March 17, 2025
While Delaware’s SB 21 was the most hotly
debated topic at Tulane’s Corporate Law Institute earlier this month,
there were also lots of great discussions surrounding shareholder
activism and engagement. Tiffany Posil, Chief of the Office of M&A in
the Division of Corporation Finance, joined the panel “Hot Topics in
M&A Practice” and shared some helpful comments on common questions
that have come up since the mid-February release of updated CDIs on the filing
of Schedules 13D and 13G.
Here’s a summary of her comments on three
common questions. (Keep in mind that all Staff comments are subject to
the standard disclaimer that the
views are the person’s own in their official capacity and not
necessarily reflective of the views of the Commission, the
Commissioners, or members of the Staff, and our summaries are based on
our real-time notes.)
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– Is publishing a voting policy or guideline viewed as
influencing control with no other actions taken? No; these
policies are not targeting a particular company and apply
to all the filer’s portfolio companies. Even where they
have bright line conditions (for example, to say that the
investor will always vote “against” if the company doesn’t
take a particular action), they are not considered an
attempt to influence control at a particular company, and
the CDI permits 13G filers to express views and how those
views impact its voting decisions.
– What if investors then meet with an issuer to discuss
those guidelines? The CDI allows for a meeting and
discussion regarding policies, but 13G status is at risk
the more the discussion becomes specific or insistent or
turns into a negotiation (like demanding actions in
exchange for votes). She also noted that company-initiated
meetings are less likely to call filer status into
question, but that doesn’t mean that an investor has a
“blank check” to say whatever it wants in a
company-initiated engagement and remain a 13G filer.
– What is the intent behind
the use of “implies” and “implicitly conditions its
support”? These words were used to make sure the CDI
didn’t “imply” that 13G filers can continue to use
Schedule 13G as long as they don’t say magic words like
“We’re going to vote against a director,” where all other
actions suggest that that’s what they’re going to do.
(Note the parallel to Regulation FD where companies can
trip up Regulation FD when they convey information “the
meaning of which is apparent though implied.”).
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Finally, she stressed that the examples provided in the CDI are
illustrative only and not the only instances where engagement could be
considered influencing control and the guidance was not intended to
chill or impede communications.
– Meredith
Ervine
Posted by
Meredith Ervine
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