Lately, several media and news organizations have “settled” somewhat frivolous lawsuits filed by President Trump, raising suspicions in at least some minds that the settlements were a rather unsubtle form of bribery, intended to win Trump’s favor with respect to other aspects of their businesses.

I am not particularly knowledgeable about bribery laws but let us assume, for the moment, that if these settlements were, in fact, shams to funnel money to Trump in exchange for regulatory favors, that would be illegal under some law somewhere. And, given that Trump is, you know, president, I also assume that, to the extent those laws are federal, charges are unlikely to be pursued by federal authorities.

But Disney/ABC, and Meta – not X – are incorporated in Delaware. And Delaware makes it a breach of fiduciary duty for corporate managers to intentionally break the law. I’ve blogged about the doctrinal difficulties that Caremark creates for Delaware (and they’re discussed extensively in my new paper, The Legitimation of Shareholder Primacy, now forthcoming in the Journal of Corporation Law), but whatever the doctrine’s flaws, there remains the intriguing possibility that an enterprising shareholder might bring a lawsuit – or even just a books and records action – alleging that these corporate boards transferred valuable assets out of their companies for a corrupt purpose, in violation of their obligations to shareholders.

Now, that might be a tough claim to make, and there wouldn’t be much in it for the shareholders because the dollar figures themselves, at least in the Disney and Meta cases, are relatively small.

But now we have reporting that Paramount executives are angsting over whether to settle another one of Trump’s suits, and this situation has a little more meat. The claims are, to put it mildly, weak (that CBS deceptively edited an interview with Kamala Harris, which somehow caused $20 billion of damages to Trump in Texas, in part because of a diversion of attention from Truth Social. In 2023, Truth Social reported $300 million in assets, with a $21 million loss, so man, that interview did a number on it).

(I will also point out that Trump is currently arguing that he cannot be named as a defendant in lawsuits involving Truth Social, because it would distract him from his duties as President. Being a plaintiff, apparently, poses no such threat).

Anyhoo, Trump brings these claims right as Paramount is seeking FCC permission to be bought out by Skydance, and, reportedly, Paramount has been mulling a settlement just to get the deal done. But this settlement might be a large one, and the merger itself contemplates leaving a number of public shareholders in place. Several such shareholders have already expressed dissatisfaction with the merger, and at least two are suing for books and records. For these shareholders, it would certainly be a sweetener if they could demonstrate that executives violated the law in connection with the transaction, and, in so doing, transferred money out the door that might otherwise have increased the company’s valuation.

That possibility is, according to WSJ, weighing heavily on the minds of Paramount executives, who fear insurance might not cover their liability.

But may I venture an alternative interpretation? Many, both inside and outside of Paramount, have warned that settling this type of claim erodes press freedom. The prospect of Caremark liability – however dim – may actually function as an excuse for executives to reject a settlement they don’t want anyway. That’s a point that was made when Trump announced he’d be pulling back on FCPA enforcement: executives doing business abroad may like being able to say that American law prohibits bribery because it gives them an excuse not to bend to extortion. Right now, Caremark could serve a similar function for Delaware-incorporated firms.

(Trump could, I suppose, pardon everyone, which does raise the question whether Caremark liability attaches for pardoned criminal acts.)

And another thing: New Shareholder Primacy podcast is up!  This week, Mike Levin and I talk about companies staying private longer, and about rational shareholder apathy.  Available here at Spotify, here at Apple, and here at YouTube.

Call for Papers

The National Business Law Scholars Conference (NBLSC) will be held on Wednesday and Thursday, June 25-26, 2025, at UCLA School of Law in Los Angeles, California.  This is the sixteenth meeting of the NBLSC, an annual conference that draws legal scholars from across the United States and around the world. We welcome all scholarly submissions relating to business law.  Junior scholars and those considering entering the academy are especially encouraged to participate.

