MSLaw Blog

The City of Cambridge, Massachusetts recently sold $2,000,000 of community-sourced minibonds (the “Community Bonds”) to finance various capital projects, including school building renovations and street and sidewalk improvements. The Community Bonds are referred to as “minibonds” because (a) they were marketed only to residents of the City of Cambridge, (b) minimum denominations were lowered to $1,000 from the customary $5,000 and (c) individual orders were capped at $20,000. The hope of such a sale is to engage residents and to

On January 31, 2017, an ad hoc task force (“Task Force”) of the Business Law Section of the Maryland State Bar Association issued a Final Report and Proposed Recommendations for the Business & Technology Case Management Program (“BTCMP”), proposing changes to the management of complex business and technology cases in Maryland.  The Task Force was initiated to address the concerns of the current management of the BTCMP, including the lack of uniformity in administering cases among the circuit courts; lack

Merger and purchase agreements involving Maryland corporations and REITs may be governed by Maryland law. For lawyers accustomed to agreements governed by Delaware or New York law, we are frequently asked to describe key differences that arise under Maryland law so that parties may make informed decisions during negotiations. This is the first post of a multipart series that will describe some common issues that arise in relation to Maryland law. Merger and purchase agreement covenants often require parties to perform

As of December 2016 Congress has (again) revised the law about which civilian agency task order and delivery order (TO/DO) awards can be protested. Bidders who may want to protest such awards (or fend off such protests) need to know the new rules. Civilian TO/DO Awards over $10 Million On September 30, 2016, the Government Accountability Office’s (GAO) jurisdiction over protests against most types of civilian TO/DO awards lapsed, leaving many disappointed bidders without protest remedies. To fix this problem, on December

Closed-end funds trading at a discount to net asset value sometimes are the subject of attack by activist stockholders. Activist focus on short-term gains can be at the expense of the long-term strategy preferred by many retail stockholders. In 2016, several closed-end funds were the subject of campaigns by activist stockholders and corresponding demands that boards of directors liquidate or open-end their funds. This post discusses options available to boards of directors of closed-end funds formed as Maryland corporations. This

The U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) (collectively the “Agencies”) have issued new Antitrust Guidance for Human Resource Professionals. The new Guidance is designed to “alert human resource (HR) professionals and others involved in hiring and compensation decisions to potential violations of the antitrust laws.”  The Agencies state that they will bring enforcement actions against employers who have agreements with other employers to limit or fix wages or other terms of employment, or to improperly exchange

On Friday, October 7, 2016, the Court of Appeals of Maryland and the Maryland Court of Special Appeals will each hold oral argument in appeals with implications for Maryland corporations and their directors. In Oliveira v. Sugarman, No. 17 Sept. Term 2016, the Court of Appeals of Maryland will consider: Whether stockholders of a Maryland corporation may bring direct claims against a board of directors for alleged breaches of the duty of candor in a proxy statement and for alleged breaches

Can participation in a business or trade association and allegiance to its rules trigger antitrust liability for association members under the Sherman Act?  Next term, the Supreme Court will hear Osborn v. Visa Inc., the appeal of a 2015 decision of the U.S. Court of Appeals for the District of Columbia Circuit, which held that allegations of members’ participation in the governance of an association and adherence to its rules is sufficient to plead a conspiracy for purposes of Section

In Americold Realty Tr. v. ConAgra Foods, Inc., 136 S. Ct. 1012 (2016), the Supreme Court held that, for purposes of federal diversity jurisdiction, the citizenship of a Maryland real estate investment trust (formed pursuant to the Maryland REIT Law) is determined by the citizenship of all of its shareholders. The Supreme Court rejected arguments that the standard for determining the citizenship of a corporation or a “traditional” trust should be applicable to a Maryland real estate investment trust. The underlying

On May 26, 2016, the Business Law Section of the Maryland State Bar Association in collaboration with the Litigation Section, the University of Baltimore School of Law, and the University of Maryland Francis King Carey School of Law will host a Business and Technology Case Management Program Symposium at the University of Maryland Francis King Carey School of Law. Since Maryland implemented its Business and Technology Case Management Program to address complex commercial and business litigation in its circuit courts, an

On April 26, 2016, Governor Hogan signed House Bill 354 (chapter 171), which amends the Maryland General Corporation Law (the “MGCL”) to clarify that a director of a Maryland corporation only has an obligation to comply with the statutory standard of conduct – and not unspecified common law duties – when acting as a director. The bill also makes corresponding amendments with respect to the duties owed by trustees of Maryland real estate investment trusts (formed pursuant to the Maryland

In Oliveira v. Sugarman, No. 1980 September Term 2014 (Jan. 28, 2016), the Maryland Court of Special Appeals held that the decision of a board of directors of a Maryland corporation to refuse a stockholder demand is entitled to the presumption of the statutory business judgment rule, codified in Section 2-405.1(e) of the Maryland General Corporation Law. In reaching its decision, the Court of Special Appeals revisited the 2011 Court of Appeals decision, Boland v. Boland, 423 Md. 296 (2011),

