Securities Regulation and Corporate Governance


SEC Division of Corporation Finance Issues Interpretations Addressed to SPACs’ Business Combinations

​On March 22, 2022, the staff of the Division of Corporation Finance (the “Staff") of the Securities and Exchange Commission (the “Commission") issued new Compliance and Disclosure Interpretations (“C&DIs") that primarily focus on filing and disclosure issues that arise in the context of merger transactions by special purpose acquisition companies (“SPACs"). The Staff has previously addressed concerns with respect to SPACs, as discussed in our previous article, including statements addressing certain accounting, financial reporting and governance issues related to SPACs and the post-business combination public company.

The new C&DIs address the following issues related to the business combination process:

  • public communication by private target company constitutes a “solicitation" of the acquirer's shareholders subject to the proxy rules
    (see C&DI Proxy Rules and Schedules 14A/14C, Question 101.02); and
  • public communications by a private target that is not filing a proxy solicitation in connection with a proposed business combination are allowed prior to the proxy solicitation by the acquiror, under certain circumstances
    (see C&DI Proxy Rules and Schedules 14A/14C, Question 132.01);
  • public communications by an acquirer that is not filing a proxy solicitation in connection with a proposed business combination are allowed prior to the proxy solicitation by the target company, under certain circumstances
    (see C&DI Proxy Rules and Schedules 14A/14C, Send Comment to EditorSend comment to Editor
Long-Awaited SEC Rule Proposal on Climate Change Disclosure


On March 21, 2022, the Securities and Exchange Commission approved a rule proposal for new climate change disclosure requirements for both U.S. public companies and foreign private​ issuers. The SEC has posted the 500+ page Proposing Release and issued a Press Release and a Fact Sheet summarizing notable provisions. Not surprisingly, the rule proposal was approved along party lines.

These disclosure requirements, which are largely aligned with the Taskforce on Climate-related Financial Disclosures reporting framework and the Greenhouse Gas Protocol, would phase in over time based on a company's filer status and would apply to annual reports on Forms 10-K and 20-F, with material changes to be reported quarterly on Form 10-Q, and would even apply to IPO and merger registration statements.

A brief summary of the proposal appears below, and we anticipate issuing a more detailed analysis of the rule proposal in the near future.

Reg S-K Amendments

The proposed climate change disclosure requirements would amend Regulation S-K to require a new, separately captioned “Climate-Related Disclosure" section in those SEC filings listed above that would cover a range of climate-related information, including:

·      How any climate-related risks have had or are reasonably likely to have material impacts on a company's business or consolidated financial statements;
·      How any climate-related risks have affected or are reasonably likely to affect a company's strategy, business model and outlook;
·      Processes for identifying, assessing and managing climate-related risks, as well as board governance of climate-related risks and relevant risk management processes;
·      Scope 1 and Scope 2 greenhouse gas (GHG) emissions metrics, which, for accelerated and large accelerated filers only, will be subject to assurance by an independent GHG emissions attestation provider;
·      Scope 3 GHG emissions, but only if material or if the company has set a GHG emissions reduction target or goal that includes its Scope 3 emissions; and
·      Information regarding climate-related targets, goals, and transition plans, if any.

Reg S-X Amendments

In addition, the rule proposal would amend Regulation S-X to require certain climate-related financial statement metrics and related disclosures in a separately identified note to companies' audited financial statements, as well as dis...

SEC Proposes Rules on Cybersecurity Disclosure

SEC Proposes Rules on Cybersecurity Disclosure

3/11/2022 | Posted by Lori Zyskowski; Thomas KimJulia Lapitskaya

Topic: Corporate Governance ; Disclosure ; Securities Regulation

On March 9, 2022, the Securities and Exchange Commission (“SEC" or “Commission") held a virtual open meeting where it considered a rule proposal for new cybersecurity disclosure requirements for public companies, primarily consisting of: (i) current reporting of material cybersecurity incidents and (ii) periodic reporting of material updates to cybersecurity incidents, the company's cybersecurity risk management, strategy, and governance practices, and the board of directors' cybersecurity expertise, if any.

The proposal passed on party lines and the comment period ends on the later of 30 days after publication in the Federal Register or May 9, 2022 (which is 60 days from the date that the rules were proposed). Below please find a summary description of the rule proposal, as well as certain Commissioner's concerns related to the proposal.

Summary of Proposed Amendments

New Current Reporting Requirements

The proposed amendments would require current reporting of material cybersecurity incidents by adding new Item 1.05 to Form 8-K.   As is the case with almost all other Form 8-K items, Item 1.05 would require companies to disclose material cybersecurity incidents[1] within four business days. The trigger date for the disclosure is the date of the materiality determination, rather than the date of discovery of the incident, although companies are required to make a materiality determination ...

