Securities Regulation and Corporate Governance


SEC Extends Conditional Exemptions From Reporting and Proxy Delivery Requirements for Public Companies Affected By COVID-19 For Reports due on or before July 1, 2020 4/1/2020

​On March 25, 2020, the Securities an​d Exchange Commission (the “Commission") announced (available here) that it is providing a 45-day extension for companies to file certain disclosure reports that would otherwise have been due on or before July 1, 2020 (Order available here).  This is an extension of the conditional reporting relief covered by the Commission's relief (Original Order available here) for certain public company filing obligations under the federal securities laws, issued on March 4, 2020 (as previously discussed in our post here, and updated here), to companies impacted by the novel coronavirus disease 2019 (“COVID-19"). In addition, the Commission's Division of Corporation Finance (the “Division") issued on March 25, 2020 its current views regarding disclosure considerations and other securities law matters related to COVID-19 (available here).

Relief from Filing Requirements

The Commission provided conditional relief in the form of an exemption from any requirement to file or furnish certain materials with the Commission.  Specifically, the exemption covers filings made under the following provisions of Securities Exchange Act of 1934, as amended (the “Exchange Act"): Sections 13(a), 13(f), 13(g), 14(a), 14(c), 14(f), 15(d), Regulations 13A, 13D-G (except for those provisions mandating the filing of Schedule 13D or amendments to Schedule 13D), 14A, 14C and 15D, and Rules 13-f-1, and 14f-1.  This includes Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, among others. This also includes proxy statements that are required to be filed within 120 days after fiscal year-end by companies relying on General Instruction G(3) of Form 10-K to incorporate Part III information by reference to the proxy statement.  This does not include Section 16 filings (such as Forms 3, 4 and 5), Form SD (conflict minerals reports) or Schedule 13D or its amendments.

The exemption is subject to the satisfaction of the following conditions:

SEC Amends Accelerated and Large Accelerated Filer Definitions to Reduce Burdens on Smaller Reporting Companies – Effective April 27, 2020

On March 12, 2020, the Securities and Exchange Commission announced (available here) the adoption of a final rule (available hereamend

Reconsidering Poison Pills

​The public health crisis caused by COVID-19 has had a dramatic economic impact on the trading prices of U.S. companies across all industries.  As boards of directors and management teams work to stabilize their operations and deal with the myriad issues caused by the pandemic, we have witnessed a number of opportunistic shareholder activists accumulating stakes in publicly traded targets.  In the current environment, boards and their advisors should take, and several already have taken, a fresh look at the implementation of a shareholder rights plan (aka “poison pill"). 

Rights plans were a permanent fixture in most public companies' defensive profile until the turn of century, when various governance and proxy advisory groups began an effective campaign to pressure companies into letting expire, or terminating, their rights plans.  This is reflected in the fact that, according to SharkRepellent, only approximately 1% of companies in the S&P 500 had an active rights plan in place as of March 1, 2020, while around the year 2000 approximately 60% of the S&P 500 had one.  Instead of maintaining standing long-term rights plans as a general defensive measure, many companies have kept rights plans in draft form “on the shelf"—ready for implementation if needed.  Under the existing extraordinary market conditions, companies in particularly affected sectors should evaluate the advisability of activating on-the-shelf plans.

In assessing whether to activate a rights plan, companies should consider the following:

  • Presence of Activist:  Companies that already have an activist in their stock should closely monitor for potential accelerated accumulations.  We recommend that boards take prompt action in the event there is a clear indication that the activist is proceeding with any aggressive accumulation of additional shares.

  • Schedule 13D:  Federal securities rules and regulations require an activist or hostile bidder to publicly file a Schedule 13D within ten days after crossing the 5% ownership threshold.  However, after the initial threshold is crossed, accumulations can continue during the ten-day filing window, such that the buyer could launch its public campaign after having acquired an ownership stake well over the 5% threshold.  This is particularly important to consider for companies that are seeing increased trading volumes that might facilitate rapid accumulations of large blocks of stock.  Companies should also keep in mind that currently SEC rules do not require the aggregation of certain derivative instruments in computing whether the 5% threshold has been crossed, a loophole often used by professional activists to conceal their economic exp...
Coronavirus Disease 2019 Update: Impact under Nasdaq Rules of SEC Relief to Affected Companies

