On December 19, 2023, the Fifth Circuit vacated the SEC’s Share Repurchase Disclosure Modernization rule (the “Repurchase Rule") in its entirety. The Repurchase Rule, discussed further in our Client Alert, would have required companies to disclose objectives or rationales and certain additional information for all share repurchases conducted during the quarter on Form 10-Q and Form 10-K and required quarterly disclosure regarding a company’s adoption or termination of any Rule 10b5-1 trading plans.
Disclosure
SEC Stays Effectiveness of New Buyback Disclosure Rule; Fifth Circuit Denies SEC’s Request for Additional Time to Correct Rules
On November 22, 2023, the SEC announced that it had issued an order indefinitely postponing the effectiveness of the Share Repurchase Disclosure Modernization rule (the “Repurchase Rule"), pending further SEC action. At the same time, the SEC asked the Fifth Circuit for additional time to respond to the court’s order that the SEC correct deficiencies in the Repurchase Rule by November 30. The court denied that motion on November 26. As a result, the SEC has until November 30 to correct the deficiencies the court had found with the SEC’s rulemaking, after which we expect the court will consider a renewed motion from the petitioners to vacate the Repurchase Rule.
SEC Rolls Out Enforcement Sweep Against Delinquent Filers Ahead of Recent 13D/G Amendments
Late last month, shortly before adopting amendments to Regulation 13D/G, the Securities and Exchange Commission (“SEC") announced civil charges against several officers, directors, and major shareholders of public companies for failing to satisfy their timely reporting obligations. The SEC also charged the affiliated public companies for contributing to the reporting failures by insiders.
UPDATE: California Governor Signs Climate Legislation Into Law, But Signals Changes To Come
On October 7, 2023, California Governor Gavin Newsom signed into law Senate Bill 253, the Climate Corporate Data Accountability Act (“SB 253") and Senate Bill 261, Greenhouse Gases: Climate-Related Financial Risk (“SB 261"). The legislation imposes extensive new climate-related reporting requirements on any public or private U.S. business entity with annual revenues over $1 billion and $500 million (for SB 253 and SB 261, respectively) doing business in the state. A detailed discussion of each bill is available in our recent client alert.
SEC Desktop Calendar 2024 – Now Available
To continue assisting US companies with planning for SEC reporting and capital markets transactions into 2024, 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).
Preparing for a Potential Government Shutdown: Initial Impacts on SEC Operations
A looming partial shutdown of the federal government is on track to occur at 12:01 a.m. ET on Sunday, October 1, 2023, if Congress is unable to reach agreement on legislation funding the government. The SEC Division of Corporation Finance (the “Division”) announced that in the event of a government shutdown, the SEC’s “activities will be extremely limited” and specifically, that it would not be able to accelerate the effectiveness of registration statements. The Division advised that, to the extent possible, registrants with pending registration or offering statements that have satisfied the requirements to request acceleration of the effective date should consider requesting effectiveness or qualification while the Division continues its normal operations.
Another Batch of SEC Staff Guidance on Rule 10b5-1 Amendments
On August 25, 2023, the staff of the Division of Corporation Finance (the “Staff") of the Securities and Exchange Commission (the “SEC") issued five new Compliance and Disclosure Interpretations (“C&DIs") regarding the SEC’s recent Exchange Act Rule 10b5-1 amendments. The new C&DIs address how to calculate the required cooling-off period; how 401(k) plans interact with the Rule 10b5-1 affirmative defense in certain circumstances; when the Rule 10b5-1 check box on Form 4 applies; and when disclosure of plan adoption and termination is required.
Summary of Public Company Cybersecurity Disclosure Rules
On July 26, 2023, the Securities and Exchange Commission (“SEC” or “Commission”), in a 3-to-2 vote, adopted a final rule requiring the disclosure of material cybersecurity incidents and cybersecurity risk management, strategy, and governance by public companies, including foreign private issuers. A two-page summary of the final rule is attached for your reference.
Form 10-Q Updates and Reminders
As many companies prepare their quarterly reports on Form 10-Q for the quarter ended June 30, 2023, we offer the following observations and reminders regarding new disclosure requirements taking effect for this reporting period, as well as risk factor considerations that may be relevant to upcoming Form 10-Q reporting. For convenience, this publication also includes a summary of certain upcoming compliance dates for public companies.
Data Verification Period for New ISS Environmental & Social Disclosure QualityScore Questions Open from July 10 until July 21, 2023; Companies Should Log On Soon and Validate Their Information
A data verification period for Institutional Shareholder Services’ (ISS) new Environmental & Social Disclosure Quality Score questions opened for companies on July 10, 2023 and will remain open until July 21, 2023. The data verification process reflects a comprehensive update to ISS’s Environmental & Social Disclosure QualityScore scoring methodology, which ISS previewed in April 2023 and elaborated on in a June 2023 announcement.