Responding Era, the Reformation Era, the Moderating Era, the Generative Era, the Implementing Era, and the Current Era. Each era presented the Delaware courts with different challenges. Not surprisingly, those different challenges produced different responses.

The Eras article examines those eras and the judicial responses. The tour demonstrates that Delaware has offered a principles-based system in which judges shaped corporate law by ruling on the facts of a particular case within the context of a prevailing legal environment. As Chief Justice Leo E. Strine, Jr. observed over two decades ago, Delaware’s corporation law has been “highly dynamic,” deploying principles of equity and case-specific rulings to avoid doctrinal lock-in and ossification.

This Eras article addresses each era, giving primacy to the five decades of the Journal’s existence. Over that period, the Delaware courts have confronted too many issues to cover. The Eras article prioritizes three high-profile areas: controller transactions, third-party mergers and acquisitions, and derivative actions. For each era, the article considers the rules the courts established, the results they reached, and the rhetoric they deployed.

The article reaches an unsurprising conclusion: The defining hallmark of Delaware corporate law has been its independent judiciary, adhering to the rule of law, and reaching case-specific decisions as challenges emerge and conditions change. The judge-led dynamism of Delaware corporate law has been the key to its success.

The article will be published in the Journal of Corporation Law. It is posted on SSRN and can be found here.

Nevada Amends Corporate Law to Attract Incorporations

Posted by David Bell, Ran Ben-Tzur, and Dean Kristy, Fenwick & West LLP, on
Wednesday, June 4, 2025
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David Bell, Ran Ben-Tzur, and Dean Kristy are Partners at Fenwick & West LLP. This post is based on a Fenwick memorandum by Mr. Bell, Mr. Ben-Tzur, Mr. Kristy, and Wendy Grasso.

What You Need To Know

  • Nevada’s legislature recently adopted Assembly Bill No. 239, which provides for significant amendments to the Nevada Revised Statutes governing Nevada corporations. The amendments have been delivered to the Governor for signature.
  • The amendments would, among other things, clarify the fiduciary duties of controlling stockholders, allow corporations to waive jury trials in their articles of incorporation, and permit certain holding company reorganizations.

Not to be outdone by Delaware and Texas, the Nevada Senate voted unanimously on May 21, 2025, to adopt Assembly Bill No. 239 (AB 239), which provides for significant amendments to the Nevada Revised Statutes (NRS) governing Nevada corporations. The legislation was initially proposed by the State Bar of Nevada’s Executive Committee, Business Law Section, which also prepared a memorandum summarizing the changes.

The memorandum explains that the proposed amendments are intended to provide greater clarity and to respond to practice considerations, requests/comments from other attorneys, and other business law developments in other states (presumably Delaware and Texas). While the memorandum does not address the corporate amendments just adopted in Texas, it does reference the existing corporate laws in Delaware, including recently adopted amendments to the Delaware General Corporation Law (DGCL)—making clear that the proposed changes are an attempt to appeal to corporations and challenge Delaware’s status as the preferred state for incorporation.

Key changes proposed by AB 239 are summarized below.

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Streamlining Sustainability Reporting: Survey Reveals Top Priorities for Corporates

Posted by Subodh Mishra, ISS STOXX, on
Tuesday, June 3, 2025
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Subodh Mishra is Global Head of Communications at ISS STOXX. This post is based on an ISS-Corporate memorandum by Kosmas Papadopoulos, Executive Director & Head of Sustainability Advisory for the Americas at ISS-Corporate.

Streamlining Sustainability Reporting: Survey Reveals Top Priorities for Corporates

Sustainability reporting has become widespread and increasingly complex, as corporate issuers manage stakeholder expectations, regulatory mandates, and alignment with multiple reporting frameworks. As they strive to meet these needs, sustainability reporting teams seek ways to standardize and streamline their approach, ensuring efficiency in data gathering, relevance, accuracy and traceability of sustainability information shared with stakeholders. Software solutions have emerged to address these needs, assisting organizations with data collection, data analysis, and alignment with reporting standards and frameworks.

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The Value of Privacy and the Choice of Limited Partners by Venture Capitalists

Posted by Rustam Abuzov (University of Virginia), Will Gornall (University of British Columbia), and Ilya A. Strebulaev (Stanford University), on
Tuesday, June 3, 2025
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Rustam Abuzov is an Assistant Professor of Finance at the Darden School of Business, University of Virginia, Will Gornall is an Associate Professor of Finance at UBC Sauder School of Business, and Ilya A. Strebulaev is The David S. Lobel Professor of Private Equity and Professor of Finance at Stanford Graduate School of Business. This post is based on their recent article forthcoming in the Journal of Financial Economics.

