E-Minders January 2015


In This Issue:

E-Minders is our monthly e-mail newsletter containing the latest developments and practical guidance for corporate & securities law practitioners.

We view TheCorporateCounsel.net as the gathering place for the community and encourage those who may not yet be members to take advantage of a 2015 No-Risk Trial to see what you are missing. Here are 10 Good Reasons to try us now.

You can subscribe below to receive a complimentary E-Minders subscription - even if you don't subscribe to TheCorporateCounsel.net. Our hope is that once you get to know us, you will understand the true value of a subscription to TheCorporateCounsel.net. Note that subscribers to TheCorporateCounsel.net should sign up below for E-Minders too, as we don't have the e-mail addresses for many people in our community.

2015 Edition of Romanek's "Proxy Season Disclosure Treatise": Broc Romanek has wrapped up the 2015 Edition of the definitive guidance on the proxy season—Romanek's "Proxy Season Disclosure Treatise & Reporting Guide." With over 1450 pages—spanning 32 chapters—you will need this practical guidance for the challenges ahead.

Popular "Romeo & Dye Section 16 Forms & Filings Handbook": Good news. Alan Dye has completed the 2014 edition of the popular "Section 16 Forms & Filings Handbook," with numerous new—and critical—samples included among the thousands of pages of samples. Remember that a new version of the Handbook comes along every 4 years or so—so those with the last edition have one that is dated. The last edition came out in 2009.

Act Now: Try a '15 no-risk trial to the "Romeo & Dye Section 16 Annual Service" - and we will mail this invaluable resource to you now that it's done being printed.

1st Edition of Morrison & Romanek's "The Corporate Governance Treatise": Wrapping up a project that Randi Morrison & Broc Romanek feverishly commenced two years ago, we are happy to say the inaugural 2014 Edition of Morrison & Romanek's "The Corporate Governance Treatise" is finished. With over 900 pages—including 212 checklists—this tome is the definition of being practical. You can return it any time within the first year and get a full refund if you don't find it of value.

Upcoming Webcasts on TheCorporateCounsel.net: Join us on January 14th for the webcast - "Governance Roadshows: In-House & Investor Perspectives" - during which Vanguard's Sarah Goller, BlackRock's Michelle Edkins, Morrow & Co's Bill Ultan and Global Governance Consulting's Susan Wolf will explain governance roadshows - including provide practice pointers about what works - and what doesn't.

And join us on January 20th for the always entertaining webcast - "Pat McGurn's Forecast for 2015 Proxy Season" - when Davis Polk's Ning Chiu and Gunster's Bob Lamm join Pat McGurn of ISS and the proxy season expert to recap what transpired during the 2014 proxy season and what to expect for 2015.

And join us on February 11th for the webcast - "Conflict Minerals: Tackling Your Next Form SD" - to hear our own Dave Lynn of Morrison & Foerster, Schulte Roth's Michael Littenberg, Elm Sustainability Partners' Lawrence Heim and Deloitte's Christine Robinson discuss what you should now be considering as you prepare your Form SD for 2015.

And join us on March 3rd for the webcast - "Conduct of the Annual Meeting" - to hear Randy Clark of Sempra Energy; Angela Hilt of Clorox; Carol Ward of Mondelez International and Carl Hagberg of The Shareholder Service Optimizer explain how they handle the many challenges of running an annual shareholders meeting.

There is no cost for these webcasts if you are a member of TheCorporateCounsel.net. If you are not a member, take advantage of our no-risk trial to access the programs. You can sign up for this no-risk trial online, send us an email at info@thecorporatecounsel.net - or call us at 925.685.5111.

Upcoming Webcasts on CompensationStandards.com: Join us on January 15th for the webcast - "The Latest Developments: Your Upcoming Proxy Disclosures" - to hear Mark Borges of Compensia, Alan Dye of Hogan Lovells and Section16.net, Dave Lynn of CompensationStandards.com and Morrison & Foerster and Ron Mueller of Gibson Dunn discuss all the latest guidance about how to overhaul your upcoming disclosures in response to say-on-pay-including the latest SEC positions-and the other compensation components of Dodd-Frank, as well as how to handle the most difficult ongoing issues that many of us face.

