I am excited to announce that Bass, Berry & Sims has formally launched its Environmental, Social and Governance (ESG) Advisory Practice Group. Businesses are facing increased pressure from regulators and stakeholders to meet ESG expectations and the area is rapidly evolving. To help our clients manage these new expectations, the firm has assembled a multidisciplinary team with extensive experience addressing the complex regulatory landscape and practical business considerations to help companies succeed. You can read more about our firm’s capabilities related to ESG here.

In conjunction with the launch of this new practice and to help businesses stay on top of the new regulations and other developments, the team is planning an ESG Impact Webinar Series. The first event in the series will be held November 10 and will focus on ESG matters related to regulatory updates, disclosure considerations, and stakeholder engagement. Additional information and registration details can be found here.

I am excited to be tasked with leading this new ESG Advisory Practice Group. I look forward to working with my team members and our clients on this evolving area. More information about the launch of the practice can be found here. As always, please reach out if you have any questions.

As we’ve previously blogged, in November 2020, the Securities Exchange Commission (SEC) adopted amendments to the Regulation S-K items related to Management’s Discussion and Analysis (MD&A) as well as certain selected financial disclosures.  The amendments became effective on February 10, 2021 (effective date) but registrants were not required to apply the amended rules until their first filing related to their fiscal year ending on or after August 9, 2021 (mandatory compliance date).

As a result, compliance with these amendments will be required for most calendar-year companies beginning with the Annual Report on Form 10-K for the fiscal year ending December 31, 2021.  However, companies with fiscal years that ended September 30, 2021, will be required to comply with the new rules in their upcoming 10-K.  Registrants will also be required to apply the amended rules in a registration statement and prospectus that on its initial filing date is required to contain financial statements for a period on or after the mandatory compliance date.

While many issuers voluntarily early adopted the amendments covering Items 301 and 302 during this last 10-K reporting cycle, based on our experience a large number of registrants chose not to early adopt the amendments to Item 303 of Regulation S-K, relating to the MD&A section, because of the short time period after their adoption before the first 10-K.  As a result, this fall will be an ideal time for many companies to analyze what impacts the new rules will have on their upcoming MD&A.

Continue Reading New MD&A Rules Are Here – A Slide Deck to Help with Internal Discussions

It is with a heavy heart that we inform you that our friend and Bass, Berry & Sims colleague Jim Cheek passed away last week. He was a legend in the legal industry, especially in the area of corporate and securities law, and he is remembered as an inspiring leader and mentor. His legal acumen and commitment to service and meaningful relationships with clients, colleagues, and friends have shaped our law firm and the broader legal community, and his influence will remain central to that foundation for years to come.

Last year marked Jim’s 50th anniversary with Bass, Berry & Sims. As we reminisce about Jim and his impact on the firm, we find solace in knowing we had the opportunity to celebrate his career through a video tribute and dedication of our Nashville boardroom in his honor. We invite you to watch the video, which can be found here, in remembrance of a great man.

We join the Cheek family in grieving his loss. Please keep the family in your thoughts and prayers during this time. The firm is collecting some quotes in remembrance of Jim that we will share with the family, and we will publish some of them on our website. If you’d like to contribute, please email your tribute to tributes@bassberry.com.

Special purpose acquisition companies (SPACs) continue to pique investor interest as an attractive mechanism through which a private company can raise growth capital and become a publicly traded entity. As of June 2021, 330 SPACs have raised nearly $105 billion, a significant jump compared to previous years, according to SPAC Research. Further, SPACs and de-SPAC transactions are on the radar of the Securities and Exchange Commission which continues to consider investor protection measures.

Please join Bass, Berry & Sims and J.P. Morgan on September 14 at 11:00 a.m. Central for a complimentary webinar exploring the continued interest in the use of SPACs and lessons learned from the trenches. Bass, Berry & Sims Private Equity Chair and Healthcare Private Equity Team Co-Chair, Ryan Thomas, will lead a discussion with panelists Jay Knight, Member and Capital Markets Team Chair at Bass, Berry & Sims and Eric Rabinowitz, Managing Director and Healthcare M&A Co-Head at J.P. Morgan who will share their first-hand experiences. Speakers will cover the following topics:

  • History of the SPAC and de-SPAC structure.
  • Advantages and disadvantages compared to a traditional IPO or M&A transaction.
  • Rise in popularity of SPACs in healthcare sector.
  • Potential private investment in public equity (PIPE) financing considerations.
  • De-SPAC transaction lessons learned.

Register for this webinar here.

Continue Reading [Webinar] Lessons Learned from the Trenches of a SPAC and De-SPAC

On August 23, the Securities and Exchange Commission (SEC) announced that effective October 1, 2021, the fees that public companies and other issuers pay to register their securities with the SEC will be set at $92.70 per million dollars of the proposed maximum aggregate offering price of the securities to be registered, a 15% reduction as compared to the prior year.

This annual adjustment to fees paid under Section 6(b) of the Securities Act also applies to the fee applicable to repurchases of securities under Section 13(e) of the Securities Act, proxy solicitations and statements in corporate control transactions pursuant to Section 14(g) of the Securities Act and annual notices of securities sold pursuant to Rule 24f-2 under the Investment Company Act of 1940. The SEC is required to set the rates for fees paid under Section 6(b) of the Securities Act to levels that the SEC projects will generate collections equal to annual statutory targets.

If you have any questions regarding the SEC’s registration filing fee change, please feel free to email the authors directly or, if applicable, contact your primary Bass, Berry & Sims relationship attorney.

