January 26, 2022 Webinar
12:00pm – 1:00pm EST
Register here.

Various academic studies and some well-publicized sales by corporate executives made pursuant to 10b5-1 trading plans have drawn media scrutiny and attention from legislators, prompting calls for the SEC to take a closer look at the area. In addition, issuer share repurchase programs have been criticized by some politicians and media reports. On December 15, 2021, the SEC proposed amendments to Rule 10b5-1. On the same day, the SEC also proposed enhanced disclosures of share repurchases by issuers.

During this webinar, Mayer Brown lawyers will discuss the use of Rule 10b5-1 trading plans including by issuers, corporate policies relating to trading plans, and issuer share repurchase programs, as well as the potential impact of the proposed amendments. Specifically, they will cover:

  • Rule 10b5-1 basics;
  • Proposed SEC amendments;
  • Share repurchase disclosure proposed amendments;
  • Areas as to which the SEC solicited comment;
  • Best practices for public companies; and
  • What to expect in the months ahead on these issues.

This practice note discusses market trends on how public companies’ political contributions, or “political spending,” are perceived to be intertwined with environmental, social, and governance (ESG) issues, and provides illustrative; disclosures regarding political contributions. This piece concludes with recommendations on how to prepare and enhance such disclosures.

Read the full article here.

The IPO market was reinvigorated in 2021, breaking prior records. In aggregate, in 2021, there were 407 IPOs, which raised $139.3 billion in proceeds.  As companies stay private longer, market capitalization of public companies at IPO continues to rise.  The median market capitalization for an IPO issuer in 2021 was $928.1 million, with a median of $164.7 million per deal raised, in 2021.

In this What’s the Deal? guide, we provide an overview of the IPO process, including the considerations related to becoming a public company.

January 11, 2022 | PLI Webinar
3:00pm – 4:00pm EST
Register here.

Mayer Brown partners, Brian Hirshberg and Christina Thomas, will discuss US Securities Exchange Commission (“SEC”) disclosures, issues and recent developments for foreign private issuers (“FPIs”) during this Practising Law Institute briefing. Key topics to be addressed, among others, include:

  • Areas of focus for SEC comments in anticipation of upcoming 20-Fs and 40-Fs, including climate change and cybersecurity matters
  • Financial statement and MD&A considerations, including revenue recognition, tax, non-GAAP, and KPIs
  • SEC and PCAOB implementation of the Holding Foreign Companies Accountable Act
  • Areas of likely SEC-focus in the coming months

On January 3, 2022, the Delaware Court of Chancery issued an opinion denying motions to dismiss in In re Multiplan Corp. Stockholders Litigation, a stockholder action arising out of the completed business combination for Churchill Capital Corp. III (“Churchill”), a SPAC, and Multiplan Inc. (“MultiPlan”). The court’s opinion has important implications for SPAC sponsors, directors, officers and other stakeholders because of its application of traditional Delaware corporate law concepts to a “deSPAC” business combination transaction. This Legal Update (i) summarizes the facts alleged by the plaintiffs in the case and the court’s conclusions; and (ii) provides key takeaways and practical considerations.

On December 30, 2021, the Internal Revenue Service (IRS) published final regulations for the IBOR transition. This Legal Update provides background on the principle US federal income tax concern with IBOR-related amendments to existing contracts and an overview of previous IRS guidance aimed at addressing the concern. The Update then discusses the types of modifications that can fit within the final regulations, the relief provided for modifications that do fit and a few questions left open by the IRS.

The US Securities and Exchange Commission (SEC) adopted final amendments to its rules on December 2, 2021 to implement the requirements in the Holding Foreign Companies Accountable Act of 2020.  Although for the foreseeable future, the majority of the new rules are expected only to affect SEC registrants whose operations are based in China or Hong Kong, all SEC registrants that file their annual reports on Forms 10-K, 20-F, or 40-F need to be aware of new requirements that are not included in the forms themselves.

