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?

I am excited to announce that Bass, Berry & Sims has formally launched its Environmental, Social and Governance (ESG) Advisory Practice Group. Businesses are facing increased pressure from regulators and stakeholders to meet ESG expectations and the area is rapidly evolving. To help our clients manage these new expectations, the firm has assembled a multidisciplinary…

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

Special purpose acquisition companies (SPACs) continue to pique investor interest as an attractive mechanism through which a private company can raise growth capital and become a publicly traded entity. As of June 2021, 330 SPACs have raised nearly $105 billion, a significant jump compared to previous years, according to SPAC Research. Further, SPACs and de-SPAC transactions are on the radar of the Securities and Exchange Commission which continues to consider investor protection measures.

Please join Bass, Berry & Sims and J.P. Morgan on September 14 at 11:00 a.m. Central for a complimentary webinar exploring the continued interest in the use of SPACs and lessons learned from the trenches. Bass, Berry & Sims Private Equity Chair and Healthcare Private Equity Team Co-Chair, Ryan Thomas, will lead a discussion with panelists Jay Knight, former Member and Capital Markets Team Chair at Bass, Berry & Sims and Eric Rabinowitz, Managing Director and Healthcare M&A Co-Head at J.P. Morgan who will share their first-hand experiences. Speakers will cover the following topics:

  • History of the SPAC and de-SPAC structure.
  • Advantages and disadvantages compared to a traditional IPO or M&A transaction.
  • Rise in popularity of SPACs in healthcare sector.
  • Potential private investment in public equity (PIPE) financing considerations.
  • De-SPAC transaction lessons learned.

Register for this webinar here.Continue Reading [Webinar] Lessons Learned from the Trenches of a SPAC and De-SPAC

On August 23, the Securities and Exchange Commission (SEC) announced that effective October 1, 2021, the fees that public companies and other issuers pay to register their securities with the SEC will be set at $92.70 per million dollars of the proposed maximum aggregate offering price of the securities to be registered, a 15% reduction…

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

I recently discussed the growing importance of environmental, social and governance (ESG) concerns in private deals in an article and podcast for Smart Business Dealmakers. While ESG has been a popular aspect in public deals for a while, its relevance in private deals is gaining in popularity and investors are starting to demand it.

“Oftentimes,…

On August 6, 2021, the Securities and Exchange Commission (SEC) approved Nasdaq’s proposed rule that would require a listed company to comply with certain board diversity requirements, or explain why it does not (the Board Diversity Rules).  Nasdaq proposed this rule late last year (see our blog post about Nasdaq’s proposed board diversity rules) to help make more transparent diversity in the boardroom.

Overview of Board Diversity Rules

In its approved form, the Board Diversity Rules set a “recommended objective” for most Nasdaq-listed companies with more than five directors to include at least one woman on their board of directors, along with one person who is an underrepresented minority or self-identifies as LGBTQ+.  Smaller companies with five or fewer total directors may satisfy the recommended objective with one director from a diverse background rather than two.  An “underrepresented minority” is defined as “an individual who self-identifies as one or more of the following: Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or Two or More Races or Ethnicities.”  “LGBTQ+” is defined as “an individual who self-identifies as any of the following: lesbian, gay, bisexual, transgender, or as a member of the queer community.”Continue Reading It’s a Rule! SEC Approves Nasdaq’s Board Diversity Proposal

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

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