In Case You Missed It - Interesting Items for Corporate Counsel - January 2017

Stoel Rives LLP

Stoel Rives LLP

  1. The SEC published a white paper about Regulation A+, What Do We Know So Far?, here. Since changes to Regulation A in June 2015, there have been 147 Regulation A offerings, seeking $2.6 billion, that have raised about $190 million. The SEC also published a report about the outcomes of investing in over-the-counter stocks here (generally, “poor”). Meanwhile, the North American Securities Administrators Association published for public comment a model statute and rules for Tier 1 Regulation A offerings, here.
  2. The Sustainability Accounting Standards Board, which is not in any way shape or form associated with the Financial Accounting Standards Board, published its first State of Disclosure Report on the disclosure of environmental, social and governance issues (see here). You must purchase a full-access pass to get the full report, which we’re not doing, but the gist is:
    • Lots of companies (81%) include some disclosure about SASB topics, which SASB claims is “a clear indication that companies acknowledge the majority of the sustainability factors identified in SASB standards are currently having—or are reasonably expected to have—material impacts on their business.” (Our suspicion is that most disclosures are in the risk factors section of businesses, and thinking that reference to these factors is a clear acknowledgment by issuers of their materiality is wishful.)
    • Most disclosure (53%) is boilerplate and not specific to the issuer.
  3. The Financial Stability Board, also in no way related to FASB, released its recommendations on climate-related financial disclosures here, generally suggesting that disclosures be improved and made more useful to understanding risks.
  4. The Department of Labor issued guidance, here, that among other things clarifies when ERISA plan fiduciaries may consider environmental, social and governance issues when voting or otherwise engaging companies. Basically, whenever there is a “reasonable expectation that such monitoring or communication with management, by the plan alone or together with other shareholders, is likely to enhance the value of the plan's investment in the corporation, after taking into account the costs involved.”
  5. Although many are anxious about Trump appointees and the havoc they anticipate his Administration will wreak on the environment, at least some are hopefully pointing to SEC Chair nominee Jay Clayton’s name on a client alert published by Sullivan & Cromwell, in which clients are advised to consider whether their disclosure about climate change is adequate, as a sign that he may not be all that bad. See, e.g., here. Although horrified at the idea that someone, somewhere might predict our editorial staff’s political views based on prior summaries of SEC rules ("Snarky comments about conflict mineral disclosure rules suggest ICYMI staff likes Congolese warlords!”), we are not horrified by Mr. Clayton’s nomination. A transactional lawyer at a respected law firm familiar with how SEC rules work and affect public companies, investors and capital formation . . .. OK. Mr. Clayton will likely endure criticisms from the left for representing large companies and not “the little guy,” working on Wall Street, having a spouse affiliated with Goldman Sachs, and generally being successful; but who knows, perhaps Democrats will instead elect to keep some outrage powder dry for Trump nominees who deserve it, or for the next infantile Presidential tweet that (unless you can’t chug the Kool-Aid fast enough) you just know is coming.
  6. Generally, we don’t spend much time speculating about potential legal and regulatory changes, but plenty of people do. A few resources that predict what, exactly, a Trump Administration might do to achieve its well-considered goal to Make America Great Again are here, here and here (corporate governance and securities regulation); here, here, and here (tax plan); here (estate tax); here (export tax); here (financial services industry); here (insurance industry); here (FCPA); here (private equity outlook); and here (Dodd Frank repeal).
  7. A view on the volatile M&A environment—uncertainty about potential Trump policies and their effect on foreign investment (see, e.g., here), say, or Brexit and worldwide political unrest—and speculation on whether MAC-outs will be an increased focus of dealmakers is here. And speaking of, a survey of MAC clauses in acquisition agreements is here.
  8. Other looks ahead to 2017 include:
    • E&Y’s top priorities for boards in 2017, here.
    • Preparation for the 2017 proxy season, here and here.
    • Potential changes to executive compensation practices, here.
    • FINRA’s 2017 Regulatory and Examination Priorities Letter, here.
  9. Institutional Shareholder Services and Glass Lewis served up a host of items in the last month, including:
    • Updated voting policies, see here.
    • Updated ISS FAQs on equity compensation plans, here and executive compensation policies, here.
    • A summary of ISS’s methodology for evaluating equity compensation plans here.
  10. The new year always occasions retrospectives about the significant events of the prior year. Just a few:
    • The top 10 D&O stories of 2016 are here.
    • A brief look back at 2016 M&A activity, and a look forward, is here.
    • Three key securities litigation developments in 2016 are here.
    • A review of the IPO market in 2016 is here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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