On March 25, 2020, the SEC’s Division of Corporation Finance provided disclosure guidance to public companies to assist in the evaluation of a company’s disclosure obligations with respect to the COVID-19 (novel coronavirus) pandemic and related business and market disruptions.
While it may be difficult for companies to assess or predict the exact impact of COVID-19 on individual companies or entire industries, the SEC explained that a company may have obligations to disclose certain risks and effects to the extent material to investment and voting decisions. Such risks and effects include the impact of COVID-19 on the current state of a company’s operations, management expectations regarding its future effects, a company’s response to the evolving pandemic and operational plans to address such uncertainties. The SEC noted that disclosure of these risks and COVID-19-related effects may be necessary or appropriate in various sections of SEC filings, including, but not limited to, management’s discussion and analysis, the business section, risk factors, legal proceedings, disclosure controls and procedures, internal control over financial reporting, and a company’s financial statements. Continue reading “SEC Sets Course on COVID-19 Disclosure”
On March 13, 2020, the Federal Trade Commission (“FTC”) and the Department of Justice (“DOJ”) announced that they have adopted a series of temporary changes to their civil merger investigation processes, which will remain in place during the pendency of the Coronavirus (COVID-19) event.These changes will ensure that the DOJ and FTC will be able to continue operations as their employees carry out their duties under a mass telework directive in accordance with health guidance from the CDC, WHO, and other health authorities. These temporary measures include the following: Continue reading “Merger Modifications”
On March 13, 2020, the U.S. Securities and Exchange Commission (the “SEC”) published guidance to assist public companies, investment companies, shareholders and other market participants affected by COVID-19 in connection with their upcoming shareholder meetings. The SEC explained that this guidance was designed to allow these companies to continue to hold their meetings, including through the use of technology, and engage with shareholders under social distancing circumstances, while still complying with the federal securities laws.
Shareholder Meetings – The Impact of COVID-19 and the Natural Transition to Virtual Meetings
Generally, public companies and investment companies are required to hold annual meetings of security holders, with the federal securities laws requiring the delivery of proxy materials to the voting shareholders.Over the past few years, more and more companies have been transitioning to either complete “virtual” shareholder meetings or “hybrid” meetings, which avoid the need for in-person shareholder attendance. Continue reading “Shareholder Distancing”
On September 21, 2017, President Trump issued an Executive Order (yet to be numbered) (“EO”) imposing additional sanctions on North Korea. It took effect the next day. The general press has quoted Treasury Secretary Mnuchin as stating: “Foreign financial institutions are now on notice that going forward they can choose to do business with the United States or North Korea, but not both.” These latest changes raise the specter for even more caution on the part of companies conducting international business. The question every CFO at every company should ask is – is our due diligence program as good as it needs to be? If not, your funds could get seized and dealing with the Dept. of Justice in these types of cases can be quite challenging. The government often has information the private sector does not possess and, if your due diligence program is not deemed sufficient, you stand little chance of getting those funds released. Given the current climate, you can bet getting funds released related to the North Korea sanctions is going to be even more difficult!
In a recent effort to foster increased public offering activity, the U.S. Securities and Exchange Commission (SEC) announced on June 29, 2017 that it will permit all companies to submit voluntary draft registration statements relating to initial public offerings (IPOs), certain follow-on offerings and national securities exchange listings for non-public review. This process will be available for nearly all offerings made in the first year after a company has entered the public reporting system. This benefit will take effect on July 10, 2017.
Just about every survey of General Counsels reveals the same #1 culprit of sleepless nights….. a cybersecurity hack. If you run a business in today’s global environment, it is hard to escape the fundamental reality that it is more than likely a matter of when, not if, you will face a cyber threat. And depending on the nature of your business, that threat can have a wide range of implications. If you are a public company, there is an additional issue to consider… what do you have to disclose to your investors and shareholders?
Being prepared for a hack with a comprehensive written information security plan and an equally robust incident response plan is just one component to be considered if you are a public company. You must also have a plan to meet your reporting and disclosure obligations to a variety of governmental bodies. While measuring your response needs in the wake of a hack, and determining if there are state, federal or international laws and regulations that require reporting, you must also pay close attention to possible disclosure obligations in your SEC filings. Specifically, if you have tripped a disclosure to a state attorney general or your company’s customers, then it is possible you may also have a disclosure obligation to your shareholders. Continue reading “If You SEC Something, Say Something”