After months of anticipation, on March 21, the U.S. Securities and Exchange Commission (SEC) voted 3:1 to propose climate change-related disclosure rules that would implement prescriptive climate-related disclosure requirements (which would be applicable for most public companies) in a wide array of climate-related areas, including with respect to governance, outlook, risk management, GHG emissions, climate-related targets and goals and financial statement disclosures. These proposed rules, which are intended to provide investors with consistent, comparable, and reliable climate-related information, would represent a major shift in the public company disclosure landscape and will require significant advance effort by public companies to facilitate compliance.

Join Bass, Berry & Sims and leading environmental, social and governance (ESG) thought leaders for the next installment in our ESG Impact Webinar series on Tuesday, May 24, 2022. Our panelists will share their experience and perspectives on what in-house counsel should consider as it relates to these proposed climate change disclosure rules. Discussion topics will include:

  • Overview of the Proposed Rules.
  • Required Disclosure under Regulation S-X.
  • Required Disclosure under Regulation S-K.
  • Phase-In Periods.
  • Practical Takeaways and Next Steps.


Continue Reading [WEBINAR] What’s Next in ESG? Understanding the Proposed SEC Climate Change Disclosure Rules

Along with equal prominence, probably one of the most often non-GAAP comments we see issued by the U.S. Securities and Exchange Commission (SEC) Staff involves its objection to adjustments that it believes substitute individually tailored measurement methods for those of GAAP.  Often, the SEC Staff comments will cite to Question 100.04 of the Non-GAAP Financial Measures Compliance & Disclosure Interpretations, as follows:

Question 100.04

Question: A registrant presents a non-GAAP performance measure that is adjusted to accelerate revenue recognized ratably over time in accordance with GAAP as though it earned revenue when customers are billed. Can this measure be presented in documents filed or furnished with the Commission or provided elsewhere, such as on company websites?

Answer: No. Non-GAAP measures that substitute individually tailored revenue recognition and measurement methods for those of GAAP could violate Rule 100(b) of Regulation G. Other measures that use individually tailored recognition and measurement methods for financial statement line items other than revenue may also violate Rule 100(b) of Regulation G.   [May 17, 2016] (emphasis added)

Continue Reading SEC Staff Pushes Back on Adjusting for Normal Recurring “Public Company Expenses”

After months of anticipation, on March 21, 2022, the U.S. Securities and Exchange Commission (SEC) voted 3:1 to propose climate change-related disclosure rules that would impact a company’s annual reports and registration statements.   As indicated previously by the Staff, the proposed climate-related disclosure framework is modeled partially on the Task Force on Climate-related Financial Disclosure’s (TCFD) recommendations and draws upon the Greenhouse Gas (GHG) Protocol.  (See our previous blog post discussing the Staff’s consideration of TCFD). The proposed rules, seemingly unprecedented in nature, are significantly more prescriptive rather than “principles-based” disclosure rooted in materiality, and intended to provide stakeholders with “consistent and comparable data.”

Continue Reading The SEC’s Proposed Climate Change Rules Are Out: Making Sense of 500+ Pages

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

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.

Continue Reading Insight on Disclosures Related to Climate Change Risks

The rules of the New York Stock Exchange (NYSE) and the Nasdaq Stock Market (Nasdaq) require that a majority of a listed company’s board of directors (board) must be comprised of “independent directors” and that vital board committees such as the audit, compensation and nominating/governance committees must be comprised solely of independent directors (subject to certain exceptions).

Continue Reading SEC Staff Comments on Director Serving as Corporate Secretary

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.”

Continue Reading SEC Proposes New Rules for Share Repurchases and Rule 10b5-1 Plans

Last month at the 2021 United Nations Climate Change Conference (commonly referred to as the COP26), the International Financial Reporting Standards Foundation (IFRS Foundation) announced the formation of an International Sustainability Standards Board (ISSB).
Continue Reading Consolidation and Globalization of ESG Standards Progress: CRD Dissolves to Support IFRS Foundation and ISSB

On November 3, Chairman Gary Gensler announced that the Staff (Staff) of the Securities and Exchange Commission’s (SEC) Division of Corporation Finance released SLB 14L (“new guidance”) regarding shareholder proposals.

The new guidance significantly changes the Staff’s approach when determining whether a shareholder proposal may be properly excluded from a company’s proxy statement. The new guidance rescinds SLBs 14I, 14J, and 14K (Rescinded SLBs), as well as any provisions of other prior Staff guidance that could be considered as inconsistent with the new guidance.  A few of these changes are highlighted below.

Significant Social Policy Exception

The new guidance significantly impacts Rule 14a-8(i)(7), commonly referred to as the “ordinary business exception.”  This substantive basis for exclusion permits a company to exclude a proposal that “deals with a matter relating to the company’s ordinary business operations.”  Under the new guidance, the Staff will realign its approach for determining whether a proposal relates to “ordinary business” with the standard the SEC initially set forth in 1976, which provided an exception for certain proposals that raise significant social policy issues.

According to the new guidance, the Staff believes that an “undue emphasis was placed on evaluating the significance of a policy issue to a particular company at the expense of whether the proposal focuses on a significant social policy.”

Continue Reading SEC Staff Significantly Changes Guidance on Shareholder Proposals and Rescinds Prior Guidance

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