On February 11, 2011, the German Parliament approved the bill for the so-called "Investor Protection and Capital Markets Improvement Act" (Anlegerschutz- und Funktionsverbesserungsgesetz) which is part of the ongoing legislative activity responding to the financial crisis. The bill is now referred to the second chamber of the Parliament and is expected to enter into force in April.
Archives for February 2011
Delaware Chancery Court Upholds Airgas Poison Pill
On February 15, 2011, the Delaware Court of Chancery issued an important opinion upholding the continued vitality of the poison pill as an appropriate defensive measure for companies faced with takeover proposals deemed inadequate by the target’s board of directors. Chancellor Chandler’s 158 page decision in Air Products & Chemicals, Inc. v. Airgas, Inc. C.A. No. 5249-CC (Del. Ch. 2011) held that the maintenance of a poison pill by the Airgas board of directors was a reasonable response to an all cash, non-coercive, $70 per share tender offer by market rival Air Products & Chemicals, Inc. Despite the fact that Air Products’ tender offer had been public for more than a year–during which time Air Products won a proxy contest to place three directors on Airgas’s staggered board–and that Airgas stockholders were sophisticated and well-informed, the Court concluded that the Airgas board "acted in good faith and in the honest belief" that the $70 per share offer was inadequate, and therefore did not breach a fiduciary duty by failing to redeem the company’s poison pill. The Court highlighted the fact that the independent directors appointed pursuant to Air Products’ successful proxy efforts "changed teams" once they were appointed to the Airgas board–that is, Air Products’ own nominees voted to maintain the poison pill that prevented the tender offer from going forward.
U.S. SEC Extends the Customer Identification Program No-Action Letter for Broker-Dealers and Changes the Terms
On January 11, 2011, the U.S. Securities and Exchange Commission ("SEC"), in consultation with the Department of the Treasury, Financial Crimes Enforcement Network ("FinCEN"), again extended the Bank Secrecy Act ("BSA") Customer Identification Program ("CIP") no-action letter (initially issued in 2004) relating to broker-dealer reliance on SEC registered investment advisers ("RIAs"). As previously, the extension was granted at the request of the Securities Industry and Financial Markets Association ("SIFMA").
The SEC Begins to Part Ways with Credit Ratings Pursuant to Dodd-Frank Stricture
On February 9, 2011, the Securities and Exchange Commission ("SEC") proposed to amend the SEC’s rules to eliminate credit rating as one of the "transaction requirement" criteria by which an issuer can qualify for the short-form registration process, most notably under Forms S-3 and F-3. Originally proposed in 2008, similar amendments were the subject of extensive, largely negative, comments and were not adopted at that time. Section 939A of the Dodd-Frank Act now requires the SEC to replace any reference to or reliance upon credit ratings with an appropriate alternative standard of credit-worthiness, and the 2008 proposals have thus been resurrected. We expect the proposed amendments, if adopted, will have a relatively limited impact on most companies that are frequent issuers. The proposals will likely affect those issuers with no publicly held common equity that historically have relied upon their investment-grade credit rating to qualify for short-form registration.