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Activist Investing Today: Akin's Rappaport, Koenig Talk 13D, Delaware

Published: December 21st, 2023
Akin’s Doug Rappaport and Jason Koenig discuss strategic board subcommittee disclosures, books and records requests and unintended consequences for companies with 13D rules.

Companies often grant an activist’s petition to gain access to corporate books and records, though shareholders are typically required to sign nondisclosure agreements prohibiting public dissemination of any provided documents, according to Akin Gump Strauss Hauer & Feld LLP partner Doug Rappaport.

Rappaport together with Akin partner Jason Koenig spoke on the Activist Investing Today podcast about the complexities of gaining access to behind-the-scenes board minutes, emails and other documents. The duo also talked about new 13D disclosure rules, strategic board subcommittee charters, the future (or lack thereof) of single-issue director contests and red flags in board tenure.

“Any time there is an agreement to provide information to investors, the standard practice is for the investor to sign an NDA so they can’t disclose those documents publicly,” Rappaport said. “For an activist it can be challenging, because if you are looking to ultimately have a proxy contest and bring your case to the public, you may receive documents with info you may not be able to use and socialize with the other shareholders in the context of a proxy contest.”

Meanwhile, Koenig said he didn’t think a new unusual director contest launched by a coalition of labor unions at Starbucks Corp. (SBUX) with a labor issue focus will open up the floodgates for other single-issue board elections in the years to come.

“The [universal proxy card] makes contests more available, and it is easier for activists to pursue single-issue contests,” Koenig said. “UPC can help an activist raise awareness of certain social issues. I would argue that this will be an uphill battle [for the dissident investor] because [proxy advisers] and most institutional investors will want to see directors who are effective stewards of capital and can oversee the company in many ways, not just a single issue.”

The duo also discussed unintended corporation consequences with new 13D disclosure rules, and what kind of director red flags could attract activists.

Check out the podcast with Doug Rappaport and Jason Koenig below:

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