Corp Fin posts new and updated CDIs related to omission of financial information in registration statements

The Corp Fin staff has posted new and updated CDIs related to omission of financial information from registration statements by emerging growth companies and, under the recently expanded guidance that allows non-EGCs to file registration statements confidentially (see this PubCo post), by non-EGCs. The updated CDI under the FAST Act and the identical new CDI under the Securities Act appear to refine an earlier position taken by the staff. 

Corp Fin supplements information regarding expanded process for confidential filing of IPO registration statements

Yesterday, the SEC supplemented the information in its June 29 announcement regarding its expanded draft registration statement processing procedures, which allowed companies that were not emerging growth companies to file confidentially.  The supplement relates to availability of the process and transition matters. The announcement also indicates that companies may submit questions about their eligibility to use the expanded processing procedures to CFDraftPolicy@sec.gov.

SEC approves NYSE amendments requiring notice related to dividends and stock distributions, even if outside of NYSE trading hours

Yesterday, the SEC approved a rule change that amended the NYSE Manual to require listed companies to provide notice to the NYSE at least ten minutes before making any public announcement with respect to a dividend or stock distribution, irrespective of the time of day, even when the notice is outside of NYSE trading hours (rather than limited to the hours of 7:00 A.M. and 4:00 P.M. as in the prior rule).  Bring your sleeping bags, NYSE staff: the NYSE indicated that “it intends to have its staff available at all times to review dividend or stock distribution notices immediately upon receipt, regardless of the time or date the notices are received….The Exchange staff will contact a listed company immediately if there is a problem with its notification.”

CII updates its best practices for proxy access

As proxy access bylaws have continued to proliferate—with 60% of the S&P 500 now having adopted some form of proxy access provisions—the Council of Institutional Investors has decided that the time is right to update its 2015 best practices guide.  In particular, the 2017 update addresses practices that, while viewed by companies as designed to ensure the legitimate and appropriate use of proxy access, are viewed by CII as impairing the ability of shareholders to use proxy access. But will companies be guided by CII’s advice?

Decline in IPOs—blame Dodd-Frank?

A frequent lament these days is the decline in the number of IPOs and public companies generally, with much of the discussion—particularly at the agency and Congressional levels—focused on the adverse impact of increased regulatory burden. (See this PubCo post.) In December 2015, Congress directed the SEC’s Division of Economic and Risk Analysis to assess the impact of Dodd-Frank and other financial regulations on access to capital for consumers, investors and businesses and market liquidity, including U.S. Treasury and corporate debt markets. The staff of DERA has now issued its report to Congress on Access to Capital and Market Liquidity.  The report begins with a gigantic caveat: it’s really challenging to determine the effects of  changes in regulations.  At the end of the day, DERA did not pinpoint any “causal relationship” between Dodd-Frank and developments in the capital markets, emphasizing instead that the volume of IPOs has historically ebbed and flowed, with many contributing factors influencing IPO dynamics.

Asset managers support shareholder proposals for board diversity—will it make a difference?

There’s been chatter about board gender diversity for a long time and, while there has been some modest progress, we have yet to see any dramatic breakthroughs. Now some of the largest asset managers are not just talking the talk, they are also walking the walk.  Will it make a difference?  Time will tell.

Major indices announce decisions to exclude companies with multi-class share structures

Earlier this week, the S&P Dow Jones Indices announced that the S&P Composite 1500 and its component indices (the S&P 500, S&P MidCap 400 and S&P SmallCap 600) will no longer add companies with “multiple share class structures.” Existing index constituents will be grandfathered in.  This decision follows a similar, but less sweeping proposal announced last week by FTSE Russell,  with FTSE focused on multiple classes with limited or no voting rights. (The proposal is expected to be published, subject to any further feedback, as changes to the “ground rules” on August 25.) Another index, MSCI, has made a similar proposal. While these changes in methodology are imposed against the backdrop of an ongoing conversation about voting rights, the S&P confirmed to me informally that the change in methodology for the S&P Composite 1500 applies to multiple classes of listed or unlisted outstanding common equity, regardless of whether any class has limited or no voting rights. The S&P also confirmed that the phrase “multiple class share structures” is not intended to capture any class of preferred stock. Why do these changes in methodology matter?  As described in this article from Reuters, “[i]nclusion in a stock index has been an important milestone for young companies, bringing their shares into many passive funds and others that closely follow indexes like the S&P 500, a guide for trillions of dollars of capital worldwide.”