Becker Shareholder Yolanda Cash Jackson moderated a Virtual Town Hall on “Election 2020” presented by the Miami Alumnae Chapter of Delta Sigma Theta Sorority, Inc. Panelists included mayoral candidates Esteban Bovo, Daniella Levine Cava, Alex Penelas, and Xavier Suarez. They discussed the outlook of Miami-Dade county post COVID-19 and how the mayoral candidates intend to adapt to these changes and support the African-American community.
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Patrick Howell Appears on “Construction Defect, The Road to a Smooth Resolution” Webinar Hosted by ASCEND
Becker’s Patrick Howell appeared as a panelist in the webinar, “Construction Defect, The Road to a Smooth Resolution.” Hosted by ASCEND, the webinar focused on advice from industry experts on how to identify a construction defect and how to assist your community and association members through it all.
David Ramsey Participates in “The New Normal: ReOpening Communities,” Webinar Presented by CAI
New Jersey shareholder David Ramsey participated in a Community Associations Institute (CAI) national webinar, “The Next Normal: Reopening Communities.” As states use a phased approach to open public facilities and businesses, community associations must consider whether and when to open amenities and common areas. Panelists discussed specific issues related to when and how to open community association amenities and manage common areas.
Webinar: Navigating COVID-19 in the Workplace: Are You on the Right Path?
Becker Shareholder Jamie Dokovna, who focuses her practice on employment law, and Dr. Shanequa Fleming, Founder and CEO of human potential development firm, Culture Accelerators came together for a candid conversation on returning to work in our current environment. ‘Navigating COVID-19 in the Workplace” emphasized how to safely return employees to the workplace and what future trends we can expect in light of COVID-19. It also highlights the concerns of employees as well as employers and how to create an environment that make sense for both as we move forward.
House to Vote on Changes to Small Business Program Next Week
The House will vote next week on a bipartisan proposal to make the popular small-business Paycheck Protection Program (PPP) more flexible and extend the time limit for using the aid, House Speaker Nancy Pelosi said today.
Moving ahead on the proposal with Republican support would allow Congress to get around the current impasse on whether to approve a new round of coronavirus relief. The bill is separate from the $3 trillion Democratic catch-all package combining state aid with new stimulus checks that the House passed last week over the objections of the GOP.
Senate Republicans have voiced support for changes to PPP this week. Senate Small Business Chairman Marco Rubio said there is a strong consensus that the changes need to be made.
The Senate may be able to get unanimous consent to make the changes this week and send legislation to the House.
The Paycheck Protection Flexibility Act, H.R.6886, introduced by Minnesota Democrat Dean Phillips and Texas Republican Chip Roy, would allow businesses receiving forgivable loans to be able to use the funds on payrolls for more than the eight weeks under the original program and relax a requirement that 75% of the loans be used for payroll expenses. It would also give them more than two years to pay back the loans and allow businesses that receive PPP loans to receive a payroll tax deferment.
Phillips, who represents a swing district, said last week he would vote for the $3 trillion package after receiving a commitment for a vote on his PPP bill from congressional leaders.
Pelosi said today that she was not worried that passing a Republican priority as a stand-alone bill would give away negotiating leverage on a larger relief bill because pressure was mounting on the GOP to act on wider stimulus.
Tennis Courts – Executive Order 147
On May 18 Governor Murphy’s Executive Order #147 (“EO”) was published. The order, among other matters, permits the opening of private “tennis clubs” subject to compliance with various regulations. Our Community Association Practice Group has reviewed these regulations and it is our opinion that association boards need to take the following into consideration before opening the community’s tennis courts:
1. Insurance coverage issues: As with all issues related to the coronavirus and possible claims related to the contraction of COVID-19, it is likely that the association’s insurance policy excludes claims related to viruses and, as such, if a claim were brought, the association would be compelled to respond to a complaint out of its own funds. While the likelihood of any such claim may be reasonably small, the cost of simply defending a COVID-19 claim could be very expensive. And, if a judgment were obtained the homeowners in the community would be responsible for paying the cost of any judgment, settlement, and costs of suit. We encourage the board to discuss with the association’s insurance agent if, and in what circumstances, coverage may be provided.
Questions Potential Buyers Should Consider When Buying an Investment Property During the Coronavirus Pandemic
Spring is traditionally the hottest time of the year for real estate. Inventory typically spikes as many sellers put their properties for sale. Buyers enter the market knowing that inventory is increasing.
But that has changed some this year with the coronavirus in full effect. The economy came to a stop with numerous “stay at home” orders. Employment has been dramatically impacted and everyone is grappling with the social norms of the “new normal.”
Week 9 Webinar: COVID-19 Best Practices for Community Associations
Becker Shareholders David Muller, Rosa de la Camara, and Steve Mezer participated in a webinar discussion hosted by KW Property Management and Consulting (KWPMC). The webinar, entitled “COVID-19 Best Practices for Community Associations,” was moderated by KWPMC Managing Director, Tim O’Keefe and addressed best practices for HOAs and condo associations.