And join us on January 28th for the webcast - "Executive Compensation Litigation: Proxy Disclosures " - to hear Pillsbury's Sarah Good, Shearman & Sterling's Doreen Lillenfeld and Winston & Strawn's Mike Melbinger as they drill down on how proxy disclosure-related lawsuits are faring and what you can do to avoid them.

No registration is necessary - and there is no cost - for these webcasts for CompensationStandards.com members. If you are not a member, take advantage of our no-risk trial to access the programs. You can sign up online, send us an email at info@compensationstandards.com - or call us at 925.685.5111.

Upcoming Webcasts on DealLawyers.com: Join us on January 29th for the webcast - "Proxy Solicitation Tactics in M&A" - to hear Okapi Partners' Chuck Garske, Alliance Advisors' Waheed Hassan, Managing Director and Innisfree's Scott Winter discuss the latest techniques used to sway opinion and bring in the vote - including social media - as well as how traditional tactics have evolved.

And join us on February 5th for the webcast - "Rural/Metro II: Aiding & Abetting Breach Claims Now" - to hear Steve Haas of Hunton & Williams, Kevin Miller of Alston & Bird and Blake Rohrbacher of Richards Layton discuss the pair of decisions expected to have a dramatic impact on the viability of claims for aiding and abetting breaches of fiduciary duty in connection with M&A transactions.

And join us on March 4th for the webcast - "Merger Filings with the SEC: Nuts & Bolts" - to hear Dennis Garris of Alston & Bird, Laurie Green of Holland & Knight and Jim Moloney of Gibson Dunn discuss the nuts & bolts of preparing disclosure documents that are filed with the SEC, including practical guidance into what should be disclosed (or not disclosed) to minimize litigation risk - as well as how to handle common Corp Fin comments.

No registration is necessary - and there is no cost - for these webcasts for DealLawyers.com members. If you are not a member, take advantage of our no-risk trial to access the programs. You can sign up online, send us an email at info@deallawyers.com - or call us at 925.685.5111.

Upcoming Webcast on Section16.net: Join us on January 27th for the webcast - "Alan Dye on the Latest Section 16 Developments" - to hear Alan Dye of Section16.net and Hogan Lovells discuss the most recent updates on Section 16, including new SEC Staff interpretations and Section 16(b) litigation.


Proxy Access: Corp Fin Grants Whole Foods No-Action Request - Now What?

In November, Broc blogged about "Proxy Access: Will the Whole Foods No-Action Request Maim Private Ordering?" As most people expected, Corp Fin did indeed grant Whole Foods no-action request in early December - meaning that the company can exclude a 3%/3-year shareholder proposal - and instead place the company's own 9%/5-year proposal on the ballot. In allowing exclusion, Corp Fin relied on the Rule 14a-8(i)(9) counter-proposal basis.

As we noted in Broc's prior blog, it's highly unlikely that the company's 9%/5-year would ever be triggered given that the company's largest shareholder owns 5.4% and a 5-year holding period is quite long. This leads to a few musings including:

- How will shareholders react to this type of move by a company? The investors I have heard speak on this topic aren't happy that companies might respond with their own counterproposals.
- Will shareholders even vote in favor of management's threshold if they feel the bar is too high? My guess is that management's proposal won't even muster majority support as shareholders place pressure on Whole Foods to adopt what they think is a more reasonable threshold in '16.
- Would Corp Fin let any counterproposal knock out a shareholder proposal? What about a counterproposal with a 20%/10-year threshold?

Bear in mind that nearly half of the several dozen companies that rushed to adopt fee-shifting bylaws over the past few months have already pulled them in the face of shareholder anger.

