Tag: Compliance and Disclosure Interpretations

Corp Fin issues new CDIs on universal proxy

At the end of last week, Corp Fin issued three new CDIs related to universal proxies under Rule 14a-19.  In November 2021, the SEC amended the federal proxy rules to mandate the use of universal proxies in all non-exempt solicitations in connection with contested elections of directors of operating companies. By mandating the use of universal proxies—proxy cards that, when used in a contested election, include a complete list of all candidates for director duly nominated by both management and dissidents—the SEC’s rules now allow a shareholder voting by proxy to choose among director nominees in an election contest in a manner that closely mirrors in-person voting. (See this PubCo post.) The new CDIs address questions that have arisen in connection with notice and proxy statement disclosure.  Below are brief summaries.

Corp Fin posts CDI regarding swaps and forward contracts

Corp Fin has posted a new Exchange Act CDI regarding swaps and forward contracts. Swaps and security-based swaps are subject to a comprehensive regulatory framework established under Dodd-Frank. Under release 33-9338, forward contracts are excluded from the definitions of the terms “swap” and “security-based swap.” More specifically, these definitions exclude “any sale of a nonfinancial commodity or security for deferred shipment or delivery, so long as the transaction is intended to be physically settled.” But what if the underlying securities cannot be legally transferred when the parties enter into the contract? Are they still ”intended to be physically settled”? New Question 101.01 addresses this question.

Corp Fin issues two new CDIs regarding Rule 12b-25 in the context of the SEC’s conditional relief order

The Corp Fin staff has issued two new CDIs regarding Rule 12b-25 in the context of the SEC’s conditional relief order.  That order extends for 45 days the filing periods for specified SEC filings due between March 1 and July 1, 2020. (See this PubCo post.) Both of the CDIs reaffirm that companies must comply with the conditions of the order, particularly the Form 8-K/6-K requirement, to take advantage of the relief. Companies that are unable to comply “are encouraged to contact the staff to discuss collateral consequences of late filings.”

Corp Fin posts new CDIs on Inline XBRL

Corp Fin has posted some new CDIs on Inline XBRL summarized below:

New CDI addresses diversity disclosure

Corp Fin has posted a new Compliance & Disclosure Interpretation under Reg S-K that relates to diversity disclosure.  The new interpretation applies to both Item 401— Directors, Executive Officers, Promoters and Control Persons and Item 407—Corporate Governance.

Corp Fin updates CDIs related to smaller reporting companies

Corp Fin has posted some updates to its CDIs relating to the new rule amendments regarding smaller reporting companies. (See this Cooley Alert and the SEC’s  Amendments to the Smaller Reporting Company Definition — Compliance Guide.)  In connection with the new updates, Corp Fin has also withdrawn a number of CDIs (presumably, at least in part, because they were no longer appropriate in view of the changes to the rules).  Below are summaries:

Corp Fin staff issues new CDIs regarding cross-border exemptions

The staff of Corp Fin have posted a revised set of CDIs interpreting the cross-border exemptions. The new CDIs replace the 17-year old interpretations that were contained in Section II of the July 2001 Interim Supplement to the antediluvian Telephone Interpretations Manual. (You may even have a copy in a three-hole binder somewhere.) Some of the CDIs reflect only technical revisions, some are substantive and some are entirely new interps.

Staff provides a bit of relief regarding compliance with Disclosure Update and Simplification

You may have noticed that there’s still no effective date for the new Disclosure Update and Simplification, which was adopted in August. (See this Cooley Alert.) The new amendments are scheduled to become effective 30 days after publication in the Federal Register, but at this point, the release has not been published. The reason for the delay is anyone’s guess.  In the meantime, however, questions have arisen about when filers may be expected to comply with certain financial statement requirements in the new amendments for purposes of upcoming Forms 10-Q.

Corp Fin updates CDIs for proxy rules and proxy statements

For quite a while, the CDIs related to the proxy rules and proxy statements have been a bit of a hodge-podge of different sources and supplements. There were even interpretations extant from the ancient Telephone Interpretations Manual—you may even have a mimeograph copy of that in your office somewhere. Now, Corp Fin has undertaken to update and harmonize some of those proxy-related interpretations, specifically the basic Interpretations Manual and its March 1999 Supplement. The rest of the supplements remain undisturbed for the moment; however, Corp Fin advises that it is in the process of updating them all.  

Corp Fin posts new CDI regarding safeguards for electronic delivery of information under Rule 701

Yesterday, Corp Fin posted a new CDI 271.25 regarding permissible safeguards for protection of Rule 701(e) disclosures that are furnished electronically. You may recall that Rule 701—which provides an exemption from registration under the Securities Act for offers and sales to employees, directors and consultants under compensatory benefit plans and contracts—requires companies to deliver to the employee/investor a copy of the applicable benefit plan or contract, and, if the company sells, in any consecutive 12-month period, securities with a value in excess of $5 million, the company must deliver, a reasonable period of time before the date of sale, specified other information, including financial statements and information about the risks associated with the investment, much of which is likely to contain confidential or sensitive material.