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Bureau of Economic Analysis – Five-Year Benchmark Survey 06/25/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Legal Developments.
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By Joshua E. French

frenchWhat is this?

The Bureau of Economic Analysis (BEA) regularly analyzes data related to US investment in foreign corporations.  Many large companies are specifically requested to provide data which is included in semi-annual and annual reports.  Every five years, however, the BEA produces a more comprehensive five-year benchmark survey (the last one occurred for fiscal year 2009).

How does this affect me?

At the end of last year, the BEA adopted a new rule pursuant to the International Investment and Trade in Services Survey Act, which changed the requirements for who had to report data for the benchmark survey.  Whereas prior benchmark surveys only required responses from those companies specifically requested by the BEA, the new rule mandates that U.S. Persons (including individuals, business entities, trusts, funds, etc.) that owned, directly or indirectly, at least 10% of the voting securities of a “Foreign Affiliate” (essentially any entity governed by the laws of another country) during 2014, must complete the reporting requirements for themselves and each such foreign affiliate.

What are some examples?

  • A U.S. parent entity with foreign subsidiaries.
  • The general partner of a U.S. private fund which has investments in foreign portfolio companies.
  • A U.S. person which manages an offshore private fund.

What if I don’t fill it out?

Failing to file could result in civil penalties of up to $25,000 or injunctive relief.  Willful failure to file could even result in criminal penalties of up to a $10,000 fine and imprisonment for up to one year.

What does this report entail?

Each U.S. Reporter must file one BE-10A form for its domestic consolidated business.  If the domestic business enterprise’s total assets, sales or gross operating revenues excluding sales taxes or net income after taxes exceeds $300 million (either positive or negative), you must complete the entire form.  If the U.S. Reporter doesn’t meet this threshold, it only needs to report certain sections.  The BE-10A form asks for information regarding the U.S. Reporter’s business sector, sales and employment information, contract manufacturing services, financial data (limited if the $300 million threshold is not met, more significant if the threshold is met) and import and export data.

What about for the foreign affiliates?

For each “Foreign Affiliate” for which the U.S. Reporter is required to provide data, you must file a Form BE-10B, BE-10C or BE-10D.

  • You file a Form BE-10B if the Foreign Affiliate (i) is majority-owned by the U.S. Reporter AND (ii) its total assets, sales or gross revenue (excluding taxes) or net income (after foreign income tax) exceed $80 million (positive or negative).
  • You file a Form BE-10C if the Foreign Affiliate (i) (1) is minority-owned by the U.S. Reporter AND (2) its total assets, sales or gross revenue (excluding taxes) or net income (after foreign income tax) exceed $80 million (positive or negative); OR (ii) if its total assets, sales or gross revenue (excluding taxes) or net income (after foreign income tax) exceeds $25 million but is less than $80 million (positive or negative); OR (iii) if the Foreign Affiliate is the parent of another Foreign Affiliate which has to file a Form BE-10B or BE-10C.
  • You file a Form BE-10D if the Foreign Affiliate doesn’t meet any of the above criteria.

The BE-10B is extremely detailed, seeking information regarding location, when it was formed, the ownership breakdown, what industries it is involved in, financial and operating data, and investments and transactions between the U.S. Reporter and the Foreign Affiliate.  The entire form is 24 pages and you would have to complete one form for each Foreign Affiliate that meets the criteria set forth above.

The BE-10C is slightly less burdensome (16 pages) and covers much of the same information as above, with slightly less detail.

The BE-10D is very straightforward.  A U.S. Reporter can list every Foreign Affiliate which meets the criteria for BE-10D on one form and only needs to list for such affiliate its name, location, industry code, number of employees, the U.S. Reporter’s ownership percentage, total assets, total liabilities, gross revenues, net income or loss after income tax, and any intercompany debt between the Foreign Affiliate and the U.S. Reporter.

Is this confidential?