We have posted the transcript for our recent popular webcast: "Proxy Access: A New World of Private Ordering." Also don't forget the podcast with Mike Garland of the Office of New York City Comptroller about the 75 access proposals that his office has sent to companies...


Shareholder Proposals: Court Overturns Corp Fin's "Ordinary Business" Exclusion Determination

Wow. Not soon after Broc blogged about a few members of the US Supreme Court questioning the deference given to the SEC in the enforcement context, a federal court rules against a Corp Fin no-action response in the shareholder proposal context in Trinity Wall Street v Wal-Mart Stores. Here's a blog by Davis Polk's Ning Chiu:

The U.S. District Court for the District of Delaware determined that Wal-Mart should not have excluded a shareholder proposal from its 2014 proxy statement, even after it received a favorable SEC no-action letter.

Trinity, an Episcopal parish headquartered in New York City, submitted a proposal for Wal-Mart's 2014 annual meeting requesting that the Compensation, Nominating and Governance Committee charter be amended to add oversight of implementation of policies that would evaluate whether the company should sell a product that endangers public safety, has the substantial potential to impair the company's reputation or would be considered offensive to the values that are integral to the company's brand. Trinity wanted the committee to consider whether or not the company should sell guns equipped with magazines holding more than 10 rounds of ammunition.

In March 2014, the SEC staff agreed with the company that it could exclude the proposal under Rule 14a-8(i)(7), as relating to its ordinary business operations. This is consistent with prior SEC staff views about shareholder proposals focused on company decisions to sell controversial products. In April, the Court denied Trinity's request for a preliminary injunction to prevent Wal-Mart from printing proxy materials without this proposal, on the basis that Trinity had not shown a likelihood of success on the merits. The Court specifically deferred to the SEC's no-action decision.

But in an opinion issued recently on summary judgment motions, the Court held that Trinity's 2014 shareholder proposal does not deal with matters that relate to Wal-Mart's ordinary business operations because it seeks to have Wal-Mart's board oversee the development and effectuation of a policy. The Court found that while the policy could, and likely would, influence what products are sold by the company, the proposal itself does not. Moreover, the proposal relates to social policy issues that transcends ordinary business matters, including the social and community effects of sales of these types of firearms at the retailer and the impact that could have on the company's reputation.

Although the Court acknowledged that it had previously accorded significant weight to the SEC staff's no-action letter determination during the preliminary injunction hearing, the Court noted that the final determination of the application of the ordinary business exception is for the Court alone to make. The SEC itself has acknowledged the same in its 14a-8 guidance.

The Court also decided that Trinity's request for declaratory relief regarding Wal-Mart's 2014 proxy materials for a meeting that already occurred is not moot because it falls into an exceptional category of disputes in which the challenged action was of too short a duration to be fully litigated, given that the Court had little time to make a decision before Wal-Mart's printing deadline for its 2014 annual meeting and therefore could not have resolved the parties' disputes by then. In addition, there was a reasonable expectation that the claim is capable of repetition since Trinity intends to submit another proposal for the next meeting.


ISS Issues 20 FAQs on "Equity Plan Scorecard"

In late December, ISS issued 20 FAQs on its new "Equity Plan Scorecard." Here's some analysis from this excerpt of Steve Quinlivan's blog:

The FAQs go a long way in adding some transparency to a complex new policy. Absent overriding factors, a score of 53 or higher (out of a total 100 possible points) generally results in a positive recommendation for the proposal. EPSC factors are not equally weighted. Each factor is assigned a maximum number of potential points, which may vary by model. Some are binary, but others may generate partial points. For all models, the total maximum points that may be accrued is 100. The FAQs include a useful chart showing factors scored and definitions, but it does not include the number of points allocated to the factors.

