On November 2, 2017, the House of Representatives released the first draft of the Tax Cuts and Jobs Act (the Bill), which could result in the most significant overhaul of the U.S. federal tax system since 1986. Subsequently, two substantive amendments were introduced by the Chairman of the House Ways and Means Committee. While the Bill is expected to change substantially and the Senate version remains to be unveiled, the Bill provides certain indications as to how tax reform may affect investment funds and asset managers. Significant aspects can be summarized as follows:
Akin Gump real estate partner John Bain has been profiled by Metropolitan Corporate Counsel in the article “To Make Deals in Hospitality Today, You Need to Be Creative: As the challenges mount, lawyers need to adapt,” discussing his practice and the state of the hospitality sector.
To read the full article, please click here.
As previously reported, New York City is set to ban firms from inquiring about prospective employees’ salary history in connection with the recruiting and hiring process. On May 4, 2017, Mayor Bill de Blasio signed the bill into law, and the new law will take effect on October 31, 2017. In the attached article, published in the Hedge Fund Law Report on May 11, 2017, we describe the new law, including what practices will and will not be permitted, and provide advice regarding what steps firms should take to prepare in advance of the law’s implementation.
Click here to read the full article.
On March 28, 2016, the U.S. District Court for the District of Massachusetts in Sun Capital Partners III LP v. New England Teamsters & Trucking Industry Pension Fund, No. 10-10921 (D. Mass. 2016) delivered a surprising victory for the pension fund, on the unique and potentially disturbing holding that (1) the record showed that Sun Fund III and Sun Fund IV had formed a “partnership-in-fact” between them; (2) this partnership was engaged in a trade or business under the Employee Retirement Income Security Act of 1974 (ERISA) (as were both funds); and (3) the partnership was in common control with a bankrupt portfolio company, Scott Brass Inc., and thus responsible for the portfolio company’s multiemployer plan withdrawal liability. As a result of the funds’ partnership, the court ruled the Sun Funds, as partners, to be jointly and severally responsible for the withdrawal liability as well.
When Mark Zuckerberg recently announced that he was giving away up to 99 percent of his Facebook shares (valued at approximately $45 billion), he was severely criticized for it. Zuckerberg and his wife created the Chan Zuckerberg Initiative, a Delaware-based limited liability company (LLC) dedicated to “advancing human potential and promoting equality.” Zuckerberg’s pledge to donate his Facebook shares to his charitable LLC has been characterized as an empty promise because, critics say, he could “take it back” at any time. These critics are not faulting Zuckerberg for his desire to “do good”; it is the manner by which he is attempting to accomplish this good deed that has raised eyebrows.
On November 2, 2015, the Bipartisan Budget Act significantly overhauled the audit regime applicable to U.S. and certain non-U.S. investment fund vehicles that are taxed as partnerships for U.S. federal income tax purposes. In general, under the existing audit rules, enacted under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), adjustments are made in fund-level audit proceedings, but flow through to the investors, and any associated tax is also assessed by the Internal Revenue Service (IRS) at the investor level. The highlights of the new regime are as follows:
Amendments to the DGCL
Several significant amendments to the Delaware General Corporation Law (DGCL) were signed into law on June 24, 2015, and will go into effect on August 1, 2015. Most significantly, these amendments:
- Prohibit fee-shifting – After the revised Sections 102 and 109 take effect, any provisions in the certificates of incorporation or bylaws of Delaware corporations that would seek to “fee shift,” or impose liability on a stockholder for attorneys’ fees or expenses of the corporation (or anyone else) in connection with “internal corporate claims” (e.g., breaches of fiduciary duties) will be prohibited.1
- Authorize Delaware forum selection clauses – In the new Section 115, the DGCL (1) expressly authorizes the inclusion of Delaware exclusive forum provisions for internal corporate claims in the certificates of incorporation or bylaws of Delaware corporations and (2) prohibits provisions in such certificates of incorporation or bylaws that would disallow bringing internal corporate claims in Delaware.2
This month, Duff & Phelps published its 2015 Fairness and Solvency Opinions Report, covering six recurring transaction structures often pursued by our clients. Why are certain transaction types prevalent? We believe the seeds were planted when the financial crisis unleashed massive deflationary forces across the globe. The relentless efforts of the Fed (and other central banks) to stimulate growth with unprecedented monetary easing have driven interest rates to historic lows. These two macro trends – stagnant growth and low interest rates – are contributing factors to several transactions we discuss in the report, as listed below. To access the report, click here.
- Corporate Spin-Off Transactions
- Master Limited Partnerships (MLPs) and YieldCos
- Real Estate Roll-up Transactions
- Going-Private Transactions for Chinese Companies
- Dividend Recaps
- Affiliate Party Transactions