Corporate Finance Law Blog : Corporate Finance Lawyer & Attorney : Davis Wright Tremaine Law Firm

From the SEC's proposed rule release issued today.

"We are proposing amendments to our rules to enhance the compensation and corporate governance disclosures registrants are required to make about: their overall compensation policies and their impact on risk taking; stock and option awards of executives and directors; director and nominee qualifications and legal proceedings; company leadership structure; the board's role in the risk management process; and potential conflicts of interest of compensation consultants that advise companies. The proposed amendments to our disclosure rules would be applicable to proxy and information statements, annual reports and registration statements under the Securities Exchange Act of 1934, and registration statements under the Securities Act of 1933 as well as the Investment Company Act of 1940. We are also proposing amendments to transfer from Forms 10-Q and 10-K to Form 8-K the requirement to disclose shareholder voting results. In addition, we are proposing amendments to our proxy rules to clarify the manner in which they operate and address issues that have arisen in the proxy solicitation process."

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Considering SEC requirements, key issues and voluntary disclosure

By Ame Wellman Lewis and Laura A. Baumann

As annual reporting season approaches, public companies may want to consider climate change issues when determining material information to be disclosed under SEC Regulation S-K. Increases in climate change regulation, certain environmental issues affecting the registrant's industry or assets, and the adoption of corporate “green” initiatives to address climate change may impact the registrant's financial condition or competitive position.

As more investors become interested in companies' environmental, social and corporate governance practices, public companies may voluntarily elect to include information related to climate change in their SEC filings. Companies should consider disclosing the physical, regulatory and financial consequences that climate change may have on their business.

Disclosure of climate change issues will be most arduous for companies with significant greenhouse gas emissions, such as airlines; trucking or other companies with fleets of vehicles; manufacturing companies; oil and gas companies and other businesses that rely on coal or oil as their primary fuel sources; and those directly tied to the weather, such as ski resorts, and agricultural, timber and insurance companies. Continue reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Based on the facts presented, the Division will not object if Facebook, Inc. does not comply with the registration requirements of Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act") with respect to restricted stock units granted and to be granted pursuant to the Company's 2005 Stock Plan in the manner and subject to the terms and conditions set forth in your letter. This position will remain in effect until the earlier of (1) the date that Facebook, Inc. otherwise becomes subject to Exchange Act registration or reporting requirements with respect to any other class of its securities, or (2) the date of a Change of Control (as defined in your letter).

More here.

 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Today, October 8, 2008, the SEC issued new Exchange Act Compliance and Disclosure Interpretations.

You can review them here.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

"We have concluded that it is necessary to impose enhanced delivery requirements on sales of all equity securities, by adding and making immediately effective a temporary rule to Regulation SHO, Rule 204T. The temporary rule imposes a penalty on any participant of a registered clearing agency, and any broker-dealer from which it receives trades for clearance and settlement, for having a fail to deliver position at a registered clearing agency in any equity security."

For more, read here.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

 

On August 27, 2008, the Securities and Exchange Commission ("SEC") adopted significant changes to the rules regulating cross border tender offers.  The final rules largely follow the changes proposed in May of this year, including:

 

• changing the measurement date, from 30 days prior to commencement of the tender offer to 60 days before announcement or 30 days after announcement, of U.S. ownership for purposes of  determining eligibility for Tier 1 or Tier 2 cross-border rules exemptions;
• providing relief to bidders that are unable to use the 60/30 day measurement dates;
• amending the Tier 1 and Tier 2 exemptions in connection with going private transactions and multiple foreign tender offers done contemporaneously with US offers;
• relaxing rules regarding withdrawal of tender offers; and

making other changes that the SEC hopes have the effect of better ensuring that tender offers and similar transactions by foreign companies will be made available to U.S. shareholders.  When combined with earlier rule changes and amendments with respect to such things as the use of international accounting standards and amendments to the Rule 12g3-2(b) registration exemption, the SEC continues on its quest to make the US capital markets friendlier and easier for foreign companies.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The SEC has accepted the Nasdaq's proposed rule change increasing the dollar threshold for determining director independence.  "Nasdaq Rule 4200(a)(15)(B) provides that a director of a listed company who accepted, or has a family member who accepted, any compensation from the company in excess of $100,000 during any period of twelve months within the preceding three years cannot be deemed an independent director (with certain exceptions). The proposed rule change would change this threshold amount to $120,000."

