Preparing a Company to Deal With Activist Investors

Shareholder activism has the potential to affect any publicly traded manufacturer’s business approach. Recently activist investors have impacted companies by persuading them to change executive compensation, accept new directors, update environmental policies, restructure the company, and more.

Furthermore, how the SEC responds to shareholder proposals is of great interest to publicly traded manufacturing firms. Under Rule 14a-8, a shareholder that satisfies the rule’s prerequisites can submit a “recommendation or requirement that the company and/or its board of directors take action” for inclusion in the company’s proxy materials. Manufacturers may deal with such proposals in a variety of ways. For example, manufacturers may raise an objection with the SEC or negotiate with the investors making a proposal. Recently, environmental and sustainability issues have gained support among activist investors, so companies should understand how to adapt to the changing concerns of shareholders.

Regardless of how activist investors raise concerns, what concerns are raised, or who the activist investors are, a manufacturer and its board should have a strategy prepared. In this video, Foley Partner Deepak Nanda discusses steps companies can take to prepare for activist shareholders.

Coming to America: Challenges in Moving Manufacturing to the U.S.

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News of manufacturing companies coming to America or choosing to stay in the U.S. is plentiful of late. Why the focus on American manufacturing? And, perhaps more important, what are the legal and cultural issues facing manufacturers expanding into U.S. facilities?

Why the United States?

  • Credibility. Establishing a successful business in America demonstrates a level of maturity, because the U.S. market is very sophisticated and highly competitive. The thought is: if a company can succeed here, it can succeed anywhere.
  • Professional Services. American management, sales and marketing expertise remain highly valued. This expertise can be best harnessed through a U.S. entity, which offers familiarity and important tax and financial advantages to U.S. employees.
  • Access to Capital. U.S. venture capital still remains a critical source of funding for enterprises of all sizes and stages. While American VCs are prepared to invest all over the world, many find it easier and less risky to invest in a U.S. entity.
  • Strategic Partnerships. Many international companies find it easier to establish alliances with U.S.-based businesses, primarily due to the predictability of U.S. laws and corporate governance requirements.
  • Business Ethics. Financial and managerial transparency, compliance with legal and ethical standards, and an overall culture of ethical business dealings constitute key pillars of the success of the U.S. economy. Non-U.S. companies can benefit from this culture by establishing U.S. operations.

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Closing a Facility? Dig Deep to Avoid Contractual Issues

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When closing a facility, the legal issues that most often come to mind are terminating a lease or selling the asset(s). However, those are just the tip of the iceberg. From below the surface, potential problems may arise out of contracts seemingly outside the facility closure’s scope.

Regardless of the reason, myriad legal considerations accompany a decision to close a facility. For example, we previously addressed the HR considerations. But, in many cases, issues can arise from provisions in unseen depths of contracts. We hope that the five tips, listed below, will help manufacturers avoid unwanted contractual surprises in the facility-closing process. Continue reading this entry

Closing a Facility? Don’t Create Human Capital Problems

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In recent years, manufacturers have closed facilities, corporate offices, warehouses, and production plants, for a variety of reasons. All too often, manufacturers overlook important legal requirements or planning steps, especially where human capital is concerned. Thus, we compiled the following human resources issues to help manufacturers identify problems that should be avoided. Continue reading this entry

Ex-Im Bank Is Closed for Business – At Least for Now

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The U.S. Export-Import (Ex-Im) Bank closed its doors on Tuesday following a lapse in Congressional authority. The 81-year-old agency provided financing for both American companies that export goods and their foreign customers, helping to secure American exporters’ access to emerging markets. But following a push by conservative Republicans who claimed the Ex-Im Bank was a form of corporate welfare, Congress declined to extend the Bank’s charter before recessing for the Fourth of July holiday. Absent congressional action, the Ex-Im Bank is now unable to authorize new loans, insurance, or guarantees, effectively freezing new projects.

American businesses that rely on the Ex-Im Bank are concerned that, without access to the capital the Ex-Im Bank provides, they will not be able to take on large-scale projects abroad, resulting in a substantial loss of jobs here in the United States. Continue reading this entry