KMK Law Corporate & Securities Blog

On October 27, 2010, the Financial Accounting Standards Board met to further discuss the timeline for adoption of its Exposure Draft of a proposed Statement, Contingencies (Topic 450), Disclosure of Certain Loss Contingencies.  For an overview of this Exposure Draft and the events leading up to its issuance, please see our previous blog on this subject.

On October 18, 2010, the SEC released proposed rules on "Shareholder Approval of Executive Compensation and Golden Parachute Compensation" which address three separate shareholder votes mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act for annual meetings of shareholders conducted on or after January 21, 2011.

Yesterday, the SEC decided to stay the effectiveness of the proxy access rules pending resolution of a petition for review filed in connection with this lawsuit filed by the Business Rountable and U.S. Chamber of Commerce.  As a result, proxy access will not take effect in 2010 and its potential applicability to the 2011 proxy season is in limbo.

The Business Roundtable and U.S. Chamber of Commerce have filed a lawsuit in the U.S. Court of Appeals for the D.C. Circuit to invalidate the SEC’s recently-adopted proxy access rules. 

This week, the SEC adoped final rules on proxy access which will require companies to provide certain shareholders or shareholder groups the opportunity to nominate candidates for boards of directors and to include information in the company's proxy materials about, and the ability to vote for, these shareholder nominees.

The Dodd-Frank Wall Street Reform and Consumer Protection Act immediately revised the net worth test for determining whether an individual investor is an “accredited investor” for purposes of Regulation D and Section 4(6) of the Securities Act of 1933. Specifically, as revised, prospective investors can no longer include the value of their primary residence for purposes of satisfying the $1 million net worth test. Historically, many investors have relied on the value of their homes for purposes of qualifying as an accredited investor. This immediately effective provision applies to offerings that are already in progress, including those that have had initial closings.

On July 20, 2010, the Financial Accounting Standards Board issued a new Exposure Draft of a proposed Statement, Contingencies (Topic 450), Disclosure of Certain Loss Contingencies. The FASB has proposed various amendments to Topic 450, formerly known as FASB Statement No. 5, in response to investor concerns about the inadequacy of information currently available regarding the likelihood, timing and amount of future cash flows associated with loss contingencies.

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law.

The Senate recently passed the Consumer Financial Protection Act of 2010 and, like the House financial reform legislation passed back in December, it has a lot to say on corporate governance and executive compensation.

The Patient Protection and Affordable Care Act adds a new provision to the Internal Revenue Code that could provide a significant benefit to small and mid-size companies in the biotechnology industry.  The Act, which was signed by President Obama on March 23, authorizes the Secretary of the Treasury to award up to $1 billion in qualifying therapeutic discovery project credits in 2009 and 2010.  The credit is equal to 50% of an eligible taxpayer’s qualified investment in a qualifying therapeutic discovery project.