The deadline for submission is Friday, March 28, 2025.  Please include the following information in your submission:

• Name
• E-mail address
• Institutional Affiliation & Title
• Paper title
• Paper description/abstract
• Keywords (3-5 words)
• Willingness to be a panel moderator
• Known scheduling conflicts
• Dietary restrictions
• Mobility restrictions

Please email your submission to Professor Eric C. Chaffee at eric.chaffee@case.edu

We realize that this conference may overlap with part of at least one other conference.  Unfortunately, these conflicts are unavoidable because of the number of conferences and other events in June and the event schedule at the UCLA School of Law, our host school.  We always are happy to work with any conflicts to permit those desiring to participate in the National Business Law Scholars Conference to do so and still attend other events.  We anticipate the conference schedule will be circulated in late April or early May.

Conference Organizers:

Afra Afsharipour (University of California, Davis, School of Law)
Tony Casey (The University of Chicago Law School)
Eric C. Chaffee (Case Western Reserve University School of Law)
Steven Davidoff Solomon (University of California, Berkeley School of Law)’
Michael Dorff (UCLA School of Law)
Benjamin Edwards (University of Nevada, Las Vegas Boyd School of Law)
Joan MacLeod Heminway (The University of Tennessee College of Law)
Nicole Iannarone (Drexel University Thomas R. Kline School of Law)
Kristin N. Johnson (Emory University School of Law)
Elizabeth Pollman (University of Pennsylvania Carey Law School)
Jeff Schwartz (University of Utah S.J. Quinney College of Law)
Megan Wischmeier Shaner (University of Oklahoma College of Law

Maxine Eichner of UNC has organized a petition, available at this link, for law professors to communicate the urgency of the constitutional crisis that is facing the country. More than 400 law professors have signed as of this posting. If you would like to add your name, you can do so by emailing maxine.eichner@gmail.com. You are invited to share the link with others who may be interested in signing.

The Drexel University Thomas R. Kline School of Law invites applications from entry-level as well as pre- and early-tenure lateral candidates for one full-time, tenured/tenure-track position expected to begin in fall 2025. While we have needs in many curricular and research areas, we have particular needs in environmental law, international law, legal methods, criminal procedure, evidence, tax, private law, and required first year subjects. 

Candidates must have a demonstrated record of significant scholarly achievement and commitment to excellent teaching. Tenure stream faculty are expected to engage in significant research and demonstrate educational, methodological, or practice backgrounds that add vitality to their work. Drexel University and the law school are committed to cross-campus collaboration and research that extends beyond disciplinary borders, with a strong interest in Law and Society research. 

Applications are encouraged from people of color, individuals with disabilities, people of all sexual and gender identities, and anyone whose background, experience or viewpoint will contribute to the diversity of the faculty. 

The law school was founded in 2006, and has quickly been recognized for its successes, rising over 50 places in US News to its current rank of #75. In addition to their research profile, law school faculty are highly visible in the national press. 

Drexel University, a large private R1 research university, is particularly known for its programs in engineering, computing, public health, and medicine, as well as its College of Computing and Informatics which includes the Isaac L. Auerbach Cybersecurity Institute. The University is situated in Philadelphia’s renowned University City, a robust campus community and the academic epicenter of the entire region. 

To apply, please send a cover letter, research and diversity statements, and curriculum vitae (with references) to Faculty Appointments Chair David S. Cohen at dsc39@drexel.edu

* * *

Assistant Teaching Professor in Law 

Job Overview: 

Drexel University Kline School of Law, in Philadelphia, seeks applications for one non-tenure track/teaching faculty position for the 2025-2026 academic year. 

Qualifications and requirements: 

  • A JD or its equivalent. 
  • At least two years of legal practice experience. 
  • Candidates with teaching experience are preferred. 

