In late 2013, JOBS Act-related amendments to Regulation D under the Securities Act lifted the ban on general solicitation in certain offerings under Rule 506. However, the ability to generally solicit came with new limitations and procedural burdens for issuers. Specifically, all purchasers in Rule 506 offerings involving general solicitation must be accredited investors and the issuer must take "reasonable steps" to verify this. In these three widely read Legal Updates, Practical Law reported on guidance on the new requirements issued by the SEC staff and by the industry group SIFMA:

Also in late 2013, the "bad actor disqualification" amendments to Rule 506, which were required by the Dodd-Frank Act, became effective. Under amended Rule 506, the safe harbor from registration is not available for a securities offering if the issuer, the placement agent or certain other parties have particular disqualifying events in their past. Practical Law reported on SEC staff guidance relating to bad actor disqualification in Legal Update, SEC Issues New C&DIs on Securities Act Rule 506(d) and Exchange Act Rule 13d-3.

To learn more about Regulation D offerings, see Practice Note, Section 4(a)(2) and Regulation D Private Placements.

The first filings required by Rule 13p-1 under the Exchange Act, the SEC’s conflict minerals rule, were due by June 2, 2014. SEC guidance issued in 2014 sought to answer common questions that arose as companies prepared to comply with this complex rule. Meanwhile, during 2014 a legal challenge to the rule brought by several business groups was pending in the Court of Appeals for the District of Columbia Circuit. In April, the Court of Appeals ruled that certain provisions of the conflict minerals rule violated the First Amendment, while upholding the rest of the rule. In response, the SEC staff issued guidance on how it expected companies to comply with the rule in light of the holding. Practical Law reported on this sequence of events in several Legal Updates, including:

For more information on the conflict minerals rule, see Practice Note, Conflict Minerals Diligence.

Practical Law's Capital Markets & Securities service reported on and analyzed many other developments throughout 2014, including voting guideline updates by proxy advisory firms Institutional Shareholder Services and Glass Lewis & Co. All of Practical Law's Capital Markets and Securities Legal Updates can be found here.

The most read Legal Update in Practical Law's Corporate and M&A service in 2014 was the update on the Delaware Court of Chancery's decision in Third Point v. Ruprecht. The decision represented the Court's first significant examination of a traditional takeover defense to the new paradigm of shareholder activism and short-slate proxy contests. While expressing certain reservations, the Court declined to treat the issue as a novel question of law and instead followed the lead of Moran and applied the Unocal standard of reasonableness to its review of the board's adoption and enforcement of a poison pill. For a detailed summary of the holding and its practical implications, see Legal Update, Third Point v. Ruprecht: Creeping Control and Negative Control Upheld as Defenses for Two-tier Poison Pill.

The Delaware legislature passed several amendments to its business-organizations statutes and statute of limitations whose effects are significant for all corporate practitioners. These amendments widened application of the Section 251(h) tender offer process, liberalized various rules for entity formation and dissolution, and allowed contractual extensions of the statute of limitations without need for a sealed instrument. Practical Law described these statutory changes in two widely read Legal Updates:

An area of intense interest for both corporate law practitioners and academics has been the statutory and common law status of fee-shifting by-laws under Delaware law. The issue erupted last May, when the Delaware Supreme Court ruled that a non-stock corporation's fee-shifting by-law was facially valid and adopted for a proper purpose. For more on the decision in ATP Tour, Inc. v. Deutscher Tennis Bund, see Legal Update, ATP Tour: Delaware Supreme Court Upholds Fee-shifting By-laws if Adopted for Proper Purpose.

The decision almost immediately elicited a legislative response, with the Delaware State Bar Association considering an amendment to the DGCL that would limit ATP Tour to non-stock corporations. This development was reported in Legal Update, Proposal to Limit "ATP Tour" Decision on Fee-shifting By-laws.

Just as it seemed that the amendment would be passed into law, the Delaware State Senate and House of Representatives passed, with the approval of the Governor, a joint resolution that directed the Delaware State Bar Association, its Corporate Law Section and the Council of that section to continue examining the proposed amendments to the DGCL regarding fee-shifting by-laws and other aspects of corporate litigation. Practical Law provided a detailed summary of the resolution and the general context of the proliferation of litigation in the realm of public M&A in Legal Update, Delaware General Assembly and Governor Direct Further Investigation into Fee-shifting By-laws.

Practical Law continues to monitor the status of fee-shifting by-laws and will report on any significant new judiciary or legislative developments.

