Update as of December 6, 2017:  Congress and the President are nearing the finish line for significant tax reform with the likelihood of passing by the end of the year. Since it has the potential to significantly change the corporate tax rate, the below is even more relevant at this time. Read more about the impact of the lower corporate tax rate, if enacted.

Yogi Berra is often attributed with saying, “It’s difficult to make predictions, especially about the future.” This is especially true with predictions about revisions to the tax code.  However, many observers now believe a reduction in the corporate tax rate is a realistic possibility as a result of the combination of a new Trump administration and a Republican-controlled Congress. According to www.donaldjtrump.com, “The Trump Plan will lower the business tax rate from 35 percent to 15 percent, and eliminate the corporate alternative minimum tax.” In light of these dynamics, a potential sleeper issue for many companies, especially those carrying sizeable deferred tax assets on the balance sheet, is a potential charge to earnings resulting from the remeasuring of deferred tax assets due to a change in the corporate income tax rate.

Continue Reading Sleeper Issue? Deferred Tax Assets under a Trump Administration

Recently, a shareholder was the first to attempt to use proxy access bylaws to nominate a director. The shareholder was GAMCO Asset Management, and the company involved was National Fuel Gas Company (NFG).

NFG amended its bylaws in March 2016 to include a proxy access bylaw and its terms are pretty typical:  the bylaws provide that a shareholder, or a group of up to 20 shareholders, owning 3% or more of the Company’s outstanding Common Stock continuously for at least three years may nominate and include in the company’s proxy materials directors constituting up to 20% of the board, provided that the shareholders(s) and the nominee(s) satisfy the bylaw requirements. Here is NFG’s proxy access bylaw.

Continue Reading Proxy Access Developments

Probably one of the most sensitive disclosures a public company may be required to make is information related to “contingencies.”  Disclosure of pending lawsuits and government investigations is closely scrutinized by analysts, investors and the SEC.  With respect to the latter group, we recently came across the below SEC staff comment, which is a stark reminder of the importance of fully considering the accounting literature when analyzing whether a litigation contingency is probable and reasonably estimable.  The comment pointedly asks the company (Stericycle, Inc.) why it was unable to disclose an amount or range of reasonably possible loss under the accounting literature for a legal proceeding when the settlement agreement was entered into shortly after the filing of the 10-Q.   The company’s response is worth reading.

Continue Reading A Recent SEC Comment Drives Home the Importance of Carefully Considering the Accrual and Disclosure Requirements under ASC 450 (Contingencies)

Deloitte recently posted an excellent study regarding SEC comment letter trends.

The Deloitte study highlights the significant increase in 2016 in SEC comments regarding non-GAAP financial measures, which is no surprise in light of the SEC’s public comments regarding this issue and the new SEC guidance (C&DIs) released in May 2016, and is consistent with trends we have been seeing.  Registrants should continue to be mindful of the focus of the SEC (both the Division of Corporation Finance in relation to the SEC comment letter process and the Division of Enforcement) on this issue.

Continue Reading SEC Comment Letter Trends

For those following recent SEC developments, you know that the SEC has made a concerted effort this year to reign in the use of non-GAAP financial measures made by companies, or at least make sure their usage complies with Regulation G and Item 10(e) of Regulation S-K. Recently, I came across the below comment sent by the Staff of the Division of Corporation Finance to Activision Blizzard, Inc. regarding its first quarter earnings release.  It is a friendly reminder to companies that disclose non-GAAP financial measures in earnings releases that the requirement to give equal or greater prominence to GAAP financial measures generally also applies to percentages and ratios calculated using a non-GAAP financial measure.

Continue Reading Equal Prominence When Giving the Percentage Growth of a Non-GAAP Financial Measure?

I authored an article published by Law360 on the growing trend in support for proxy access among shareholders. In the article, I weigh the pros and cons of adopting proxy access for a public company and concludes “on balance, we believe that many public companies that have not yet adopted proxy access or received a proxy access shareholder proposal, particularly those in the mid-cap and small-cap sectors, will deem it advisable to defer adopting proxy access bylaws at this time.”

The full article, “Should Public Cos. Voluntarily Adopt Proxy Access?” was published by Law360 on September 13, 2016, and is available online.

Blueprint for an IPOBass, Berry & Sims is pleased to provide its Blueprint for an IPO to help companies understand the process of going public and the new challenges they will face once their securities are publicly traded. An initial public offering (IPO) is a transaction in which a company’s securities are offered to the public for the first time. Companies go public to raise capital to fuel growth, pay down debt and provide liquidity to shareholders, among other things. Going public is a corporate milestone, particularly in the Sarbanes-Oxley Act era of corporate reform. An IPO is at the same time exciting and very demanding on a company’s management team. IPO candidates face for the first time the expansive regulatory scheme administered by the Securities and Exchange Commission (SEC) and must deal with corporate governance processes that are much different than what they had as private companies.

Continue Reading Bass, Berry & Sims Releases Blueprint for an IPO

Since the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) in July 2010, public companies have had to keep track of numerous rulemakings promulgated by the Securities and Exchange Commission (SEC). These include rulemakings mandated by the Dodd-Frank Act, the Jumpstart Our Business Start-Ups Act in 2012 (the JOBS Act) and the Fixing America’s Surface Transportation Act of 2016 (the FAST Act), as well as other SEC rulemakings without a Congressional mandate.

Continue Reading SEC Rulemaking Pipeline and Status Update

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

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