Yes.  The BEA is not permitted to identify the individual respondents to the Benchmark Survey and may not share responses with other government agencies (including the IRS).  The information provided may only be used for analytical and statistical purposes.

When is it due?

The deadline is June 30, 2015.  There is an opportunity to request an extension through no later than August 31, 2015, but the request must be filed by June 30, 2015.

For more information contact Josh French.

M&A Video Clip: Investment Banker Engagement Letters 06/22/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Legal Developments, M&A, New Resources.
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The second video in MBBP’s M&A Clip Series addresses the necessity of Investment Banker Engagement Letters. Corporate attorney Shannon Zollo gives a brief overview.

Catch Shannon next week discussing another common issue in M&A transactions: Cash vs. Equity

SSZvideo

Did you miss last week’s topic? No problem. Check our archive.

VIDEO: Common Issues in M&A Transactions: Deal Structure 06/15/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Legal Developments, M&A, New Resources.
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Head on over to MBBP’s YouTube page and enjoy the 1st in our 2015 M&A Clips Series. Attorney Scott Bleier discusses Deal Structure and other common issues in M&A transactions, as well as practical information on how to avoid complicated, expensive and time-consuming pitfalls.

Make sure to visit the M&A Blog too. You won’t want to miss Video 2 – Investment Banker Engagement Letters!

Also – have you registered for next week’s seminar: Tax Issues in M&A Transactions? Space is filling quickly!

SRBvideo

MBBP’s Joe Martinez to Discuss Fundamentals of Raising Start-Up Capital Through the Internet – Upcoming MCLE Program 06/12/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Events, Public Companies.
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Corporate Attorney Joseph MartinezMBBP Corporate Attorney Joseph R. Martinez will be among the faculty presenting at MCLE New England‘s upcoming program “Fundamentals of Raising Start-Up Capital Through the Internet” on Thursday, June 18th from 8:00 am to 12:00 pm.

In this new program, leading practitioners in the field will analyze the legal and business points of internet-based fundraising in a small, highly-focused, fast-paced conversational setting.

To learn more or to register for this event, please visit MCLE.

For more information, please feel free to contact Joe Martinez directly.

MBBP Attorneys to Host Office Hours at TechSandBox 6/4/2015 06/03/2015

Posted by Morse, Barnes-Brown Pendleton in Attorney News, Corporate, Events.
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IP and Technology Licensing Attorney Howard ZaharoffOn June 4th MBBP Attorneys Howard Zharoff and Daniele Ouellette Levy will host Office Hours at TechSandBox providing legal guidance on topics that include copyright, trademark and licensing work. These pro bono sessions give you access to experts in topics such as intellectual property, business formation, benefits, taxes, marketing, sales  funding, IT and technology commercialization. Access is offered to Members and Non-members as space allows.

Corporate Attorney Daniele Ouellette LevySign up today to reserve your time slot by visiting TechSandBox!

 

 

Employment Law Update: Proposed Sick Leave Regulations 04/30/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Employment, Legal Developments, New Resources, Public Companies.
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As we previously advised clients, on November 4 Massachusetts voters approved a ballot measure entitling employees to earned sick leave, which goes into effect on July 1, 2015. The Massachusetts Attorney General recently issued proposed regulations on the application and enforcement of the new law.

To learn more about the MA Sick Leave Law or the proposed regulations, please visit our Employment Law blog.

MBBP Attorney to Present at Upcoming MCLE Program – Primer on Preparing Massachusetts & Delaware LLC Documents 04/20/2015

Posted by Morse, Barnes-Brown Pendleton in Attorney News, Corporate, Events, Legal Developments, Taxation.
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Corporate and Tax Attorney Charles Wry, Jr. MBBP Attorney Charles A. Wry, Jr. will be among faculty presenting at MCLE New England’s upcoming program “Primer on Preparing Massachusetts & Delaware LLC Documents” on Tuesday, May 5th from 2:00 pm – 5:00 pm.

