Corporate Governance: Trends and Fundamental Skills for Paralegals. Libby Ragan, Esq. Alan J. Wilson, Esq. Wilmer Cutler Pickering Hale and Dorr LLP

Transcription

1 Corporate Governance: Trends and Fundamental Skills for Paralegals Libby Ragan, Esq. Alan J. Wilson, Esq. Wilmer Cutler Pickering Hale and Dorr LLP

2 What Constitutes Corporate Governance At its most general level, corporate governance is the system by which the business of a corporation is directed and controlled. It includes the formal instruments of governance, such as the composition of the board and board committees, committee charters, policies and guidelines, etc. It also includes a broader set of concepts that touch on all aspects of the business and the relationships among the board, management team, employees and shareholders. 2

3 Corporate Governance Defined Corporate governance involves a set of relationships between a company s management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined. (G20/OECD Principles of Corporate Governance, 2015) 3

4 Why We Care About Corporate Governance All companies (public or private) State law (e.g., Delaware fiduciary duties) Generally, good corporate governance supports an efficient and transparent organization Public companies U.S. federal securities laws (e.g., Securities Act, Exchange Act, Sarbanes-Oxley) Requirements to maintain governance infrastructure Requirements to disclose governance infrastructure Other U.S. regulatory regimes New York Stock Exchange Listed Company Manual NASDAQ Stock Market Rules 4

5 Selected Hallmarks of Good Corporate Governance Effective relationships among the board, management and shareholders Clearly defined structures, roles and responsibilities Orderly, updated corporate documentation Anticipation of and responsiveness to trends and developments Participation in risk management 5

6 Key Players in Corporate Governance Shareholders Board of directors Management External advisors Regulators and standard setters 6

7 Examples of Routine Corporate Governance Independent directors Board committee roles, responsibilities and composition Independent board leadership Executive session requirements Meeting frequency and director attendance Codes, policies and procedures Minutes 7

8 Trends in Corporate Governance Proxy access SEC disclosure reform Refinements to Delaware General Corporation Law Board refreshment and diversity Corporate strategy/risk management CEO succession planning Activist investors Crisis management 8

9 Trends in Corporate Governance Proxy access Process administration Assist in reviewing proxy access nominee submissions for satisfaction of procedural requirements (e.g., required documentation, share ownership information, etc.) Assist in reviewing statement for inclusion in company proxy statement 9

10 Trends in Corporate Governance SEC disclosure reform Assist in locating new disclosures among peer companies to establish benchmarks Collaborate with counsel to develop processes for gathering and updating necessary information for required disclosures Compensation metrics Conflict minerals Insider reporting (Section 16 reporting) 10

11 Trends in Corporate Governance Refinements to Delaware General Corporation Law Be sure to include individualized date lines on the signature pages of written consents of shareholders of Delaware corporations (until the DGCL is revised) Keep track of changes in annual franchise report for Delaware corporations (different requirements currently apply to Delaware corporations versus non- Delaware corporations that are qualified to business in Delaware) 11

12 Trends in Corporate Governance Board refreshment and diversity Coordinate with counsel to track and monitor director characteristics, such as: Diversity classifications Board committee memberships Board tenure Other board commitments Career experiences Shareholder support in recent shareholder votes Independence as determined by D&O questionnaires 12

13 Trends in Corporate Governance Corporate strategy/risk management Coordinate with various company departments to assist in preparing board materials and work with counsel to ensure alignment with board expectations Are written summaries and documents clear? Are materials consistent? Is the material current and not outdated? Observe discussions and trends among coworkers in other departments and help counsel identify potential risks 13

14 Trends in Corporate Governance Activist investors Keep track of any shareholder proposals sent to your company Submitted within submission deadline stated in last year s proxy statement Proponent Topic Similarity to past proposals Similarity to proposals received by peer companies Monitor shareholder proposal activity among peer companies Topic Proponent Shareholder vote Company statement in opposition 14

15 Practice Tips for Effective Corporate Governance Orderly, updated corporate documentation Centrally organized in corporate records Document or reconcile any differences between drafts and final versions Save fully executed copies (i.e., not copies bearing only one party s signature) Uniform naming conventions for electronic documentation Board and committee minutes Tracking mechanism for approval of meeting minutes Accurate details regarding directors present and participating Complete exhibits accompanying meeting minutes Consistent with electronic versions provided to the board or committee 15

16 Practice Tips for Effective Corporate Governance Corporate minutes Familiarize yourself with preferred structure Confirm state law requirements as to form, content, who must sign, etc. Be consistent Each company/committee/attorney may have different approach Be organized. Often must draft minutes on short notice Keep track of state filing requirements/deadlines/expediting availability Ownership Maintenance of shareholder records Capitalization table Stay on top of it Work with company s finance team to identify and resolve issues early 16

17 General Best Practices for Paralegals Effective communication Relationship building Process management Planning and checklists Careful attention to deadlines (e.g., transaction deadlines, corporate renewals, notice requirements) 17

18 PRESENTERS 18

19 Libby Ragan Ms. Ragan advises clients on capital markets, securities, mergers and acquisitions, and general corporate and governance matters. (202) Prior to joining the firm, Ms. Ragan was an associate at Sullivan & Cromwell LLP in New York, where she advised clients on corporate and finance matters with a focus on capital markets transactions, compliance with federal securities laws, corporate governance matters, and mergers and acquisitions. While attending law school, she worked as a legal intern at Grassroots Business Fund. 19

20 Alan J. Wilson (202) Mr. Wilson is an associate in s Transactional Department, who advises public and private company clients on a variety of matters, including SEC disclosures, corporate governance and complex accounting issues. Mr. Wilson regularly advises public companies on addressing new SEC rules and emerging issues. He also routinely assists companies on transactional matters, including securities offerings, mergers and acquisitions, joint ventures and entity formation. Mr. Wilson has experience in legal aspects of accounting and auditing. He is the Content Director of the Audit Responses Committee of the Business Law Section of the American Bar Association. He is also a Massachusetts CPA and is a member of the Massachusetts Society of CPAs and the American Academy of Attorney-CPAs. Previously, Mr. Wilson worked as an audit/state and local tax intern with KPMG in Pittsburgh, Pennsylvania. In that role, he prepared quarterly audit documentation and analyzed state tax laws providing energy exemptions from sales and use tax. 20