Law Blog Tag: due diligence

Mergers And Acquisitions – The Merger Transaction

Guide to Reverse Merger Transaction

Mergers and Acquisitions – The Acquisition Agreement

May 27, 2011 in Mergers And Acquisitions

Simply stated, the acquisition agreement sets forth the financial terms of the transaction and legal rights and obligations of the parties with respect to the transaction. It provides the buyer with a detailed description of the business being purchased and provides for rights and remedies in the event this description proves to be materially inaccurate. The agreement spells out closing procedures, pre-conditions to closing and post-closing obligations. The agreement provides for representations and warranties and the rights and remedies if these representations and warranties are inaccurate.

Public Company Compliance – Selecting An Auditor

he Sarbanes Oxley Act of 2002 (SOX) created the PCAOB, which is the Public Company Accounting Oversight Board. All public company auditors must be PCAOB licensed and qualified. Prior to the enactment of SOX, the profession was self regulated and any CPA could audit a public company. On its website, the PCAOB describes itself as “[T]he PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and the public interest by promoting informative, accurate, and independent audit reports. The PCAOB also oversees the audits of broker-dealers, including compliance reports filed pursuant to federal securities laws, to promote investor protection.”

Responsibilities of Independent Directors Increases in Response to Sarbanes Oxley

November 10, 2009 in SEC Guidance, Uncategorized

Serving as an independent director carries serious obligations and responsibilities.

Following the passage of the Sarbanes Oxley Act of 2002 (SOX), the role of independent directors has become that of securities monitor. They must be informed of developments within the company, ensure good processes for accurate disclosures and make reasonable efforts to assure that disclosures are adequate. Independent directors, like inside directors, should be fully aware of the company’s press releases, public statements and communications with security holders and sufficiently engaged and active to questions and correct inadequate disclosures.

The Federalism of State Corporate Law

October 29, 2009 in Corporate Law, Uncategorized

Historically the regulation of corporate law has been firmly within the power and authority of the states. However, over the past few decades the federal government has become increasingly active in matters of corporate governance. Typically this occurs in waves as a response to periods of scandal in specific business sectors or in the financial markets. Traditionally, when the federal government intervenes in these situations, they enact regulation either directly or indirectly by imposing upon state corporate regulations.

Specifically, the predominant method of federal regulation of corporate governance is through the enactment of mandatory terms that either reverse or preempt state laws on the same point. The most recently prominent example is the passing of the Sarbanes Oxley Act of 2002 (SOX).

Five Essential Conditions for Unregistered Spin-Offs

A spin-off occurs when a parent company distributes shares of a subsidiary to the parent company’s shareholders such that the subsidiary separates from the parent and is no longer a subsidiary. In Staff Legal Bulletin No. 4, the Securities and Exchange Commission (SEC) explains how and under what circumstances a spin-off can be completed without the necessity of filing a registration statement.

The Securities & Exchange Commission (SEC) Provides Guidance Regarding Section 3(a)(10) of the Securities Act of 1933

Section 3(a)(10) of the Securities Act of 1933, as amended (“Securities Act”) is an exemption from the Securities Act registration requirements for the offers and sales of securities by Issuers. The Securities and Exchange Commission (SEC) has given guidance on the operation of Section 3(a)(10) in its Division of Corporation Finance: Revised Staff Legal Bulleting No. 3. Read the Legal & Compliance analysis and review of their advice and recommendations.

New FINRA Requirements for Corporate Actions Require More Thorough Documentation on Behalf of Issuers

October 19, 2009 in FINRA, SEC Guidance

Corporate compliance, federal securities regulations and SEC reporting requirements are highly technical and always changing. Accordingly, small publicly traded companies require the assistance of an experienced securities attorney or securities law firm.

Necessity of Background Searches on Officers and Directors as Part of Due Diligence Prior to a Reverse Merger or IPO

Corporate compliance, federal securities regulations and SEC reporting requirements are highly technical and always changing. Accordingly, small publicly traded companies require the assistance of an experienced securities attorney or securities law firm.

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