 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The SEC has issued interpretive guidance on the use of company web sites under the Exchange Act and the antifraud provisions of the federal securities law.

You can find the guidance here. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

February 21, 2008

Printer-friendly version

By Stuart C. Campbell and Michele L. Buck-Romero

On Feb. 6, 2008, the Securities and Exchange Commission (SEC) issued a final rule adopting revisions to Form D effective Sept. 15, 2008, and requiring electronic filing of Form D as of March 16, 2009. Any company issuing securities pursuant to an exemption from registration under Regulation D should be aware of this new rule. The rule amendments are intended to ease the burdens of complying with Form D, facilitate electronic filing, improve and update Form D information requirements, and increase the public’s access to Form D information.

Under the Securities Act of 1933, an offer to sell securities must either be registered with the SEC or fall within an exemption from the registration requirements, such as the offering exemptions under Rules 504, 505 and 506 of Regulation D. A company relying upon a Regulation D exemption currently must file a Form D with the SEC in paper format no later than 15 days after the first sale of securities in the offering. Form D serves as the official notice of an exempt offering under Regulation D and includes basic information about the issuer and the offering. Continue reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

January 16, 2008

Printer-friendly version

SEC staff stresses better analysis and use of “plain English”

By Ryan York and Matt Larson

On Oct. 9, 2007, Securities and Exchange Commission (SEC) staff released additional guidance on Compensation Disclosure & Analysis (CD&A) disclosures that will affect many public companies as they prepare 2008 annual reports and proxy statements. We want to remind those affected by the guidance that the SEC expects registrants to incorporate it in 2008.

All companies that have a class of securities registered under Securities Exchange Act Section 12, or that are required to file reports under Exchange Act Section 15(d), are affected. We remind you to be certain that CD&A disclosures in your annual report and proxy include better analysis, are written in “plain English” and meet the SEC staff's disclosure standards for performance targets, benchmarks and change-in-control agreements.

We recommend that you review the SEC's Oct. 9, 2007 guidance (available at http://www.sec.gov/divisions/corpfin/guidance/execcompdisclosure.htm) as well as Item 402(b) of Regulation S-K well in advance of this year's deadlines for filing your annual report and distributing your proxy statement. Continue reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

January 15, 2008

Printer-friendly version

SEC simplifies reporting requirements for certain plans

By Marcus Williams

Effective Dec. 7, 2007 the U.S. Securities & Exchange Commission (SEC) adopted a rule making it easier for larger private companies to use certain types of compensatory stock option plans. The rule exempts such plans of qualifying non-reporting companies from Exchange Act registration.

The exemption under the SEC’s new Rule 12h-1(f) affects private companies with more than $10 million in assets that have a class of equity securities, with stock options treated as a separate class, held by more than 500 persons. The rule also will impact certain subsidiaries of public companies.

Qualifying companies with stock option plans may reduce their compliance burden by ensuring their plans are properly structured. Qualifying companies that would like to establish stock option plans now have a clear path to doing so with greatly reduced regulatory obligations. Continue reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

 By Kenneth Mitchell-Phillips

The U.S. Securities and Exchange Commission (SEC) has made a new years resolution: clamp down on Insider Trading in 2008. This, in response to a critical report of the SEC conducted by the Government Accountability Office which acts as the investigative arm of Congress. Essentially, the SEC will provide closer scrutinize to lower-level regulators that police brokerages and stock exchanges like the New York Stock Exchange and Nasdaq. These regulators known as self-regulatory organizations (SRO's) typically conduct internal audits themselves to curb insider trading, but now the SEC will make better use of their audits by improving their computer systems so as to make more use of referrals and advisories that it gets from SRO's on possible insider trading problems and other potential misconduct.