The Federal Trade Commission (“FTC”) has announced revised monetary thresholds for determining whether companies are required to notify federal antitrust authorities about a transaction under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”).  The new thresholds take effect February 25, 2016.  The HSR Act requires the FTC to revise the thresholds annually based on changes in the gross national product.  The FTC also revised the interlocking directorate thresholds under Section 8 of the Clayton Act,

Interested director transactions (transactions where one or more members of a board of directors will “receive a personal financial benefit … that is not equally shared by the stockholders.” Rales v. Blasband, 634 A.2d 927, 936 (Del. 1993)) are common sources of derivative suits. To protect the interests of the stockholders and to preserve the application of the business judgment presumption, a board of directors may appoint independent directors to a special committee authorized to approve, reject, or consider strategic

In the recently released Revenue Procedure 2015-43, the Internal Revenue Service (“IRS”) announced that it no longer will issue private letter rulings with respect to certain tax-free spin-offs where, immediately after the spin-off, there is a newly-formed real estate investment trust (“REIT”).  Given the frequency with which such REITs are formed as Maryland corporations and real estate investment trusts under Title 8 of the Corporations and Associations Article of the Maryland Code, this development will not only be of interests

In the 2015 legislative session, the Maryland General Assembly implemented several useful changes to the Maryland General Corporation Law (the “MGCL”). House Bill 522 (now Chapter 526 of 2015 Session Laws and referred to herein as the “act”) was signed by Governor Lawrence J. Hogan, Jr. on May 12, 2015, and became effective on October 1, 2015.  The resulting changes will be of interest to Maryland corporations, Maryland real estate investment trusts, and their mergers and acquisition counsel. Actions by Written

Generally, prior to bringing a derivative action and attempting to wrest control of a corporate claim from the board of directors, a stockholder must demand remedial action by the board. But because Maryland continues to recognize a very limited demand futility exception, we are frequently asked to consider: under what circumstances may demand be excused? The answer surprises many lawyers more familiar with Delaware practice: almost never. In Delaware, demand futility is well-established and its two tests are clearly drawn. First,

In 2014, the Maryland General Corporation Law (“MGCL”) was amended to provide a more simplified process for public company mergers via a two-step tender offer. With the addition of a new Section 3-106.1, buyers are permitted to effect a short form merger (without the need for a top-up option) instead of a longer form merger if the buyer acquires at least the percentage of shares of the corporation in the tender offer that would be required to approve the merger

As previously discussed, precatory stockholder proposals regarding proxy access in Maryland REITs were universally successful this past proxy season. As boards of directors and trustees now consider the propriety of proxy access, directors electing to adopt proxy access bylaws will confront choices concerning appropriate stock ownership thresholds, the number of stockholders permitted to comprise such groups, and the maximum number of nominees afforded to qualifying stockholders. While directors will undoubtedly tailor proxy access bylaws to address the needs of their

While many corporate lawyers and litigators are familiar with the Court of Chancery of the State of Delaware, few outside of the State of Maryland are acquainted with the Maryland analog, the Maryland Business and Technology Case Management Program. Here is a quick introduction to Maryland’s "B&T Panel." Background Fifteen years ago, the Maryland General Assembly recognized an increasing need for Maryland’s trial courts to focus on the particular aspects of complex business and technology cases. In response, the General Assembly created

In Hogans v. Hogans Agency, Inc., the Court of Special Appeals tackled the rarely litigated topic of demands for access to books and records under the Maryland General Corporation Law (MGCL). By way of background, stockholders of a Maryland corporation are granted access to certain books and records of the corporation pursuant to Sections 2-512 and 2-513 of the MGCL. Stockholders owning less than 5% of the corporation are limited to the right to inspect the bylaws, minutes of stockholder meetings,

Of interest to Maryland REITs, underwriters and investors, the Maryland Business and Technology Case Management program recently published the May 18, 2015 opinion of Judge Michel Pierson of the Circuit Court for Baltimore City in Poling v. CapLease, Inc., which held that a cash-out merger does not constitute a “redemption” of preferred stock and, therefore, is not prohibited by a common five-year redemption restriction contained in articles supplementary for preferred stock. Background In April 2012 and January 2013, CapLease, Inc., a Maryland

Earlier this month, Seritage Growth Properties (SRG), the long anticipated real estate spin-off of Sears Holdings Corporation (SHLD), began trading on the New York Stock Exchange. SRG was formed as a Maryland Real Estate Investment Trust (REIT) under Title 8 of the Corporations and Associations Article of the Code of Maryland. While the event itself received much publicity, the following corporate governance features of the trust will be of further interest to Maryland corporate lawyers. First, the SRG declaration of trust

In the recently decided case of Gary W. Stisser v. SP Bancorp, Inc., Case No. 24-C-14-003610, 2015 MDBT 3 (Balt. Cir. Ct. 2015), the Circuit Court for Baltimore City granted motions to dismiss in stockholder litigation for lack of personal jurisdiction and failure to state a claim upon which relief can be granted. A key holding in the case was the court’s determination that the non-resident directors of a Maryland corporation were not subject to personal jurisdiction in Maryland (see

