This week's corporate law news roundup includes discussions of Why UK Health and Safety Laws Favor Having at Least One UK Board Director; The SASB's Recent Release of Rules of Procedure and Conceptual Framework; and The Delaware Supreme Court's confirmation that the business judgment rule applies to tender-offer mergers approved by a fully informed, uncoerced vote of disinterested stockholders
UK HEALTH AND SAFETY COMPLIANCE PROGRAMS FAVOR HAVING AT LEAST ONE UK BOARD DIRECTOR
Under the Sentencing Council's definitive guideline establishing the seriousness of an offence, a number of factors are taken into account. With regards to Health and Safety (H&S) issues, in particular, the UK's Health and Safety Executive (HSE) requires there to be strong and active leadership 'from the top' which should involve a 'visible, active commitment from the board.' The fact that one or more board level directors are visible on site from time to time and that the board are demonstrably focused on H&S issues is likely to help a company mitigate any penalty which might be imposed as a result of an H&S offence. Board level cooperation in relation to any investigation and a genuine understanding of the UK H&S practices and procedures is important. The HSE guidance also suggests that a board director being the nominated H&S responsible officer is best practice. While this does not strictly require a board member to be based in the UK, a company may want to give further consideration to the pros and cons of either (i) having a board member in the UK who has particular responsibility for overseeing H&S matters and for ensuring H&S is properly considered at board meetings or (ii) for otherwise ensuring that the existing board members are fully briefed on H&S issues and that there is regular reporting in person at board meetings by the nominated UK employee responsible for H&S. For more information, see http://www.hse.gov.uk/leadership/whyleadership.htm.
SASB RELEASES RULES OF PROCEDURE AND CONCEPTUAL FRAMEWORK
On February 15, 2017, the Sustainability Accounting Standards Board (SASB) released Rules of Procedure and Conceptual Framework to establish the principles and processes of the SASB's approach to standards development. The Rules of Procedure establish processes for the SASB in its standards-setting activities. The Conceptual Framework sets out the basic concepts, principles, definitions and objectives that guide the SASB in its approach to setting standards for sustainability accounting. Following the 90-day public comment period, the SASB made the following three key changes to the final rules of procedure and conceptual framework: (i) the SASB adopted a two-tiered governance model to separate financial responsibilities from the standards-setting activities, (ii) going forward, the SASB standards will be developed under the authority of the SASB technical board, an expert-let development process, and (iii) the SASB will include experts with standards-setting, financial reporting or sustainability knowledge. Feedback received prior to the April 1st deadline will inform the technical agenda for the new SASB board to consider as it contemplates necessary changes to the provisional standards. For more information, see: https://www.sasb.org/approach/conceptual-framework/?utm_campaign=general+SASB+info&utm_source=hs_email&utm_medium=email&utm_content=42637101&_hsenc=p2ANqtz-_TATrPdZnefv26__x_mWLUL8iU7TXg76o1FuOUE3iGjg7xDK-N0Mk85Nl7zSNLI4x2dvZqqTITM02Gse71NtZWjfY9AA&_hsmi=42637101.
DELAWARE SUPREME COURT CONFIRMS THAT THE BUSINESS JUDGMENT RULE APPLIES TO TENDER-OFFER MERGERS APPROVED BY A FULLY INFORMED, UNCOERCED VOTE OF DISINTERESTED STOCKHOLDERS
On February 9, 2017, the Delaware Supreme Court affirmed that the Court of Chancery's decision in In re: Volcano Corp. Stockholder Litigation, confirming that tender-offer mergers can be subject to the business judgment rule. In In re: Volcano Corp. Stockholder Litigation, Volcano's shareholders challenged the company's cash-out merger with Philips Holding. The Court of Chancery applied Corwin to the two-step transaction under Section 251(h) of the DGCL to find that breach of fiduciary duty claims must be evaluated under the business judgment rule if the deal is approved by an uncoerced, fully informed vote of the shareholders. In deciding to extend Corwin to two-step mergers, the Court of Chancery reasoned that (i) Volcano's board's role in negotiating a two-step merger and the board's disclosure obligations are substantially similar to the board's role and obligations in a merger, (ii) there is nothing inherently coercive about a two-step merger because it is for all of the target's outstanding shares, must be for the same consideration and appraisal rights are available, (iii) Delaware has a policy of judicial deference when stockholders made a free and informed decision about a transaction, and (iv) case law equated stockholder acceptance of a tender offer with a stockholder vote in favor of a merger. For more information, see http://courts.delaware.gov/Opinions/Download.aspx?id=252440 and http://courts.delaware.gov/Opinions/Download.aspx?id=243120.
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