On August 26, the SEC voted to adopt amendments to modernize the description of business (Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants are required to make pursuant to Regulation S-K.  The amendments reflect the SEC’s continued movement to a principles-based, registrant-specific approach to disclosure.

As detailed below, some of the changes are rather significant, particularly the changes to the business disclosures and the requirement to have a new risk factor summary section of no more than two pages if the risk factors exceed 15 pages.  As a result, we expect most companies will need to make revisions and updates to their existing disclosures, specifically in connection with their Annual Report on Form 10-K where Items 101 and 105 of S-K are triggered. The rules are effective 30 days after their publication in the Federal Register.

The following table briefly summarizes the final amendments.  We have presented some practical takeaways following the table.


Continue Reading Practical Takeaways on SEC Amended Disclosure Requirements for Business Description, Legal Proceedings and Risk Factors under Regulation S-K

Today, June 30, is the reference date for calendar year-end companies to calculate next year’s filer status, as well as the aggregate market value of equity held by non-affiliates (i.e., public float) for purposes of inclusion in the annual report on Form 10-K to be filed in early 2021. In preparing these calculations, it is important each year for counsel to apply the definitions of public float and the relevant filer statuses to ensure that upcoming filings are made timely.

For calculating 2021 filer status, however, several of the definitions have changed. Earlier this year, the SEC adopted amendments adding a revenue element to the definitions of accelerated filer and large accelerated filer to exclude low revenue filers. While relatively straightforward in theory, the tests have proven rather complicated in practice. To assist companies in applying the amendments, the SEC has produced a Small Entity Compliance Guide. Although helpful, even this guide may prove difficult at times to follow.

Since most companies will start analyzing these changes today, this blog post is intended as a practical reminder of and gap-filling guide to the relevant changes for public companies. Generally, the amended definitions now include a carve-out for smaller reporting companies (SRC) with annual revenues less than $100 million in most recent audited annual financial statements.


Continue Reading Happy Filer Status Day! Remember to Check the New SEC Definitions for Accelerated Filer and Large Accelerated Filer

On March 2, the Securities Exchange Commission (SEC) adopted amendments that, among other things, significantly reduce the subsidiary guarantor financial statement requirements in periodic reports for companies that have registered debt that is guaranteed by subsidiaries. These changes are part of the SEC’s ongoing efforts to modernize and ease disclosure burdens for public companies.  The SEC hopes that these amendments will facilitate an increase in the number of registered (versus unregistered) debt offerings.

Although the amendments do not become effective until January 2021, in light of the relief offered, many companies are preparing to voluntarily comply with the amendments in advance of the effective date (which is expressly permitted by the SEC).

This alert briefly describes the changes to existing reporting requirements for subsidiary guarantors.  The SEC’s press release announcing the changes and full text of the final rule can be found here.


Continue Reading SEC Provides Welcome Relief from Reporting Requirements for Subsidiary Guarantors

The Staff of the various Securities Exchange Commission (SEC) divisions, including the Division of Corporation Finance, issued an announcement on March 24, 2020, which provides some flexibility to registrants seeking to satisfy the record retention requirement in Rule 302(b) of Regulation S-T that the registrant retain the manually signed documents.

Rule 302(b) of Regulation S-T requires that each signatory to documents electronically filed with the SEC “manually sign a signature page or other document authenticating, acknowledging or otherwise adopting his or her signature that appears in typed form within the electronic filing.”  Such documents must be executed before or at the time the electronic filing is made.  Further, electronic filers must retain such documents for a period of five years and furnish copies to the SEC or its staff upon request.


Continue Reading SEC Staff Provides Relief to “Manual Signature” Retention Requirement in Light of COVID-19 Concerns

Jay Knight (far right) discusses disclosure challenges for public companies at the 2020 Securities Regulation Institute.

The Bass, Berry & Sims Corporate & Securities Practice Group kicked off the new year by participating as a sponsor of the 47th Annual Securities Regulation Institute, which is held annually in San Diego by Northwestern University. Jay Knight, head of the firm’s Capital Market Subgroup, was featured as a speaker in a well-attended panel discussing recurring disclosure challenges faced by public companies and their advisors. Each year, the conference draws SEC staffers and many of the leading practitioners of the public company industry, and the keynote speaker for this year’s conference was SEC Commissioner Jay Clayton.

Our key takeaways from the conference follow:
Continue Reading Five Key Takeaways from the 2020 Securities Regulation Institute

With many year-end companies working on initial drafts of their 2020 proxy statements, we thought it might be worth sending a quick reminder of two recent rule changes – briefly summarized below – that will (modestly) impact this year’s proxy statement.

