Shareholder proposal process in the crosshairs

by Cydney Posner

According to this report in Bloomberg BNA,  the plans for changing the shareholder proposal process in the Financial CHOICE Act 2.0 are quite dramatic and could effectively curtail the process, if that is, the current version of the provision ever makes it into law.   Continue reading

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Senate hearing on conflict minerals law reveals common theme

by Cydney Posner

On April 5, just prior to the release of  Corp Fin’s Updated Statement on conflict minerals, the Senate Subcommittee on Africa and Global Health Policy held a hearing on the effects on the Democratic Republic of the Congo of Section 1502 of Dodd-Frank and the SEC’s related conflict minerals rule, examining the approach taken in the rule and its achievements.  The hearing comes as Congress considers whether and how to revise Section 1502.  While the witnesses were divided in their views of the value of Section 1502, surprisingly, there was something of a common theme — that the illicit trade in conflict minerals is more a symptom of the problem in the DRC region, not at the root, and that addressing the trade issue alone will not suffice.  Continue reading

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Responses to Corp Fin’s Updated Statement on Conflict Minerals

by Cydney Posner

A number of NGOs have issued statements emphatically rejecting Corp Fin’s  Updated Statement on the Effect of the Court of Appeals Decision on the Conflict Minerals Rule and the Acting Chair’s separate Statement on conflict minerals (see this PubCo post) and calling for companies to disregard them and file their conflict minerals reports as usual. How will companies respond? Continue reading

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SEC Chief Accountant addresses audit committee effectiveness

by Cydney Posner

In a recent speech at the University of Tennessee, “Advancing the Role and Effectiveness of Audit Committees,” SEC Chief Accountant Wes Bricker discusses his recommendations for — wait for it — improving the effectiveness of audit committees.  The speech addresses issues such as diversity, work overload, tone at the top, staying current, implementing new GAAP standards, internal control over financial reporting, non-GAAP measures, external auditor oversight and enhanced audit committee reporting. Continue reading

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Corp Fin provides relief on conflict minerals in light of final judgment in National Association of Manufacturers v. SEC

by Cydney Posner

Today, in light of the entry of final judgment by the D.C. District Court in National Association of Manufacturers v. SEC, Corp Fin issued an Updated Statement on the Effect of the Court of Appeals Decision on the Conflict Minerals Rule that provides substantial relief to companies subject to the rule. You may recall that, in that case, the Court held that a part of the conflict minerals rule violated the First Amendment. Corp Fin’s Updated Statement advises that companies will not face enforcement if they perform only a reasonable country-of-origin inquiry and file only a Form SD and do not conduct detailed supply-chain due diligence or prepare and file a conflict minerals report (Item 1.01(c) of Form SD) or have an audit performed — even if they would otherwise be required to do so under the rule. In a separate Statement, Acting SEC Chair Michael Piwowar commented that the “primary function of the extensive and costly requirements for due diligence on the source and chain of custody of conflict minerals set forth in paragraph (c) of Item 1.01 of Form SD is to enable companies to make the disclosure found to be unconstitutional. In light of the foregoing regulatory uncertainties, until these issues are resolved, it is difficult to conceive of a circumstance that would counsel in favor of enforcing Item 1.01(c) of Form SD.” Continue reading

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More opposition to the virtual-only annual meeting

by Cydney Posner

In case you missed it, Gretchen Morgenson’s column in the Sunday NYT railed against virtual-only annual meetings, which according to her data (provided by Broadridge), have increased in number from 21 in 2011 to 154 in 2016.  And joining in the condemnation of the practice was NYC Comptroller Scott Stringer, who, you may recall, submitted 75 shareholder proposals for proxy access at major companies in 2014, triggering the movement toward wider adoption of proxy access bylaws.  Interestingly, the virtual annual meeting was initially viewed as “CPR” for the debilitated annual shareholders’ meeting, which had, over time, evolved into a moribund ritual of corporate governance, as fewer and fewer shareholders were able or willing to overcome the logistical and financial burdens of attendance in person. With virtual technology, large numbers of shareholders were suddenly able to attend meetings on their laptops. Ironically, however, it is shareholders — the designated beneficiaries of the virtual annual meeting — that have raised objections. Continue reading

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SEC adopts JOBS Act inflation adjustments and other technical changes

by Cydney Posner

The SEC has adopted a number of inflation-related adjustments under the JOBS Act, including an adjustment to the revenue cap in the definition of “emerging growth company,” as well as adjustments to the dollar amounts in Reg Crowdfunding. A number of technical amendments were also adopted to conform various rules and forms to self-executing changes effected when the JOBS Act was signed into law.  The various amendments will become effective upon publication in the Federal Register. Continue reading

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