Commissioner Crenshaw decries SEC action pulling the plug on defense of climate disclosure rules
As reported in this PubCo post, the SEC announced yesterday that it was ending its “defense of the rules requiring disclosure of climate-related risks and greenhouse gas emissions”—the climate disclosure rules. In response to that action, Commissioner Caroline Crenshaw issued this Statement Regarding Climate-Related Disclosures Rule Litigation: The Commission has Left the Building. She’s none too pleased with the SEC’s action—to put it mildly.
Surprise—not! SEC votes to terminate defense of climate disclosure rules
Today, the SEC announced that the Commissioners had voted to end the SEC’s “defense of the rules requiring disclosure of climate-related risks and greenhouse gas emissions”—the climate disclosure rules. As you probably know, a number of challenges to the climate disclosure rule were consolidated as State of Iowa v. SEC in the Eighth Circuit, where briefs in the case had been filed. Then, in February, Acting Chair Mark Uyeda issued a statement advising that he had requested that the Court presiding over the litigation not “schedule the case for argument” in order to allow time for the SEC to rethink its position. And here it is: according to Uyeda, “The goal of today’s Commission action and notification to the court is to cease the Commission’s involvement in the defense of the costly and unnecessarily intrusive climate change disclosure rules.”
Delaware SB 21 signed into law
Controversial Delaware SB 21 was signed into law last evening after passage yesterday by the legislature. According to this Statement from the office of Delaware Governor Matt Meyer, the Governor has “signed Senate Bill 21 into law, thanking lawmakers for the swift passage of this critical update to Delaware’s corporate law, aimed at ensuring the state remains the premier home for U.S. and global businesses. The legislation, developed in collaboration with corporate leaders and legal experts, clarifies key governance structures to reinforce Delaware’s reputation for equitable, predictable, and efficient corporate oversight.” The law provides a process for boards to invoke safe harbor protection from litigation over potentially conflicted transactions for directors and controlling stockholders. It also addresses Delaware’s provisions related to books and records. (For a brief summary of the bill, see this PubCo post.) Notably, the legislature rejected five proposed amendments, including a proposed amendment discussed in this PubCo post, providing for an opt-in provision. The legislature also rejected a proposed amendment that would have eliminated the February 17 retroactive effective date.
Will an opt-in mechanism resolve the melee over Delaware’s controversial SB 21?
As widely reported, the Delaware legislature has responded to increasing chatter and speculation about the intentions of some companies—as well as action in some cases—to change their states of incorporation from Delaware to other states by proposing new legislation, Senate Bill 21. That proposed bill would offer a process for boards to invoke safe harbor protection from litigation over potentially conflicted transactions for directors and controlling stockholders. The bill would also address Delaware’s provisions related to books and records. (For a brief summary of the bill, see this PubCo post.) At this point, the bill has passed the State Senate and been reported out of the Judiciary Committee in the Delaware House. As you probably know, however, SB 21 has been quite contentious. Now, a group of 26 corporate law and governance professors from universities worldwide—apparently representing a broad spectrum of political opinion—have submitted a letter proposing a “pragmatic solution that simultaneously renders much of the debate moot and aligns with Delaware’s longstanding commitment to contractarianism: an opt-in mechanism.” An amendment providing for that opt-in has been introduced.
How will AI impact the boardroom?
In this new paper from the Rock Center for Corporate Governance at Stanford, The Artificially Intelligent Boardroom, the authors discuss the potential impact of artificial intelligence on boardroom practices—impact that they believe will be significant, “but perhaps in different ways than is commonly recognized.” While managements and boards have been practically transfixed by the prospective application of AI across the operations of companies, the authors point out that much less attention has been paid to how AI might be applied to “reshape the operations and practices of the board itself, with the prospect of substantially improving corporate governance quality.” The authors expect AI to affect board function, board processing of information, contributions of board advisors and, especially, board/management interaction. The adoption of AI, they advise, “will also raise important questions about how to maintain the line between board and managerial responsibilities, and how expectations on each side will change.” Will AI fuel expectations for board performance? Will it increase the burden on directors to meet those expectations?
Securities Act and FPI Exchange Act forms CDIs update
Corp Fin continues its project of updating CDIs. This new tranche relates to effectiveness of Form S-3 relative to timing of filing of Forms 10-K and proxy statements, allowing non-automatically effective Forms S-3 to be declared effective during the period between the filing of the Form 10-K and the definitive proxy statement. The CDIs also relate to foreign private issuer filings and withdraw a few CDIs to reflect the vacatur by a Federal court of the repurchase modernization rules. The new, revised and withdrawn CDIs are summarized below.
SEC approval now needed for formal orders of investigation
As discussed in this PubCo post, in February, Reuters reported that, under the new Administration, some SEC Enforcement staff have recently “been told that they will need to seek the Commission’s approval for all formal orders of investigation, which are required to issue subpoenas for testimony or documents,” marking a “change in procedure that could slow down investigations.” Previously, Reuters reported, authority to formally launch investigations had been delegated to Enforcement directors or other senior staff, including even supervising attorneys; during the first term of the current Administration, the “SEC required approval by its two enforcement [co-]directors to formally launch probes.” Now, that change in authority has been formalized: the SEC has amended its regulations to eliminate the delegation of authority to the Director of the Division of Enforcement to issue formal orders of investigation. That is, the SEC itself must approve these orders. The SEC release indicates that the amendment “is intended to increase effectiveness by more closely aligning the Commission’s use of its investigative resources with Commission priorities.”
Acting SEC Chair Uyeda presents blueprint for SEC rulemaking processes
Yesterday, Acting SEC Chair Mark Uyeda delivered remarks to the Investment Company Institute’s 2025 Investment Management Conference. While much of his presentation was specific to investment companies, the theme of his remarks had a more general application: a revised—revived?—blueprint for SEC rulemaking processes. This is certainly not the first time that Uyeda has been critical of the SEC’s rulemaking process (see, e.g., this PubCo post and this PubCo post), but now, as Acting Chair, his words may carry more weight as both a reflection of his intentions as Acting Chair and a harbinger of the Administration to come. Among Uyeda’s objectives—“to set forth a blueprint for restoring the Commission’s rulemaking processes to the ‘gold standard’ among regulatory agencies.”
SEC approves Nasdaq proposal to modify initial listing requirements related to liquidity
In December of last year, Nasdaq proposed a rule change to modify the initial listing requirements related to liquidity. More specifically, Nasdaq proposed to change Listing Rules 5405 and 5505 to require that a company seeking to list on the Nasdaq Global Market or Nasdaq Capital Market in connection with an IPO or to uplist to Nasdaq from the OTC in connection with a public offering “satisfy the applicable minimum Market Value of Unrestricted Publicly Held Shares (MVUPHS) requirement solely from the proceeds of the offering.” That would mean that previously issued shares registered for resale would no longer be counted as unrestricted publicly held shares in the calculation of MVUPHS. The proposal was amended in February of this year. The SEC has now approved the amended proposal on an accelerated basis.
Government shutdown maybe?
Based on the news reports from this morning, it seems unlikely that the threatened government shutdown will come to pass. Nevertheless, although the shutdown appeared doubtful, just this morning, Corp Fin posted an Announcement Regarding Pending Registration Statements and Offering Statements. As a cautionary measure, until the shutdown is fully resolved by a vote, it may make sense for those with pending registration statements to take a look.
You must be logged in to post a comment.