Proposals that only seek approval to ensure tax deductibility of awards pursuant to Section 162(m), and that do not seek additional shares for grants, will generally receive a favorable recommendation regardless of EPSC factors, provided the Board's Compensation Committee (or other administrating committee) is 100 percent independent according to ISS standards. In the case of proposals that include additional plan amendments, such amendments will be analyzed to determine whether they are, on balance, positive or negative with respect to shareholders' interests, and ISS will determine the appropriate evaluative framework and recommendation accordingly.


ISS Issues 9 FAQs on Independent Chair Policy

In late December, ISS issued 9 FAQs on its new "Independent Chair Policy." Here's some analysis from this excerpt of Steve Quinlivan's blog:

The FAQs reveal that board tenure can play a role in the analysis. According to ISS, board tenure may be a contributing factor in determining a vote recommendation for independent chair shareholder proposals, but will be considered in aggregate with other factors. Concurrence of director/CEO tenure, lenghty directorships, or high average director tenure, may be considered. These concerns will be considered in the context of the overall leadership structure in determining whether the proposal presents the best leadership structure at the company.

And if you get a proposal, what action can you take that would be sufficient for ISS? ISS states full implementation would consist of separating the chair and CEO positions, with an independent director filling the role of chair. A policy that the company will adopt this structure upon the resignation of the current CEO/Chair would also be considered responsive.

ISS says partial responses will be evaluated on a case-by-case basis, depending on the disclosure of shareholder input obtained through the company's outreach, the board's disclosed rationale, and the facts and circumstances of the case. There are many factors that can cause investors to support such proposals, without necessarily demanding an independent chair immediately. For example, through their outreach, a company may learn that shareholders are concerned about the lack of a lead director, weaknesses in the lead director's responsibilities, or the choice of lead director. In such a case, creating or strengthening a robust lead director position may be considered a sufficient response, assuming no other factors are involved. If the company already has a robust lead director position, then the company's outreach to shareholders to discover the causes of the majority vote and subsequent actions to address the issue will be reviewed accordingly.


JOBS Act: SEC Proposes '34 Act Registration Requirements

In late December, the SEC proposed a number of JOBS Act changes to the thresholds for registration, termination of registration & suspension of '34 Act reporting including (here's an overview in this blog):

1. Amending Rules 12g-1 through 4 and 12h-3 which govern the procedures relating to registration, termination of registration under Section 12(g), and suspension of reporting obligations under Section 15(d) to reflect the new thresholds established by the JOBS Act
2. Revising the rules so that savings & loan holding companies are treated in a similar manner to banks and bank holding companies for the purposes of registration, termination of registration, or suspension of their Exchange Act reporting obligations
3. Applying the definition of "accredited investor" in Securities Act Rule 501(a) to determinations as to which record holders are accredited investors for purposes of Exchange Act Section 12(g)(1). The accredited investor determination would be made as of the last day of the fiscal year.
4. Amending the definition of "held of record" to provide that when determining whether an issuer is required to register a class of equity securities with the Commission under the Exchange Act Section 12(g)(1), an issuer may exclude securities:
- Held by persons who received them under an employee compensation plan in transactions exempt from the registration requirements of Section 5 of the Securities Act or that did not involve a sale within the meaning of Section 2(a)(3) of the Securities Act
- In certain circumstances, held by persons who received them in exchange for securities received under an employee compensation plan
5. Creating a non-exclusive safe harbor under which a person will be deemed to have received the securities under an employee compensation plan if the person received them under a compensatory benefit plan in transactions that met the conditions of Securities Act Rule 701(c).

The SEC's press release says that the Commission "voted yesterday" to approve this proposal. Since there wasn't an open Commission meeting that day, these proposals were approved in seriatim. As noted in this blog, there's nothing wrong with that as rules get approved or proposed in this manner on occasion, particularly in December. And the press releases issued by the SEC typically don't state that action has been taken in seriatim - since it doesn't really matter for our purposes...


