|Update on Changes in SEC Commissioners|
On July 18, 2022, the Securities and Exchange Commission (“SEC”) announced that Jaime Lizárraga was sworn in as the SEC’s newest Commissioner following the departure of Allison Herren Lee on July 15. The current SEC Commissioners are as follows, in order of reverse seniority:
Commissioner Jaime Lizárraga is returning to the SEC after a lengthy career in public service, serving in roles as Senior Professional Staff Member/Director of Legislative Affairs for the Democratic staff of the House Financial Services Committee, Deputy to the Assistant Secretary of Legislative Affairs at the U.S. Department of the Treasury, and Deputy Director of the SEC’s Office of Legislative and Intergovernmental Affairs. More recently, he served as Senior Advisor to Speaker of the House Nancy Pelosi.
Commissioner Lizárraga’s term expires on June 5, 2027.
Commissioner Mark Uyeda was sworn in as a Commissioner in June 2022 continuing his long career at the SEC. He has served on the staff of the SEC since 2006, including as Senior Advisor to Chairman Jay Clayton, Senior Advisor to Acting Chairman Michael S. Piwowar, Counsel to Commissioner Paul S. Atkins, and various staff positions in the Division of Investment Management. At the time of his appointment, he was serving as securities counsel to the Senate Banking Committee’s minority staff. Prior to joining the SEC, he served as Chief Advisor to the California Corporations Commissioner and was an attorney at K&L Gates and O’Melveny & Myers LLP.
Commissioner Uyeda’s term expires on June 5, 2023.
Chair Gary Gensler was sworn in as Chair of the SEC in April 2021. Before joining the SEC, Chair Gensler was most recently Professor of the Practice of Global Economics and Management at the MIT Sloan School of Management, Co-Director of MIT’s Fintech@CSAIL, and Senior Advisor to the MIT Media Lab Digital Currency Initiative. From 2017-2019, he served as chair of the Maryland Financial Consumer Protection Commission. Chair Gensler also served as chair of the U.S. Commodity Futures Trading Commission, leading the Obama Administration’s reform of the $400 trillion swaps market, Senior Advisor to U.S. Senator Paul Sarbanes in writing the Sarbanes-Oxley Act (2002), and was Under Secretary of the Treasury for Domestic Finance and Assistant Secretary of the Treasury from 1997-2001. Prior to his public service, Gensl...
|Now Available: SEC Desktop Calendar for 2023|
To continue assisting US companies with planning for SEC reporting and capital markets transactions into 2023, we offer our annual SEC Desktop Calendar. This calendar provides both the filing deadlines for key SEC reports and the dates on which financial statements in prospectuses and proxy statements must be updated before use (a/k/a financial staleness deadlines).
Please note the SEC has proposed new rules on share repurchases and beneficial ownership reporting deadlines that have yet to be finalized. The final rules, if adopted, may affect certain future filing deadlines, and we will provide an updated calendar accordingly.
You can download a PDF of Gibson Dunn's SEC Desktop Calendar for 2023 at the link below.
Gibson Dunn has a preeminent capital markets practice. Our capital markets group is consistently ranked among the top firms for complexity and value of the capital markets matters in which we are involved, both domestically and internationally. Through our regular participation in a variety of IPOs and other offerings, Gibson Dunn has access to a wealth of transaction data, market intelligence and practical, actionable experience. We offer clear advice on risks and opportunities. For access to resources, publications and replays of webcasts, please visit Gibson Dunn's Capital Markets Practice Center.
Gibson Dunn is consistently recognized as having one of the leading Securities Regulation and Corporate Governance practices in the United States. We regularly represent public and private companies of all sizes on a variety of disclosure, accounting and securities regulation issues, as well as on shareholder activism. We also advise senior management, boards of directors and their audit, compensation, governance and special committees on a wide range of issues relating to board and committee operation, fiduciary duties, conflicts of interest and relationships with shareholders. This group includes a deep bench of lawyers who are dedicated to specific areas of securities regulation, governance and disclosure practices. Our SRCG-dedicated lawyers work seamlessly with our Capital Markets lawyers to deliver the highest quality service and forward-thinking advice on the latest developments. For more information and resources about current developments in securities regulation, corporate governance and executive compensation, please visit Gibson Dunn's
|Updated Summary of Select Director Education Opportunities Available|
Gibson Dunn's summary of director education opportunities has been updated as of July 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 additional opportunities as well as updates to the programs offered by organizations that have been included in our prior summaries.
Thank you to summer associate Ruoqi Wei for her assistance with this quarter's update.
|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 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 Kim; Julia 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 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 Deadline||Proposed Deadline|
|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 securities||5 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 ineligibility||5 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 occurs||1 business day after the date on which a material change occurs|
|Qualified Institutional Investors|
(under Rule 13d-1(b))
|45 calendar days after the last day of the calendar year in which beneficial ownership exceeds 5% of a covered class of equity securities, or 10 calendar days after the last day of the month in which beneficial ownership exceeds 10% of a covered class of equity securities||5 business days after the last day of the month in which beneficial ownership first exceeds 5% of a covered class of equity securities|
|Annual Amendments to Schedule 13G (under Rule 13d-2(b))||45 calendar days after the the end of each calendar year in which a reportable change occurs||None|
|Monthly Amendments to Schedule 13G (under Rule 13d-2(b))|
|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: https://www.gibsondunn.com/considerations-for-preparing-your-2021-form-10-k/
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