In Case You Missed It - Interesting Items for Corporate Counsel - January 2016
Stoel Rives LLP
(re)proposed Resource Extraction Disclosure Rules
. Recall, these rules are required by the Dodd-Frank Act and were adopted in 2012, vacated in 2013 by the U.S. District Court in D.C., and the subject of a lawsuit and court order that the SEC adopt revised rules in 2015. A more detailed history is
, as is speculation that the new rules will be challenged again.
And speaking of Dodd-Frank, the first Dodd-Frank-mandated
accredited investor study
. In addition to a review of the history of the definition of “accredited investor,” the report reviews alternatives to the accredited investor definition and recommends that the SEC revise financial thresholds (unchanged since 1982), introduce investment limits, and adopt other measures of financial sophistication. The recommendations echo the SEC’s Investor Advisory Committee recommendations from October 2014,
. Any change to the accredited investor definition, for good or ill, will be a big deal, and emerging companies will continue to watch potential SEC action on this topic with a wary eye.
Apropos potential securities law changes, the SEC issued an advanced notice of proposed rulemaking and a concept release,
, to seek public comment on changes to
rules governing transfer agents
, which haven’t changed since 1977. Among other things, the proposal suggests transfer agent restricted stock departments may become even more difficult to deal with by formalizing requirements that they have policies and procedures designed to achieve compliance with securities laws and regulations. (A noble goal, to be sure, which often suffers in the implementation by the 22-year-old working in the transfer agent’s restricted stock department, in our experience.)
Last month, we reported on
securities law changes
in the FAST Act (where else, but in a transportation bill?). The SEC provided its own summary of FAST’s securities law changes,
, and issued a few Compliance and Disclosure Interpretations,
The PCAOB adopted,
, new rules to require additional disclosure about a public company’s
audit engagement partner
and other accounting firms that took part in the audit. Subject to SEC approval of the new rule, auditors must file a new Form AP with the PCAOB for each audit within 35 days after the audit report is first included in an SEC filing (10 days for an IPO filing).
The New York City Comptroller issued
72 more proxy access proposals
, including repeat proposals for 36 of the 75 companies it targeted in 2015. The Comptroller released a 2015 post-season report on its shareholder activist activities,
. (Recall our summary of the results of its proxy access proposals from July 2015,
.) The Comptroller cites a CFA Institute study,
, and an SEC study,
, as evidence that proxy access increases shareholder value. Keep in mind, the Comptroller’s 2015 proposals were precatory, which is to say company shareholders voted on a proposal to ask the board to propose a bylaw amendment for the following year, although some boards just went ahead and adopted proxy access bylaw provisions rather than submit them for a shareholder vote in 2016.
ISS’s views on board implementation of proxy access proposals are included in FAQ #30 and its views on evaluating proxy access nominees are in FAQ #60 (we particularly like the phrase “additional analytical latitude,” which probably sounded sophisticated to the report drafter at the time), each one of 78
FAQs ISS published on its U.S. proxy voting policies
. ISS also released 69 FAQs relating to executive compensation,
, and 52 FAQs on equity compensation plans,
Meanwhile, Nasdaq and the Center for Capital Market Competitiveness published a 2015 proxy season survey on
public company experience with proxy advisory firms
, perhaps in an effort to highlight frustrations with the penchant of proxy advisors to get things wrong.
Cornerstone Research and NYU law school released a report,
, noting the increase in
SEC administrative actions against public companies since 2010
, and the concomitant constitutional challenges to the SEC’s ability to bring them.
If the increase in administrative actions weren’t depressing enough to public companies, the U.S. District Court in Northern California suggested in
Wadler v. Bio-Rad Laboratories
, that directors responsible for firing an employee while knowing he had reported Foreign Corrupt Practice Act violations might be “agents” of the company or the “employer” under
federal whistleblower laws
and therefore personally liable for retaliation.
And finally, to cap our foray into litigation news, the Oregon Supreme Court upheld a Delaware corporation’s adoption of
exclusive forum bylaws
, by board action immediately before announcing a merger transaction, in
Roberts v. Triquint Semiconductor
. The case is notable because Oregon may be the first state outside of Delaware to rule on the issue and because the Supreme Court’s decision corrects a contrary ruling by the lower court.