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After a series of recent Delaware Chancery Court and Delaware Supreme Court decisions and the standard of judicial review applied in challenges to “going‐private” transactions, controlling stockholders seeking to privatize their subsidiaries may be induced to do so by means of a two‐step acquisition (i.e., unilateral tender or exchange offer, followed by a short‐form merger) instead of a negotiated, single‐step merger. That said, there are a range of practical considerations for public M&A advisors in the wake of these decisions that may not necessarily make the two‐step method the “be all and end all” approach. In any case, there is an incongruity in Delaware’s common law, which is policy‐driven and, to some degree, formalistic, and which may no longer be as defensible today as it once may have been. Accordingly, a critical review of the applicable Delaware precedents and, ultimately, the reversal or modification thereof, seems appropriate at this time.

The authors study the shareholder wealth effects of the adoption and subsequent litigation confirming the validity of shareholder right plans that are enacted to protect a firm’s net operating loss (NOL) carry forwards (tax benefit preservation plans (TBPPs)). The purpose of this paper is to expand the understanding of nontraditional shareholder rights plans, which are becoming increasingly more common.

This paper considers abnormal returns around TBPP adoptions and Delaware Court rulings that validated their use. The authors study 118 plans adopted between 1998 and 2011. Abnormal returns are measured using both a market model and a performance-matched sample.

The authors find that abnormal returns are negative at the announcement of a new TBPP. However, the full impact of plan adoption on share prices is not evident until the Delaware Courts validated their use. The Delaware Court rulings in the case of Selectica, Inc. v. Versata Enterprises, Inc. and Trilogy, Inc. are associated with additional negative wealth effects for both prior plan adopters and the firms most likely to consider adopting a plan. These results suggest that entrenchment concerns tend to outweigh the protection of NOL carry forwards when firms adopt TBPPs.

This study was the first to consider the adoption of TBPPs. Currently, it is the only study that considers Delaware Court rulings related to these plans, which allows us to successfully disentangle the entrenchment hypothesis from the potential alternative hypothesis that the negative announcement period returns are driven by investors updating their expectations for firm performance.

The very contextual nature of most mitigating evidence runs counter to America’s individualistic culture. Prior research has found that capital jurors are unreceptive to most mitigating circumstances, but no research has examined the capital sentencing decisions of trial judges. This study fills that gap through a content analysis of eight judicial sentencing opinions from Delaware. The findings indicate that judges typically dismiss contextualizing evidence in their sentencing opinions and instead focus predominately on the defendant’s culpability. This finding calls into question the ability of guided discretion statutes to ensure the consideration of mitigation and limit arbitrariness in the death penalty.

The purpose of this paper is to explain the meaning and legal impact of two September 2011 Supreme Court of Delaware decisions regarding challenges to the validity of life insurance policies sold to investors as life settlements on the basis of a lack of an insurable interest after the expiration of the two‐year contestability period.

The paper outlines the background, factual circumstances, and court decisions on Lincoln Nat. Life Ins. Co. v. Joseph Schlanger 2006 Ins. Trust and PHL Variable Ins. Co. v. Price Dawe 2006 Ins. Trust.

The court certified three legal questions concerning life insurance policies sold to investors as life settlements: whether two‐year statutory contestability limits apply to insurance policies deemed void for lack of an insurable interest; whether the Delaware statute requiring an insurable interest is violated when the insured individual procures a life insurance policy on his or her own life and immediately transfers the policy to a person without an insurable interest; and whether Delaware law confers an insurable interest upon a trustee of a trust established by an individual insured when at the time of application for a life insurance policy the insured intends to transfer the beneficial interest of the trust to a third‐party having no insurable interest on the individual insured's life.

Investors may require legal comfort concerning insurable interest for policies beyond the two‐year contestability period, but the Delaware court's ruling explicitly affirms the legality of selling life insurance policies to third‐party investors.

The paper provides expert guidance from experienced financial services lawyers.

