HB 134 aims to make incorporating in Ohio more attractive by allowing corporations to permit majority voting instead of plurality voting. The bill builds upon corporate reforms made in the last session. OSBA supports H.B. 134 , Inside OSBA, March 29, 2007. See our prior post: Ohio Corporate Law Modernization Act, Aug. 1, 2006.
A recent article examines the impact of the McNulty Memorandum on a corporation's support of "culpable" employees during a corporate fraud investigation. The Department of Justice can decide which employees are "culpable" even before a determination of guilt. The McNulty Memorandum prohibits prosecutors from giving cooperation credit to a corporation for cutting off the payment of legal fees to executives or employees. However, the government may penalize corporations for other types of support, such as continued employment without sanctions for misconduct or information sharing pursuant to a joint defense agreement. See Will the Government Punish You for Standing by Your Employees? by R. Christopher Cook, Jones Day Publications, March, 2007. Also see our prior post: Justice Dept New Rules for Corporate Fraud Prosecutions.
For a great article on how to advise corporate clients on legal issues concerning company blogs, see: As Blogging Grows, So Do Its Do's and Don'ts by Alysa N. Zeltzer and John E. Villafranco, Internet Law & Strategy, Feb. 20, 2007. The article mentions such items as:
* Considering how the blog will effect the company's document discovery and retention obligations
* Establishing a corporate blogging policy and making sure employees are complying. The policy should cover such issues as preventing defamation suits and preventing other information damaging to the company from getting on the blog.
*Being mindful of making representations in violation of consumer protection laws
*Being mindful of privacy and information security laws
The IRS has released proposed guidelines concerning the governance of nonprofits. While the IRS lacks the power to enforce these guidelines, they are expected to be influential nonetheless when a final version is adopted. The proposed guidelines should prompt tax-exempt organizations to review their governance rules, organizational documents and compensation policies. See IRS Releases "Suggested" Governance Guidelines for Tax- Exempts by Jerry O. Allen and Allan D. Duffy, Bricker & Eckler, Feb. 2007.
"The guidelines address the following nine general topics: (1) Adoption of a Mission Statement, (2) Adoption of a Code of Ethics and Whistleblower policies, (3) Satisfaction of the Duty of Care/Director Diligence, (4) Satisfaction of the Duty of Loyalty/effective conflicts of interest oversight, (5) Constituent transparency, (6) Oversight of fund-raising activity, (7) Stewardship of financial affairs, (8) Payment of reasonable compensation, and (9) Adoption of a document retention policy."
IRS Releases Suggested Governance Guidelines for Tax-Exempt Organizations by McDermott, Will & Emery, 2/5/2007. This articles has a link to a copy of the proposed guidelines, "Good Governance Practices for 501(c)(3) Organizations". A copy is also available at the IRS Website.
To find out about economic development programs which may assist your clients, consult the Economic Development Assistance Handbook compiled by the Cuyahoga County Board of Commissioners. The 47 page book details programs from 15 different organizations, and provides links for more information. Programs include public financing assistance and economic development technical assistance from such organizations as the Cuyahoga County Department of Development, Ohio Department of Development, Council of Development Finance Agencies, City of Cleveland Department of Economic Development and the Small Business Administration.
The SEC issued its final rules concerning posting proxy materials on the Internet, as an alternative to sending them by mail. A company must issue notices indicating that the proxy materials are available on the web. The final rules can be viewed in the SEC Release No. 34-55146, Jan. 22, 2007. For more details see SEC Posts Final Rules for Internet Availability of Proxy Materials by Bricker & Eckler, Jan. 2007.
The SEC "is altering the requirements for disclosing the value of stock option awards and giving firms more flexibility in how they report those expenses." SEC Amends Rules on Disclosing Executive Compensation by Donna Block, The Deal, Dec. 27, 2006. See also SEC Amends Executive Compensation Disclosure To More Closely Align With FAS 123R, Press Release 2006-219 and our prior post: New SEC Rules on Executive Compensation.
For a great article detailing Ohio's business entity modernization act, H.B. 301, see Amendments to Ohio’s Business Entity Statutes Effective in October 2006, Jones Day Commentaries, September 2006 by David P. Porter, Jeanne M. Rickert, Randall M. Walters and Jennifer C. Lewis. See our prior post: Ohio Corporate Law Modernization Act, Aug. 1, 2006.
HB 301 makes changes to Ohio corporations law. The changes include:
1. Procedures for the conversion of a foreign entity into a domestic entity and conversion of a domestic entity from one type to another (for example, corporation, LLC, partnership) and/or conversion of a domestic to a foreign entity.
2. Procedures for a domestic parent and subsidiary company to switch designations as parent and subsidiary.
3. Changes in mergers and consolidations of Ohio partnerships.
4. Changes concerning the enactment and contents of corporations' regulations and articles of incorporation.
5. Changes concerning the liability of partners in registered limited liability partnerships, see ORC 1775.14(B).
6. Incorporates into Ohio law future amendments to federal securities laws.
See also Final Bill Analysis. The intent of this legislation is to update and streamline corporations law, to make Ohio competitive with other states. See Judicial Administration and Legal Reform Update 2006 by William K. Weisenberg at page 50 of the pdf document.
The SEC issued new rules on reporting executive compensation, effective Dec. 15, 2006. Companies must now disclose the date of granting stock options to executives. The new rules also require companies to have one consolidated table in annual filings showing total annual compensation for chief executive officers, chief financial officers and the next three highest paid executives. Compensation must be explained in detail on a new statement called the "Compensation Discussion and Analysis," or CD&A. The explanations in proxy and information statements must be in plain english. Executive Rewards: Please Itemize by Marcy Gordon, Associated Press, The Plain Dealer, July 27, 2006; SEC Orders More, Clearer Exec Pay Disclosure by Rueters, posted at businessinsurance.com, July 26, 2006; SEC Votes to Adopt Changes to Disclosure Requirements Concerning Executive Compensation and Related Matters, SEC Press Release 2006-123, July 26, 2006. The SEC press release contains a form for the Summary Compensation Table.
