In a significant development, Lisa Monaco, Deputy Attorney General, announced the Department of Justice’s (DOJ’s) new “Safe Harbor Policy” that affects mergers and acquisitions (M&A). This news was disclosed on October 4, heralding a distinctly proactive approach to corporate compliance within M&A.
The Safe Harbor Policy could potentially provide a means for acquiring companies to steer clear from DOJ charges. The pathway though is not without its requirements; the acquiring firm must voluntarily disclose any misconduct that it uncovers during its due diligence of the company being acquired. This moves the onus onto the buyer to ensure an exhaustive review of the target company’s regulatory history and ongoing compliance with legal stipulations.
It appears this measure is intended to encourage acquiring companies to be transparent and forthcoming about any issues surfaced during the acquisition process, thus helping reduce the risk of future non-compliance. This voluntary self-disclosure policy also seems to reflect a shift in DOJ stance towards emphasizing the importance of corporate diligence and good faith proactive measures in M&A procedures.
This Safe Harbor Policy announcement and its potential implications mark an important evolution in the legal landscape surrounding mergers and acquisitions. M&A professionals will doubtlessly be reviewing the full text of the Safe Harbor Policy and examining its implications on their current and future transactions.
For more details regarding Deputy Attorney General Lisa Monaco’s announcement, you may follow this link.