On March 8, 2020, we discussed on a post (available here) about the announcement (available hereby the Securities and Exchange Commission (the “Commission”) that 

SEC Provides Conditional Regulatory Relief and Additional Disclosure Guidance for Companies Affected by the Coronavirus Disease 2019 (COVID-19)

On March 4, 2020, the Securities and Exchange Commission (the “Commission”) announced (available herethat it is providing conditional regulatory relief (Order available herefor certain filing obligations under the federal securities laws to 

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SEC Amends Rules to Encourage Issuers to Conduct Registered Debt Offerings

On March 2, 2020, the Securities and Exchange Commission (the “Commission”) announced (available here) the adoption of amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees, in an effort to “improve the quality of disclosure and increase the likelihood that issuers will conduct debt offerings on a registered basis."

Consistent with the Commission’s ongoing effort

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Direct Listing Update: Revised Proposal for Primary Offerings


On December 3, 2019, Gibson Dunn published A Current Guide to Direct Listings discussing, among other things, a proposal submitted to the U.S. Securities and Exchange Commission (SEC) by the New York Stock Exchange (NYSE)that would permit a privately-held company to conduct a direct listing in connection with a primary offering. On December 11, 2019, the NYSE withdrew its proposal (as reported in An Interim Update on Direct Listing Rules) and was expected to submit a revised proposal consistent with past proposals related to direct listings...

SEC Announces Proposed Amendments to MD&A and Guidance on Key Performance Indicators and Metrics; Commissioners Debate Addition of Sustainability Disclosure Requirements

On January 30, 2020, the Securities and Exchange Commission (the SEC) issued proposed amendments to simplify the requirements of Regulation S-K and an interpretative release relating to Management’s Discussion and Analysis (MD&A).

Proposed Amendments to Regulation S-K

The SEC announced (available here) that it had voted to propose amendments to modernize, simplify and enhance certain financial disclosure requirements under Regulation S-K, in order to focus on a principles-based disclosure framework.

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Considerations Regarding Exclusion of Earliest Year From MD&A in the 10-K

Companies preparing their 2019 Form 10-K are mindful that, under the relatively new revision to Instruction 1 to Item 303(a) of Regulation S-K adopted by the SEC in March 2019, a registrant may omit from MD&A a discussion of the earliest of the three years of financials included in the 10-K if such discussion was included in a prior filing with the SEC.  (See our client alert on this here.) On January 24, 2020, the Division of Corporation Finance issued three new Compliance and Disclosure Interpretations (C&DIs) (available here) addressing common questions that have developed regarding Instruction 1 to Item 303(a).

​Question 110.03 reiterates the simple point that a registrant may not omit a discussion of the earliest of three years from its current MD&A if it believes a discussion of that year is necessary to an understanding of its financial condition, changes in financial condition and results of operations.  This is consistent with the adopting release (available here), which stated:  “Although a discussion of the earliest year of the financials could in some circumstances be material, in many cases the entirety of the discussion of the earliest year that was presented in the MD&A of a prior filing would not need to be reiterated if, in management’s view, that discussion is not necessary to understand the financial condition, changes in financial condition, and results of operations.  This is the standard that applies to all of MD&A, and our amendments do not change that standard.” When determining whether to omit the earliest year discussion, a registrant should analyze whether the entirety of the discussion of its financial condition and operating results from three years ago (e.g., 2017 for the 2019 10-K), either as previously reported or updated to reflect trends or developments, is necessary to understand its financial condition, changes in financial condition and results of operations.  If so, that discussion should be included in the 10-K.  If not, a registrant may determine to address only the most recent two years in MD&A and, if necessary, to comment on any specific aspects of its third-year financial results needed to understand its financial condition, changes in financial condition and results of opera...

Considerations for Preparing Your 2019 10-K

In a client alert published today (available here)we offer our observations on new developments and recommended practices to consider in preparing the Annual Report on Form 10-K.  In particular, given the U.S. Securities and Exchange Commission’s latest enforcement actions and recent adoption of amendments impacting disclosures in Form 10-K, there are a number of important substantive and technical considerations that registrants should keep in mind when preparing their 2019 Forms 10-K.


Our thanks to Jonathan Sapp in Dallas and David Korvin in Washington D.C. for their assistance in preparing the client alert.


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Current thoughts on development and trends in securities regulation, corporate governance and executive compensation published by Gibson Dunn.

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