On December 18, 2018, the US Securities and Exchange Commission adopted a final rule requiring companies to disclose their hedging policies and practices for employees, officers and directors. This Legal Update discusses details of the requirements as well as related practical considerations for companies.
On December 19, 2018, the US Securities and Exchange Commission (the Commission) amended Rule 251 and Rule 257 of the Securities Act of 1933, as amended (the Securities Act), which are part of Regulation A, in order to allow companies subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act) to make offerings in reliance on the Regulation A exemption. The rule changes were mandated by the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (the Economic Growth Act).
To read more, see our Legal Update.
On December 18, 2018 the Commission published a Request for Comment on Earnings Releases and Quarterly Reports (the “Request”), which solicits public comment on both earnings releases and the frequency of periodic reporting. In the Request, the Commission notes that it is seeking to reduce administrative and other burdens for U.S. public companies without compromising investor protection.
To learn more, read our Legal Update.
On August 17, 2018, the US Securities and Exchange Commission (SEC) adopted disclosure update and simplification amendments to certain of its disclosure requirements. These amendments become effective 30 days after publication in the Federal Register. (As of today, the amendments have not been published.)
One of the amendments requires the presentation of changes in shareholders’ equity in the interim financial statements (either in a separate statement or footnote) in quarterly reports on Form 10-Q. Recognizing that the anticipated effective date of the amendment may be close to filing dates for most filers’ quarterly reports, the staff of the SEC’s Division of Corporation Finance (Staff) issued compliance and disclosure interpretation 105.09 on September 25, 2018. While reiterating that the amendments apply to all filings made after the effective date, the Staff said that it “would not object if the filer’s first presentation of the changes in shareholders’ equity is included in its Form 10-Q for the quarter that begins after the effective date of the amendments.” (Emphasis added.) As an example, the Staff indicated that if the effective date of the amendments were October 25, a calendar-year filer could omit the changes in shareholders’ equity disclosure from its September 30, 2018 Form 10-Q. The Staff also stated that a June 30 fiscal year-end filer could omit this disclosure from its September 30, 2018 and December 31, 2018 Forms 10-Q but not from its March 31, 2019 Form 10-Q.
Additional interpretations of the amendments could be coming. Interested persons should continue to look for such developments as they revise their disclosures and procedures to comply with the revised requirements.
For further information on the disclosure simplification amendments, see our Legal Update, “Capital Markets Implications of Amendments to Simplify and Update SEC Disclosure Rules,” dated August 29, 2018.
It is already that time of year when public companies should be thinking about the 2019 proxy and annual reporting season. Advance planning greatly contributes to a successful proxy season, culminating with the annual meeting of shareholders. This Legal Update highlights issues of importance to the upcoming 2019 proxy season.
We discuss the following topics:
- Pay Ratio
- Compensation Litigation and Compensation Disclosure
- Board Diversity
- Investor Stewardship Group
- Voluntary Proxy Statement Disclosure
- Shareholder Proposal Guidance
- ESG Shareholder Proposals
- Notice of Exempt Solicitations
- Proxy C&DIs
- Examination of Proxy Process
- Virtual Meetings
- Disclosure Update and Simplification
- Cybersecurity Disclosure
- Risk Factors
- Accounting Impact of Tax Reform
- Auditor Report Requirements
- Iran Disclosures
- Changes to Form 10-K Cover Page
- Exhibit Hyperlinks
The Securities and Exchange Commission (SEC) has announced a decrease in the filing fees to be paid by public companies and other issuers. Effective October 1, 2018, the first day of the SEC’s 2019 fiscal year, the filing fee rate will decrease 2.7 percent from the current rate of $124.50 per million dollars to $121.20 per million dollars for:
- The registration of securities under the Securities Act of 1933;
- The repurchase of securities in going private transactions pursuant to Section 13(e) of the Securities Exchange Act of 1934 (Exchange Act);
- Certain proxy solicitations and statements in corporate control transactions pursuant to Section 14(g) of the Exchange Act; and
- The payment of fees in connection with the Annual Notice of Securities Sold Pursuant to Rule 24f-2 under the Investment Company Act of 1940.
The fiscal year 2019 filing fee decrease follows two years of filing fee increases. Companies that are planning on submitting filings later in 2018 for which a filing fee will be paid at the time of filing may want to consider whether they have the flexibility to file after October 1, 2018, to take advantage of the filing fee decrease.
New filing and transaction fee rates for the SEC’s 2020 fiscal year will be announced by August 31, 2019.
On August 17, 2018, the US Securities and Exchange Commission (SEC) amended certain disclosure requirements that it determined to be redundant, duplicative, overlapping, outdated or superseded in light of other SEC disclosure requirements, US GAAP or changes in the information environment. Our Legal Update highlights several key amendments, discusses related practical considerations for companies and provides a table listing the SEC rules, regulations and forms impacted.
On July 18, 2018, the Securities and Exchange Commission issued a concept release soliciting public comment on potential ways to modernize compensatory offerings and sales of securities, consistent with investor protection. Specifically, the concept release requests comment on aspects of Rule 701 under the Securities Act of 1933 and on Form S-8. This Legal Update highlights key questions raised by the concept release and practical considerations for public and private companies.
The Securities and Exchange Commission has adopted amendments requiring the use of the Inline eXtensible Business Reporting Language (XBRL) format for the submission of operating company financial statement information and fund risk/return summary information. The amendments become effective 30 days after publication in the Federal Register (likely by the middle of August 2018) but provide a phased-in compliance period. Our Legal Update summarizes the new requirements and offers timing and other practical considerations.
On May 11, 2018, the staff of the Division of Corporation Finance of the US Securities and Exchange Commission issued compliance and disclosure interpretations (C&DIs) on proxy rules and related Schedules 14A and 14C. These C&DIs replace the interpretations published in the Proxy Rules and Schedule 14A Manual of Publicly Available Telephone Interpretations and the March 1999 Supplement to the Manual of Publicly Available Telephone Interpretations (collectively, Telephone Interpretations). Generally, the new C&DIs are consistent with the Telephone Interpretations, although several reflect substantive or technical changes from the Telephone Interpretations. Our Legal Update discusses those changes as well as practical considerations for companies.