Essential Functions: Faculty are expected to teach a total of 4 courses over two semesters and participate in service to the Law School and the University. Core courses we are particularly looking to cover include Legal Methods I (predictive legal writing and analysis); Legal Methods II (persuasive legal writing and oral advocacy); Evidence; Criminal Procedure/Investigations; international law subjects; Environmental Law; private law subjects; required first year courses; Federal Income Tax; and Enterprise Tax. Occasional teaching in our Undergraduate program in law is also possible. This position is non-tenure track; time spent in the position will not accrue toward tenure. The contract is initially for two years with the goal of reappointment if mutually satisfactory. 

Supplemental Posting Information: 

To apply for this position, please upload a cover letter, curriculum vitae (with references), and a teaching statement (or, if you are receiving this directly, email your materials to Professor David S. Cohen at dsc39@drexel.edu). Individuals selected for interviews will be asked to provide three letters of recommendation. 

Drexel University is an Equal Opportunity/Affirmative Action Employer. The Kline School of Law is especially interested in qualified candidates who can contribute to the diversity and excellence of the academic community. Salaries are commensurate with experience. The University offers an attractive benefits package including a generous retirement packages with matching funds. 

Lotta news lately about companies seeking to leave Delaware, so it’s amusing to see a company fighting to get in. 

Daktronics is incorporated in South Dakota of all places (is it lonely there?).  South Dakota mandates cumulative voting, which makes it much, much easier for a minority blockholder to gain board representation, as Matt Levine explains here.

And such a blockholder has emerged, in the form of Alta Fox.  Alta Fox is both a shareholder and a holder of Daktronics notes, but the notes are convertible into shares, so on a fully diluted basis, Alta Fox owns over 11% of Daktronics’ voting power.  Given that, at least some of Alta Fox’s director nominees would likely have been seated in a proxy contest but – plot twist! – Daktronics called a special meeting of its shareholders to vote on reincorporation to Delaware, where cumulative voting is not the default.

And, as I understand it, Daktronics is calling for that vote before Alta Fox’s shares convert, so that Alta Fox will be heading into the meeting with less than its full voting power. In response, Alta Fox filed a lawsuit (in federal court, presumably because it just likes the judges and/or procedures better), alleging that Daktronics’s proposal represents a breach of fiduciary duty and shareholder oppression.

So, quick point: Shareholder oppression is a remedy unavailable in Delaware, but available in most other states in one form or another, and typically protects shareholders in close corporations from the unreasonable frustration of expectations by a majority shareholder or controlling group.  Usually, the issue is that the majority group is refusing to pay dividends or otherwise cutting the minority shareholder off from the economic benefits of the investment, leaving the minority shareholder trapped with illiquid holdings that are not generating any income.  So, employing the doctrine in the context of a public company would be unusual, but I’m not an expert in South Dakota corporate law (is anyone?) and we’ll have to see how that unfolds.

That said, the more interesting question is how to think about the legal issue of using reincorporation as a defensive tactic.

As Ben Edwards posted, earlier this week, the Delaware Supreme Court decided Maffei v. Palkon, where it held that reincorporation out of Delaware into Nevada – even if forced through by a controlling shareholder – will not be treated as a conflicted transaction subject to entire fairness review.  But there’s an important caveat: the Delaware Supreme Court made clear that if there is an actual transaction under consideration, such that the plaintiffs can show reincorporation would rob them of specific rights, then entire fairness might be the appropriate standard of review.  As the court held:

[T]he hypothetical and contingent impact of Nevada law on unspecified corporate actions that may or may not occur in the future is too speculative to constitute a material, non-ratable benefit triggering entire fairness review…. Given the absence of any allegations that the Conversion decisions were made to avoid any existing or threatened litigation or that they were made in contemplation of any particular transaction, we hold that Plaintiffs have failed to adequately allege facts showing Defendants’ receipt of a material, non-ratable benefit….

We note that Plaintiffs have not alleged that Defendants have taken any articulable, material steps in connection with any post-conversion transactions.  If directors or controllers were to take such steps in furtherance of breaching their fiduciary duties prior to redomesticating, even though such transactions or conduct would not be consummated or take place until after the change of corporate domicile, then our standard of review could be different.  Although we do not reach that issue today, under such a scenario the conduct of those alleged to have engaged in it could still be subject to Delaware law.  But, as we have stated above, the record here suggests the existence of a “clear day” and the absence of any material, non-ratable benefits flowing to the controller or directors as a result of the Conversions.

