On March 15, 2021, the Acting Chair of the Securities and Exchange Commission (SEC), Allison Herren Lee, gave a speech entitled “A Climate for Change: Meeting Investor Demand for Climate and ESG Information at the SEC,”[1] in which she sets forth a near-term regulatory agenda for the SEC that centers on climate and Environmental, Social, and Governance (ESG) topics. On the same day, she also jump-started the regulatory process toward adopting potentially extensive new disclosure requirements for public companies on climate-change matters by issuing a request for comments on 15 broad issues.[2]
Securities Regulation
SEC Announces Enforcement Task Force Focused on Climate and ESG Issues
On March 4, 2021, the Securities and Exchange Commission (SEC) announced the creation of the “Climate and ESG Task Force” in the SEC’s Division of Enforcement.[1] The purpose of the Task Force is to “develop initiatives to proactively identify ESG-related misconduct.” The Task Force’s initial focus will be to identify “any material gaps or misstatements in issuers’ disclosure of climate risks under existing rules.” The Task Force will also “analyze disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies.”
Nasdaq Amends Proposed Rules to Allow Primary Direct Listings
As discussed in Gibson Dunn’s Current Guide to Direct Listings, the New York Stock Exchange (NYSE) recently amended its rules to permit a primary offering in connection with a direct listing. The Nasdaq Stock Market LLC (Nasdaq) also had proposed rules permitting primary offerings in connection with a direct listing.[1] On February 24, 2021, in the course of the SEC’s review, Nasdaq amended its original proposal to bring its rules more in line with those adopted by the NYSE and approved by the SEC – clearing up some confusion caused by the original proposal.[2]
Now Available: Considerations for Preparing Your 2020 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 annaul report on Form 10-K. In addition to the many challenges of the past year, the SEC adopted and provided guidance on a number of changes to public company reporting obligations impacting disclosures in the 10-K for 2020. In particular, we discuss the recent amendments to Regulation S-K, disclosure considerations in light of COVID-19, a number of technical considerations that may impact your Form 10-K, and other considerations in light of recent and pending changes in the executive branch and at the SEC. The full memo is available at the following link:
SEC Proposes Changes to Rule 144, Form 144, Form 4 and Form 5
On December 22, 2020, the Securities and Exchange Commission (the “SEC") proposed and published for comment amendments to Rule 144, Form 144, Form 4, Form 5 and Rule 101 of Regulation S-T. These amendments primarily seek to (a) mitigate the risk of unregistered distributions in connection with sales of market-adjustable securities under the current Rule 144 safe harbor by revising the holding period for such securities to begin upon the conversion or exchange of such securities, and (b) update and streamline Form 144 by mandating electronic filing and eliminating the Form 144 filing requirement with respect to non-reporting issuers. Comments on the proposed rules will be due 60 days after publication of the proposal in the Federal Register and may be submitted electronically using the SEC’s internet comment form (http://www.sec.gov/rules/submitcomments.htm) or by mail to the following address: Vanessa A. Countryman, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. All submissions should refer to File Number S7-24-20.
SEC Adopts New Rule Relating to Submissions through EDGAR and Electronic and Remote Online Notarization
On December 11, 2020, the Securities and Exchange Commission (the “SEC") announced its adoption of a new rule under Regulation S-T in connection with its administration of the Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR") to promote the reliability and integrity of EDGAR submissions, and also the adoption of revisions to Volumes I and II of the EDGAR Filer Manual and related rules under Regulation S-T, including provisions regarding electronic notarizations and remote online notarizations, which include electronic signatures.
SEC Updates Rules Relating to Electronic Submission of Documents
On November 17, 2020, the Securities and Exchange Commission (the “SEC”) announced that it had approved amendments to Regulation S-T and the Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”) Filer Manual relating to the use of electronic signatures for SEC filings, including registration statements, reports on Forms 10-K, 10-Q and 8-K, and Section 16 reports. The new rules expressly provide for the use of e-signature methods (e.g., “DocuSign” and “AdobeSign”) for these filings, subject to new authentication procedures summarized below.
Desktop Calendar of SEC Deadlines for 2021 Now Available
To assist companies in planning for their SEC reporting and capital markets transactions in 2021, we have prepared a desktop reference calendar that sets forth filing deadlines for core SEC reports. Our calendar also provides SEC staleness dates (i.e., the last date financial statements may be used in a prospectus or proxy statement without being updated).
SEC Adopts Changes to the Exempt Offering Framework
In an effort to facilitate capital formation and increase opportunities for investors by expanding access to capital for small and medium-sized businesses, on November 2, 2020, the SEC announced that it had approved amendments to certain of its rules relating to exempt offerings. The amendments follow the SEC’s June 2019 concept release and the SEC’s March 2020 proposing release on the harmonization of offering exemptions and reflect the SEC’s ongoing effort to harmonize, simplify and improve its offering framework. As discussed in our prior Monitor post (available here), the SEC has been working to untangle the current regulatory regime in order to ensure that capital-raising is rational, accessible and effective.
Regulation S-K Amendments to Items 101, 103, and 105 to go Effective November 9, 2020
The amendments to Items 101, 103, and 105 of Regulation S-K that were adopted by the SEC on August 26, 2020 (discussed in our previous client alert, available here) were published in the Federal Register today, October 8, 2020. As a result, the amendments will go into effect on Monday November 9, 2020 (the first business day following 30 days after publication in the Federal Register). November 9 is also the last day for calendar companies that are large accelerated filers or accelerated filers to file the Q3 10-Q.