  • Compliance with Section 16(a) of the Exchange Act: Item 405 of Regulation S-K previously required companies to disclose information about late Section 16 filings under the caption “Section 16(a) Beneficial Ownership Reporting Compliance.” As part of the recent FAST Act amendments, the disclosure header is now “Delinquent Section 16(a) Reports” and companies are encouraged to exclude this heading altogether when they have no Section 16(a) delinquencies to report.  Since this is one item that is typically specifically incorporated by reference into Part III of Form 10-K, to the extent the heading is retained, companies should also update the header cross-reference in the Form 10-K.


    Continue Reading Proxy Statement Rule Change Reminders for 2020

Earlier this month, in a bipartisan vote of 384 to 7, the U.S. House of Representatives passed the 8-K Trading Act of 2019.  A similar bill has been introduced in the Senate and given the bipartisan support in the House, is likely to pass in the Senate when considered.  The proposed law stems from academic research that suggests corporate insiders that trade around the filing of Forms 8-K regularly beat the market in the four days preceding the filing of a Form 8-K.

Basics of the 8-K Trading Act of 2019

The new law, when it becomes effective, requires the SEC to issue rules requiring issuers to establish and maintain policies, controls and procedures that are reasonably designed to prohibit executive officers and directors of issuers from purchasing, selling or otherwise transferring equity securities of the issuer, directly or indirectly, with respect to an event described in Items 1 through 6 of Form 8-K between the occurrence of the event and the filing or furnishing of the related 8-K.


Continue Reading House Passes Bill to Limit Trading by Insiders around Form 8-K Filings

The Bass, Berry & Sims Corporate & Securities Practice Group recently hosted another in a series of complimentary webinars exploring various public company-related securities law issues.

The most recent Securities Law Exchange webinar, Recent SEC Reporting Developments and Enforcement Insights, was held on November 19 and discussed recent developments from the Securities Exchange Commission (SEC), including best practices and lessons learned from recent changes under the Fixing America’s Surface Transportation (FAST) Act and the SEC’s new rule that extends “testing-the-waters” to all issuers. It also covered recent SEC guidance and enforcement actions impacting public companies.


Continue Reading Key Takeaways from Our Public Company SEC Reporting Webinar

Glass Lewis recently posted its comprehensive 2020 voting guidelines, which are summarized on the first page of the 2020 voting guidelines as well as on the Glass Lewis blog. Among other things, the 2020 voting guidelines update Glass Lewis’ voting guidance regarding excluded shareholder proposals. The updates are in response to the September 2019 guidance by the Staff of the Division of Corporation Finance (the Staff) regarding potential oral rather than written responses to 14a-8 no-action letter requests, as further outlined in recent our blog post.

As a general matter, Glass Lewis believes companies should only exclude a shareholder proposal when the Staff has explicitly concurred with a company’s argument for the exclusion of such shareholder proposal.

Staff Declines to Articulate a View on the Exclusion of a Shareholder Proposal

In instances where the Staff has declined to provide a view on whether the shareholder proposal is ripe for exclusion, Glass Lewis believes such a shareholder proposal should be included in the company’s proxy statement. In the event a company excludes such a shareholder proposal from its proxy statement, Glass Lewis will likely recommend that shareholders vote against the members of the company’s governance committee.


Continue Reading Glass Lewis Issues Policy Changes Regarding Excluded Shareholder Proposals

On November 5, the Securities and Exchange Commission (SEC) in a 3-2 decision voted to propose amendments to rules governing shareholder proposals in companies’ proxy statements.  These proposed amendments – which seek to revise Rule 14a-8’s eligibility requirements, one-proposal limit, and resubmission thresholds – follow on the heels of recent guidance issued by the Staff of the Division of Corporation Finance related to the no-action letter process for shareholder proposals.

The press release announcing the proposed changes noted that the changes are part of the SEC’s ongoing focus on improving proxy access and the ability of shareholders to exercise their rights to vote. SEC Chairman Jay Clayton commented in the release that the proposed changes are designed to “facilitate constructive engagement by long-term shareholders in a manner that would benefit all shareholders and our public capital markets.”  Not without controversy though, the rule revisions are receiving criticism from shareholder advocacy groups, while business-minded groups like the U.S. Chamber of Commerce have come out in support of the proposed changes.

Eligibility Requirements for Shareholders

The current eligibility requirements require that a shareholder proponent hold at least $2,000 or 1% of a company’s securities for at least a year to be eligible to submit a proposal.  The proposed revisions, eliminate the 1% threshold and replace the $2,000 threshold with the following three alternatives:


Continue Reading SEC Proposes to Modernize Shareholder Proposal Thresholds and Certain Procedural Elements of Rule 14a-8