SEC Proposes Rule to Amend Beneficial Ownership Reporting

On February 10, 2022, the Securities and Exchange Commission (the “Commission") announced a proposed rule to modernize the rules governing beneficial ownership reporting, by:

  • accelerating the filing deadlines under Schedules 13D and 13G;
  • expanding the application of Regulation 13D-G to certain derivative securities;
  • clarifying when two or more persons have formed a “group" subject to beneficial ownership reporting obligations; and
  • requiring a structure, machine-readable data language for filing Schedules 13D and 13G.

    Please see below for more details on the proposed amendments.

Shorter Filing Deadlines

 Current DeadlineProposed Deadline
Schedule 13D  
Initial filing for acquisitions of more than 5% interest
(under Rule 13d-1(a))
10 calendar days after the date of the acquisition of more than 5% of a covered class of equity securities5 calendar days after the date of the acquisition of more than 5% of a covered class of equity securities
Initial filing for those who forfeit eligibility to report on Schedule 13G
(under Rules 13d-1(e), (f) and (g))
10 calendar days after the event that causes the ineligibility5 calendar days after the event that causes the ineligibility
Amendments to Schedule 13D
(under Rule 13d-2(a))
“Promptly" after the date on which a material change occurs1 business day after the date on which a material change occurs
Updated Summary of Select Director Education Opportunities Available

Gibson Dunn's summary of director education opportunities has been updated as of February 2022 and is available at the link below. Boards of Directors of public companies find this a useful resource as they look for high quality education opportunities.

This update includes a number of opportunities from additional organizations as well as updates to the programs offered by organizations that have been included in our prior summaries.

Thank you to associates David Korvin and Meghan Roll for their assistance with this month's update.

SEC Proposes Rule Changes to Shorten the Security Settlement Cycle to T+1 by March 31, 2024

​On February 9, 2022, the Securities and Exchange Commission (the “Commission") announced a proposed rule to shorten the standard settlement cycle for most broker-dealer transactions from two business days after the trade date (“T+2") to one business day after the trade date (“T+1"), while soliciting comments regarding challenges and possible approaches to achieving settlement by the end of trade date (“T+0"). To facilitate a T+1 settlement process, the Commission is proposing new requirements designed to protect investors, reduce risk between a transaction and its completion, and increase operational efficiency. The proposed rules and rule amendments would establish a compliance date of March 31, 2024.

With settlement for securities offerings to be accelerated to the trading day after pricing, issuers, underwriters and their counsel should be aware that more work should be done in advance of pricing an offering. This is of particular importance where parties are located across time zones or settlement includes additional steps (e.g., obtaining medallion guarantees).

Despite this shortened standard settlement cycle, parties would still be permitted to explicitly agree to a different settlement cycle at the time of the transaction – though it should be noted that transactions priced after 4:30 pm Eastern time will no longer automatically gain an extra day to settle.

The proposed rule would amend Rule 15c6-1 of the Securities Exchange Act of 1934 to establish a standard settlement cycle of T+1 for most broker-dealer transactions. In addition, the Commission also proposed three additional rules applicable to broker-dealers, investment advisers and central matching service providers (“CMSPs") which would improve the processing of institutional trades by accelerating the confirmation and affirmation of such trades between broker-dealers and their institutional customers. Below is a summary of the proposed rules and amendments:

  • unless expressly agreed by the parties, brokers and dealers would not be able to enter into a contract for the purchase or sale of securities (with certain exceptions) that provides for settlement later than T+1 (see amendment to Rule 15c6-1(a));
  • parties could still expressly agree to a later settlement when necessary (see Rule 15c6-1(d));
  • the proposal would remove the T+4 settlement cycle for certain firm commit...
Now Available: Considerations for Preparing Your 2021 Form 10-K

As we do each year, we offer our observations on new developments and recommended practices for calendar-year filers to consider in preparing their Form 10-K. This alert reviews the recent amendments to Regulation S-K adopted by the U.S. Securities and Exchange Commission (“SEC”) and discusses how public companies are reacting to these new requirements. In addition, it discusses other disclosure topics, including Environmental, Social, and Governance (“ESG”) issues such as human capital management, climate change, and cybersecurity, that, in light of increasing investor focus and forthcoming rulemaking, continue to be a top priority for public companies. The full memo is available at the following link:​

SEC Proposes Rules on Insider Trading, Rule 10b5-1 and Share Repurchases

On December 15, 2021, the Securities and Exchange Commission (“SEC" or “Commission") held a virtual open meeting where it considered four rule proposals, including two that are particularly pertinent to all public companies: (i) amendments regarding Rule 10b5-1 insider trading plans and related disclosures and (ii) new share repurchase disclosures rules.

