KMK Law Corporate & Securities Blog

On December 11, 2019, in response to the SEC’s rejection of its initial primary direct listing proposal, the NYSE filed a revised rule change proposal that would allow issuers to sell newly issued primary shares in a direct listing. A direct listing refers to the listing of a privately held company’s stock for trading on a national stock exchange without conducting an underwritten offering, spin-off or transfer quotation from another regulated stock exchange. The proposal would delay, until 90 trading days after the direct listing, the requirement that an issuer have 400 round lot holders at the time of listing.

On November 5, 2019, the SEC proposed amendments to certain procedural requirements and resubmission thresholds under the shareholder proposal rule of Rule 14a-8.

On November 5, 2019, the SEC proposed amendments to its rules governing proxy solicitations to require proxy advisors to provide to their clients more extensive disclosure of material conflicts of interest.

On October 16, 2019, the Division issued a bulletin providing guidance on certain issues arising under Exchange Act Rule 14a-8.  The bulletin addressed the “ordinary business” exception under Rule 14a-8(i)(7), which allows a company to exclude from its proxy statement certain proposals that “deal[ ] with a matter relating to the company’s ordinary business operations.” The applicability of the exception is based on (1) the subject matter of the proposal and (2) the degree to which the proposal involves the “micromanagement” of the company. A bulletin is not a rule ...

On September 26, 2019, the SEC adopted final rules permitting all companies to gauge market interest in registered offerings (including possible initial public offerings) through “testing the waters” by reaching out to certain institutional investors before filing a registration statement. Prior to these rules, only emerging growth companies had been able to engage in this activity under provisions of the JOBS Act. New Securities Act Rule 163B will allow any issuer to engage in oral or written communications with potential investors who are (or are reasonably believed to ...

On August 8, 2019, the SEC proposed rule amendments to modernize the business, legal proceedings and risk factors disclosures that public companies are required to make pursuant to Regulation S-K. 

The proposed amendments to Items 101(a), 101(c) and 105 would focus on a principles-based approach to allow companies to address the particular aspects of these disclosures that are material to each company.  Under amended Item 101(a), companies would be required to disclose information only to the extent it is material to an understanding of the development of the company’s business.  ...

On July 31, 2019, the SEC and North American Securities Administrators Association published a staff statement on “opportunity zones” and related compliance implications under federal and state securities laws considerations.

In general, the statement indicated that interests in a “qualified opportunity zone” (QOF), which is an investment vehicle organized as a corporation or partnership to invest in qualified opportunity zone property, will be considered securities within the purview of federal and state securities laws, except under limited circumstances.

As ...

On July 12, 2019, the SEC staff published a statement seeking to encourage public companies to actively prepare for the transition away from LIBOR. Among other considerations, the SEC statement provides that such preparation should include determining current contractual exposure to LIBOR and evaluating possible alternatives to LIBOR in future contracts.  The Division of Corporation Finance also provided specific advice to public companies that they should consider disclosures relevant to investors pertaining to LIBOR’s expected discontinuation.

For more information ...

On July 1, 2019, SEC rules regarding the disclosure of hedging policies or practices became effective.  New Item 407(i) of Regulation S-K requires public companies to provide, among other items:

• A summary of the company’s hedging policies or the full text of such policies;
• The categories of hedging transactions that are either specifically allowed or disallowed;
• The effect of hedging policies on all employees and directors; and
• If no hedging policy is in effect, a statement that no such policy is in effect.

The new rule applies to proxy statements for fiscal years beginning on or ...

On April 30, 2019, the U.S. Department of Justice (“DOJ”) released new guidance detailing its evaluation of the adequacy and effectiveness of a company’s compliance program (the “Guidance”). The Guidance spells out how prosecutors examine compliance programs when deciding whether to monitor, fine or file criminal charges against a company, and we believe the 18-page document is the most comprehensive and detailed corporate compliance document that informs all businesses, whether or not party to a DOJ enforcement action. The Guidance includes a step-by-step ...