The purpose of this study is to examine how the liability of foreignness (LOF), choice of incorporation and an institutional change independently and jointly affect a reverse merger (RM) firm’s capital-raising performance.

The study draws on the data of shell reverse merger transactions in the USA from 2007 to 2016.

This paper finds that LOF and the choice of incorporation as a signal have a significant effect on RM firms’ capital-raising performance. In addition, this study finds that the effectiveness of the signaling can be affected by LOF. Finally, this paper finds that an institutional change that lowers the entry barrier to the initial public offering (which is a superior alternate to an RM) affects the impacts of LOF and signaling on RM firms’ capital-raising performance.

The study contributes to the international business literature by examining the RM (which has been an under-researched topic in the literature) by drawing on the LOF framework. The study finds that LOF and the choice of state for incorporation affect RM firms’ capital-raising performance; moreover, these relationships are affected by an institutional change.

Even though there is neither case law nor policy negating the concept of the maximisation of shareholders' profits, the ‘schizophrenia’ of the legal conception of the corporation (Allen 1992), and the incertitude that stems from this, justify a new definition of the ‘best interests of the corporation’. Doubt is accentuated by the statutes of American companies, called non-shareholder constituency statutes, which refer to ‘best interests’ in the assessment of corporation director duties. Indeed, nearly half of U.S. states have adopted ‘constituency statutes’ which allow the board of directors to take into account the interests of non-shareholders when making decisions (Mitchell, 1992; Orts, 1992).⁷

Planning Review interviewed T. Boone Pickens in Westchester shortly before he spoke at Business Week's “Conference on the Future” in April. Mr. Pickens is a charming propagandist, a great talker generous with his time, and an entrepreneur clearly excited about catching a ride on the flood tide of opportunity. The misadventures of the oil business and the malapropisms of its cast of characters provide him with a generous supply of raw material for his saga of the populist gamesman, armed with the best strategy, pitted against the entrenched and self‐righteous establishment. He obviously loves the contest.

To explain the implications of a March 2014 Delaware Court of Chancery decision that found RBC Capital Markets liable for damages for aiding and abetting breaches of fiduciary duty by the directors of Rural/Metro Corporation in connection with the company’s 2011 sale to an affiliate of Warburg PIncus.

Explains the court’s findings and decision, offers procedural lessons for sell-side financial advisors, and recommends what sell-side advisors can do to limit exposure to aiding and abetting claims.

The Rural/Metro decision opens the door to additional litigation risk for sell-side advisors. However, Vice Chancellor Laster’s opinion also provides a roadmap for how an advisor can limit that risk.

Director and financial advisor liability most often results from process failures.

Practical guidance from experienced mergers and acquisitions and securities and corporate governance lawyers.

When a board is faced with a choice of aiding the public or government during a crisis, or more generally any corporate social responsibility initiative, well established doctrines of American corporate law can protect directors from legal liability in a shareholder derivative lawsuit. A hallmark trait of the public corporation is a separation of ownership and control (Berle & Means, 1932). Accordingly, managers have great authority over corporate assets. Delaware corporate law provides that “[t]he business and affairs of every corporation organized under this chapter shall be managed by or under the direction of a board of directors.”² The board has the authority to manage the “business and affairs” of the corporation, which in the judgment of the board may include corporate social responsibility initiatives and decisions based thereon.

“The lot of a holder of junior preferred stock is not always a happy one,” observed the Delaware Chancery Court in Benchmark Capital Partners IV, L.P. v. Vague. It certainly wasn’t for Benchmark Capital Partners. Benchmark’s fate holds important lessons for institutions and funds that invest in preferred stock. Preferred stock investors typically seek voting rights or veto rights over certain significant corporate actions and against direct economic impairment of the preferred stock investment. The Benchmark case illustrates some limitations of such traditional preferred stock protective provisions. Examining these limitations illustrates several ways that investors may help limit impairment of their preferred stock investments.