Disclosure

Preparing for California’s Climate Reporting Legislation – Takeaways from Recent Amendments and Early AB 1305 Reporting Trends

October 25, 2024 | Posted by Elizabeth A. Ising; Aaron K. Briggs; Cynthia M. Mabry; Michael K. Murphy Topic(s): Corporate Governance; Disclosure; Environmental/Climate Change; ESG

Last year, California adopted a trio of laws requiring certain public and private companies to provide climate-related disclosures. As a quick refresher:

Climate Corporate Data Accountability Act (Senate Bill 253). For U.S. companies doing business in California with annual revenues over $1 billion, Senate Bill (“SB”) 253 requires them to report their greenhouse gas (“GHG”) emissions annually beginning in 2026 (for Scope 1 and 2 GHG emissions) and 2027 (for Scope 3 emissions).
Greenhouse Gases: Climate-related Financial Risk (Senate Bill 261). For U.S. companies doing business in California with annual revenues over $500 million, SB 261 effectively requires them to begin biennial reporting in 2025 regarding their “climate-related financial risks” and adopted measures to reduce or adapt to them.
Voluntary Carbon Market Disclosures (Assembly Bill 1305). For companies that make certain environmental claims, adopt particular environmental goals, or purchase, use, market, or sell voluntary carbon offsets in California, Assembly Bill (“AB”) 1305 requires annual website disclosure providing support for those claims, goals, or offsets.

Early Insights from the Insider Trading Policies Filed by S&P 500 Companies under the SEC’s New Exhibit Requirement

September 9, 2024 | Posted by Aaron K. Briggs; Thomas J. Kim; Brian J. Lane; Julia Lapitskaya; James J. Moloney; Ronald O. Mueller; Michael A. Titera; Lori Zyskowski Topic(s): Audit Committee; Capital Markets; Corporate Governance; Disclosure; Securities Regulation

I. Introduction

For fiscal years beginning on or after April 1, 2023, domestic public companies are required to disclose whether they have adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of their securities by their directors, officers and employees, or the companies themselves, and if so to file those policies and procedures as an exhibit to their annual reports on Form 10-K.[1] While calendar year companies must comply with these requirements in their Form 10-K for, or proxy statement following, the fiscal year ending December 31, 2024, 49 S&P 500 companies had addressed these requirements in filings as of June 30, 2024.[2]

Important Reminder to 13F Filers – New Vote Reporting Disclosures Required on Form N-PX (due August 31, 2024)

July 30, 2024 | Posted by James J. Moloney; Brian J. Lane Topic(s): Disclosure; Investment Act/Investment Advisors Act; Say on Pay; Securities Regulation

As a quick reminder, all institutional investment managers filing 13F reports under the Exchange Act (“13F Filers") are subject to a new requirement this year to file a Form N-PX by August 31, 2024. Form N-PX includes disclosures regarding certain executive compensation-related proposals described below.

Preparing for CDP’s New Sustainability Reporting Platform

June 25, 2024 | Posted by Elizabeth A. Ising; Cynthia M. Mabry Topic(s): Corporate Governance; Disclosure; Environmental/Climate Change; ESG; Securities Regulation

Earlier this month, CDP (formerly known as the Carbon Disclosure Project) announced the launch of a new environmental disclosure platform. CDP is a non-profit that scores and assesses participating companies and cities, states, and regions on climate, deforestation, and water security topics. According to CDP, over 23,000 companies (representing two-thirds of global market capitalization) disclosed through CDP in 2023.

Division of Corporation Finance Issues Interpretive Guidance on the SEC’s Cybersecurity Incident Reporting Requirements

June 25, 2024 | Posted by Michael A. Titera; Lori Zyskowski; Thomas J. Kim; Brian J. Lane Topic(s): Corporate Governance; Disclosure; Securities Regulation

As discussed in our previous client alert, on December 18, 2023, new rules went into effect requiring companies to report material cybersecurity incidents on Form 8-K within four business days of the company’s determination that the cybersecurity incident is material. In the last several weeks the staff of the Division of Corporation Finance (the “Staff") of the Securities and Exchange Commission (the “SEC") has provided guidance regarding incident reporting in the form of a May 21 statement and a June 20 announcement from the Division of Corporation Finance Director Erik Gerding and, most recently, more formal Compliance and Disclosure Interpretations (“C&DIs") on June 24.

Eighth Circuit Establishes Briefing Schedule for SEC Climate Disclosure Rules Litigation

May 24, 2024 | Posted by Elizabeth A. Ising; Ronald O. Mueller Topic(s): Corporate Governance; Disclosure; Environmental/Climate Change; ESG; Securities Regulation

On May 20, 2024, the U.S. Court of Appeals for the Eighth Circuit issued an order establishing the briefing schedule for the consolidated litigation challenging the Securities and Exchange Commission’s (“SEC") final climate disclosure rules.

Reminder For Resource Extraction Issuers: Form SD Due September 2024

April 16, 2024 | Posted by Hillary H. Holmes; James J. Moloney; Harrison Tucker Topic(s): Audit Committee; Corporate Governance; Disclosure; Securities Regulation

As previously reported on our Securities Regulation and Corporate Governance Monitor on December 16, 2020 (available here), the Securities and Exchange Commission (the “SEC") adopted the final rule (available here) requiring additional disclosures by public companies that engage in the commercial development of oil, natural gas or minerals. Under the final rule, domestic or foreign “resource extraction issuers" are required to annually disclose information about certain payments made to foreign governments or the U.S. federal government on Form SD.

Fifth Circuit Stay of the SEC’s Climate Disclosure Rule Dissolved

March 22, 2024 | Posted by Ronald O. Mueller; James J. Moloney; Elizabeth A. Ising; Lori Zyskowski Topic(s): Corporate Governance; Disclosure; ESG; Securities Regulation

On March 21, 2024, the Judicial Panel on Multidistrict Litigation randomly selected the U.S. Court of Appeals for the Eighth Circuit to hear all cases challenging the Securities and Exchange Commission’s final climate disclosure rule. Within the first ten days after the rule’s issuance, nine petitions were filed, in six different circuits, challenging the rule.

Recent SEC Enforcement Action Underscores Importance of Timely Filing of 13D/G Beneficial Ownership Reports

March 6, 2024 | Posted by James J. Moloney; Brian J. Lane Topic(s): Disclosure; Securities Regulation

On March 1, 2024, the SEC announced an enforcement action against an investment advisory firm (“Investor"), stemming from its failure to promptly convert from a Schedule 13G to 13D after forming a “control" purpose within the meaning of Section 13(d) of the Exchange Act and Rule 13d-1 thereunder.^[1]

Fifth Circut Strikes Down SEC’s New Buyback Disclosure Rule

December 20, 2023 | Posted by James J. Moloney; Michael A. Titera; Ronald O. Mueller Topic(s): Capital Markets; Disclosure; Miscellaneous; Securities Regulation

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.