normes de droit

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Public Benefit Corporation : modification législative au Delaware

Voici un article qui intéressera celles et ceux qui suivent l’actualité entourant les Public Benefit Corporation : « Delaware Public Benefit Corporations—Recent Developments » (Michael R. Littenberg, Emily J. Oldshue, and Brittany N. Pifer, Harvard Law School Forum on Corporate Governance, 31 août 2020).

Extrait :

The 2020 Amendments

Delaware has amended the PBC statute twice since inception to address concerns that limited its utility.

Most recently, in July, Delaware amended the PBC statute to, among other things, (1) reduce the stockholder approval threshold necessary for becoming a PBC, and for exiting the PBC regime; (2) eliminate statutory appraisal rights in connection with the conversion of a conventional corporation to a PBC; and (3) strengthen the protections for directors. Each of these amendments is discussed in more detail below.

Voting Thresholds for Opting In and Opting Out Lowered. Section 363(a) of the DGCL originally provided that an existing conventional corporation could not become a PBC without the approval of 90% of the outstanding stock on the amendment of its certificate of incorporation or the merger or consolidation with or into a PBC. Conversely, under Section 363(c), a PBC had to satisfy the 90% voting threshold to become a conventional corporation. In 2015, this threshold was amended down to a two-thirds majority. The 2020 PBC amendments eliminated Section 363(a) and (c). The result is that the voting thresholds for conversions, mergers and consolidations involving PBCs are now governed by Sections 242(b) and 251 of the DGCL, which provide for majority voting unless the certificate of incorporation provides otherwise.

Elimination of Statutory Appraisal Rights in Connection with PBC Conversions. Section 363(b) of the DGCL previously provided appraisal rights for stockholders of a conventional corporation that amended its certificate of incorporation to become a PBC or engaged in a merger or consolidation that resulted in the surviving corporation being a PBC, to the extent the stockholder did not vote for the amendment, merger or consolidation. In 2015, this section of the DGCL was amended to add a “market out” exception, which provided that appraisal rights generally would not be available to holders of shares listed on a national securities exchange or held of record by more than 2,000 holders. The market out exception of course did not apply in the private company context.

The 2020 PBC amendments eliminated Section 363(b). As a result, there no longer is a specific statutory appraisal right if a conventional corporation converts to a PBC. Appraisal rights in connection with PBC mergers and consolidations are now governed by Section 262 of the DGCL, which addresses appraisal rights in connection with mergers and consolidations more generally.

Director Protections Strengthened. As discussed above, under Section 365(a) of the DGCL, directors of a PBC must balance the pecuniary interest of stockholders, the interests of other stakeholders and the specific public benefit identified in the certificate of incorporation. Section 365(c) has been amended to clarify that a director’s ownership of stock or other interests in the PBC does not inherently create a conflict of interest, unless the ownership of the interests would create a conflict of interest in a conventional corporation.

In addition, the 2020 PBC amendments revised Section 365(c) to provide that any failure on a director’s part to satisfy Section 365(a)’s balancing requirement does not constitute an act or omission not in good faith or a breach of the duty of loyalty for purposes of Section 102(b)(7) (exculpation of directors) or Section 145 (indemnification) of the DGCL, unless the certificate of incorporation provides otherwise. Previously, this was framed as an opt-in in Section 365(c), rather than as an opt-out.

Ability to Bring Derivative Suit Brought into Alignment with Conventional Corporations. Section 367 of the DGCL sets forth the ownership requirements for PBC stockholders to be able to bring a derivative suit to enforce the statutory requirement to balance the stockholders’ pecuniary interests, the best interests of those materially affected by the PBC’s conduct and the public benefit identified in the certificate of incorporation. The 2020 PBC amendments provide that a derivative action to enforce the balancing requirement can only be brought by one or more plaintiffs owning individually or collectively (1) at least 2% of the corporation’s outstanding shares or (2) in the case of a corporation listed on a national securities exchange, the lesser of 2% of the corporation’s shares and shares with a value of at least $2,000,000.

The amendments to Section 367 align the thresholds for PBC derivative actions with those applicable to conventional corporations.

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actualités internationales Gouvernance normes de droit Responsabilité sociale des entreprises Structures juridiques

Public Benefit Corporation : réforme en vue

En cette période estivale, suivre l’actualité est toujours intéressant. Ma lecture d’un article ce matin « Renewed Interest in IPOs of Public Benefit Corporations » (de Cydney Posner) m’apprenait que l’État américain du Delaware est en train de débattre d’une réforme législative en matière d’entreprise à mission !

