ISS Discusses Japanese Board Independence and Diversity

A recent ISS analysis of Japanese board composition finds a marked uptick in board independence and female board representation. At the close of Japan’s March 2022 “mini-season”, ISS found a 13percentage point jump in companies with at least a one-third independent board (based on the Tokyo Stock Exchange (TSE) classification), and a 12-percentage point increase in boards with at least one female director for companies listed on TSE’s Prime (the former First) listing section, compared with the same time in 2021 March.

Based on the 200+ companies listed on the TSE’s Prime listing section that held their 2022 AGMs during

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Why Corporate America Should Pay Attention to the Proposed EU Directive on Corporate Sustainability Due Diligence

On February 23, 2022, the European Commission issued its long-awaited proposal for a Directive on Corporate Sustainability Due Diligence (the Proposed Directive). Under the Proposed Directive, large companies operating in the EU market must identify, prevent, and mitigate any actual or potential adverse human rights and environmental impact in their own operations, in their subsidiaries, and at the level of their established direct or indirect business relationships in their value chain. Adverse human rights and environmental impacts are keyed to violations of a long list of human rights and environmental obligations laid out in international conventions and declarations, irrespective of … Read more

Cleary Gottlieb Discusses the LIBOR Act, State Law, and Litigation Risks

On March 15, 2022, President Biden signed into law the Adjustable Interest Rate (LIBOR) Act  (the “LIBOR Law”).[1] The objectives of the legislation are to facilitate the transition of legacy LIBOR contracts that either (a) lack LIBOR fallback provisions entirely or (b) contain inadequate LIBOR fallback provisions and to avoid related “disruptive litigation”.[2]

When Does the LIBOR Law Apply?

The LIBOR Law applies to contracts that use, as a Benchmark rate, the one-month, three-month, six-month and twelve-month tenors of U.S. Dollar LIBOR as of the applicable LIBOR Replacement Date (each, a “LIBOR Contract”).[3]Read more

Why Delaware and England Win the Global Corporate Law Race

What makes the corporate laws of some jurisdictions more attractive for entrepreneurs and investors than others in the global arena? Within the United States, the competition among state laws is a popular explanation for Delaware’s corporate law prominence. However, interjurisdictional competition over corporate law is not limited by U.S. borders. In recent decades, an international market for corporate law has emerged; consequently, foreign countries compete with Delaware to supply corporate law.

In our recent paper, we used qualitative methods based on interviews with mergers and acquisitions (M&A) practitioners from the United States, United Kingdom, continental Europe, and Israel and … Read more

Sullivan & Cromwell Discusses Federal LIBOR Transition Legislation

On March 15, 2022, President Biden signed into law the “Consolidated Appropriations Act, 2022,” which enjoyed significant bipartisan support and contains, as Division U, the “Adjustable Interest Rate (LIBOR) Act” (the “LIBOR Act”).[1]  The LIBOR Act provides a uniform national approach for replacing U.S. dollar LIBOR (“LIBOR”) as a reference interest rate in so-called “tough legacy” contracts (contracts that do not include effective fallback provisions, for example, because they have no provisions for a replacement benchmark or their fallback provisions would require the use of a LIBOR-based rate or a poll to determine a rate) for a time when … Read more

Environmental Protection and Sovereign Debt Restructuring

Some countries have a compelling argument for why they should not be expected to join the planetary effort to fight climate change. These are countries facing the need to restructure their external debt. By definition, sovereigns that cannot pay what they are already contractually obligated to pay will not have excess cash to devote to environmental conservation or other measures to assist with limiting climate change. As incongruous as it may sound, however, it is precisely this subset of countries undergoing a debt restructuring that may have an alternative avenue for funding these projects.


Most modern sovereign debt restructurings … Read more

Debevoise & Plimpton Discusses the Policy Debate over Developing a U.S. Central Bank Digital Currency

For much of the past century, consumers and commercial end users could access the Federal Reserve’s balance sheet directly in only one way—by holding physical currency or coin issued or distributed by a Federal Reserve Bank. A major drawback, however, is that Federal Reserve Bank notes and coins are bearer instruments that must be physically held and transferred in order to effect transactions. Although the United States also offers digital money in the form of deposit balances at Federal Reserve Banks, only commercial banks are directly eligible to access this money through Federal Reserve Bank master accounts.