IFRS: The SEC's Saga Continues

During the recent annual AICPA Conference, SEC Chief Accountant Jim Schnurr delivered this speech about the SEC possibly continuing to consider the use of IFRS by domestic companies. As noted in this blog by George Wilson: "While he did not say anything definite, it is clear the IFRS is no longer on the back burner!"

As it typically does, the SEC has posted these additional speeches and PowerPoint presentations used by its Staffers during the AICPA Conference (here's summaries of these from this Morgan Lewis blog and this Deloitte memo):

- Auditor Independence Matters - Deputy Chief Accountant Brian Croteau

- Internal Controls - Senior Associate Chief Accountant Kevin Stout

- Spinoffs, Goodwill Impairment & Pushdown Accounting - Associate Chief Accountant Carlton Tartar

- Consolidation & JVs - Accounting Fellow Christopher Rogers

- Revenue Recognition - Accounting Fellow Steve Mack

- Segment Reporting; SEC Staff Speeches - Deputy Chief Accountant Dan Murdock

- International Issues - Deputy Chief Accountant Julie Erhardt

- Financial Instrument Issues - Accounting Fellow Hillary Salo

Here's a presentation from the PCAOB's Associate Chief Auditor that provides an overview of comments received on the Staff's "Fair Value" Consultation Paper...


The SEC's 3rd Annual Whistleblower Report: 3600 Tips

In November, the SEC's Office of the Whistleblower published its 3rd annual report for its activities of for the past year. The highlights include:

- 3620 whistleblower during the 2014 fiscal year, an increase of 382 (11.8%) over 2013
- Been a total of 10,193 whistleblower reports since the program commenced toward the end of 2011 fiscal year
- Relatively few whistleblower bounty awards authorized, although the number of awards is slowly increasing.
- Total of 14 whistleblower awards, 9 during the 2014 fiscal year;
- SEC made more awards in the 2014 fiscal year than in all the other years of the program combined.
- 29% of the 14 awards have gone to non-U.S. whistleblowers
- Denied a total of 19 claims, with 12 taking place during 2014 fiscal year

We have been posting memos in our "Whistleblowers" Practice Area - also see this blog by Jill Radloff and Reuters article. And I can't remember if I ever shared this blog by Jill entitled "Whistleblowers Fight Over SEC Award." And then there's this "Mentor Blog" that I just posted entitled "Bigger Penalties When Whistleblowers Involved"...


SEC Commissioners: "Bad Actor" Waiver Deadlock Partially Broken

A few months ago, Broc blogged about the latest in the drama among the SEC Commissioners in approving "bad actor" waivers as the SEC Commissioners were stuck in a 2-to-2 deadlock over the ability of BofA to continue certain activities with Chair White recused. As noted in this Reuters article - and this article - the SEC Commissioners granted a partial waiver (here's the incoming request) in early December that waives the majority of sanctions that begin when the settlement with Bank of America is entered into court - but the one area that wasn't waived is BofA's ability to issue securities without getting the approval of the SEC every time. See this Reuters article entitled "SEC's Stein says Bank of America waiver policy is 'breakthrough'"...


Delaware's C&J Energy Services: Boards Can Decide How to Conduct a Sale of the Company Process

Here's news from late December as reflected in this Wachtell Lipton memo (there are more memos on this case in our "Go-Shop" Practice Area):

Earlier today, the Delaware Supreme Court issued a landmark decision strongly reaffirming two basic principles of Delaware merger law: first, that a board of directors has wide latitude to craft a sales process, including to choose a single-bidder strategy; and, second, that the Delaware courts, even if they find that a board erred in decision-making, cannot rewrite the merger contract in a way that reduces the buyer's rights. C&J Energy Servs., Inc. v. City of Miami Gen. Emps.' & Sanitation Emps.' Ret. Trust, No. 655/657, 2014 (Del. Dec. 19, 2014) (en banc).