The panel will debate the pros and cons of LLCs and corporations, discuss basic tax and business issues presented by LLCs, identify specific advantages and disadvantages of LLCs, and report on common mistakes and traps for the unwary in forming and advising LLCs—with special emphasis on drafting LLC agreements. Panelists will also discuss single member LLCs, combinations of LLCs with other business entities, “employee equity participation” for LLCs, “piercing the veil” of an LLC, dissolution of LLCs, and the differences between the Delaware and Massachusetts LLC statutes.

To register for this event, please visit MCLE.

For more information regarding this topic, please feel free to contact Charles A. Wry, Jr. directly.

MBBP Attorney to Present Upcoming myLawCLE Program 04/09/2015

Posted by Morse, Barnes-Brown Pendleton in Attorney News, Corporate, Events, Legal Developments, Licensing & Strategic Alliances, M&A, MBBP news, Public Companies.
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Corporate Attorney Mark TaralloOn Monday, April 13th, MBBP Attorney Mark Tarallo will be presenting myLawCLE’s “Basic LCCs 101″. The goal of the program is to provide course participants with a basic understanding of limited liability companies.

The course will discuss a wide range of information regarding limited liabilities companies, including:

  • What is an LLC?
  • Comparison of LLCs with other entities-Liability, Taxes, and Other Issues
  • Formation of the LLC
  • When to Use and Avoid the LLC
  • Drafting the Operating Agreement-Key Provisions
  • Ethical Issues in Representing the LLC

Any questions regarding this topic, please feel free to contact Attorney Mark Tarallo directly.

To register for this event, please see the myLawCLE events page.

Upcoming Boston IE Club Panel at Venture Cafe 03/05/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Events, Legal Developments, New Resources, Public Companies.
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2015-03-03_10-20-57On Wednesday March 11, 2015, Innovation & Enterprise Business Club (The IE Club) will host an event entitled “Successful Partnerships Between Large And Small Companies Building Great Success With… Very Different Teams Working Together: How To Make It Work”. The panel will feature several CEOs of small companies sharing their views of company best practices, as well as practices to avoid (internet/enablers/innovative services). This event will be held at the Venture Cafe at the Cambridge Innovation Center from 5:30 pm – 8:00 pm, and is complimentary.

Moderator:

David Feinberg, Esq. Feinberg Hanson LLP

Panel:

Robert Kalocsai, Founder, Software Continuity
Bernard Haurie, General Manager, Geopost
Ann Halford, Executive Director of Digital Technology, Boston University
Daniel Behr, CEO at Slips Technologies

 

MBBP’s Robert M. Finkel is a board member of IE Club of Boston. To learn more or to register for the event, please visit The IE Club.

Insights on Corporate Venture Capital 03/04/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Legal Developments, New Resources, Public Companies, Venture Capital & Private Equity.
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Corporate Attorney Scott BleierLast week, MBBP’s Scott Bleier attended a panel discussion hosted by the Johnson & Johnson Boston Innovation Center, which featured three corporate venture capitalists from Sanofi-Genzyme Bioventures, Boehringer Ingelheim Venture USA Inc. and Johnson & Johnson Development Corp.  In a very informative and candid discussion, the panelists shared the investment philosophies behind their companies’ CVC funds, what issues they consider when making an investment and their insights for start-ups seeking access to CVC funding.  The panel revealed several points of apparent consensus in the CVC community while also highlighting a divergence of philosophical approach in certain important areas.

To learn more about the panel discussion regarding CVC funds, please visit our VCs and Start-Ups blog.

Forging Successful Strategic Alliances for Life Sciences Companies 02/25/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Licensing & Strategic Alliances, Life Sciences, M&A, New Resources, Public Companies.
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M0744200When entering into an exclusive licensing arrangement, the odds of success are against most companies. Typically within the first twelve months of an arrangement, 2/3 of all alliances crumble.  If these ventures are so prone to failure, what preventative measures can a company employ to ensure success?