Webinar: Risky Business: What Owners Need to Know When Reopening
Community associations, country clubs, retail owners, and mixed-use facilities have all implemented strict protocols in response to COVID-19, including restricting access to common areas and shared amenities. As owners begin to look ahead to reopening many of these spaces, the big question is – how do they do so safely? Becker attorneys are joined by experts from Signal Restoration, a leading provider of commercial sanitization services, to explore important questions on what owners need to know about reopening facilities.
Click here to watch the replay.
Nasdaq Provides Temporary Emergency Relief to Issuers from Shareholder Approval Requirements in Response to COVID-19
Due to the dramatic impact that the spread of COVID-19 continues to have on businesses, the SEC approved with immediate effect a rule change proposed by the Nasdaq Stock Market to provide listed companies with a temporary exception to its shareholder approval requirements for certain private placements and a related limited exception concerning insider participation in those transactions. The temporary rule, adopted as Listing Rule 5636T, became effective on May 4, 2020 and is in force through June 30, 2020. Subject to compliance with the technical conditions of the temporary exception, including execution of binding agreements by June 30, 2020, the rule permits Nasdaq-listed companies to issue securities without shareholder approval until the later date of June 30, 2020 and 30 days following the date of the binding agreement.
The Current Rule – Listing Rule 5635
Nasdaq’s listing rules require that companies obtain shareholder approval prior to issuing securities in connection with (i) certain acquisitions of the stock or assets of another company; (ii) a change of control; (iii) equity-based compensation of officers, directors, employees or consultants; and (iv) the issuance of 20% or more of its equity securities (other than in a public offering) at a price less than the lower of (1) the Nasdaq official closing price immediately preceding the signing of the binding agreement and (2) the average Nasdaq official closing price of the common stock for the five trading days immediately preceding the signing of the binding agreement. Notably, Nasdaq interprets this rule as requiring shareholder approval for certain issuers to officers and directors where the issuance may be considered a form of equity compensation, such as where the insider participates in a private placement and acquires equity securities at a price less than the minimum price. By adopting Listing Rule 5636T, Nasdaq is providing temporary flexibility to listed companies that are seeking to raise equity capital on terms which would otherwise require shareholder approval under Listing Rule 5635.
The Temporary Exception – Listing Rule 5636T
Although Nasdaq already provides listed companies with a “financial viability exception” to the shareholder approval requirements of Listing Rule 5635, Nasdaq’s adoption of Listing Rule 5636T is based on the premise that there are many companies whose financial viability may not be in serious jeopardy but which are otherwise in need of additional capital on an accelerated timeline due to the impacts of COVID-19. In sum, subject to compliance with a number of conditions, the temporary exception allows Nasdaq-listed companies to issue securities, without shareholder approval, in a private placement notwithstanding the 20% shareholder approval rule. The temporary exception is in force through June 30, 2020, and to take advantage of the relief, a binding agreement to issue the securities must be signed, the requisite notices need to be submitted, and Nasdaq approval (unless the rule’s “Safe Harbor”, as described below, is available) must be obtained prior to that date.
Additionally, the temporary rule provides an exception from the shareholder approval requirement for equity compensation arrangements under Listing Rule 5635(c), provided that the affiliates participate in a transaction covered by the Rule 5636T, the affiliates’ participation was specifically required by unaffiliated investors, any single affiliate’s participation is less than 5%, and all affiliates’ participation is for less than 10%, of the transaction. Further, affiliates may not participate in negotiating the economic terms of the transaction.
Procedural Requirements
As a threshold matter, Rule 5636T requires that listed companies seeking relief must demonstrate that (i) its need for capital is due to the impact of COVID-19, (ii) the delay in complying with the shareholder approval requirements would have a material adverse impact on the company’s ability to maintain pre-COVID-19 operations, force workforce reductions, adversely impact the company’s ability to take on new initiatives to combat COVID-19, or seriously jeopardize its financial viability; (iii) it undertook a process to ensure that the transaction represented the best available terms; and (iv) its audit committee (or a committee of independent directors) approved the transaction and determined it to be in the best interests of the shareholders. Further, a company that wishes to take advantage of this temporary exception must, prior to issuing securities in reliance on the temporary rule, (a) execute a binding agreement governing the issuance of the securities, (b) submit the notices required by the Rule 5636T, including a certification of compliance, and (c) unless eligible under the safe harbor, obtain approval from Nasdaq. These conditions must be satisfied by June 30, 2020.
The safe harbor provides an exception to the pre-issuance approval requirement if the maximum issuance of equity securities is less than 25% of the total shares outstanding and less than 25% of the voting power outstanding before the transaction and the discount to the minimum price is no more than 15%. If these conditions pertain, then the company may issue the securities without waiting for Nasdaq approval, but after submitting its listing notification with Nasdaq.
As mentioned earlier, a company may only rely on the temporary rule until June 30, 2020. If by such date it has satisfied the technical conditions of the temporary rule, it may issue the securities governed by such agreement by the later date of June 30, 2020 and 30 calendar days following the date of the binding agreement. In addition, Rule 5636T requires companies to disclose their reliance on the temporary rule by filing a Form 8-K or issuing a press release no more than two days before the issuance of the securities.
Please contact Michael A. Goldstein, Esq., Victor J. DiGioia, Esq., or your regular Becker contact with any questions on these or related topics.