At a preliminary hearing last month, the Court of Chancery enjoined a proposed merger transaction involving C&J Energy Services and Nabors Industries, because the C&J board did not affirmatively shop the company either before or after signing the deal. The court's order required C&J to run a go-shop process notwithstanding the merger agreement's no-shop provision, and it ruled that Nabors could not treat C&J's solicitation efforts as a basis to walk away.

The Supreme Court unanimously reversed, emphatically rejecting the premise that Revlon duties require an auction or other proactive market check. To the contrary, Chief Justice Strine wrote, "Revlon does not require a board to set aside its own view of what is best for the corporation's stockholders and run an auction whenever the board approves a change of control transaction." Independent and well-informed directors may choose any reasonable path when selling a company, "so long as the transaction is subject to an effective market check under circumstances in which any bidder interested in paying more has a reasonable opportunity to do so." Thus, for example, a board may choose to conduct discussions with only a single potential buyer, and then sign up a merger agreement with customary "no shop" and "break fee" provisions, provided that there is an opportunity, through a fiduciary out, for a new bidder to challenge the agreed transaction by offering superior terms.

The Court also held that judges may not "blue-pencil an agreement to excise a provision beneficial to" a buyer while simultaneously barring the buyer from "regard[ing] the excision as a basis for relieving it of its own contractual duties."

C&J thus offers practical guidance for transaction planners by reaffirming that Revlon does not mandate any specific sales procedure. It is an important decision that recognizes stockholder value is best served by legal rules that give well-motivated and engaged boards the discretion necessary to craft effective sales processes.


Update on the St. Petersburg Stock Exchange Scam

Last year, Broc blogged about companies receiving letters from the St. Petersburg (Russia) Stock Exchange stating that it is in the process of unilaterally listing the company's securities. Here's an update from Brian Breheny of Skadden (also see this memo for a list if impacted companies):

A number of companies have recently received a letter from the St. Petersburg Stock Exchange (Exchange) in Russia stating that it has decided to admit the company's securities to public trading on the Exchange. These letters do not request a response from the company and note that the Exchange's decision does not impose any obligations on the company. Many companies received a similar letter from the Exchange in 2013. Companies generally responded to those letters and requested that their securities not be admitted to trading on the Exchange. It is our understanding that, as a result, the Exchange did not proceed with the admissions.

In July 2014, there were a number of changes to the Russian securities markets laws that regulate the procedures for listing of foreign securities in Russia. These changes further facilitate the listing of securities by Russian stock exchanges without the consent of the issuing company. and relieve the issuers from certain Russian reporting and disclosure obligations by shifting the burden of compliance onto the relevant exchange. Because of these changes, we expect that the Exchange will not be amenable to ceasing the admission of foreign securities to trading.


Insider Trading: Newman Decision Makes It Harder to Bring Cases in 2nd Circuit

In what many are calling a "landmark" case, the Court of Appeals for the Second Circuit issued a long-anticipated decision in mid-December dismissing indictments against two defendants in United States v. Newman. The Court ruled that the government must prove that a remote tippee knows of the personal benefit received by a tipper in exchange for disclosing nonpublic information - and the Court held that the government must prove that the personal benefit is "of some consequence." In other words, the benefits alleged by the government in United States v. Newman were not sufficient to support a conviction.

We are posting memos about this case in our "Insider Trading" Practice Area. Also scroll down on this Bloomberg View piece for analysis of the decision, including this unusually chastened statement by US Attorney Preet Bharara. And this Reuters article notes the fallout as this decision impacts other investigations...

Speaking of trading, the SEC's Inspector General reports that the agency still lacks reliable tools to monitor the trading of Staffers, as noted in this Bloomberg article...


