Why the SEC’s SPAC Solution Makes Sense

By Karen E. Woody and Lidia Kurganova October 26, 2023 by renholding

On March 30, 2022, the SEC proposed much-anticipated regulations governing Special Purpose Acquisition Companies (“SPACs”), which provide an alternative route for a company to be traded on a national exchange without undertaking the cumbersome process of an initial public offering …

Does “Wedge” Size in Dual-Class Firms Matter?

By Rimona Palas, Dov Solomon, Dalit Gafni and Ido Baum October 19, 2023 by renholding

The structure of dual-class stock, where one class of shares confers more votes per share than the other, creates a gap (“wedge”) between voting rights and cash flow rights that allows insiders to raise capital without relinquishing effective control of …

Paul Weiss Discusses Supreme Court Decision Limiting Who May Sue Under Section 11 of Securities Act

By Kannon K. Shanmugam, Susanna M. Buergel, Andrew J. Ehrlich, Audra J. Soloway and Brian M. Lipshutz June 7, 2023 by renholding

On June 1, 2023, the Supreme Court unanimously held in Slack Technologies v. Pirani that Section 11 of the Securities Act of 1933 requires plaintiffs to plead and prove that they bought shares registered under the registration statement they claim …

How Startup Attorneys Create Value and Engineer Exits

By Rachel Landy April 25, 2023 by renholding

For nearly 40 years, scholars have debated whether business lawyers add value to transactions. The debate essentially started with an influential article by Professor Ronald Gilson, who characterized business lawyers as “transaction cost engineers.” These engineers optimize the costs of …

Skadden Discusses SEC Guidance on Pay-Versus-Performance Disclosure

By Shalom D. Huber and Loren Koles March 6, 2023 by renholding

The staff of the Securities and Exchange Commission’s (SEC’s) Division of Corporate Finance recently issued guidance to address open questions related to the final pay-versus-performance (PVP) disclosure rules adopted in 2022. The 15 new Compliance & Disclosure Interpretations (C&DIs) are …

Skadden Discusses Delaware Chancery Decision Questioning Fundamental SPAC Structure

By Howard L. Ellin, Edward B. Micheletti, Gregg A. Noel, Richard C. Witzel, Jr. and Sarah Runnells Martin February 3, 2023 by renholding

With all the SPAC activity and scrutiny over the past several years, it was only a matter of time before the Delaware courts had an opportunity to weigh in on SPAC stockholder litigation.

Early last year, in January 2022, Vice …

How SPACs Disable Indirect Investor Protection

By Holger Spamann and Hao Guo July 11, 2022 by renholding

Special Purpose Acquisition Companies (SPACs) are a trap for unwary investors. In standard public equity securities, even the most naïve investor is protected, first, by the market price – you pay only for what you get – and, second, by …

Debevoise & Plimpton Discusses SEC’s Proposed SPAC Rules and Investment Banks

By Christopher Anthony, Andrew L. Bab, Morgan J. Hayes, William D. Regner and Gregory V. Gooding May 2, 2022 by renholding

The new rules relating to special purpose acquisition companies proposed by the Securities and Exchange Commission on March 30, 2022, would, if adopted, have far-reaching effects on investment banks involved in business combination transactions involving SPACs. The proposed rules aim …

SEC Chair Gensler on SPACs, Shell Companies, and Projections Proposal

By Gary Gensler March 31, 2022 by renholding

Today [March 30], the Commission is considering a proposal to strengthen investor protections in special purpose acquisition companies (SPACs). I am pleased to support this proposal because, if adopted, it would strengthen disclosure, marketing standards, and gatekeeper and issuer obligations

…

Initial Public Offerings and Optimal Corporate Governance

By Albert H. Choi March 9, 2022 by renholding

Do companies adopt optimal governance arrangements when they go public? This question has been a hotly debated topic in corporate law and governance and one that I examine in a recent paper.

At the time of an initial public offering …

SPACs and PIPEs as Efficient Tools for Corporate Growth

By Frank Fagan and Saul Levmore March 8, 2022 by renholding

A SPAC can be understood as an alternative to an IPO, with investors using a large investor, a PIPE, to find out whether the SPAC founder has really chosen a good target or is simply rushing to get a big …

SEC Chair Speaks Before Small Business Capital Formation and Asset Management Advisory Committees

By Gary Gensler September 28, 2021 by renholding

Thank you, Carla [Garrett]. It’s good to be with this Committee again. I’d like to thank the members for their time and willingness to represent the interests of America’s small businesses. As is customary, I’d like to note I’m not

…

The Jobs Act Did Not Raise IPO Underpricing

By Omri Even-Tov, Panos N. Patatoukas and Young S. Yoon September 17, 2021 by renholding

The JOBS Act was signed into law on April 5, 2012, with the objective of improving access to the public capital market for growth companies. Title I of the JOBS Act amended the Securities Act and the Exchange Act and …

Paul Weiss Discusses How to Mitigate SPAC Litigation Exposure

By Brad S. Karp, Lewis R. Clayton, Jessica S. Carey, Gregory F. Laufer and Geoffrey R. Chepiga March 26, 2021 by Nisha Chandra

The explosive growth in Special Purpose Acquisition Companies (“SPACs”)[1] is starting to generate significant amounts of litigation. Scores of civil lawsuits have been filed against SPAC sponsors and/or their directors and officers since the start of 2020, with more …

Corporate Venture Capital

By Darian Ibrahim March 4, 2021 by renholding

Why are venture capitalists the winners in the startup funding game? VCs have funded most of the big-name startups that now dominate the NASDAQ and, in a sense, have been the only game in town for high-growth startups needing millions …

The Myth of Dual Class Shares: Lessons from Asia

By Min Yan February 16, 2021 by renholding

Companies with dual class shares have, as the term suggests, two (or more) classes of common stock. One class gives its holders voting power proportionate to their equity shareholdings. The other offers a group of shareholders, normally corporate insiders, weighted …

The Lowdown on SEC Approval of the NYSE Primary Direct Listing Proposal

By Anat Alon-Beck, Robert Rapp and John Livingstone December 24, 2020 by renholding

Direct listings, the most promising disruptor of IPOs, received a significant boost this week, thanks to the U.S. Securities and Exchange Commission (SEC) ruling on a petition from the Council of Institutional Investors.

Most common in the tech industry, direct …

Skadden Discusses California Decision Upholding Uber’s Federal Forum Charter Provision

By Peter B. Morrison, Virginia Milstead and Zachary Faigen December 4, 2020 by Nisha Chandra

A California state court dismissed a putative securities fraud class action against Uber, as well as certain individuals and underwriters, on the grounds of inconvenient forum, holding that the federal forum selection provision (FFP) in Uber’s charter was valid and

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Initial Public Offerings Chinese Style

By Yiming Qian, Jay R. Ritter and Xinjian Shao November 18, 2020 by renholding

The forced postponement of Ant Group’s initial public offering (IPO), the largest ever, by the Chinese government is the latest example of the heavy-handed regulatory approach that has made it extremely costly for companies to go public in China. The …

Fenwick & West Discusses Mitigating Class Action Litigation Risk for SPAC Transactions

By Jay Pomerantz, Marie Bafus, David Michaels and Nicolas Dumont October 26, 2020 by Nisha Chandra

Special purpose acquisition companies (SPACs) are increasingly being used as an alternate vehicle to traditional initial public offerings. Companies that go public through a traditional IPO process are often subject to shareholder securities class actions. Inevitably, securities class actions will …

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