So, back to Daktronics.  Here, the reincorporation is not intended to effectuate a specific transaction, but it is intended to thwart shareholder voting rights in the context of a particular, threatened proxy contest.  And – I have no idea what South Dakota law is, I doubt anyone knows – but under Delaware law, such actions would usually be evaluated under the heightened scrutiny of Unocal/Coster.  Specifically, as the Delaware Supreme Court put it in Kellner v. AIM:

the court should review whether the board faced a threat “to an important corporate interest or to the achievement of a significant corporate benefit.” The threat must be real and not pretextual, and the board’s motivations must be proper and not selfish or disloyal. As Chancellor Allen stated long ago, the threat cannot be justified on the grounds that the board knows what is in the best interests of the stockholders.

In other words, as Kellner put it, takeover defenses are prohibited when they interfere with voting rights and are adopted by a board “for the primary purpose of precluding a challenge to its control.”

Now, relocating to Delaware does not preclude Alta Fox’s challenge, but it does seem like reincorporation is intended to change the rules of the game to Alta Fox’s detriment mid-stream, so I venture to guess that a Delaware court, confronted with the problem, would in fact employ the heightened test rather than business judgment review.

Anyhoo.  I don’t know how the case comes out, I don’t even know if a South Dakota court will look to Delaware precedent.  But it’s interesting that even after Maffei, we immediately see an example of reincorporation as potentially subject to a heightened standard of review.

And another thing.  New Shareholder Primacy podcast is up!  This week, Mike Levin talks to Lauren Thomas of the Wall Street Journal.  Available here at Spotify, here at Apple, and here at YouTube.

The University of Iowa College of Law

Faculty Hiring Announcement

The University of Iowa College of Law anticipates hiring lateral faculty members in the areas of Family Law and Business Law.

APPLICATION PROCEDURE: To apply, candidates should submit a letter of interest, CV, a list of three references, and a law school transcript through Jobs@UIOWA, https://jobs.uiowa.edu, refer to Requisition #75522. 

Consistent with the mission and responsibilities of a top-tier public research university, we are interested in candidates who are recognized scholars and teachers and who will participate actively in the intellectual life of the College of Law.  In addition, we desire candidates with a demonstrated ability to maintain effective and respectful working relationships with the campus community to uphold a standard of cultural competency and respect for differences. We also desire candidates who would bring significant new scholarly strengths to the College of Law. Candidates who can contribute to these goals are encouraged to apply and to identify their strengths in these areas.

QUALIFICATIONS: 

  • Required Qualifications for Associate Professor:
  • Consistent record of ability as a teacher of law students.
  • Consistent record of scholarly productivity.
  • JD, PhD or other advanced degree related to the area of the candidate’s scholarly work.
  • Experience teaching in the area of family law or business law. 

    Required Qualifications for Professor:

    • Consistent record of high-quality teaching at all appropriate instructional levels.
    • Scholarly achievement of high quality, accompanied by unmistakable evidence that the candidate is a nationally and, where applicable, internationally recognized scholar in the chosen field.
    • Record of significant and effective service to the law school, university, and, if appropriate, to the profession.
    • JD, PhD or other advanced degree related to the area of the candidate’s scholarly work.
    • Experience teaching in the area of family law or business law.

      Desirable Qualifications for Associate Professor and Professor:

      • Demonstrated experience working effectively and collaboratively with individuals from a variety of backgrounds and perspectives, including knowledge of effective strategies that foster and promote a welcoming and respectful work/academic environment. 
      • Will bring significant new scholarly strengths to the College of Law.

        Successful candidates will be required to self-disclose any misconduct history or pending research misconduct investigation including but not limited to sexual misconduct in prior employment and provide a related release and will be subject to a criminal background and credential check.