The Delaware judiciary issued several groundbreaking decisions in 2014 that touch on the fiduciary duties of board of directors, particularly in the context of sales of the company. Some of the most widely read Legal Updates of the year were summaries of the Courts' decisions in M & F Worldwide, Chen v. Howard-Anderson and Answers. All of Practical Law's Corporate and M&A Legal Updates can be found here.

An attorney performing a form check is essentially making sure a draft SEC filing complies with all the requirements set out in the applicable SEC form. While the name "form check" makes this work assignment sound administrative in nature, when done correctly, a form check of an SEC filing is a highly challenging and substantive undertaking. To help junior lawyers avoid (or at least minimize) the "head hits desk" moments in their form check assignments, Legal Update, Form Checking SEC Filings (Without Head Hitting Desk) gave practical tips on conducting a form check and identified Practical Law resources that can help.

Each fall, new securities attorneys begin their careers, doing their best to learn and absorb the unfamiliar world of a transactional attorney. One of the most important concepts a new securities attorney must learn can also be one of the most difficult to teach: materiality. The ability to apply the materiality standard to fluid situations with many complex variables is an essential tool for any securities lawyer but a true understanding of these concepts typically only comes with experience. To help with this learning process, Practical Law featured Practice Note, Determining Materiality in Securities Offerings and Corporate Disclosure and Is it Material?: Asking the Right Questions Checklist.

In securities offerings, underwriters and certain other financial intermediaries rely on "10b-5 letters" from counsel, also known as negative assurance letters, to help document their due diligence investigation of an issuer. Counsel delivering a 10b-5 letter may have legitimate reasons to exclude certain information included in an offering document from the scope of the letter. Because any carve-outs may weaken underwriter defenses, however, they are often hotly negotiated. To help counsel get up to speed on typical negotiations, Practical Law featured Practice Note, Common Carve-outs from 10b-5 Letters.

The JOBS Act-related amendments lifting the ban on general solicitation in certain offerings under Rule 506, effective in late 2013, present exciting new capital-raising opportunities for early-stage companies. Offerings using general solicitation in reliance on the amendments must be sold only to accredited investors and the issuer must take "reasonable steps" to verify this. To help guide issuers in satisfying this requirement, Practical Law featured our Standard Document, Accredited Investor Representation Letter for Rule 506(c) Offering.

An operating company or investment fund conducting an offering under any of the Regulation D safe harbors must also file a Form D with the SEC. Practical Law featured our Practice Note, Form D: Notice of Exempt Offering of Securities, which explains the item-by-item disclosure requirements of Form D, how to file Form D with the SEC, the risks of neglecting to file Form D and more.

In certain situations, there is a clear answer to the question of whether an event triggers the requirement for a reporting company to file a current report on Form 8-K. However, announcements that a number of reporting companies had experienced cybersecurity breaches highlighted that in other situations, it is less clear whether it is necessary or advisable for a company to report a corporate event on Form 8-K. With this in mind, Practical Law featured Legal Update, When Is a Form 8-K Necessary?

In September, the SEC announced it had brought charges against 28 directors, officers and major stockholders of reporting companies for alleged violations of the beneficial ownership reporting requirements under Sections 16 and 13(d) of the Exchange Act. The SEC also brought charges against several reporting companies for alleged violations related to their insiders' failure to file timely reports. The announcements came as a surprise to many, because the SEC has not historically taken enforcement action against delinquent Section 16 filers or related companies, let alone in large numbers in a short period. To assist companies in coping with this new era of heightened enforcement, Practical Law featured Beneficial Ownership Reporting: Getting It Right in the Era of "Broken Windows" Enforcement.

The most popular feature of the Corporate and M&A service in 2014 was Legal Update, Covenants, Implied and Explicit, in Earn-out Provisions. In that feature, Practical Law reviewed judicial developments and market practice regarding covenants in acquisition agreements for post-closing efforts by the buyer to achieve earn-out targets for the seller. The feature demonstrated that under Delaware law, the implied covenant of good faith and fair dealing does not automatically obligate the buyer to operate the business in a manner aimed at achieving the payment milestones.

