On December 3, 2019, Gibson Dunn published A Current Guide to Direct Listings discussing, among other things, a proposal submitted to the U.S. Securities and Exchange Commission (SEC) on November 26, 2019 by the New York Stock Exchange (NYSE) that would permit a privately held company to conduct a direct listing in connection with a primary offering, potentially creating a new on-ramp to the public capital markets in the United States.
A Current Guide to Direct Listings
Direct listings have increasingly been gaining attention as a means for a private company to go public. In our most recent memo available here, we provide a summary of the current requirements for direct listings on the NYSE and Nasdaq and of NYSE’s recent proposal to amend its direct listing rules to allow primary offerings through the NYSE in conjunction with direct listings. We also explore the potential benefits and risks associated with direct listings.
Division of Corporation Finance Unveils Further Details on Its Process for Responding to Shareholder Proposal No-Action Requests
On November 21, 2019, the Division of Corporation Finance (the “Division" or “Staff") of the Securities and Exchange Commission (“SEC") provided additional detail on how it will process responses to shareholder proposal no-action requests under Rule 14a-8. As discussed in our prior posts, available here and here, in September 2019 the Division announced that, starting with the 2019-2020 shareholder proposal season, it may respond orally instead of in writing to some no-action requests, and in some cases its response may indicate that it is declining to state a view on whether a proposal satisfies the requirements of Rule 14a-8 or is properly excludable.
Developments Regarding Changes to SEC Staff’s Shareholder Proposal No-Action Responses
Several noteworthy developments have occurred following the September 6, 2019 announcement by the Division of Corporation Finance (the “Staff") of the Securities and Exchange Commission (“SEC") regarding two significant procedural changes for responding to Exchange Act Rule 14a-8 no-action requests that will be applicable to no-action requests regarding shareholder proposals submitted for annual meeting to be held in 2020. That announcement indicated that the Staff may now respond orally instead of in writing to shareholder proposal no-action requests and that the Staff may now more frequently respond by declining to state a view on whether or not it concurs that a company may properly exclude a shareholder proposal under Rule 14a-8.
EDGAR Updates Change Filer Password Requirements and Increase Character Length of Certain Cover Page Tags
Everyone Jump In! All Issuers Will Be Allowed to “Test-the-Waters”
On September 26, 2019, the SEC announced (available here) that it has adopted a new rule, Rule 163B (available here) under the Securities Act of 1933, that allows all issuers to “test-the-waters." This accommodation, which had previously been available only to emerging growth companies (EGCs), allows issuers and authorized persons (e.g., underwriters) to engage in discussions with, and provide written offering material to, certain institutional investors prior to, or following, the filing of a registration statement, to determine market interest in potential registered securities offerings. Rule 163B will become effective 60 days after publication in the Federal Register.
SEC Staff Announces Significant Changes to Shareholder Proposal No-Action Letter Process
On September 6, 2019, the Division of Corporation Finance (the “Staff") of the Securities and Exchange Commission (“SEC") announced[1] two significant procedural changes for responding to Exchange Act Rule 14a-8 no-action requests that will be applicable beginning with the 2019-2020 shareholder proposal season:
SEC Issues New Guidance for Proxy Advisors and Investment Advisers Engaged in the Proxy Voting Process
On August 21, 2019, the Securities and Exchange Commission (the Commission) issued two releases (the Releases) regarding two elements of the proxy voting process that are influenced by proxy advisory firms: proxy voting advice issued by proxy advisors (available here) and proxy voting by investment advisers who use that proxy voting advice (availablehere). The guidance, in the words of Commissioner Elad L. Roisman, “reiterate[s] longstanding Commission rules and positions that remain applicable and very relevant in today’s marketplace."
Desktop Calendar of SEC Deadlines for 2020 Now Available
This is a smart time of year to confirm plans for SEC reporting and capital markets transactions in 2020. To assist public companies in keeping track of the various filing deadlines, we have prepared a desktop reference calendar that sets forth filing deadlines for many SEC reports. To assist companies with planning capital markets transactions, including IPOs, our calendar also provides the staleness dates (i.e., the last date financial statements may be used in a prospectus or proxy statement without being updated).
SEC Issues Interpretations Clarifying Inline XBRL Rules
On August 20, 2019, the Division of Corporation Finance (the “Staff") of the Securities and Exchange Commission (“SEC") issued nine new Compliance and Disclosure Interpretations (“C&DIs") regarding Interactive Data (available here), addressing many of the technical compliance issues surrounding the Inline XBRL rules, particularly with respect to common questions related to the exhibit index and cover page tagging. The C&DIs also address compliance by early or voluntary filers and foreign private issuers. The Inline XBRL rules went into effect for calendar year-end large accelerated filers when filing their second quarter Form 10-Q.