        For questions, please contact Diane Lourdes Dick, chair of the Faculty Appointments Committee at diane-dick@uiowa.edu

        The University of Iowa is an equal opportunity/affirmative action employer. All qualified applicants are encouraged to apply and will receive consideration for employment free from discrimination on the basis of race, creed, color, religion, national origin, age, sex, pregnancy (including childbirth and related conditions), disability, genetic information, status as a U.S. veteran, service in the U.S. military, sexual orientation, gender identity, or associational preferences.

        In addition to abiding by the UI Nondiscrimination Statement the College of Law further prohibits discrimination on the basis of ethnicity, gender, gender identity and expression, and military status. The College of Law affirms its commitment to providing equal opportunity without discrimination or segregation on the same bases.

        Persons with disabilities may contact University Human Resources/Faculty and Staff Disability Services, (319) 335-2660 or fsds@uiowa.edu, to inquire or discuss accommodation needs. 

        Prospective employees may review the University Campus Security Policy and the latest annual crime statistics by contacting the Department of Public Safety at 319/335-5022.

        The Delaware Supreme Court has just released its decision in the TripAdvisor case. It’s available here.

        Although I’m going to need more time to sit with and read the opinion carefully, it’s definitely a significant win for corporations considering exiting Delaware in favor of some other jurisdiction. The decision reverses the Chancery court and finds that redomesticating to operate under different state’s law with different standards for liability does not confer a material, non-ratable benefit on defendants. In essence, the mere possibility that the defendants might get away with something in the future that they could not get away with under Delaware law is too remote and speculative a reason to award damages for leaving Delaware or to apply anything other than business judgment rule deference. The Delaware Supreme Court found:

        Taken together, these cases suggest that the hypothetical and contingent impact of Nevada law on unspecified corporate actions that may or may not occur in the future is too speculative to constitute a material, non-ratable benefit triggering entire fairness review. Given that Plaintiffs have not alleged any past conduct that would lead to litigation, this case aligns with our case law that applies the business judgment rule. 

        . . .

        Here, Plaintiffs’ allegations have not satisfied the requirement of pleading a material benefit because they have not alleged anything more than speculation about what potential liabilities Defendants may face in the future. On this record, we cannot conclude that the Conversions would provide Defendants with a material, non-ratable benefit triggering entire fairness review. Accordingly, we hold that the business judgment rule is the applicable standard of review in this case.

        Delaware’s Supreme Court also weighted in on the basis of comity, finding that it provided another reason to stay out of trying to value differences between the two states. The decision finds:

        We note finally that, although comity concerns are not an independent ground for reversal in this case, our holding furthers the goals of comity by our declining to engage in a cost-benefit analysis of the Delaware and Nevada corporate governance regimes. . . . States have taken different approaches on matters such as the scope of director and officer exculpation, standards of review, and the scope of stockholder inspection rights. And litigation rights, as the Vice Chancellor recognized, are only one stick in the corporate governance bundle. Delaware courts are well-aware that “it is more than the statutory words on paper that give life to a system of entity law. Much often depends on the extent to which specific disputes are consistently handled by courts, thus giving business[persons] predictable guidance by which to order their relations.”

        I wrote about the case shortly after the oral argument and noted that it would be very difficult to figure out damages for moving between states because states offer such different overall packages. Then, I wrote:

        Either for the loss of the constituency statutes or for other changes in rights between states, figuring out damages appears to be a really nasty thicket. I don’t know any great way to do it. I don’t think anyone does. How do you value a different set of statutes, different cases, and a different court system? I don’t know. I don’t think the Delaware Supreme Court has a great answer either. It might be better to just treat damages here as too speculative.

