– but happily there’s no shortage of news about holiday-themed shortages.

For starters, Christmas tree supplies are tight, and this is both a covid problem and a climate change problem:

The American Christmas Tree Association has said this year’s supply of real Christmas trees will be squeezed by the summer’s heat dome in the Pacific Northwest, while supplies of artificial trees, largely coming from China, will be affected by the same shipping and labor problems plaguing many industries.

And apparently some of the problems can be blamed on … *squints* … Lehman Brothers?

Hundley of the National Christmas Tree Association said there is one reason for the tighter stocks this year that has nothing to do with the pandemic or the world’s supply chain headaches: During the financial crisis of 2008, many growers didn’t have the capital to plant a lot of trees, and national plantings dipped.  “The previous financial crisis caused fewer to be planted, so we don’t have an oversupply right now. It’s a supply that matches demand,” he said. 

It also seems that covid has come for Santa:

The pandemic hit the Santa Claus community hard, for obvious reasons: Many of the men who play

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I’ve blogged a couple of times on the eroding distinction between private and public companies – “private is the new public,” as Matt Levine likes to say (though Prof. Ilya Beylin does not agree that the erosion is so drastic).  Which is why I was struck by the package of financial reforms endorsed this week by the House Financial Services Committee.

Among other measures, the Committee backed a restriction on the marketing of public companies – namely, SPACs – to retail investors.  Per the proposed legislation, no investment adviser or broker-dealer would be permitted to recommend, or even facilitate a trade in, a SPAC investment by an unaccredited investor unless either the “promote” is less than 5%, or the SPAC “makes such disclosures to the Commission as the Commission, by rule, may determine to be necessary or appropriate in the public interest or for the protection of investors.”

Now, this is kind of a weird requirement – what disclosures is the SEC supposed to mandate? Isn’t it already, like, mandating disclosures of everything it thinks is necessary or appropriate?  So, I don’t think this proposal – or, I suspect, a lot of the other proposals endorsed by the…

Elizabeth Pollman has a new Comment, published in the Harvard Law Review, on what she calls “The Supreme Court’s Pro-Business Paradox.”  She makes several very well-argued points.  First, that by weakening corporate regulation, the Supreme Court has put greater pressure on corporate governance to constrain antisocial corporate behavior; second, the Court’s rulings are arguably at odds with the preferences of corporate shareholders, whose interests the Court clams to be furthering; and third, that in its zeal to insulate corporations from liability, the Supreme Court has turned corporate governance concepts upside-down – by, for example, holding that the Alien Tort Statute makes corporations less responsible for the “decisionmaking” that occurs in boardrooms than for the actions of employee-agents lower down in the hierarchy.   There’s no abstract for me to quote, but here’s an excerpt from the Introduction:

This Comment makes two primary contributions. It first observes that cases from the recent Term reflect an important way in which the Roberts Court has earned its reputation: over the beginning of the twenty-first century, the Court has often expanded corporate rights while narrowing corporate liability or access to justice against corporate  defendants. Part I of this Comment sets forth this

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As the followers of this blog well know, I’ve written a lot about controlling shareholders.  There have been blog posts here, here, here, here, here, here, here, here, here, here, and here, and an essay, After Corwin: Down the Controlling Shareholder Rabbit Hole.  So, I finally posted a whole new essay to SSRN on the subject, called The Three Faces of Control.  It’s very short; it’s kind of a follow-up/sequel/coda/friendly amendment to After Corwin. Here is the abstract:

Controlling shareholders are subject to distinct legal obligations under Delaware law, and thus Delaware courts are routinely called upon to distinguish “controlling shareholders” from other corporate actors.  That is an easy enough task when a person or entity has more than 50% of the corporate vote, but when a putative controller has less than 50% of the vote – and is nonetheless alleged to exercise control over corporate operations via other means – the law is shot through with inconsistency.

What is needed is a contextual approach that recognizes that the meaning of control may vary depending on the purpose of the inquiry.  Under Delaware doctrine, the

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As has been widely reported, Third Point/Dan Loeb is arguing that Shell should split its green assets from the brown assets, on the theory that the brown assets are currently undervalued by the market.   According to the Third Point letter:

We believe all stakeholders would benefit from a plan to:

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Match its business units with unique shareholder constituencies who may be interested in different things (return of capital vs. growth; legacy energy vs. energy transition)

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This should involve the creation of multiple standalone companies.  For example, a standalone legacy  energy  business  (upstream,  refining  and  chemicals)  could  slow  capex beyond what it has already promised, sell assets, and prioritize return of cash to shareholders (which can be reallocated by the market into low-carbon areas of the economy).  A standalone LNG/Renewables/Marketing business could combine modest cash returns with aggressive investment in renewables and other carbon reduction technologies (and this business would benefit from a much lower cost of capital).  Pursuing a bold strategy like  this  would  likely  lead  to  an  acceleration  of  CO2  reduction  as  well  as  significantly increased returns for shareholders, a win for all stakeholders.

Shell argues – and apparently some of its large investors agree – that…

No, not that SPAC.

Actually, I’m thinking about the SPAC I blogged about here, GigCapital3, which merged with Lightning Systems.  It’s the subject of a lawsuit in Delaware Chancery; the allegation is that the de-SPAC transaction was bad for the SPAC investors, and rushed through in order to benefit the sponsor, before the eighteen month deadline passed and the sponsor was forced to liquidate.

There are some claims that the proxy statement was misleading – I’ll get back to that – but one claim is that this was a bad deal, the SPAC shareholders would have been better off if the SPAC had simply liquidated, and it was approved and recommended by the board because they either benefitted personally or had ties to the sponsor. 

Ordinarily, if you claim that a conflicted board approved a bad deal, that claim is reviewed for entire fairness unless it’s cleansed.  And in this case, theoretically any board breaches were cleansed by the shareholder vote in favor of the merger.  To address that, the complaint claims that the SPAC sponsor was actually a controlling shareholder, suggesting that cleansing could only come via MFW protections.

The problem is, it’s really hard to transpose…

This week, I continue in my series of posts about controlling shareholders (prior posts here, here, here, here, here, here, here, here, here, and here) to call your attention to Patel v. Duncan, decided September 30.

Talos was a company backed by two private equity sponsors: Apollo and Riverstone. Apollo had 35% of the shares; Riverstone had 27%; and the rest were publicly traded.  Talos had a 10 member board, and Apollo and Riverstone had a shareholder agreement that guaranteed each would appoint 2 members, a fifth member would be jointly agreed upon, and the sixth member would be Talos’s CEO.  Of course, because their combined voting power exceeded 50%, there was no doubt their nominees would be included on the board.  As a result, the company’s SEC filings identified Talos as a “controlled company” for the purposes of NYSE rules; as the company put it, “We are controlled by Apollo Funds and Riverstone Funds. The interests of Apollo Funds and Riverstone Funds may differ from the interests of our other stockholders…. Through their ownership of a majority of our voting power and the provisions set forth in our…