Pour accéder à cette réforme : ici

Extrait :

These and other similar risks are some of the reasons that, in adopting laws authorizing PBCs, the Delaware legislature made it particularly difficult to convert a traditional corporation to a PBC. For example, currently, the approval of 2/3 of the outstanding stock is required for a traditional corporation to amend its certificate of incorporation to become a PBC or to merge with another entity if the effect of the merger is to convert the shares into shares of a PBC. (Note that, originally, the vote required for conversion was 90%, which made it well nigh impossible for a traditional public company to convert to a PBC.) Appraisal rights are available to stockholders that did not vote in favor of the conversion or merger. And the same vote is required for conversion from a PBC form of entity into a traditional corporation.

The legislation that was just passed by the House in Delaware would, if ultimately signed into law, eliminate the 2/3 voting requirements, making it easier to convert a traditional corporation to a PBC or a PBC to a traditional corporation. Only the standard stockholder vote provisions would be applicable—generally a vote of a majority of the outstanding shares (or any greater or other vote required under the company’s certificate of incorporation) would be required. The amendments would also eliminate the special appraisal rights provisions, with the result that appraisal rights would not be available for conversions resulting from amendments to the certificate, but standard appraisal rights (§262) would be available in the context of mergers.

In addition, as noted above, the current PBC statute mandates that the board of directors manage the business and affairs of the PBC by balancing “the pecuniary interests of the stockholders, the best interests of those materially affected by the corporation’s conduct, and the specific public benefit or public benefits identified in its certificate of incorporation.” The statute provides that, with respect to a decision implicating the “balance requirement,” directors of PBCs will be deemed to satisfy their fiduciary duties to stockholders and the corporation if their decision “is both informed and disinterested and not such that no person of ordinary, sound judgment would approve.” A PBC is also permitted to include in its certificate, for purposes of its director exculpatory provisions under §102(b)(7) and its indemnification provisions under §145, that any disinterested failure to satisfy the mandate will not be considered to “constitute an act or omission not in good faith, or a breach of the duty of loyalty.”

The new legislation would also amp up the protections for directors of a PBC. The amendments would clarify that a director would not be considered “interested” in connection with a balancing decision solely because of the director’s interest in stock of the corporation, except to the extent that the same ownership would create a conflict of interest if the corporation were not a PBC. The amendments would also provide that, in the absence of a conflict, no failure to satisfy the balancing requirement would, for purposes of §102(b)(7) or §145, be considered “an act or omission not in good faith, or a breach of the duty of loyalty, unless the certificate of incorporation so provides.” That is, the certificate would no longer need to expressly provide for the protection for it to apply. In addition, the amendments would provide that, to bring any lawsuit to enforce the PBC balancing requirement, the plaintiffs must own at least 2% of the corporation’s outstanding shares or, for PBCs listed on a national securities exchange, shares with a market value of at least $2 million, if lower.

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devoirs des administrateurs Gouvernance mission et composition du conseil d'administration normes de droit Nouvelles diverses

Devoirs fiduciaires en droit des sociétés américain : une synthèse

Bonjour à tous et à toutes, Lawrence Hamermesh et Leo Strine offre une belle étude du devoir fiduciaire dans une perspective de droit des sociétés par actions américain dans un chapitre intitulé : « Fiduciary Principles and Delaware Corporation Law: Searching for the Optimal Balance by Understanding that the World is Not ».

 

This Chapter, forthcoming in the Oxford Handbook of Fiduciary Law, examines the principles that animate Delaware’s regulation of corporate fiduciaries. Distilled to their core, these principles are to: give fiduciaries the authority to be creative, take chances, and make mistakes so long as their interests are aligned with those who elect them; but, when there is a suspicion that there might be a conflict of interest, use a variety of accountability tools that draw on our traditions of republican democracy and equity to ensure that the stockholder electorate is protected from unfair exploitation.

After reviewing the evolution and institutional setting of the pertinent Delaware case law, the Chapter details how these principles have emerged in several highly-salient contexts (the business judgment rule, controller freeze-outs, takeovers, and stockholder elections), and demonstrates that the identified principles aim to preserve the benefits of profit-increasing activities in a complex business world where purity is by necessity impossible. Further, the Chapter demonstrates that, even when a stricter approach to fiduciary regulation is warranted because of the potential for abuse, these principles hew to our nation’s republican origins and commitment to freedom in another way: when possible to do so, regulation of fiduciary behavior that might involve a conflict of interest should not involve after-the-fact governmental review, but before-the-fact oversight by the fiduciaries of the corporation who are impartial and, most importantly, by the disinterested stockholders themselves.