How Much Does a GC Make? Equilar's General Counsel Pay Study

In Broc's experience, there is no more widely read document than one that reveals how much others in similar situations make. It's the bling baby. $$$. So folks should be excited about Equilar's new study on general counsel pay at Fortune 1000 companies (which isn't publicly available fyi; here's Equilar's site - and here's last year's findings). Here are the key findings:

- How Much - The median total compensation for General Counsels, broken out by revenue range was:
o Under $500 Million: $677k
o $500 Million to $1 Billion: $808k
o $1 Billion to $ 5 Billion: $1.1 million
o $5 Billion to $15 Billion: $1.8 million
o Over $15 Billion: $2.7 million

- #2 Lawyers Make About Half - Across all of the companies, #2 general counsels received 49% as much total compensation as top general counsels, on average, and the #2 general counsel received 51% as much as the top general counsel when examining median compensation.

- Smaller Companies Rely More on Salary - The ratio of median salary to median equity and long-term incentive compensation was 1.2 and 1.0 for the two lowest revenue ranges, and 0.7, 0.6 and 0.4 for the three highest revenue ranges. (Listed in ascending order of size.)

- Performance Awards More Common at Larger Companies - 78% of general counsels at companies in the highest revenue range received performance-based stock, compared to only 22% of executives in the lowest revenue range and 54% of executives in the second lowest revenue range.

- Perks - 62% of general counsels were eligible for perquisites, including 83% of executives at companies with over $15 billion in revenue.


Will We Ever See a Public Benefit Corporation? Yes, We Have The First (In Brazil)

Just as Lois Yurow muses in this blog whether it would be viable for a public company to become a benefit corporation - or for a benefit corporation to go public - comes the news of the first public B corp: Natura. However, Natura is not a US public company - but rather a Brazilian company. And as noted in this Cooley blog, Delaware Chief Justice Strine recently wrote that article praising the B Corp concept.

Meanwhile, B Lab has now certified 1200 B Corps - and Kickstarter has become a B Corp, as well as Green Mountain Power, a public utility. A lot of action in this area...


NASAA Unveils Online Filing System for State Form D Filings

Here's an excerpt from this blog by David Jenson:

On December 15, 2014, the North American Securities Administrators Association, Inc. (NASAA) unveiled its Electronic Filing Depository (EFD) for use in connection with state Form D filings in Rule 506 offerings. The NASAA has been pursuing initiatives to streamline the state blue sky filing process for some time. In July of 2014, we reported on the NASAA's proposed model rules that could be enacted by states to require electronic filings in connection with Rule 506 offerings. The EFD system dovetails with that initiative. While the availability of the EFD is an interesting and welcome development, there are a few important limitations to note.


Nasdaq's Listing Fees: Going Up & A New Structure

Here's an excerpt from this Goodwin Procter memo:

A new fee structure and increased fee rates for the Nasdaq Global Select, Global and Capital Markets will become effective on January 1, 2015, subject to several transition provisions described below. All companies that list securities on these Nasdaq markets after January 1, 2015 will be subject to the all‑inclusive annual fee, subject to transitional relief for companies that apply to list on Nasdaq prior to January 1, 2015 but complete their listing after that date. Effective January 1, 2018, all Nasdaq-listed companies will be subject to the all‑inclusive annual fee.

Companies that are listed on the Nasdaq Global Select, Global or Capital Markets before January 1, 2015 and want to opt into the all‑inclusive annual listing fee structure for 2015 must complete and file the opt-in form available through the NASDAQ OMX Listing Center not later than December 31, 2014. Companies should be aware that this election is irrevocable. Companies that do not opt into the all‑inclusive annual fee will continue to be billed under the current annual fee structure for 2015, and will also continue to be subject to additional fees for listing additional shares, corporate actions and other Nasdaq regulatory fees, as applicable. Nasdaq‑listed companies should compare their current and anticipated listing and other fees under the current fee structure (using the new fee rates) with the fees payable under the new all‑inclusive fee structure to determine whether they might benefit from opting into the all‑inclusive fee structure. Further information is available in the Nasdaq Continued Listing Guide.

As shown in the tables in the memo, the all‑inclusive annual fee for companies listed on the Nasdaq Global and Global Select Markets other than ADRs and closed-end funds will range from $45,000 to $155,000 for 2015. The all‑inclusive annual fee for companies listed on the Nasdaq Capital Market other than ADRs and closed-end funds will range from $42,000 to $75,000 for 2015.