To learn how to achieve success when entering an alliance, read John Hession’s full article.

Reminder: Schedule 13G Amendments and Forms 5 due February 17, 2015 02/05/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Legal Developments, New Resources, Public Companies.
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Corporate Attorney Daniele Ouellette LevyBy: Daniele Ouellette Levy

Significant stockholders of public companies have ongoing reporting obligations under Sections 13 and 16 of the ’34 Act.

  • Beneficial owners of greater than 5% of a registered class of stock of a public company must disclose their ownership by filing a Schedule 13D. Certain stockholders may instead file the abbreviated Schedule 13G provided their ownership does not exceed 20% and they meet certain other requirements.
  • Owners of greater than 10% of a registered class of stock of a public company must disclose all transactions in company securities under Section 16 within two business days of the transaction. Reporting of certain transactions – such as gifts – may be delayed until the end of each calendar year and reported on Form 5.

Amendments to Schedule 13G and Forms 5 are due on February 17, 2015 (45 days after the end of the calendar year, plus a few extra days due to the President’s Day holiday).  These filings are required in order to disclose any changes in ownership during the past year or any transactions in company securities during the past year which were not previously disclosed.

Keep in mind that while changes in ownership may result from actions at the company level – such as option vesting or option grants – the obligation to make these filings is the responsibility of the individual stockholder.

For help determining whether you are required to submit a filing please contact Daniele Levy.

Action Item for Smaller Reporting Companies – Update Review of Internal Controls to COSO 2013 01/29/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Legal Developments, New Resources, Public Companies.
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Corporate Attorney Daniele Ouellette LevyBy: Daniele Ouellette Levy 

In response to the requirements of SOX 404, a majority of public companies adopted the 1992 framework prepare by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to assess the design and effectiveness of their internal controls over financial reporting.  Effective as of December 14, 2014, COSO no longer makes the 1992 framework available and encourages public companies to transition to its revised framework – COSO 2013.

Public companies are required, on an annual basis, to evaluate the effectiveness of their internal controls over financial reporting and to disclose in their 10-K the results of such evaluation and the framework used to make such evaluation.  Public companies must also disclose any material changes to internal controls – for example changes resulting from a transition to COSO 2013.

Companies who delay the transition to COSO 2013 face the risk of increased scrutiny by the SEC.  In a recent public meeting, the SEC staff stated “the longer issuers continue to use the 1992 framework, the more likely they are to receive questions from the staff about whether the issuer’s use of the 1992 framework satisfies the SEC’s requirement to use a suitable, recognized framework”. To avoid questions form the staff, smaller reporting companies will want to take steps to transition to COSO 2013.

 

For more information regarding this topic, please feel free to contact Daniele Ouellette Levy.

Court Outlines Requirements for Insider Trading Case 01/23/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Legal Developments, New Resources, Public Companies.
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Corporate Attorney Mark TaralloBy: Mark Tarallo

In a decision dated December 10, 2014, the Second Circuit Court of Appeals clarified its position on insider trading cases where the discloser of the information committed no crime.  In US v. Newman, the Court addressed a situation where the defendants, who were several “degrees” removed from the discloser of the information, received the information without any knowledge as to the criminal liability of the discloser.  The Court ruled that since the defendants did not know that the discloser committed a crime, then the defendants cannot be guilty of a criminal act, stating in part “we find no support for the Government’s contention that knowledge of a breach of the duty of confidentiality without knowledge of the personal benefit is sufficient to impose criminal liability.”  The Court then went on to lay out a clear statement of the requirements for an insider trading case:

In sum, we hold that to sustain an insider trading conviction against a tippee, the Government must prove each of the following elements beyond a reasonable doubt: (1) the corporate insider was entrusted with a fiduciary duty; (2) the corporate insider breached his fiduciary duty by (a) disclosing confidential information to a tippee (b) in exchange for a personal benefit; (3) the tippee knew of the tipper’s breach, that is, he knew the information was confidential and divulged for personal benefit; and (4) the tippee still used that information to trade in a security or tip another individual for personal benefit.

