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Our public company clients face continuously evolving regulatory requirements, legal obligations and corporate governance challenges and trends. We advise US and non-US public companies on their day-to-day affairs, crisis and other special situations and all aspects of their compliance with the US securities laws and the listing requirements of the major US exchanges.
Table of Contents
Current Issue
SEC Amends Rule 701 and Solicits Public Comments on Further Changes to Rule 701 and Form S-8 in a Concept Release
On July 18, 2018, the Securities and Exchange Commission ("SEC") issued final rules to amend Rule 701(e) of the Securities Act of 1933 (the "Securities Act") to raise the threshold value that triggers the requirement to deliver additional disclosure to investors when an unlisted issuer, which may include private domestic companies and foreign private issuers ("FPIs") listed in home jurisdictions, issues securities pursuant to a compensatory arrangement in reliance on an exemption from the registration requirements under Rule 701. In addition, the SEC issued a concept release soliciting comments on possible ways to modernize its rules related to compensatory securities offerings in light of various recent developments, such as proliferation of the so-called "gig economy".
The Consequences of Inaccurate Perquisite Disclosure
On July 2, 2018, the Securities and Exchange Commission ("SEC") issued a cease-and-desist order finding that The Dow Chemical Company’s (“Dow”) disclosure of executive perquisites in its annual proxy statements from 2013 to 2016 understated its disclosed perquisites and omitted disclosure of approximately $3 million worth of perquisites received by its CEO from 2011-2015.
New and Proposed Rules on Smaller Reporting Companies, XBRL and Whistleblower Program
On June 28, 2018, the Securities and Exchange Commission ("SEC") approved several final rules and rule proposals that together represent material progress toward many SEC priorities.
SEC Insider Trading Charges Against Equifax Insider Highlight Need for Proper Policies and Procedures Related to Cybersecurity and Insider Trading
On June 28, 2018, the Securities and Exchange Commission ("SEC") charged Sudhakar Reddy Bonthu, a former software engineering manager at Equifax, with insider trading, alleging that Bonthu traded on confidential information he received while creating a website for consumers impacted by the company's September 2017 data breach, which exposed Social Security numbers and other personal information of approximately 148 million US customers.
SEC Fines Yahoo $35 Million for Failure to Timely Disclose a Cyber Breach
On April 24, 2018, the Securities and Exchange Commission (the "SEC") announced that Altaba Inc. f/d/b/a Yahoo! Inc. ("Yahoo") agreed to pay a $35 million penalty to settle charges that it misled investors by failing to disclose a 2014 personal data breach impacting more than 500 million user accounts. This is the SEC's first enforcement action for failure to make timely disclosure regarding cybersecurity risks or cyber incidents. The proceeding follows the SEC’s recent release of updated cybersecurity disclosure guidance for reporting companies (the “New Guidance”) and reinforces the fact that the agency is focused on companies' cybersecurity disclosure practices.
ISS Updates Its US Proxy Voting Research Procedures & Policies FAQs
On March 29, 2018, Institutional Investor Services ("ISS") updated its US Proxy Voting Research Procedures & Policies frequently asked questions ("FAQs") . While the 2018 US proxy season is well underway, these updated FAQs provide helpful information to companies, particularly with respect to engagement with ISS' research analysts, as they prepare for the receipt of their ISS reports in advance of their upcoming shareholder meetings.
Supreme Court Limits Scope of Anti-Retaliation Protections for Whistleblowers Under Dodd-Frank: Rules That Protections Only Apply to Whistleblowers Who First Report Directly to the SEC
On February 21, 2018, in Digital Realty Trust, Inc. v. Somers, the United States Supreme Court (the "Court") unanimously held that whistleblowers are not protected by the anti-retaliation provision and thus not entitled to the related incentives of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") unless the whistleblower first reports the securities law violation directly to the Securities and Exchange Commission (the "SEC"). The Court ruled against an employee who reported to senior management but did not file an administrative complaint or report to the SEC directly, which would have earned him anti-retaliation protection under Dodd-Frank. The Court’s decision resolves a split among the Second, Fifth and Ninth Circuits.
