2012 Association of Corporate Counsel Southern California In-House Counsel conference (The Effective Corporate Secretary)

BEING AN EFFECTIVE CORPORATE SECRETARY January 11, 2012 Beverly Hills, California Sponsored by Sheppard Mullin Richter & Hampton LLP Panelists: Jeryl Bowers Jonathan Block Tina McKnight M. Christian Mitchell Moderator: Fay Feeney

Jeryl Bowers Sheppard Mullin Richter Hampton LLP/Partner/ jabowers@sheppardmullin.com Jonathan Block Hot Topic/Vice President & General/ Counsel/JBlock@hottopic.com Tina McKnight Power-One, Inc./General Counsel/ [email_address] M. Christian Mitchell Marshall & Stevens/Vice-Chairman/ [email_address] Fay Feeney - Moderator Risk For Good/CEO/fay@riskforgood.com Panelists

I work for a: Private Public Non-Profit I am: Corporate Secretary Corporate Counsel Polling Question

Primary Responsibilities Challenges of the role Why general counsel are often chosen for the role Differences in the responsibilities of public and private corporate secretaries Advantages of serving as a corporate secretary Needs and wants of business and boardroom from corporate counsel, corporate secretaries and outside counsel Legal issues most corporate secretaries will confront Best Practices Overview

Prepare draft resolutions. Gather necessary information for meeting. Ensure Board procedures and votes are organized. Document minutes of the meeting. Primary Responsibilities

EVIDENTIARY VALUE OF MINUTES Prima Facie Evidence (California and Delaware) What Took Place at Meeting Prima Facie Correct Parol Evidence can contradict or supplement minutes Courts regularly use minutes to determine whether directors discharged their duties Assume the audience for minutes are the readers of the front page of the local newspaper

Difficulty in balancing the goal of documenting the board’s duty of care in making decisions against exposing the board and company to litigation by creating a record for plaintiff’s attorney. This is particularly critical when certain board members object to the decision of the majority. Some board members want to go on the record expressing their objections which could expose the company to greater litigation risk. Challenges of Serving as a Corporate Secretary

The general counsel is best suited to advise on corporate fiduciary duties during board meetings. The general counsel will often advise the directors on issues of legal relevance during board meetings. The general counsel can often serve two roles by switching from legal counsel to corporate secretary during the meeting. Why General Counsel are often chosen for the Role

Attorney Privileged Communications and Board Minutes Scope of Privilege: Communication must be made in confidence for the purpose of obtaining legal advice from a lawyer Best Practice: Do not disclose legal discussions Instead state Board engaged in privileged discussions with legal counsel concerning the topic Challenges for In-House Counsel: Uncertainty whether in-house counsel acts in a business rather than a legal role (Georgia Pacific) For sensitive communications, it may be preferable to include outside counsel

Public corporate secretaries expend a substantial amount of time with securities compliance issues Will draft and/or review relevant disclosure documents. Manages outside and internal resources to ensure that all the necessary information for disclosure purposes is obtained. Private corporate secretaries are generally focused on: Preparing board minutes. Preparing corporate resolutions. Organizing and making preparations for the board meetings. Differences in Responsibilities of Public and Private Corporate Secretaries

Advantages of Serving as a Corporate Secretary Unique position of being the corporate fly on the wall. Have advance notice of all major issues facing the company. The effective corporate secretary will be in a position to develop stronger bonds with the board of directors and senior management team.

From corporate counsel: From corporate secretaries: From outside counsel: Needs and Wants of Business and Boardroom

Legal Issues Most Corporate Secretaries Will Confront Duty of Care for Corporate Directors. Director must expend significant time in considering issues before making final decisions. Duty of Loyalty for Corporate Directors. Director must to act solely in the best interests of the Corporation rather than in his or her own interests, or those of his or her associates. Compliance. Corporate secretary may be responsible for or play a major role in preparing and filing registration statements and reports to the Securities and Exchange Commission, insider trading reports, filings and amendments of state corporate documents, documents related to qualifications to do business, and other regulatory or legal filings.

Ensure smooth operation of corporate meetings: Ensure that agendas are logically ordered and not overcrowded for the time available. Know how to find directors and committee members on short notice when special meetings are needed. Establish a good working knowledge of the corporate, legal and regulatory matters which may come up at a meeting, and of the business of the corporation and its operations. Alert the Chief Executive Officer, or board and committee chairmen, to topics which should be brought to the attention of the board or committee. Establish minute taking protocols. Best Practices for Board and Committee Meetings

Shareholder Meetings Secretary will often prepare the meeting script for the senior executives Emergence of Electronic Shareholder Meetings Virtual meetings via remote communication implement reasonable measures to verify that each person permitted to vote is a stockholder or proxyholder, implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote, and records of votes or other action shall be maintained by the Secretary

Determine what documents and records need to be created and what matters they should, or should not, contain. Determine whether the proper delegations of authority are in place. Determine whether actions conflict with prior actions, policies or agreements. Ensure that records are filed and protected and, where applicable, indexed and kept up-to-date, but also that they are accessible. Ensure that important corporate records are retained in accordance with applicable law and sound business practice. Establish procedures and protocols to assure the accuracy of certain types of documents. Best Practices for Managing Corporate Records

Help orient new directors to the corporation and the board. Advise and keep directors informed of corporate and legal responsibilities. Assist with compliance issues. Coordinate and organize the flow of information to directors. Obtain from directors information needed for legal and regulatory compliance. Assist directors with travel arrangements to and from meetings. Best Practices for Training and Management

Advise management on director compensation. Advise the Chairman of the Board on committee assignments for directors. Keep management informed of director views and preferences. Provide resources for and coordinate board evaluations. Assist the Chairman on the selection of new directors. Advise management and directors on potential director interlock issues. Best Practices for Training and Management (continued)

2012 Association of Corporate Counsel Southern California In-House Counsel conference (The Effective Corporate Secretary)

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2012 Association of Corporate Counsel Southern California In-House Counsel conference (The Effective Corporate Secretary)

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