Specifically, a registrant filing an annual report for a period ended after December 15, 2021 that files financial statements using Inline XBRL, must tag three additional data elements:

  • the auditor(s) who provided the opinion(s) related to the financial statements in the annual report;
  • the location from where the auditor’s report was issued; and
  • the Public Company Accounting Oversight Board (PCAOB) ID Number(s) of the audit firm(s) or branch(es) that provided the opinion.

As noted above, this new requirement cannot be found in the annual report forms themselves. Rather, the SEC has adopted an amendment to Rule 405 of Regulation S-T, effective January 10, 2022.  The new paragraph in Rule 405 refers the reader to the SEC’s Document Entity and Information (DEI) taxonomy in the EDGAR Filer Manual, Volume II: EDGAR Filing, which contains these new data elements in Section 6.5.54.  While the SEC’s adopting release states that the location of the information in the annual report is “up to the registrant,” the EDGAR Filer Manual provides that the data “should be tagged where they normally appear, adjacent to the auditors’ opinion.”

The two most obvious locations to provide this information would be on the auditor’s signature page to its report, which already includes the auditor’s name and location, or in the new items added to Forms 10-K, 20-F, and 40-F to require disclosure regarding foreign jurisdictions that prevent PCAOB inspection (Items 9C, 16I, and B(18), respectively).  Note, however, that to be included on the signature page to the audit report, the auditor, and not the company, would have to provide the revised disclosure.

In another special purpose acquisition company (“SPAC”) related enforcement action, on December 21, 2021, the US Securities and Exchange Commission (“SEC”) issued an order instituting cease-and-desist proceedings (“Order”) against a Nasdaq-listed electric vehicle truck manufacturing company that went public through a combination with a SPAC (“Company”).  The Company’s initial business combination was consummated in June 2020.  Shortly thereafter, an activist short-seller published a report charging that the Company’s prototype vehicle was rigged for a presentation to appear as if it was driving when it was merely rolling downhill, relying on gravity to do so.

The SEC and Nikola agreed to a $125 million civil money penalty for the alleged violations of Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5 and 13a-15(a) thereunder and Section 17(a) of the Securities Act of 1933, as amended (“Securities Act”).  The Order, which alleges that the Company misled investors through multiple misrepresentations and material omissions, is separate from a pending litigation and a pending Department of Justice matter involving the Company and its chief executive officer (“CEO”).  Nikola did not admit any of the factual allegations or claims of statutory violations.  The Order alleges a number of issues, including the following:

  • From June 2020 to September 2020, the CEO engaged in a public relations campaign through social media posts and television/podcast appearances that were aimed at inflating and maintaining the Company’s stock price by making material misrepresentations to investors regarding the Company’s capabilities, technology, reservations, products and commercial prospects.
  • The Company did not have adequate disclosure controls or procedures over the CEO’s social media posts and appearances.
  • The CEO did not consult with anyone at the Company before publishing Company-related information. No one at the Company reviewed the CEO’s social media posts prior to publication and the Company only learned of the CEO’s interviews after they aired.
  • No one at the Company corrected the CEO’s false statements after they were made. The Company did not design, implement or maintain disclosure controls or procedures to assess whether the information the CEO published via social media and television/podcast appearances was required to be disclosed in the Company’s Exchange Act reports. The Company did not have processes in place to ensure that information published by the CEO was communicated to the Company’s management with enough time to make decisions regarding these disclosures.

Most of these allegedly false and misleading statements were made by the CEO at the time the Company’s securities were being offered or sold pursuant to the Company’s registration statements relating to the public merger and to the relevant parties’ exercise of their post-merger registration rights.  The focus on disclosure controls and procedures is an important reminder for any public company, and, perhaps more so for a target company contemplating a business combination with a SPAC.  Similarly, the focus on social media statements made by or attributable to a company’s executive officer and the need for controls relating to these and aligning these with the company’s disclosures also is important for any public company.

A copy of the Order may be viewed here.

The Mayer Brown “Deciding Among Exempt Offering Alternatives” comparison chart is now updated to reflect the amendments to various offering exemptions that became effective in 2021.  In one easy-to-read presentation, issuers and financial intermediaries can compare the elements of ten different exempt offering alternatives.  The chart covers, among other things, dollar limits, filing requirements, restrictions on the manner of offering, and resale restrictions.