First Issuer Completes NASAA Coordinated Review Program

Here's a blog by Stinson Leonard Street's Steve Quinlivan:

There has been somewhat of a controversy surrounding the SEC's rulemaking in connection with Regulation A+ under the JOBS Act. Should larger Tier 2 offerings preempt state blue sky regulation (my preference) or be subject to state blue sky regulation (the state regulators' preference)? To make state regulation an easier pill to swallow, the North American Securities Administrators Association, or NASAA, previously announced that it adopted a streamlined multi-state review protocol to ease regulatory compliance costs on small companies attempting to raise capital under the JOBS Act.

The first and only issuer has apparently completed a NASAA Coordinated Review in connection with an existing offering under the existing, but rarely used, Regulation A. Following completion of the review, the issuer filed a comment letter with respect to the Regulation A+ rulemaking with the SEC.

Among other things, the issuer noted "the Coordinated Review program has created value by defining concrete service standards. For us, the value of receiving comments in a timely fashion outweighs the marginal costs of filing in multiple states. The legal certainty this affords is substantial, and does not exist in federal review. The uniform application of NASAA's Statements of Policy has been very helpful, and we have been able to comply with these policies despite the presence of certain conditions within our company which pertain to these policies."

Upon learning about the comment letter, members of the House Financial Services Committee, Maxine Waters (D-CA) and Stephen Lynch (D-MA), sent SEC Chair Mary Jo White a letter. The letter asks the SEC to study NASAA's Coordinated Review program, and not undermine crucial investor protections by preempting the states' regulators.

Here's the issuer's comment letter and the letter to Chair White.


NYSE Proposes to Delist Companies for Late 10-Qs

Here's an excerpt from this blog by Ethan Mark:

The NYSE proposes to amend its continued listing requirements in relation to the late filing of a company's annual report with the SEC as set forth in Section 802.01E, or the Late Filer Rule, of the Listed Company Manual. As amended, the Late Filer Rule will:

- expand the rule to impose a maximum period within which a company must file a late quarterly report on Form 10-Q in order to maintain its listing; and

- clarify the NYSE's treatment of companies whose annual or quarterly reports are defective at the time of filing or become defective at some subsequent date.


The World's Largest Holiday Disclaimer: 2014 Version

In what has become an annual tradition, Cary Klafter of Intel again shares what I imagine has to be the world's largest holiday disclaimer, running for 21 pages.


Our New "Nasdaq Listing Standards Handbook"

Spanking brand new. By popular demand, this comprehensive "Nasdaq Listing Standards Handbook" covers the corporate governance listing standards for companies listed on the Nasdaq. A "must have" for any listed company (or for those that work for listed companies). This one is a real gem - 93 pages of guidance. Goes nicely with its companion: "NYSE Listing Standards Handbook."


More on "The Mentor Blog"

We continue to post new items daily on our blog - "The Mentor Blog" - for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

- Tips to Enhance Your Non-GAAP Disclosures
- Using Internal Audit to Assess & Improve Corporate Culture
- Considerations for Compliance Outsourcing
- Caremark Applies to Audit Committee Oversight of Internal Controls
- Corporate Political Spending Disclosure: Strategic Communications Plan


People: Who's Doing What and Where

Conflict Minerals: Briefs Filed in Appeals Case

As noted in this Cooley blog and Davis Polk blog, the SEC, intervenor Amnesty International and amici Global Witness and Free Speech for People have filed their briefs in support of upholding the conflict minerals disclosure requirement in the appeals case. In a joint statement, SEC Commissioners Gallagher and Piwowar said they oppose the position taken in the SEC's brief. Briefs from appellants are due in about 10 days.


Conference Calendar


What's New on Our Websites

Among other new additions, during the last month we have:


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