        The Delaware Supreme Court concluded with a similar view, stating:

        We submit that attempting to value competing corporate governance structures, particularly in the absence of any concrete allegations of Defendants receiving a material, non-ratable benefit, and based upon hypothetical future transactions, as here, would be an unacceptably speculative cost-benefit exercise. Such an exercise, under these circumstances, also risk intruding on the value judgments of state legislators and directors of corporations.

        Although this decision closes the chapter on how Delaware will treat redomesticating firms, it does also highlight key factors for boards and other states to consider in evaluating jurisdictions and possible reforms. It sets out a broad range of factors that weigh on a decision including: (1) “the court system;” (2) “the predictability of the courts with respect to business matters;” (3) “the judges’ expertise in handling such disputes;” (4) “the development and body of judicial decisions;” (4) “the familiarity of market participants with the corporate governance regime; (5) the process by which corporate statutory amendments are proposed and adopted; (6) “the effectiveness of the Secretary of State office in facilitating corporate filings; and (7) “the existence of a Corporate Bar available, willing, and able to handle such disputes.”

        When many firms look at these factors, they may continue to decide that Delaware offers them the best overall package. For states like Nevada, the list highlights areas the state should evaluate and devote additional resources to if it wants to more meaningfully compete.

        Business Transactional Skills Professor
        University of Richmond School of Law

        The University of Richmond School of Law is seeking applicants for a full-time faculty member to teach business law courses, including transactional skills courses. The position will begin in the summer or fall of 2025. The full position description is here — law.richmond.edu/faculty/hiring.html.

        Our new hire will teach one section of Business Associations (our foundational business law course), Mergers & Acquisitions, and two transactional skills courses. The skills courses will emphasize experiential learning, allowing students to work on assignments that resemble the type of work they will do in practice and to develop skills as legal and business advisors to their clients. Candidates must have several years of practice experience in business transactional law and a J.D. from a U.S. accredited law school.

        This is a non-tenure track position that focuses on teaching and mentoring students during the nine-month academic year. Depending on experience, a successful candidate will be hired as an Assistant or Associate Professor of Law, Legal Practice and will be eligible for promotion and five-year presumptively renewable contracts upon promotion to Professor of Law, Legal Practice.

        The University of Richmond is a private university located just a short drive from downtown Richmond, Virginia. Through its five schools and a wide array of campus programming, the University combines the best qualities of a small liberal arts college and a large university. The University of Richmond is committed to developing a diverse workforce and student body, and to modeling an inclusive campus community that values the expression of difference in ways that promote excellence in teaching, learning, personal development, and institutional success. Our academic community strongly encourages applications that are in keeping with this commitment. For more information on the School of Law, please visit https://law.richmond.edu/.

        Applicants should send a cover letter and resume to Professor Jessica Erickson at lawskillsapps@richmond.edu. We encourage applicants to include information in their cover letter about their own transactional practice experience, their experience with teaching and mentoring, their views on the skills and competencies that lawyers in transactional practices need, and their anticipated approach to course design, inclusive pedagogy, assessment, and feedback. The committee will begin considering applications in mid-to-late February and will start conducting Zoom screening interviews shortly thereafter.

        I wasn’t sure whether to post this paper yet, but in light of *hand waves* everything, here’s my take on current corporate governance disputes, DExit, Tornetta, Moelis, ESG – the whole shebang.

        The Legitimation of Shareholder Primacy

        We are living in a particularly polarized era, and corporate governance is no exception.  With controversies raging over “environmental, social, governance” (ESG) investing, diversity, equity, and inclusion initiatives, climate change as an investment concern, and even Elon Musk’s pay package at Tesla, it seems as though corporate governance has never been so starkly divided along partisan lines.

        The divisions have threatened to spill over to Delaware, the preferred jurisdiction for incorporation in the United States.  Several high profile cases – including those involving Elon Musk – have called Delaware’s neutrality into question.   Commenters have argued that Delaware’s newly-politicized approach threatens to splinter the corporate governance universe, driving corporations to other states that are more reliable (or that follow different corporations’ preferred politics).

