As we head into the first weeks of summer, things are heating up—not only outside but also for directors and officers in many areas of business. While the D&O Notebook is on break for the fourth-of-July holiday this week, here is a list of hot topics for director and officer summer reading.
SEC Turning Up the Heat on ESG and Climate Change Disclosures
Public companies take note: The Securities and Exchange Commission is getting serious about the quality of both climate change and ESG disclosures in public company filings. In March 2021, the SEC announced the formation of a new task force in the Division of Enforcement for climate disclosures and ESG.
In the article, SEC Turning Up the Heat on Climate Change and ESG Disclosures, we discuss the SEC’s new task force, whether disclosures will be voluntary or mandatory in the future, and next steps for directors wanting to prepare.
As Predicted: More SPACs Are Leading to More Litigation
SPAC deals are hotter than ever and, as predicted, litigation is on the rise. According to Woodruff Sawyer’s proprietary D&O litigation database, the D&O Databox, 12% of SPACs have been sued in M&A litigation, 10% in securities class actions, and 4% in derivative actions through Q1 2021.
In the article, As Predicted: More SPACs Are Leading to More Litigation, we look at the data to analyze the SPAC-related D&O litigation trends. We note that securities class actions are the most concerning of the litigation trends and why. Finally, we discuss what steps directors and officers can take to protect themselves if they are involved in a SPAC or de-SPAC transaction.
State Choice of Forum Provisions: Streamlining Fiduciary Duty Lawsuits
No list of hot topics would be complete without discussing an oldie-but-goodie topic that is back in the spotlight—state choice of forum provisions—but with a new twist: diversity lawsuits.
As some recent fiduciary duty suit dismissals have shown, state choice of forum provisions remain an important protection that companies should insert in their charter documents. In the article, State Choice of Forum Provisions: Streamlining Fiduciary Duty Lawsuits, Including Diversity Suits, we discuss a brief background on these provisions, a recent high-profile case involving The Gap, and takeaways for new and mature public companies.
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As some recent lawsuit dismissals have demonstrated, state choice of forum provisions have helped companies control what was otherwise the problem of duplicative, multi-jurisdictional breach of fiduciary duty suit litigation.