Many venture capitalists view confidentiality as a core competitive advantage when investing in high-growth companies. They guard not only the sensitive information they obtain from startups, but also the prices they pay, the structure of their deals, and the proprietary strategies they use to find and evaluate investments. In our recent paper, The Value of Privacy and the Choice of Limited Partners by Venture Capitalists, we show that disclosure requirements influence not only how VCs invest, but also which investors they are willing to accept capital from.

Public pension funds and university endowments have historically been among the most important limited partners (LPs) in VC funds, accounting for roughly one-third of reported capital commitments. However, beginning in late 2002, these public LPs faced a major shift in disclosure obligations driven by state-level Freedom of Information Acts (FOIAs). These laws require public institutions to disclose many types of records upon request, although VC data was historically treated as a trade secret and thus exempt from disclosure. That changed with a pivotal court ruling that forced public LPs to release fund-level performance data and raised the prospect of broader disclosure of sensitive portfolio company information. We refer to this change in public LP disclosure requirements as the FOIA shock.

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What DOJ’s New Enforcement Plan Means for Health Care Companies

Posted by Joshua Levy and Laura Hoey, Ropes & Gray LLP, on
Tuesday, June 3, 2025
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Joshua Levy and Laura Hoey are Partners at Ropes & Gray LLP. This post is based on a Ropes & Gray memorandum by Mr. Levy, Ms. Hoey, Jaime Orloff Feeney, and Nathalia Sosa.

On May 12, 2025, the Head of the US Department of Justice’s Criminal Division, Matthew R. Galeotti (“Galeotti”), announced DOJ’s first ever White-Collar Enforcement Plan (the “Plan”), which directs prosecutors to: (1) focus on certain priority areas, including several areas directly impacting the health care and life sciences industries, as noted below; (2) conduct white-collar investigations in fairness by incentivizing good corporate conduct and voluntary self-disclosure; and (3) boost efficiency by reducing the duration of corporate investigations and charging decisions. The Plan also introduces revisions to existing DOJ white-collar and corporate enforcement policies. We previously summarized these significant policy changes in our May 15 Alert.

While overall the Plan reflects a somewhat more measured approach to corporate criminal enforcement, investigating and prosecuting health care fraud clearly remains a priority for the Trump administration. Health care and life sciences companies will continue to be under the microscope and should be aware that:

  • Investigation and prosecution of health care violations dominate the enforcement list for Criminal and Civil DOJ.
  • DOJ has expanded the types of reports eligible under its Corporate Whistleblower Awards Pilot Program (“DOJ Whistleblower Program”) to include information of potential violations involving public health care benefit programs.
  • DOJ has signaled a reduced reliance on corporate compliance monitors in criminal resolutions; however, health care and life sciences companies may still be subject to compliance monitoring and reporting requirements imposed by the Office of the Inspector General for the US Department of Health and Human Services (“HHS-OIG”) or other regulators, such as state attorneys general.

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More and Better Options: Strengthening Long-Term CEO Succession Planning

Posted by Rusty O’Kelley and Rich Fields, Russell Reynolds Associates, on
Monday, June 2, 2025
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Rusty O’Kelley is a Managing Director, and Rich Fields is the Head of Board Effectiveness Practice at Russell Reynolds Associates. This post is based on a Russell Reynolds memorandum by Mr. O’Kelley, Mr. Fields, Margot McShane, Dean Stamoulis, and Joy Tan.

CEO succession is a board’s most important responsibility. This is especially true today, as companies face a range of intense pressures, the reality of decreasing leadership preparedness across a wide range of rapidly-evolving business challenges, record CEO turnover, and nuanced governance trends—such as an anticipated increase of shareholder activism (particularly in the United States) and a new push-and-pull dynamic between board and management.

To ensure resilience in this quickly evolving business landscape, boards need to strengthen their processes to develop long-term CEO succession pipelines. This requires integrating more meaningful options into the succession process. Increasing optionality for top leadership roles is critical, as it allows the board flexibility in decision-making and risk mitigation, making agile, informed choices. Exploring different talent strategies and pathways will also allow boards to enhance value creation, as they will have increased options to achieve desired business results.

Russell Reynold’s 2025 Global Board Culture and Director Behavior study identifies three noteworthy barriers that prevent boards from creating meaningful optionality in CEO succession pipelines.

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