Corporate Governance

Subscribe to Corporate Governance via RSS

Minnesota bans new employee non-competes beginning July 1, 2023, and the United Kingdom intends to cap their duration at 3 months

Minnesota Becomes the 4th U.S. State to Ban Employee Non-Competes

Following in the footsteps of California, North Dakota and Oklahoma, Minnesota has banned all employee non-competes beginning July 1, 2023, and bars employers from utilizing choice-of-law or choice-of-venue clauses in an attempt to use a more favorable state’s law as a workaround.  Importantly, the new law is not retroactive and does not affect other employee restrictions, such as confidentiality and non-solicitation covenants. Continue Reading Updates on Non-Competes

NLRB GC’s Action Potentially More Far-Reaching than Federal Trade Commission’s Proposed Rule Banning Non-Competes Altogether

On May 30, 2023, the General Counsel to the National Labor Relations Board (the “NLRB”), Jennifer A. Abruzzo, issued a memorandum stating that most non-compete agreements violate the National Labor Relations Act (the “Act”).  In doing so, General Counsel Abruzzo directed the NLRB’s regional offices to investigate employers using non-competes to determine whether their usage is “overbroad” or not.  General Counsel Abruzzo also directed the regional offices to seek make-whole relief for employees who lost employment opportunities because of a non-compete agreement, even where the employer did not enforce the agreement and, if necessary, present evidence of such lost opportunities at trial.Continue Reading NLRB General Counsel Unleashes Regional Offices to Clamp Down on “Overbroad” Non-Competes

On February 9, 2023, NGO ClientEarth sued all eleven members of the board of directors of Shell plc before the English High Court, for allegedly failing to take steps to protect Shell against climate-change-related risks (see our alert memorandum of February 22, 2023). Our follow-up alert memorandum of April 17, 2023, also set out some answers to some common questions on derivative claims in the context of ESG litigation.Continue Reading Derivative Claim Against Shell’s Board by Climate-Change Activist Shareholder is Refused Permission to Proceed

In a recent decision, the Delaware Court of Chancery grappled with the question whether—and to what extent—claims for breach of fiduciary duty can be waived ex ante in a corporate shareholder agreement.  Specifically, in New Enterprise Associates 14 LP v. Rich, the court denied a motion to dismiss claims for breach of fiduciary duties brought against directors and controlling stockholders of Fugue, Inc. (the “Company”) by sophisticated private fund investors who had agreed to an express waiver of the right to bring such claims.[1]  Importantly, the court found that fiduciary duties in a corporation can be tailored by parties to a shareholders agreement who are sophisticated, and were validly waived by the voting agreement in this case (which specifically addressed the type of transaction at issue).  The court, however, held that public policy prohibits contracts from insulating directors or controlling stockholders from tort or fiduciary liability in a case of intentional wrongdoing, which the court found was plausibly alleged in this case. The court’s opinion has implications for sophisticated investors in venture capital and other private transactions involving Delaware corporations. The opinion cautions against overreliance on express contractual waivers, on the one hand, while also serves as a reminder that at least in some circumstances sophisticated parties can contract around default legal principles (including fiduciary duties), even with respect to corporations.Continue Reading Delaware Chancery Court Highlights Tension Between Freedom of Contract and Corporate Fiduciary Duties

The litigation recently launched in England by the NGO, ClientEarth, against the members of the board of directors of Shell plc has generated a significant level of interest from organisations who wish to understand the implications for directors more generally.  The claim raises novel issues regarding directors’ responsibilities for a company’s environmental impact, and questions about how environmental obligations should be implemented and enforced.Continue Reading ESG Litigation: Derivative Claims Against Directors: Q&A

Earlier this month, the Treasury Department published its explanation of President Biden’s proposed fiscal 2024 budget. We have summarized the tax rate increases, as well as the executive compensation and employee benefits proposals below. These proposals, which are similar to the ones contained in President Biden’s last few budgets, are unlikely to be passed in their current form, especially now given that the House of Representatives is controlled by the GOP. However, we expect that there will be lots of negotiating over the fiscal 2024 budget, so one or more of these proposals may find their way into the final budget. We will publish updates as these proposals evolve.Continue Reading President Biden’s Fiscal 2024 Proposed Budget Includes Tax Rate Increases, and Several Executive Compensation and Employee Benefits Changes

We have once again asked our colleagues from around our firm to boil down the issues in their fields that boards of directors and senior management of public companies will be facing in the coming year. In the following pages, we present the results for 2023 – focused updates on 18 topics that will surely feature at the top of board agendas throughout the year.Continue Reading Selected Issues for Boards of Directors in 2023