The Court reversed the lower court’s guilty finding, and ordered a finding of not guilty.  In addition to clearly setting out the standards for an insider trading case, the case serves as a reminder to all public companies that they should incorporate robust protections to ensure against even the inadvertent disclosure of confidential, non-public information.

 

For more information regarding this topic, please feel free to contact Mark Tarallo.

Massachusetts Lawyers Weekly Seeks Carl Barnes Opinion in Matter of Control of Attorney-Client Privilege 01/21/2015

Posted by Morse, Barnes-Brown Pendleton in Attorney News, Corporate, Legal Developments, M&A, MBBP news, Public Companies.
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Corporate Attorney Carl Barnes

MBBP Partner Carl Barnes was recently quoted in a Massachusetts Lawyers Weekly article written by Patrick Murphy, entitled “Survivor of Merger Controls Attorney-Client Privilege.” The article discusses Novack v. Raytheon, a recent Massachusetts Superior Court decision holding that, under Delaware law and the terms of a merger agreement, control of the attorney-client privilege relating to pre-merger communications between BBN Technologies Holding Corp. and its counsel passed to the acquirer, Raytheon Company. The privilege could not, therefore, be asserted after the merger by the representative of BBN’s former shareholders. The Superior Court, applying Delaware law, simply followed the Delaware Chancery Court’s 2013 decision in Great Hill Equity IV, LP v. SIG Growth Equity Fund I, LLLP. As an M&A attorney for more than 30 years, Carl considered whether the same result would be reached under the Massachusetts Business Corporation Act. Carl stated:

Under Delaware law, the effect of a merger is the conveyance of all property, rights, privilege, powers and franchises to the surviving corporation.  On the other hand, G.L.c. 156D 11.07(a)(3) is more narrowly drawn, providing merely that the surviving entity is vested in all property owned and every contract right possessed by the entity that is merged into the survivor. There is probably more room for interpretation in Massachusetts than there is in Delaware, Barnes said.  But he said there is still a strong argument to be made under Massachusetts law that the control of the attorney-client privilege passed to the surviving corporation in a merger.It defies logic that the successor will get the property and contract rights, and nothing else.

 

For further analysis and practical recommendations for M&A lawyers in Massachusetts, see Carl’s own article, “Massachusetts Court (Sort of) Adopts Delaware’s Great Hill Holding Regarding the Attorney-Client Privilege in Mergers” or please feel free to contact Carl.

Our Greatest Hits of 2014! 01/21/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Employment, Immigration, Intellectual Property, Licensing & Strategic Alliances, M&A, MBBP news, Privacy and Data Security, Public Companies, Taxation.
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From the Top Ten Issues in M&A Transactions to the Life Cycle of an IRS Audit we’re recapping the most popular articles and blogs in 2014!

Other popular articles include:

Most popular posts from our 4 blogs:

These articles, along with our newsletters and other blogs can found here.

SEC Proposes Changes to Exchange Act Registration Thresholds 01/08/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Legal Developments, New Resources.
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Corporate Attorney Mark TaralloBy: Mark Tarallo

On December 17, 2014, the United States Securities and Exchange Commission (“SEC) issued proposed amendments to the existing rules adopted under Section 12 (g) of the Exchange Act to reflect the new, higher thresholds for registration, termination of registration and suspension of reporting that were adopted as part of the JOBS Act.    In addition, the proposed amendments would revise the definition of “held of record” in Exchange Act Rule 12g5-1, in accordance with the JOBS Act, to exclude certain securities held by persons who received them pursuant to employee compensation plans and establish a non-exclusive safe harbor for determining whether securities are “held of record” for purposes of registration under Exchange Act Section 12(g).