Both proposals passed, though only the proposed amendments regarding Rule 10b5-1 insider trading plans and related disclosures passed unanimously; the proposed new share repurchase disclosures rules passed on party lines. Notably, these proposals only have a 45-day comment period, which is shorter than the more customary 60- or 90-day comment periods. Commissioner Roisman[1], in particular, raised concerns about the 45-day comment periods being too short, noting that the comment periods run “not only over several holidays," but “also concurrent with five other rule proposals that have open comment periods."

Below, please find summary descriptions of the these two rule proposals, as well as certain Commissioners' concerns related to these proposals.

Amendments Regarding Rule 10b5-1 Insider Trading Plans and Related Disclosures

Summary of Proposed Amendments

New Conditions to the Availability of the Rule 10b5-1(c)(1) Affirmative Defense

The proposed amendments would add new conditions to the availability of the Rule 10b5-1(c)(1) affirmative defense by:

  • imposing a 120-day cooling off period for Section 16 insiders and a 30-day cooling off period for public companies before trading can commence after a new plan adoption or a plan modification/amendment;
  • requiring Section 16 insiders to certify that they are not aware of material nonpublic information (“MNPI") and that the plan is being entered into in good faith prior to adopting a new plan or modifying/amending an existing plan;
  • at any given time, only one Rule 10b5-1 plan for open market trades in a given class of securities may be in effect (this is often referred to as overlapping plans);
  • limiting single-trade plans to one trading plan per twelve month period; and
  • requiring plans be “operated" in good faith, which is an expansion from the current “entered into" in good faith standard.
ISS Proposes and Opens Comment on Draft 2022 Voting Policy Updates

Yesterday, the proxy advisory firm Institutional Shareholder Services (“ISS") proposed and published for comment voting policy changes for the 2022 proxy season.  There are five proposed updates that would apply to U.S. companies, including two related to “Say on Climate" proposals and a third related to climate issues.

In addition, ISS is proposing (starting in 2023) to begin issuing negative voting recommendations for directors at all companies with multi-class stock structures.  Companies that went public before 2015 would no longer be grandfathered under ISS policy.  ISS is requesting comment on whether to take a similar approach for companies that have other “poor" governance practices—specifically, a classified board, or the requirement of a supermajority vote to amend the governing documents. 

The proposed U.S. policy changes are available here and are summarized below.  Comments on the proposals can be submitted by e-mail to until 5 p.m. ET on November 16, 2021.  ISS will take the comments into account as part of its policy review and expects to release final changes to its voting policies by or around the end of November.  It is important to note that ISS's final 2022 proxy voting policies may reflect additional changes, beyond those on which ISS is soliciting comment.  The final voting policies will apply to shareholder meetings held on or after February 1, 2022, except for policies subject to transition periods.

Comments submitted to ISS may be published on its website, unless requested otherwise in the body of email submissions.

The proposals for U.S. companies address:

1.     Climate-Related Management and Shareholder Proposals.  In 2021, both shareholders and management have submitted Say on Climate proposals at companies that are considered “high impact" as well as at companies that would not be considered “high impact" from a greenhouse gas emissions (“GHG") emissions perspective.  ISS is proposing voting p...

Recent SEC Amendments Bring Changes to Filing Fee Disclosure and Payment Methods

On October 13, 2021, the Securities and Exchange Commission (the “SEC") adopted amendments to modernize filing fee disclosure for certain forms and schedules, as well as update payment methods for fees related to these filings. The final rule highlighted three primary goals of the amendments: (i) update disclosure requirements related to filing fees in order to provide more certainty to filers that the proper fee was calculated and facilitate the SEC staff's review of such fee; (ii) modernize the payment method for filing fees and reduce the cost and burden on processing fee payments; and (iii) permit filers to reallocate previously paid filing fees in more situations than what was previously permitted. An overview of these changes is provided below. The amendments also contained certain technical, conforming and clarifying changes related to filing fee-related instructions and information.

The amendments will become effective January 21, 2022, with the changes to fee payment methods becoming effective May 31, 2022. The requirements for filing fee disclosures will be phased in over time as summarized below.

Forms and Schedules Impacted by the Amendments

                The amendments affect the following Securities Act forms: Form S-1, Form S-3, Form S-4, Form S-8, Form S-11, Form F-1, Form F-3 and Form F-10.  The amendments also affect the following Exchange Act schedules: Schedule 13E-3, Schedule 13E-4F, Schedule 14A, Schedule 14C, Schedule TO and Schedule 14D-1F. 

Amendments to Fee Table Location, Structure, and Content

                Location. The amendments require that fee-bearing forms include an attached exhibit with two to three tables encompassing all fee-related information. This a change from the former requirement of a single fee table on the cover page of each form.

                Structure. The amendments require that all required information for a fee calculation be provided in a structured format of Inline XBRL as provided by new Rule 408 of Regulation S-T. The amendments relating to these structure changes will be phased in over time based on filer status. Large accelerated filers must comply with the new structure for filing...

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