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Institutional investors and proxy advisory firms continue developing and refining their policies regarding board diversity. While gender diversity on public company boards has been in focus for some time now, institutional investors and proxy advisory firms are also increasingly focusing on racial and ethnic diversity as part of their evolving approach to board diversity.

This post summarizes published board diversity policies of several institutional investors and proxy advisory firms into a singular resource for ease of reference. Below the initial breakdown is a description of specific policies concerning board diversity shareholder proposals. …

Continue Reading A Summary of Certain Proxy Advisory Firm and Institutional Investor Board Diversity Policies

I recently provided comments for an article in The Wall Street Journal about public company disclosures related to climate change risks. The Securities and Exchange Commission (SEC) is expected to announce a rule proposal on climate-related disclosures this year. In anticipation of that new proposal, the SEC has been sending comment letters to some companies asking for clarification about their climate change risks to help inform investors in their decision-making.
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Continue Reading Insight on Disclosures Related to Climate Change Risks

On December 15, the Securities and Exchange Commission (SEC) proposed enhanced disclosure requirements and amendments to the rules regarding issuer share repurchases and Rule 10b5-1 plans. The proposals related to Rule 10b5-1 plans address perceived gaps in the current reporting obligations and concerns over insider trading, which SEC Chairman Gary Gensler first raised in early summer 2021. Likewise, the share repurchase proposals aim to “lessen the information asymmetries between issuers and investors.”
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Continue Reading SEC Proposes New Rules for Share Repurchases and Rule 10b5-1 Plans

As you have inevitably read about, in September 2021, the Biden administration instructed the Department of Labor’s Occupational Safety and Health Administration (OSHA) to write a rule that would generally require employers with more than 100 employees to mandate vaccination or weekly testing and mask-wearing for unvaccinated employees.

OSHA published its final rule on Friday, November 5, which generally requires, among other things, employees to be vaccinated or start testing by January 4, 2022, with an earlier (December 5, 2021) enforcement date regarding the rule’s mask mandate, among other requirements for employers. Within 24 hours of the publication of the final rule, the Fifth Circuit Court of Appeals granted an emergency motion to stay enforcement of the vaccine requirement and required the administration to respond by Monday, November 8. In its response, the administration asked the court to lift the stay. Final resolution of the matter is pending.…

Continue Reading Potential SEC Disclosure Considerations Related to Vaccine Mandates

I recently co-authored an article for Corporate Counsel with Stephanie Bignon, assistant general counsel at Delta Air Lines, highlighting key environmental, social and governance (ESG) disclosure developments. “Public companies are facing a rapidly changing regulatory and investor landscape with respect to climate and other environmental, social and governance (ESG) disclosures,” the authors observed.

One area of particular regulatory focus from the Securities Exchange Commission (SEC) is climate change, as several new initiatives aim to revamp the existing disclosure framework in this area, including:

  • Indications from SEC Chairman Gary Gensler that new climate change disclosure rules will be proposed in late 2021 or early 2022.
  • Significantly enhanced focus of the SEC’s Division of Corporation Finance on climate-related disclosure in public company filings, including a sample SEC Staff comment letter sent to at least dozens of companies questioning whether consideration had been given to including climate-related disclosures in SEC filings.
  • SEC Division of Enforcement announcement in early 2021 that it is creating a Climate and ESG Task Force, and signaling that enforcement actions in the climate change area under existing SEC rules may be forthcoming.

With this heightened focus, we concluded the article with five practical takeaways for companies:…

Continue Reading Key ESG Disclosure Developments

In light of the increasing level of investor and Securities and Exchange Commission (SEC) focus on environmental, social and governance (ESG) disclosure matters and the associated increase in the scope of ESG disclosures included by public companies both within and outside of SEC filings, public companies are well-advised to assess whether their disclosure control and procedures should be modified to address ESG disclosures.

Background on ESG Disclosures

As background, the SEC rules that implemented the Sarbanes-Oxley Act of 2002 require public companies to have disclosure controls and procedures (which are designed to ensure that the information required to be disclosed by a public company in its Exchange Act filings is recorded, processed, summarized and reported in accordance with SEC rules).  Additionally, the SEC recommended that public companies establish disclosure committees as a component of their disclosure controls and procedures, and a significant majority of public companies have disclosure committees consistent with the SEC’s recommendation.

Disclosure committees may also be helpful to public companies as a means to support the Section 302 and 906 certifications required to be provided by the CEO and CFO on a quarterly basis under the Sarbanes-Oxley Act in connection with disclosures provided in periodic reports.

The amount of ESG disclosures included in SEC filings has significantly increased in recent years. This trend will no doubt continue once the SEC’s climate change rules expected to be proposed later this year or early next year become effective.  Additionally, there has been a significant expansion in the scope of ESG disclosures being provided by many public companies (particularly large-cap companies) outside of SEC filings, including via corporate social responsibility or similar reports, and company website disclosures.…

Continue Reading Should Public Companies Establish an ESG Disclosure Committee?

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 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

From the Bass, Berry & Sims Blog Network
From the Bass, Berry & Sims Blog Network

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