        This Article argues that, in some ways, the critics are correct: Delaware law is on a path toward politicization.  But it is not because of any particular bias of its judges or its law; to the contrary, the pressures toward politicization are inherent in any system that purports to guide how vast aggregations of capital will be deployed.  What is unique about the current moment is that the trends toward politicization result from tensions inherent in shareholder primacy. Shareholder primacy was conceived, in large part, as a compromise to keep politics out of business management; what the modern controversies reveal is the futility of that effort.  

        Back in 2019, I posted about a panel at Tulane’s Corporate Law Institute discussing Rule 14a-6(g).  That rule allows shareholders who are not seeking proxy authority to communicate with other shareholders without filing a proxy statement, but under some circumstances, any holder of more than $5 million of stock must file their written solicitation materials with the SEC.

        In 2019, the new thing was for shareholders who own less than $5 million to file materials anyway, because they’d figured out that EDGAR was actually a cheap and efficient mechanism to allow them to communicate with other shareholders.  So, for example, proponents of 14-8 proposals, or vote-no campaigns, had begun filing statements with the SEC under 14a-6.

        At that CLI, SEC counsel Ted Yu explained new Commission guidance that such voluntary filings were permissible, so long as there was disclosure that the filing was voluntary.

        After that, Dipesh Bhattarai, Brian Blank, Tingting Liu, Kathryn Schumann-Foster, and Tracie Woidtke conducted a study of these 14a-6(g) filings.  I posted about their paper in 2022:

        They find that a variety of institutional investors make these filings, including public pension funds (38%), union funds (26%), and other institutions, including hedge funds (22%).  The filings may be used to support shareholder proposals that are already on the ballot – and thus to exceed the 500-word limit for such proposals – and to oppose management proposals, such as director nominations and say-on-pay.  And these filings are taken seriously: 74% of them are accessed by a major investment bank, and they appear to have an effect on voting outcomes and forced CEO turnover.

        So this is fascinating.  The rule, adopted in 1992, at least as I always understood it, was intended to ensure that all shareholders receive the same information, and to allow that information to be publicly vetted, so that large shareholders can’t lobby others in secret (and away from management prying eyes).  But with modern computerized filings, the rule has been, functionally, hacked, to serve as a low-cost mechanism by which shareholders can communicate with other shareholders – and shareholders find it useful.  That’s a good thing

        Apparently, too much of one, because proxy exempt solicitations have proliferated, sometimes filed not by the shareholder-proponent of a proposal, but instead by organizations that support or oppose it.

        So, in one of the first acts of the SEC under the new administration, the SEC has issued new guidance that will, as far as I can tell, severely curtail or eliminate the use of exempt solicitations.  According to the new guidance,

        Question: Can a person submit written soliciting material under the cover of a Notice of Exempt Solicitation on EDGAR if the written soliciting material has not been sent or given to security holders?

        Answer: No. The submission of a Notice of Exempt Solicitation on EDGAR is not intended to be the means through which a person disseminates written soliciting material to security holders. Rather, its purpose is to notify the public of the written soliciting material that the person has sent or given to security holders through other means.

        Meaning, as far as I can tell, EDGAR can no long be used for low-cost distribution; shareholders have to go to the expense of actually distributing the material separately before it can be filed with EDGAR for a 14a-6(g) distribution (though it is not clear how many others must be separately solicited).  There are some other tweaks (discussed in various firm client memos, including this one from Gibson Dunn (h/t thecorporatecounsel)), but that seems to be the bombshell.

        I can believe that the process has become too crowded – especially to the extent it’s been used by nonshareholders and to offer statements that do not constitute “solicitations” – but it seems we’ve just lost a valuable method by which dispersed shareholders can communicate with each other.

        And another thing.  New Shareholder Primacy podcast is up!  This week, Mike Levin talks to Adriana Robertson of U Chicago and Slava Fos of Boston College about ways companies control and sometimes manipulate annual shareholder meetings.  Available here at Spotify, here at Apple, and here at YouTube.