In light of the fact that some jurisdictions do assume that earn-out provisions imply post-closing obligations on the buyer, Practical Law surveyed the then-most recent 50 private acquisition agreements containing earn-outs found in the What's Market private acquisitions database and the then-most recent 50 private acquisition agreements with Delaware governing law containing earn-outs. The survey found that with some statistical differences at the margins, there does not appear to be a significant distinction in market practice between Delaware and elsewhere. Most agreements generally do not leave the issue of post-closing covenants entirely silent, but either impose some sort of explicit covenant on the buyer or explicitly disclaim any such covenants. However, a substantial portion of agreements with earn-outs do remain silent altogether on earn-out covenants; it is these situations where it is most incumbent on counsel to advise their clients of the relevant judiciary's view of implied contractual obligations.

For more on drafting and negotiating earn-out provisions, see Practice Note, Earn-outs. For an example of an earn-out provision based on EBITDA triggers, see Standard Clause, Purchase Agreement: Earn-out with EBITDA Targets.

The second-most popular feature of the Corporate and M&A service in 2014 was also prompted by a recent Delaware Court of Chancery decision. In In re Interstate General Media Holdings, LLC, the Court of Chancery held that if the members of a limited liability company do not describe the procedures for the LLC's dissolution, but do agree to judicial dissolution, they essentially hand over the decision for the dissolution process to the court.

In Legal Update, Resolving Deadlocks in LLC Agreements, Practical Law featured its resources that aid in the negotiation and drafting of deadlock procedures, particularly for joint-venture LLC agreements. These include Standard Clauses for a Russian Roulette buy-sell agreement and for resolving a deadlock through mediation. For a complete joint-venture LLC agreement, which includes further discussion of other buy-sell procedures, see Standard Document, LLC Agreement (Two Member, Managing Member-Managed). For an overview that explains why exit and termination provisions are useful and that explores the primary issues in drafting and negotiating these provisions, see Practice Note, Joint Ventures: Exits and Terminations.

In 2014, Practical Law's Corporate and M&A service published two major public M&A deal studies. In April, Practical Law published Article, Deal Protections and Remedies: A Comparative Analysis of 2013 Public Merger Agreements, a study of target-side deal protections such as matching rights, break-up fees, force-the-vote provisions and many others. The study also introduced a unique scoring system that measures the overall impact of the full set of deal protections in each agreement.

In July, Practical Law published the fifth annual version of its study of remedies available to target companies in public merger agreements for a buyer's failure to close the transaction because of a breach or financing failure. Article, Reverse Break-up Fees and Specific Performance: A Survey of Remedies in Leveraged Public Deals (2014 Edition) provided data-driven, comparative analysis of three-year trends in remedies for buyer breach and financing failure and analyzes the pricing of reverse break-up fees in 2013.

Some of Practical Law's most popular Corporate and M&A features of the year were aimed at introducing newer practitioners to basic components of private M&A deal-making.

One of the most confusing aspects of corporate law and practice for new attorneys is understanding the different possible structures for M&A deals and the considerations that go into choosing one over the other. To help orient new M&A attorneys to the issue of deal structure, Legal Update, Moving in Reverse to Go Forward: Deal Structure Primer collected resources that introduce asset acquisitions, stock acquisitions and mergers and the considerations that go into choosing the right structure for a given deal.

In private acquisition agreements, the provisions for indemnification are frequently among the most heavily negotiated issues in the entire transaction. In Legal Update, Indemnification in Private M&A Deals, subscribers can:

In any M&A deal that contemplates a delay between signing and closing, the acquisition agreement places conditions on the parties' obligations to close. Two examples of those conditions are the bring-down of representations and warranties to the closing and the No Material Adverse Effect closing condition. Article, Bring-down and Material Adverse Effect Closing Conditions used Practical Law's long-form stock purchase agreements to describe the negotiation dynamics surrounding these closing conditions. The Article also surveyed 224 private acquisition agreements from the first half of 2014 to determine market practice for certain negotiated issues involving these provisions.

Public M&A crossed over into mainstream public awareness on the wave of inversion deals reached in 2014. At the height of the trend this past summer, various arguments were marshalled by each side of the debate to either defend US companies that flee an oppressive tax regime or excoriate them for turning their backs on the country that gave them their opportunity to succeed. Whatever one's particular view on the subject, one argument that ought to rankle any corporate lawyer is the notion that a board's fiduciary duties require the board to consider doing an inversion in order to minimize the company's corporate taxes. In Legal Update, Inversions and Phantom Fiduciary Duties, Practical Law dismantled this argument by proving that under Delaware law, no such fiduciary duty exists. (Unfortunately, Practical Law's reach is not quite vast enough to completely kill this argument.)