On June 24th, shareholders of Equity Residential (EQR), a Maryland statutory real estate investment trust, voted in favor of a non-binding shareholder proposal concerning proxy access. Of the approximately 150 Maryland REITs traded on the New York Stock Exchange, the EQR proposal marked the fourth time in 2015 that equity holders of a Maryland REIT considered proxy access. Despite mixed results in the broader marketplace, the equity holders of every Maryland REIT to consider a proxy access passed the corresponding proposal. Proxy

A REIT – or Real Estate Investment Trust – is an entity that owns or finances income-producing real property. REITs facilitate investment in portfolios of large-scale properties by individuals through the purchase of stock. Similar to the way individuals benefit by owning stock in an underlying corporation, individuals owning shares in a REIT earn a share of any income produced through real estate investments without actually buying or financing the underlying real property assets. Additionally, under subchapter M of chapter

The “proxy put,” a common provision in debt agreements with publicly traded companies, has become a matter of increasing concern following recent opinions of the Delaware Chancery Court. The proxy put permits a lender to accelerate the debt of a borrower if a majority of the borrower’s board of directors is no longer comprised of continuing directors (i.e., directors who are either (i) the original board members from when the debt agreement was executed or (ii) directors who were approved

Companies and investors are growing increasingly impatient with the delay by the Securities and Exchange Commission to issue final rules implementing Title III of the Jumpstart Our Business Startups Act of 2012.  As a result, many are turning to the states in an effort to establish a crowdfunding marketplace. To this end, a number of state legislatures have now proposed their own equity crowdfunding laws, and several have proceeded with enacting such laws. However, these new rules are limited to

Trade associations play an important role in promoting both the interests of their members and the industries they serve. Despite their many legitimate activities, however, trade associations have always been and remain subject to the antitrust laws. Trade associations inherently are comprised of competitors, and as recently noted on the FTC’s website, “competitors are expected to compete.” 1 While competitor conduct in the context of association meetings and other events is often the focus of regulatory scrutiny, recent FTC enforcement actions

On May 1, 2014, tech-giant, E-Bay, Inc. (“E-Bay”) entered a proposed agreement with the United States Department of Justice (“DOJ”) and California antitrust regulators to settle antitrust claims arising out of its “no-poach” agreement with Intuit Inc. (“Intuit”).  The challenged agreement prevented each firm from recruiting employees of the other, and prohibited E-Bay from hiring Intuit employees that approached E-Bay for employment.  Subject to court approval, the proposed settlement with the DOJ enjoins the challenged agreement, and more broadly prohibits

On October 23, 2013, the Securities and Exchange Commission (the “SEC”) issued its proposed rules to implement Title III of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), which would permit companies to raise up to $1 million a year from an unlimited number of investors, including non-accredited investors, through intermediaries registered with the SEC, while remaining exempt from the Securities Act registration requirements. See Proposed Rules to Implement JOBS Act, available at http://www.sec.gov/rules/proposed/2013/33-9470.pdf. Commonly referred to

On July 10, 2013, the Securities and Exchange Commission (the “SEC”) adopted rules under Title II of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), which included lifting a ban on general advertising and general solicitation in certain offerings of securities conducted pursuant to Rule 506 of Regulation D. These final rules will become effective on September 23, 2013. Rule 506(b) currently provides an exemption from the Securities Act registration requirements for issuers selling securities to an unlimited

On July 9, 2013, the Maryland Court of Appeals reaffirmed Harrison v. Montgomery County Board of Education, 295 Md. 442 (1983) and held that contributory negligence will remain the law of Maryland until the General Assembly says otherwise.  The Court of Appeals voted 5-2 not to change the common-law doctrine, citing the Civil War-era precedent and the repeated but failed attempts by the General Assembly to change the rule as strong evidence that contributory negligence is the expressed policy of

Through the highly publicized success of crowdfunding platforms operated by companies such as Kickstarter, Inc., Indiegogo, Inc. and CrowdRise, LLC, companies are increasingly considering crowdfunding as a source of new investment. There are three main crowdfunding models. The most commonly known model is the “rewards based” or “donation based” model, such as Kickstarter, Inc., where an individual receives a product or some kind of perk in return for their investment. This crowdfunding model is not considered to involve an offer

On March 14, 2013 Pennsylvania State Senator Stewart Greenleaf announced that he is reintroducing Senate Bill 1565 which, if enacted, would establish comprehensive antitrust legislation in Pennsylvania. The bill, which stalled in the judiciary committee in 2012, includes a provision that defines “Prohibited Acts” to include “(t)o contract, combine or conspire to establish a minimum price below which a retailer, wholesaler or distributor may not sell a commodity or service.” This prohibition could apply to minimum resale price maintenance (“RPM”)

In a split decision, the United States Court of Appeals for the Federal Circuit has resolved the hotly debated issue of the proper standard for pleading infringement of a design patent in Hall v. Bed, Bath & Beyond, -- F.3d --, 2013 WL 276080 (Fed. Cir., Jan. 25, 2013).  Since the Supreme Court’s landmark decisions in Twombly/Iqbal, lower courts have debated the applicability of the heightened “plausibility” pleading standard in the context of complaints alleging infringement of design patents.  In