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Impact of Corporate Governance Reforms on Private Companies
Public companies are facing dramatic changes in disclosure and corporate governance requirements under the Sarbanes-Oxley Act of 2002 (the Act) and new or proposed rules from the SEC, NASDAQ and the NYSE. While these new rules and regulations do not generally cover private companies, they do affect private companies:
- A private company will become subject to the Act upon filing a registration statement with the SEC in anticipation of an IPO.
- Certain aspects of the Act may indirectly become applicable to a private company if it is acquired by a public company.
- The boards of directors and management of many private companies are embracing various aspects of the Act as “best practices.”
Summarized below are the new requirements that are most likely to be relevant to private companies. Familiarity with these new rules will help private companies avoid pitfalls that could interfere with important future milestones, such as an IPO or acquisition, and help establish a culture of fiscal and corporate responsibility.
Prohibition on Personal Loans
The Act prohibits public companies and companies that have filed an IPO registration statement (even if not yet effective) from extending, maintaining, renewing or arranging personal loans to directors or executive officers. Loans that existed on July 29, 2002 are permitted to remain outstanding, so long as they are not materially modified or amended. Upon the filing of an IPO registration statement, all outstanding loans made after July 29, 2002 to a person who is a director or executive officer of the company at the time of filing will be illegal.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.