28 May 2020 - Article
This week's Corporate news includes information on new disclosure requirements for major shareholders of United Kingdom companies, the Delaware Supreme Court's enforcement of an expectation damages award in the context of a failed merger, and the UN Framework Convention on Climate Change's recently adopted Paris Agreement (including a framework for climate finance). DELAWARE SUPREME COURT ENFORCES AGREEMENT TO ENGAGE IN GOOD FAITH NEGOTIATIONS In December 2015, a divided Delaware Supreme Court upheld a Delaware Court of Chancery $113 million “expectation damages” award, protecting the non-breaching party for the value of the expectancy created by the other party's promise in a merger agreement that indicated that the parties would negotiate in good faith toward a license if the merger failed to close. The Delaware Supreme Court reaffirmed the “wrongdoer rule” in assessing contract breach damages and upheld as enforceable both an agreement as to which the parties have consented to essential terms (but not formalized the agreement in a fully executed document) and an agreement to negotiate in good faith (in which all essential terms have not been agreed to). For theSIGA Technologies, Inc. v. Pharmathene, Inc. case, see courts.state.de.us/opinions/download.aspx?ID=234170. NEW DISCLOSURE REQUIREMENTS FOR MAJOR SHAREHOLDERS OF U.K. COMPANIES In January 2016, companies became subject to new requirements under the United Kingdom's Small Business, Enterprise and Employment Act 2015 (SBEEA), adopted in March 2015. SBEEA requires each U.K. company to maintain a register of persons with “significant control” over the company, and such register must be made public. The new disclosure requirements are being phased in: first, starting in October 2015, companies became prohibited from serving as directors; second, starting in January 2016, U.K. companies must keep a register of “people with significant control” (PSCs); and third, starting in April 2016, the PSCs register must be filed with the Companies House. SBEEA includes an exemption for individuals who are limited partners in a limited partnership or who hold shares or an interest in a corporate limited partner of a limited partnership. For more information, see www.legislation.gov.uk/ukpga/2015/26/part/7/enacted. PARIS AGREEMENT ADOPTED DURING 21ST CONFERENCE OF THE PARTIES OF THE un fRAMEWORK CONVENTION ON CLIMATE CHANGE In December 2015, the 21st Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC) adopted the “Paris Agreement,” which marked a historic turning point in the global effort to address climate change. The Paris Agreement establishes a long-term goal of zero emissions, sets forth measures to review the progress at certain interval periods and establishes a framework for climate finance. In particular, the Paris Agreement acknowledges that $100 billion is the “floor” for climate finance from developed countries to developing countries. The Paris Agreement will open for signature in April 2016, and will become effective after ratification by 55 countries that collectively produce at least 55% of global greenhouse gas emissions. For more information, see unfccc.int/resource/docs/2015/cop21/eng/l09.pdf.