Due to a … Read more

ISS Discusses Proposed Shareholder Class-Action Against ING Groep

ING Groep N.V. – a company that offers banking services to private clients, small businesses, large corporations, financial institutions, and governments worldwide – is at the epicenter of a proposed shareholder class action. Investors are looking to remediate the significant loss experienced due to the findings of money laundering and financial terrorism… and the subsequent fines assessed against it.

In 2018, ING Groep admitted that criminals had been able to launder money through its accounts and agreed to pay a €775 million penalty to Dutch authorities to settle a probe. Dutch financial crime prosecutors alleged that ING had not properly

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Sullivan & Cromwell Discusses Dashed Efforts to Make New York a Hub for Non-U.S. Derivative Litigation

In the last week of December, the Commercial Division of the New York Supreme Court dismissed two shareholder derivative actions brought against directors and officers of large European companies in decisions with critical implications for non-U.S. companies’ exposure to fiduciary litigation in the U.S.  Those actions—against Bayer and UBS—are part of a flurry of derivative suits against major non-U.S. firms filed in New York state court over the past two years in an attempt to circumvent the requirements of these companies’ respective home forums.  These two dismissals may spell the beginning of the end of those efforts.  Sullivan & Cromwell … Read more

Davis Polk Discusses New UK Foreign-Investment Review Regime

On January 4, the UK’s new National Security and Investment filing regime became fully operational. A wide range of deals will be scrutinized for national security concerns requiring further investigation. The UK government expects to review up to 1,800 cases annually – a dramatic contrast with the handful of deals reviewed on public interest grounds in the last 20 years.

To ensure a smooth pathway to closing a notifiable deal, it will be critically important for the parties to develop clear engagement strategies with the newly established Investment Security Unit (ISU) within the Department for Business, Energy & Industrial Strategy … Read more

The Management and Oversight of Human Rights Due Diligence

Last year was the 10th anniversary of the United Nations Guiding Principles on Business and Human Rights (UNGPs) The UNGPs are a leading  framework for understanding the duties of states to protect those within their jurisdiction from corporations’ negative human rights impacts, the responsibility of corporations to respect human rights, and the role of states and businesses in providing remedies to the victims of human rights abuses.

At the heart of the UNGPs is the concept of human rights due diligence (HRDD). This is the process whereby corporations  assess the actual and potential human rights impacts of … Read more

Why Exit via Acquisition Is Essential to Entrepreneurial Investment

Antitrust regulators around the world, including in the UK, have recently proposed changes to merger review policies and enforcement strategies that have implications for how acquisitions of start-ups are investigated and evaluated.  These changes will likely lead to heightened scrutiny—and increased costs and longer reviews—for many acquisitions, including horizontal and vertical mergers. In evaluating the merits of such changes, it is critical to take into account the important role that exit via acquisition plays in providing incentives for venture capital (VC) investment and entrepreneurship, and more broadly in driving dynamic innovation—one of the stated goals of the UK’s Competition and … Read more

Davis Polk Discusses U.S. Strategy on Countering Corruption Report

On June 3, 2021, President Biden issued the Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest (the Anti-Corruption Memo).  The Anti-Corruption Memo directed senior figures from the administration’s national security team to oversee an interagency review to take stock of existing U.S. government anti-corruption efforts and to identify and seek to rectify perceived gaps in the fight against corruption.

On December 6, 2021, the Biden administration released the United States Strategy on Countering Corruption (the Strategy) as the first major step pursuant to the Anti-Corruption Memo.  The Strategy outlines the administration’s plans to … Read more

Agreement Reached on International Carbon Credit Trading Rules at COP26

The 2021 United Nations Climate Change Conference, commonly referred to as “COP26”, was held in Glasgow, Scotland last month.  Among other agreements coming out of COP26, government ministers representing nearly 200 countries reached a consensus regarding rules implementing Article 6 of the 2015 Paris Agreement, which provides a framework for the creation of voluntary international carbon credit trading markets.  This agreement follows six years of negotiations over the specific characteristics of such markets, and parties to the agreement have expressed the hope that this framework will lead to the establishment and growth of an international carbon credit trading market.


