On May 19, the Securities and Exchange Commission (SEC) proposed a sweeping set of reforms designed to modernize and simplify the framework governing registered securities offerings by public companies. The proposal, if adopted, would represent one of the most significant overhauls of the capital formation process in decades, touching on shelf registration, eligibility requirements and communications rules, among other areas.
Simplifying the Public Company Framework: Understanding the SEC’s Filer Status Reform Proposal
The SEC’s proposal would consolidate the existing filer status categories by eliminating the accelerated filer and SRC designations and creating a streamlined framework consisting of large accelerated filers, non-accelerated filers, a sub-category of small non-accelerated filers and EGCs. Under the proposal, the disclosure scaling and accommodations currently available only to SRCs and EGCs would be extended to all non-accelerated filers, which would encompass approximately 81% of all current public companies. However, large accelerated filers, the companies subject to the most extensive requirements, would still account for approximately 93.5% of total public market float.
Flexibility in Reporting Frequency: Understanding the SEC’s Semiannual Reporting Proposal
The Securities and Exchange Commission (SEC) proposed rule and form amendments under the Securities Exchange Act of 1934, as amended (Exchange Act), that would allow public companies to elect to file semiannual reports on a new Form 10-S in lieu of filing interim quarterly reports on Form 10-Q. In a statement accompanying the proposal, SEC Chairman Paul Atkins noted that “the rigidity of the SEC’s rules has prevented companies and their investors from determining for themselves the interim reporting frequency that best serves their business needs and investors.” According to Chairman Atkins, the proposal represents the first step of a “larger, comprehensive effort to review and reshape the current SEC rules governing public companies with respect to their ongoing reporting obligations and their ability to raise capital in the public markets.”
The SEC Finally Adopts Climate Change Disclosure Rules: Making Sense of 800+ Pages
After almost two years following its proposed rules, on March 6, 2024, the Securities and Exchange Commission (SEC) adopted final rules to require public companies to disclose certain climate-related information in registration statements and annual reports.
Continue Reading The SEC Finally Adopts Climate Change Disclosure Rules: Making Sense of 800+ PagesCalifornia GHG Emission Website Disclosure Legislation to Take Effect on January 1, 2024
Recently, the State of California enacted Assembly Bill 1305: the Voluntary Carbon Market Disclosures Act (AB 1305), which requires companies, under certain circumstances, to make website disclosures of certain information about their greenhouse gas (GHG) emissions and emissions-reduction programs.
Continue Reading California GHG Emission Website Disclosure Legislation to Take Effect on January 1, 2024SEC Adopts Cybersecurity Disclosure Rules
On July 26, the Securities and Exchange Commission (SEC), by a 3-2 vote, adopted final rules intended to enhance public companies’ disclosures regarding (1) cybersecurity incidents through a new required current report item under Form 8-K and (2) cybersecurity risk management and governance in annual reports on Form 10-K through a new item under Regulation S-K.
Continue Reading SEC Adopts Cybersecurity Disclosure RulesUpdates to Human Capital Disclosure Requirements
I recently authored an article highlighting the latest updates in human capital disclosure requirements for public companies since the Securities Exchange Commission (SEC) imposed new requirements in late 2020.
While public companies were historically only required to disclose their gross headcount as it relates to human capital, the 2020 changes added a broader requirement that companies include in their filings a description of their human capital resources, which includes any human capital measures or objectives that the company’s management team focuses on when running the business.Continue Reading Updates to Human Capital Disclosure Requirements
Key Takeaways from New Universal Proxy Rules Webinar
Late last year, the Securities and Exchange Commission (SEC) approved amendments to the federal proxy rules to, among other things, mandate the use of a universal proxy card in public solicitations involving director election contests. On February 24, we hosted a webinar to discuss issues relating to universal proxy rules. Access the recording of the webinar here.
Continue Reading Key Takeaways from New Universal Proxy Rules Webinar
[WEBINAR] SEC’s New Universal Proxy Rules: Key Considerations & Next Steps to Prepare
Please join the Bass, Berry & Sims Corporate & Securities Practice Group for a series of complimentary webinars exploring various public company-related securities law issues. These CLE programs will be an extension of our Securities Law Exchange Blog and will feature timely and practical guidance for SEC disclosure counsel on key topics of interest.
Continue Reading [WEBINAR] SEC’s New Universal Proxy Rules: Key Considerations & Next Steps to Prepare
A Practical Guide to Evaluating a Company’s Defensive Profile
As public companies continue to navigate the ongoing economic upheaval caused by the COVID-19 pandemic, opportunistic activist investors may find the resulting economic conditions conducive to accumulating significant ownership positions, agitating for changes in corporate strategy and management, and pursuing public activist campaigns. Although the number of overt activist campaigns were down during the primary 2020 proxy season, as the annual meeting season for most public companies took place during the initial months of the pandemic lockdown, the third and fourth quarters generally tend to see an increase in activist activity as hedge funds make initial preparations for the following year’s proxy season. Given these circumstances, this is an opportune time for public companies to make preparations by reviewing and evaluating their defensive profiles.
The following summarizes most of the common defensive mechanisms that companies utilize when faced with activist campaigns, hostile takeover attempts, and other attempts to influence corporate policy in ways that may not be in the best interest of all shareholders. While there is no one-size-fits-all approach to defensive measures, an evaluation of the existing defensive profile of the company is a critical first step. In our experience advising on behalf of companies and their boards of directors, an analysis of the corporation’s defenses under its organizational documents and applicable law is usually undertaken and summarized for the board in connection with a defensive profile review.
Defensive Measures Related to Stockholder Meetings
Are stockholders able to take action by written consent?
Section 228(a) of the Delaware General Corporation Law (DGCL) generally provides that, unless restricted by the certificate of incorporation, the requisite stockholders needed to approve an action may do so by written consent instead of a meeting—including actions to elect new directors or to approve a takeover proposal. Limiting stockholder action by written consent is particularly important for companies with large blocks of its common stock concentrated among one or several large stockholders, including holdings by large institutional holders, which could otherwise take swift action by written consent and without holding a stockholder meeting.Continue Reading A Practical Guide to Evaluating a Company’s Defensive Profile