About the Bass, Berry & Sims Corporate & Securities Practice

Public and private companies of all sizes across a variety of industries turn to Bass, Berry & Sims for counsel on a wide range of corporate matters, including mergers, acquisitions and dispositions; capital markets transactions; special purpose acquisition companies (SPACs) and de-SPAC transactions; executive compensation issues; corporate governance; ESG matters; and shareholder activism. We serve as primary corporate and securities counsel to numerous public companies and have counseled on more than 150 deals ranging in size from $20 million to more than $15 billion over the past two years. Click here to learn more about the Corporate & Securities Practice at Bass, Berry & Sims.

It is probably safe to say that most public companies have experienced the difficult situation of needing to issue preliminary financial results after the quarter ends but before the customary date that financial results would otherwise be publicly released.  A number of factors could cause this situation to arise, such as any of the following:

  • A securities offering will be launched during this time period.
  • The most recent quarter is materially different than market expectations (either unusually weak or unusually strong).
  • Management will be participating in a conference and desires to speak about recent results, among other reasons.

In securities offerings, preliminary financial results are often called “flash” numbers or “capsule financial information,” and, outside of offerings, the market may refer to an earnings release containing preliminary financial results as a “pre-release” (i.e., a preliminary earnings release before the actual, final earnings release).

Continue Reading “Actual Results May Differ Materially From These Estimates;” SEC Staff Objects to Disclaimer Language When Giving Preliminary Financial Results

I recently discussed the growing importance of environmental, social and governance (ESG) concerns in private deals in an article and podcast for Smart Business Dealmakers. While ESG has been a popular aspect in public deals for a while, its relevance in private deals is gaining in popularity and investors are starting to demand it.

“Oftentimes, investors are not giving a choice,” I explained in the article. “If you’re wanting to raise capital, you’re going to have to incorporate ESG at least to a limited extent.” I added, “Simply put, there tends to be more capital available if you focus on ESG. And beyond access to capital . . . I think there’s also value creation that’s definitely a benefit for a company that focuses on ESG.”

The full article, “Sehrish Siddiqui Talks ESG And Private Deals,” was published by Smart Business Dealmakers on August 20 and is available online. The podcast, “Ep 125: Sehrish Siddiqui, Partner with Bass Berry & Sims, Nashville,” was released August 19 as part of the Smart Business Dealmakers podcast series and is available online or wherever you get your podcast content.

I recently discussed the popularity of SPACs/de-SPAC transactions in the healthcare sector in an article featured in the Health Care M&A News publication. The rise in these types of transactions can be attributed to the market during and coming out of the COVID-19 pandemic.

Speaking to the attraction of a de-SPAC transaction, I stated “There’s more deal certainty, pricing is discovered sooner, and you have a long-term investment partner in the form of a SPAC sponsor. You effectively do the roadshow before the transaction is announced.”

I went on to add that I believe SPACs will remain a popular option for the foreseeable future. “There’s a lot of liquidity in the market and investors want to do something with it. The SPAC transaction isn’t going away anytime soon as there are still over 400 SPACs looking for a target. Moreover, the SPAC structure will likely continue to evolve over time as investors, sponsors and targets learn what works and what doesn’t work. While the froth may be coming off the SPAC market somewhat, that may ultimately be a good thing if the markets stabilize and what is left is another long-term viable path for companies to access the public markets.”

Continue Reading Popularity of SPACs in Healthcare Sector

On August 6, 2021, the Securities and Exchange Commission (SEC) approved Nasdaq’s proposed rule that would require a listed company to comply with certain board diversity requirements, or explain why it does not (the Board Diversity Rules).  Nasdaq proposed this rule late last year (see our blog post about Nasdaq’s proposed board diversity rules) to help make more transparent diversity in the boardroom.

Overview of Board Diversity Rules

In its approved form, the Board Diversity Rules set a “recommended objective” for most Nasdaq-listed companies with more than five directors to include at least one woman on their board of directors, along with one person who is an underrepresented minority or self-identifies as LGBTQ+.  Smaller companies with five or fewer total directors may satisfy the recommended objective with one director from a diverse background rather than two.  An “underrepresented minority” is defined as “an individual who self-identifies as one or more of the following: Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or Two or More Races or Ethnicities.”  “LGBTQ+” is defined as “an individual who self-identifies as any of the following: lesbian, gay, bisexual, transgender, or as a member of the queer community.”

Continue Reading It’s a Rule! SEC Approves Nasdaq’s Board Diversity Proposal

Late last year, the Securities and Exchange Commission (SEC) adopted amendments to modernize the description of business, legal proceedings, and risk factor disclosures that registrants are required to make according to Regulation S-K.  An important component of these updates was the new requirement in Item 101 (Description of Business) of Regulation S-K to require registrants to make certain human capital disclosures to the extent material to an understanding of its business as a whole.

The new rule amended Item 101(c) to require registrants to provide “a description of the registrant’s human capital resources, including the number of persons employed by the registrant, and any human capital measures or objectives that the registrant focuses on in managing the business.” The disclosure is only required to the extent such information is material to the registrant’s business as a whole, and the SEC in the adopting release stated that each registrant’s disclosure “must be tailored to its unique business, workforce, and facts and circumstances.”

As a result of these amendments, along with disclosing the number of employees, companies must also consider how to comply with the new principle-based rule. The SEC intentionally did not define “human capital,” reasoning that the term “may evolve over time and may be defined by different companies in ways that are industry specific.” The adopted rule states that the required disclosures may include “measures or objectives that address the development, attraction and retention of personnel.” But the SEC made clear that these are just “examples of potentially relevant subjects, not mandates.” Thus, companies have broad discretion in deciding which human capital measures to disclose.

Continue Reading A Survey of Recent SEC Comment Letters on Human Capital Disclosures