There was an upsurge in Insider Trading cases in 2007 which caused one senior SEC official to state, "insider trading appeared to be "rampant" among Wall Street professionals". The New York Times also noted that much of the rise in Insider Trading involved "pillow-talk" cases...insider-trading between husbands and wives.

 

 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

By Kenneth Mitchell-Phillips

Smaller reporting companies should have an easier time complying with reporting requirements from the Securities and Exchange Commission (the "SEC") in 2008. Prior to the new year, the SEC revised the rules governing eligibility to register offerings under the Securities Act using a short-form registration statement on Form S-3 or Form F-3. The result is certain domestic and foreign private issuers will be able to conduct primary securities offerings on these forms without regard to the size of their market capitalization. Essentially, the amendments should allow more companies to benefit from the greater flexibility in accessing the public securities market afforded by Form S-3 and Form F-3. The full text of the SEC’s adopting Release (Release No: 33-8878) concerning the amendments is available on the SEC website, www.sec.gov.

 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The SEC issued its "Staff Observations in the Review of Executive Compensation Disclosure" today.  This guidance grows out of the SEC's review of the executive compensation disclosures of 350 public companies, and gives a summary of the types of comments the SEC gave on various companies' compensation disclosures, and why it gave those comments.  John W. White, the Director of the SEC's Division of Corporation Finance, also gave a speech today in which he discussed CD&A disclosures.  You can view a text of the speech here.

Highlights of the staff observations on CD&A include, among other things:

• Focus on the how and why of decisions that were made;
• Emphasize material items, and de-emphasize immaterial items;
• Spend less time explaining mechanical procedures and lengthy statements on philosophy and more on how key decisions were made; flip the order--explain how the analysis resulted in the decisions made;
• Presentation matters--consider the order in which items are presented and how they are presented; and
• Consider adding tables that aren't required if they elucidate material issues.

 The SEC guidance is helpful and worth reading.

Continue Reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The SEC has issued proposed rules regarding the exemption of compensatory employee stock options from registration under Section 12(g) of the Securities Exchange Act of 1934.  

Under Exchange Act Section 12(g), an issuer with more than 500 holders of record of a class of securities and assets in excess of $10 million at the end of its most recent fiscal year must register that class of equity security (see SEC Release No. 34-37157 (May 1, 1996)), unless an exemption is available.  Stock options issued to employees are considered a separate class of security for this purpose.  There is currently no exemption available for employee stock options, and issuers with more than 500 optionees that meet the assets test instead have been relying on the SEC no-action action letter process.

The SEC has proposed an exemption from Exchange Act Section 12(g) registration for:  (i) private, non-reporting issuers for compensatory employee stock option options issued under employee stock option plans, and (ii) compensatory employee stock options of issuers that have registered under Exchange Act Section 12 the class of equity security underlying those options.

Continue Reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The SEC has issued compliance and disclosure interpretations, updated as of August 8, under Items 402 (Executive Compensation) and 404 (Transactions with Related Persons).  You can view the 402 guidance here.  You can view the 404 guidance here.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The SEC has proposed and is seeking public comment on substantial revisions to Regulation D. The purpose of the revisions is to provide additional flexibility for issuers and to clarify and improve the application of the rules. The rules would, among other things:

• Create a new exemption from registration under the Securities Act of 1933 for sales to “large accredited investors” (the definition of “large accredited investors” is based on the definition of “accredited investor”, but with higher and somewhat different dollar-amount thresholds ; limited advertising would be permitted but each purchaser would have to meet the definition of large accredited investor);
• Revise the term accredited investor to clarify it and reflect developments since its adoption (including set it to adjust for inflation);
• Shorten the integration safe harbor to 90 days; and
• Apply uniform disqualification (bad actor) provisions to all offerings under Regulation D (as opposed to just Rule 505 currently).

View the proposed rule.

 

Continue Reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

 These rules can be accessed here.

 

• Email This
• Print
• Comments
• Trackbacks
• Share Link