SEC Issues Interpretive Guidance on Public Company Cybersecurity Disclosures: Greater Engagement Required of Officers and Directors
On February 21, 2018, the Securities and Exchange Commission ("SEC") issued an interpretive release providing long-awaited guidance (the "New Guidance") to assist public companies in preparing disclosures about cybersecurity risks and incidents. Significantly, the New Guidance discusses cybersecurity and its related disclosure requirements not merely in terms of network threats and vulnerabilities, but as a key element of enterprise risk management in which program development and oversight responsibilities move straight "up the corporate ladder" to officers and directors.
BlackRock Publishes Updated Proxy Voting Guidelines
BlackRock, Inc. ("BlackRock") recently published its updated "Proxy Voting Guidelines for US Securities". Consistent with BlackRock's recent communications related to its investment principles, the guidelines emphasize BlackRock’s focus on environmental and social risk reporting and indicate its intent to use its proxy voting power to influence corporate governance and management practices in these key areas.
Reminders for Foreign Private Issuers for the 2018 Annual Reporting Season
This memorandum outlines certain considerations for foreign private issuers ("FPIs") in preparation for the 2018 annual reporting season. Part I of this memorandum discusses new developments and practical action items for the 2018 reporting season, and Part II includes a discussion of potential regulatory developments and pending rulemaking initiatives.
Compensation Season 2018: Section 162(m) and Related Considerations Post-Tax Reform
On December 22, 2017, the Tax Cuts and Jobs Act (the "Act") was signed into law. The Act includes significant changes to the executive compensation deduction rules contained in §162(m) of the Internal Revenue Code (the "Code") that could significantly impact the way many companies design and administer executive compensation programs. As boards of directors and compensation committees begin to focus on the 2018 compensation and proxy season, there are certain key considerations related to the impact of the Act that should be taken into account.
Reminders for US Public Companies for the 2018 Annual Reporting and Proxy Season
This memorandum outlines certain considerations for US public companies in preparation for the 2018 annual reporting and proxy season. Part I of this memorandum discusses new developments and practical action items for the 2018 reporting season; Part II sets forth an overview of recent corporate governance and regulatory developments and trends; and Part III includes a brief discussion relating to upcoming regulatory developments and pending rulemaking initiatives.
US Tax Reform—Disclosure Considerations
On December 22, 2017, tax reform (the "Tax Act")1 was signed into law. The Tax Act will have significant implications for companies, including on their accounting and associated disclosure, as discussed below. The SEC’s Office of the Chief Accountant and the Division of Corporation Finance ("Corp Fin") have each issued guidance to aid companies in their disclosures addressing the accounting impact of the Tax Act.
2017 Issue
ISS Releases 2018 Voting Policy Updates
SEC Releases Timely Guidance on Shareholder Proposals
ISS Issues Proposed Policy Changes for 2018 Proxy Season
SEC Proposes Amendments to Modernize and Simplify Disclosure Requirements in Regulation S-K
The SEC's New Guidance Provides Additional Flexibility for Compliance With CEO Pay Ratio Disclosure
No Payday for Objecting Stockholders as Delaware Supreme Court Reverses Appraisal Ruling
Conflict Minerals Update – SEC Releases Guidance Following District Court Decision
Certain Considerations Relating to Virtual Shareholder Meetings
Reminders for Foreign Private Issuers for the 2017 Annual Reporting Season
Reminders for US Public Companies for the 2017 Annual Reporting and Proxy Season
2016 Issue
"Golden Leash" Disclosure Rule
Delaware Court of Chancery Finds Accepting Tender
New Proposed Rules on Curbing Wall Street
DOL Issues Final Fiduciary Rule
SEC Takes Issue with Employee Confidentiality
2015 Issue
New Guidance On Exclusions Under Rule 14a-8
Delaware Supreme Court Upholds Rural/Metro Decision
SEC Adopts Final Rules on CEO Pay Ratio Disclosure
Delaware Corporation Law Amendments Address Fee-Shifting and Exclusive Jurisdiction Provisions
SEC Proposes Broadened Rules on Clawback of Incentive-Based Compensation
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