Whether or not an issuer has “gone public,” any issuer that meets certain tests with respect to total assets and number of shareholders is required to file a registration statement and file regular periodic reports (such as forms 10-K and 10-Q).  The proposed amendments will adopt the standards set forth in the JOBS Act-an issuer must register if, as of the last day of its last fiscal year, it (i) had greater than $10 million in assets and (ii) had greater than 2,000 holders of record (or 500 persons who are not accredited investors) of any class of its securities.  In addition, the proposed amendments will revise the rules to make them consistent with the standards for termination of registration and suspension of reporting set forth in the JOBS Act.

The proposed amendments will also address the concept of securities “held of record.” In an effort to meet the goals of the JOBS Act of increasing the ability to raise capital while lessening the administrative burden on issuers, when determining whether or not an issuer must register, the issuer may exclude from the calculation of securities “held of record” any securities that are held by persons who received them pursuant to an “employee compensation plan” in a transaction exempted from the registration requirements of Section 5 of the Securities Act.  This amendment may have a significant beneficial impact on technology companies and other issuers that grant restricted stock to all employees as a matter of course.

The SEC Release containing the full text of the proposed amendments can be found here .  The SEC is soliciting comments on the proposed amendments, and the comment period is open until March 2, 2015.

Any questions on this topic, please feel free to contact Mark Tarallo.

‘Employment’ New Year Resolutions 01/05/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Employment, Legal Developments.
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2015-01-05_8-08-39With the new year starting up, we have put together a handful of tips to ensure your employment practices are in order.  It is time to update handbooks and policies, make sure reviews are on schedule for the year and put a “WISP” (Written Information Security Plan) into place if you haven’t already.  Ring the year in right, ensure you and your employees are working in a happier, healthier company!

To view our Top Ten Tips for 2015.

If you have any questions, please feel free to contact a member of our Employment Law Group.

MA Employees Entitled to Paid Sick Time Beginning July 2015 11/13/2014

Posted by Morse, Barnes-Brown Pendleton in Corporate, Employment, Legal Developments, New Resources.
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On November 4th, Massachusetts voters approved a ballot measure which will entitle employees to paid sick leave. As a result, a new law will go into effect July 1, 2015  and is considered one of the nation’s most generous sick leave laws. Under the new requirement, employers of eleven employees or more must provide paid sick leave. The Attorney General will enforce this law using the same procedures applicable to other state wages. Employers who fail to comply with this requirement will be subject to mandatory treble (triple) damages, attorney’s fees, and possible criminal penalties.

For more information on this topic, please see our full Employment Law Alert.

Please feel free to contact MBBP’s Employment Law Group with any questions.

Forum Selection Clauses – From MBBP’s M&A Today 10/22/2014

Posted by Morse, Barnes-Brown Pendleton in Corporate, Legal Developments, M&A.
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In City of Providence v. First Citizens Bancshares, Inc. decided in September 2014, the Delaware Court of Chancery analyzed a forum selection provision contained in a company’s by-laws and granted the defendant’s motions to dismiss.  The plaintiff, City of Providence, challenged the forum selection provision in the defendant’s by-laws, which provision selected the United States District Court for the Eastern District of North Carolina as its forum.  The defendant, First Citizens BancShares, Inc., which was headquartered in Raleigh, North Carolina, had adopted this provision on the same day that it announced that it had entered into a merger agreement to acquire another bank.   The plaintiff’s complaints (i) challenged the facial validity of the forum selection provision, asserting a breach of fiduciary duty in connection with its adoption; and (ii) asserted claims against the defendant’s board of directors with respect to the proposed merger.

Although many states have not yet addressed the issue of enforceability of forum selection provisions, given the high percentage of shareholders lawsuits which are filed in connection with M&A transactions, companies should consider amending their by-laws to provide for an appropriate forum selection provision to help reduce future potential litigation risks.   With the Delaware Court of Chancery conclusion in the City of Providence decision, other states will likely follow.

Read more on our M&A Blog.

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