Since January 2018, the present U.S. administration has imposed a series of tariff policies (U.S. Tariff Policies) that potentially have a wide range of consequences. In this Lexis Practice Advisor® Practice Note, partner Anna Pinedo and associates Martin Estrada and Gonzalo Go discuss disclosure trends related to U.S. Tariff Policies.
Wednesday, October 17, 2018
1:00 p.m. – 2:00 p.m. EDT
During this session, Partners Michael L. Hermsen and Anna T. Pinedo will review the accommodations available to foreign private issuers, or non-U.S. domiciled companies, that choose to access the U.S. capital markets. We will discuss assessing a company’s status as a foreign private issuer, the initial registration and ongoing disclosure requirements for foreign private issuers, liability considerations, and related topics. The speakers also will address recent developments significant to foreign private issuers, including:
- Staff guidance regarding the foreign private issuer definition;
- Areas of focus for SEC comments in anticipation of upcoming 20-Fs and 40-Fs, including cyber security matters;
- Disclosure simplification;
- Exhibits, HTML and XBRL for foreign private issuers and IFRS filers; and
- Areas of likely SEC focus in the coming months.
Wolters Kluwer will provide CLE credit. For more information, or to register for this session, please visit the event website.
In a recent speech, SEC Commissioner Kara Stein commented on the importance of cybersecurity. The Commissioner noted that encouraging adoption of written policies and procedures, voluntary frameworks and non-binding guidance was not sufficient. She noted that boards of directors have a fiduciary duty to shareholders to monitor and oversee risk, including cybersecurity oversight. She seems to suggest that just as Commission rules require disclosure regarding financial experts, it would be reasonable for there to be some disclosure as to whether boards have an independent director with expert knowledge of technology and cybersecurity. Otherwise, boards should retain experts to provide advice. The Commissioner suggests independent directors meet with the company’s chief information security officer at least twice a year in executive session. She notes that boards should assess company disclosures regarding cyber risks. Finally, she suggests that the board ought to consider how well prepared the company is to respond to a breach, the resiliency of its infrastructure, and the procedures that will be implemented to recover and resume operations.
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
Speaking at a session at the American Bar Association’s annual meeting, a representative of the Securities and Exchange Commission’s Division of Corporation Finance (Michael Seaman) provided guidance for attendees regarding areas of focus in the coming months. After reviewing some of the Commission’s recent rulemaking initiatives, including the Concept Release regarding Rule 701 and Form S-8, the recent changes to Regulation S-K to address outdated, duplicative and other similar rules, and the proposed amendments to the disclosures required by Regulation S-X Rule 3-10 and Rule 3-16, Mr. Seaman commented on ongoing and upcoming priorities. He noted that the staff is working on proposed rules that would address the statutory change that permits Exchange Act-reporting companies to undertake Regulation A offerings. There appears to be significant interest on the part of smaller public companies in relying on the exemption. Mr. Seaman cautioned that the exemption is not available to such companies until the Commission adopts final rules. He noted that the staff continues its work on proposed changes to Industry Guide 3 for financial services companies. Guide 3 requirements may be simplified in light of the disclosures required of regulated financial institutions as a result of Basel III and other standards, as well as disclosures otherwise already contained in financial statements and the accompanying notes. Consistent with remarks made by other Commission representatives, Mr. Seaman noted that the staff also is working on a concept release related to private offering exemptions intended to harmonize conditions for such exemptions. When asked whether there would be additional rulemaking in furtherance of the Commission’s disclosure-effectiveness initiative, Mr. Seaman noted that the staff continues to review other aspects of the Regulation S-K requirements, including those on which comment was sought in the Concept Release on Business and Financial Disclosure required by Regulation S-K.
As far as areas of staff comment, Mr. Seaman noted that the staff was reviewing issuer disclosure related to cyber breaches and cybersecurity and commenting on risks that were generic and did not address issuer-specific facts and circumstances, as well as on disclosures related to incidents of breaches. He also noted that the staff was reviewing dispute-resolution provisions in governing documents that may have the effect of limiting investors’ rights, such as provisions requiring mandatory arbitration, waiver of jury trial provisions, provisions related to class-action waivers, and provisions requiring a minimum ownership threshold in order to bring certain claims. In this regard, the staff was commenting on issuer disclosures related to the inclusion of such provisions in the governing documents with a focus on ensuring that such provisions are clearly explained and investors understand the risks associated with such provisions, including the limitations on remedies, as well as ensuring that issuers are addressing in their disclosures whether such provisions are enforceable and comply with the securities laws.
Mr. Seaman also mentioned a new initiative, led by the Chief Counsel’s office, with the support and involvement of other groups, to review all of the Compliance & Disclosure Interpretations for any required updates, as well as to eliminate any C&DIs that may no longer be relevant or applicable. He encouraged practitioners to provide their views regarding any C&DIs that may be confusing or problematic, as well as any areas or topics that may be appropriate to address in new C&DIs.
In June 2018, the Securities and Exchange Commission adopted amendments to the definition of “smaller reporting company.” Under the amendments a company with a public float of less than $250 million qualifies as an SRC. A company with no public float or with a public float of less than $700 million will qualify as an SRC if it had annual revenues of less than $100 million during its most recently completed fiscal year. The rules are effective as of September 10, 2018.
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.
Thursday, October 4, 2018
8:00 a.m. – 8:30 a.m. Registration & Breakfast
8:30 a.m. – 4:30 p.m. Program
4:30 p.m. – 5:30 p.m. Cocktail Reception
71 South Wacker Drive
Chicago, IL 60606
Please join Mayer Brown in Chicago for our 1st Annual Executive Compensation University.
During this full-day program, we will explore tax and securities issues impacting executive compensation and hear from leading Mayer Brown lawyers about the changing regulatory landscape as they provide practical, business-focused guidance on dealing with these challenges. This program will cover such areas as the taxation of equity awards, disclosure issues and hot topics and current trends in executive compensation, including updates on issues related to say on pay, proxy disclosure, institutional shareholders and tax reform. The event will include an ethics program focused on issues relevant to in-house counsel dealing with executive compensation and securities issues. We plan to conclude the day with a cocktail reception.
We look forward to open dialogues with our guests.
A detailed program agenda can be found here.
Registration is available here.
CLE credit is pending.