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China Experiments with Cross-Border Payments of Central Bank Digital Currencies

According to the Financial Stability Board (FSB), there is a consensus among major economies, such as the G20, to enhance cross-border payments.[1] Providing faster, cheaper, and more transparent and inclusive cross-border payment services would be beneficial for citizens, businesses, and national economies. As the Bank for International Settlements (BIS) noted, the Covid-19 pandemic made global policymakers rethink the significance of optimizing global payment and settlement systems, leading some countries to further explore the possibility of developing cross-border central bank digital currencies (CBDCs).[2] In response, China has sped up its own CBDC experiment – the digital yuan or digital … Read more

The SPACtacular Rise of the Special Purpose Acquisition Company: A Retail Investor’s Worst Nightmare

The special purpose acquisition company, or SPAC, is a company with no commercial or operating history that has listed on a stock exchange with the sole objective of raising financing to identify and acquire another company.   SPACs developed after the SEC curtailed penny-stock blank-check companies and have recently achieved cult-like status.  In 2020, SPACs accounted for most of the money raised through IPOs on U.S. exchanges.  SPACs are also big business in the M&A world, completing nearly $80 billion worth of acquisitions in 2020 alone, and it is not surprising that non-U.S. exchanges are falling over themselves to take a … Read more

Offshore Activities and Corporate Tax Avoidance

Taxation of multinational companies (MNCs) has received increasing attention from politicians, the media, regulators, and academics. While the popular press provides considerable anecdotal evidence that large MNCs pay lower taxes than their domestic counterparts, academic research provides mixed evidence on how multinationality affects taxation. Although foreign operations provide additional cross-border tax avoidance opportunities such as income shifting to low-tax rate jurisdictions, the existing empirical studies find that MNCs do not have significantly lower effective tax rates than purely domestic firms have. As more U.S. firms become multinational and engage in offshore activities of serving foreign markets and moving production overseas, … Read more

Sullivan & Cromwell Discusses UK Watchdog’s Order to Unwind Facebook Acquisition

On November 30, 2021, the UK’s competition watchdog, the Competition and Markets Authority (CMA), found that the completed acquisition by Facebook, Inc. (now Meta Platforms, Inc.) of GIPHY, Inc. resulted in a substantial lessening of competition (SLC) in social media and display advertising, harming social media users and businesses in the UK.

The CMA found that the only effective remedy is a full divestiture of GIPHY to a purchaser approved by the CMA.

The decision highlights that:

  • The CMA’s jurisdiction is far-reaching: The CMA asserted jurisdiction over the transaction even though GIPHY does not generate

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ISS Discusses the Challenges of Litigating Class Actions in the UK

Although the United States inherited its common law legal system from the United Kingdom, the U.S. securities class actions jurisprudence is well advanced of the development of this area of law in the United Kingdom. With the first major collective action just occurring in 2013 (RBS Rights Issue Litigation), it is easy to understand why the case law surrounding this small but significant area of law has not had as much time to develop as it has in the United States.

The U.K. securities litigation is hitting its stride and the Courts have recently provided some valuable guidance as to … Read more

ISS Discusses Landmark Ruling in China’s First Shareholder Class Action

The Intermediate People’s Court of Guangzhou delivered a groundbreaking victory to investors in China’s first-ever shareholder class action.

The China Securities Investor Service Centre (CSISC), a government-affiliated body, represented investors as it brought the action against Kangmei Pharmaceutical Co. (In China, class actions can only be initiated by government bodies – different from the U.S., where any investor of record can file a complaint.)

On November 12, 2021, the court declared the Puning-based drug manufacturing company to pay 2.46 billion yuan (USD $385.5 million) to investors as a reimbursement of its losses. The defendants included the company’s former Chairman, Ma

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