Members of the Delaware Chancery Court and the Delaware Supreme Court as well as leading corporate law practitioners from Delaware and around the country are here in New Orleans at the Tulane University Law School’s 20th Annual Corporate Law Institute . I will be blogging live during the seminar today and tomorrow. The panel this morning is discussing the duty under Delaware law to disclose material information in connection with a merger vote, both independent of, and in light of, any possibly applicable SEC duties of disclosure.
The recent Delaware Chancery Court decision in the BEA, from the bench, was discussed by Vice Chancellor Lamb. He noted that the issue presented at the preliminary injunction hearing was whether it was enough to present the street estimates and the base line estimates. The issue presented was whether the high and low sensitivity analysis needed to be disclosed. This data was not disclosed and was not considered reliable by the management, and VC Lamb held that that data was not material based on the record before him in a preliminary injunction motion setting. This decision from the bench in March 2008 was in the context of a strained credit market which puts heightened pressures on consummating a deal.
Brian Breheny, Deputy Director of the SEC’s Division of Corporation Finance, addressed the overlap between SEC rules and the state law duty in Delaware that can force an annual meeting even if the company does not have its updated financial information prepared as required by SEC rules. See, e.g., Vesta decision by Vice Chancellor Lamb on this issue and the Delaware Supreme Court’s decision in the Skeen case.
The SEC’s Breheny commented on this situation by recognizing the tension between the SEC rule and the Delaware state law on holding an annual shareholders’ meeting, even if the necessary financial data is not available, and he said that the company should call his office in that situation and ask for a special "exemption" which the SEC has given in the past in these situations.
The enforceability of Standstill Agreements was discussed. Although they are generally enforceable, the Topps decision by Vice Chancellor Strine was reviewed as an example of such an agreement which was not upheld in light of Revlon duties. James Morphy of Sullivan and Cromwell, a member of one of the panels, said that his view of the case is that the antitrust condition of the Standstill Agreement was only used as an excuse not to entertain a higher bid, and that was one reason the agreement was not upheld.
More updates to come as the seminar continues.