 

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Ivan Tchotourian

normes de droit Nouvelles diverses Structures juridiques

Pourquoi choisir le Delaware pour s’enregistrer ?

Robert Anderson publie un intéressant article sur SSRN qui traite du pourquoi s’enregistrer au Delaware quand on est une société par actions : Anderson, Robert, The Delaware Trap: An Empirical Study of Incorporation Decisions (February 27, 2017). Le chercheur nous offre une réponse pour le moins surprenante !

 

The findings have important implications for the state “race-to-the-top” debate in corporate law. At a minimum the results in this Article make it clear that the choice of legal representation is an important missing variable in models of incorporation decisions. The fact that the choice of law firms drives the jurisdictional choice has far broader implications. If law firms drive the jurisdictional choice they may steer companies toward states that serve the law firms’ own interests without regard to the quality of legal rules or the needs of the client. When the state chosen is Delaware, as it often is, there are few alternative jurisdictions that shareholders and managers can agree on. As a result, companies inadvertently fall into a “governance trap” from which reincorporation out of state is nearly impossible.

 

Comme le souligne un article du Wall Street Journal (« A ‘Delaware Trap’ for Companies », 7 mai 2017), on est loin des théories des courses au sommet ou vers le bas !

 

There have long been two competing theories on what motivates companies’ incorporation decisions. The “race to the bottom” theory holds that states compete by making rules that favor company insiders at the expense of corporations and their shareholders.

The “race to the top” theory, in contrast, suggests that market constraints prevent such favoritism, and that states instead compete to provide efficient legal rules that enhance shareholder value.

But Dr. Anderson examined regulatory filings related to raising private capital, and concluded that it is all about the company’s choice of law firm near the time of founding.

 

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Ivan Tchotourian

normes de droit Nouvelles diverses Structures juridiques

Le Delaware ou la séduction du moins-disant

Bonjour à toutes et à tous, le journaliste de Les affaires Julien Abadie offre un chiffre ahurissant : 285 000 entreprises enregistrées dans un seul et même immeuble : « Cet immeuble du Delaware abrite 285000 entreprises ».

Apple, Google, American Airlines, Coca-Cola, Walmart, Berkshire Hathaway, Ford, General Electric… Toutes les plus grandes sociétés américaines ou presque ont leurs quartiers dans l’immeuble de deux étages Corporation Trust Center (CTC) situé au beau milieu de Wilmington. Mais ce n’est que la partie émergée de l’iceberg: en tout, ce sont en fait pas moins de 285 000 entreprises qui possèdent officiellement une boîte aux lettres à cette adresse (!). Leur objectif? Échapper au fisc américain.

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Ivan Tchotourian

normes de droit Nouvelles diverses

Delaware : les grands principes ne sont pas dans le DGCL !

Me Keith Paul Bishop offre dans son article « The Most Important Principles of Delaware Corporate Law Can’t Be Found In the DGCL » publié au JDSupra Business Advisor une très belle perspective sur 3 grands principes du droit américain des sociétés par actions. Si ces principes ont été développés dans la si influente jurisprudence de l’État du Delaware, son droit codifié des sociétés ne les prévoit pas expressément, du mois pas de manière si détaillée !

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Ivan Tchotourian

normes de droit

Is The Delaware General Corporation Law Really A Modern Corporate Law?

L’avocat Keith Paul Bishop se pose une très intéressante question à propos du droit des sociétés du Delaware : est-il un droit moderne (ici) ?

(…) It was only after New Jersey enacted the anti-corporate “Seven Sisters” laws in 1913, that Delaware began its assent as the leading state for incorporations.  In the ensuing years, Delaware has amended its general corporation law many times.  In 1953, the Delaware legislature undertook a codification of all of the state’s laws (you will notice that many of the statutory references at the end of sections of the DGCL date to 1953).  As a result, the general corporation law was rearranged but not substantively changed.  The current arrangement and numbering date from 1953.  In 1967, the legislature enacted a bill revising the general corporation law.  Thereafter, the Delaware legislature has continued to amend the law.  As the foregoing very brief history suggests, the DGCL is actually a nineteenth century law that has been rearranged, revised and amended over more than a century.

Because the DGCL has been the product of continuous evolution, it isn’t as well organized as other state corporation statutes.  California’s General Corporation Law, for example, defines terms at the beginning of the law and then uses those terms throughout the law.  The DGCL, in contrast, tends to define terms in specific sections and limit those definitions to those sections

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Ivan Tchotourian