Tag: SEC Division of Corporation Finance

A few new CDIs on Rules 147, 503 and 504, as well as Reg A

Today, Corp Fin posted a number of new CDIs that reflect updates for the amendments to Rule 147 (intrastate offers and sales) and Reg D Rules 503 and 504, and withdrew some CDIs in light of the repeal of Rule 505.  There are also a number of changes throughout the CDIs interpreting Rule 147 and Reg D that Corp Fin describes as non-substantive based on current rules, such as changes to correct outdated references.  The CDIs with these non-substantive changes are identified in the CDIs only by an asterisk and have not been updated to reflect a September 2017 date. Corp Fin has also removed the Reg D CDIs “that do not directly relate to the Commission’s current rules.” The CDIs identified as having substantive changes are summarized below, along with three new CDIs related to Reg A that were posted last week.  

Update on pay-ratio rule

Rumor has it that, at the recent ABA Business Law Section Annual Meeting in Chicago, Corp Fin Director Bill Hinman confirmed—in case there was any doubt—that the pay-ratio rule would be in place for reporting in 2018.

GAO report on gold supply chain reveals little progress in responsible sourcing

The GAO has issued a new report on conflict minerals focused in this instance on the supply chain for artisanal and small-scale mined (ASM) gold in the DRC region.  The report also addressed efforts to encourage responsible sourcing of ASM gold and sexual violence in the region since the GAO’s last report in August 2016.

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 refuses to allow exclusion of new form of proxy access fix-it proposal

It ain’t over till it’s over, as they say.  You may have thought that, after the series of staff no-action positions allowing exclusion of so-called “fix-it” proposals during the last proxy season, we had seen the last of them. If so, you would be forgetting how persistent (or relentless, depending on your point of view) these proponents are.  And this time, the staff has rejected the no-action request of H&R Block—once again the unfortunate trailblazer— which had sought exclusion of another proxy access fix-it proposal—this time to eliminate the cap on shareholder aggregation to achieve the 3% eligibility threshold—from the prolific John Chevedden et al. Given the result, you can expect to see more of this form of fix-it proposal next proxy season. 

Conflict minerals benchmarking study analyzes filings for 2016—was there any progress?

Development International has posted its most recent Conflict Minerals Benchmarking Study, analyzing the results of filings for the 2016 filing period. The study looked at filings submitted by the 1,153 issuers that had filed conflict minerals disclosures as of July 10, 2017.  The number of issuers filing disclosures for 2016 reflected a decline of 5.6% compared to 2015.  Most interesting, however, is that, notwithstanding statements from Corp Fin, echoed by the Acting SEC Chair at the time, advising companies that they would not face enforcement if they filed only a Form SD and did not include a conflict minerals report, the vast majority of companies continued to file conflict minerals reports.

Will pay-ratio disclosure benefit investors?

One of the arguments that has often been used to oppose the Dodd-Frank pay-ratio provision is that the rule does not really provide information that benefits investors; instead, the argument goes, the real animus for the rule is a political effort to focus attention on inequality.  Now, an analysis of governance ratings from Bank of America Merrill Lynch, reported in the WSJ, suggests that pay-ratio information just could provide some warning signs that investors may find valuable.