TheCorporateCounsel.net Blog |
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Friday, March 21, 2003
Yesterday, the SEC announced that it will soon have a new website for making test filings of Forms 3, 4 and 5 (the test site likely will be up and operational on Monday or Tuesday next week). The new filing system will allow filers to create and file a report directly on the SEC's website - or to make filings through the new website using third-party software that has been adapted to conform to the new reduced content format. We expect the test period to last for approximately one month, during which time the existing EDGARlink system will exist side-by-side with the new system. After the test period expires, the SEC will convert to the new system as the exclusive means for filing Forms 3, 4 and 5. Electronic filing will remain voluntary for a period of time thereafter, but it is likely that by June (well ahead of the July 30 deadline imposed by Section 403 of the Sarbanes-Oxley) the SEC will make electronic filing mandatory for all Section 16 filers. The SEC's announcement is at http://www.sec.gov/info/edgar/ednews/ownerfilesite.htm. For Section16.net subscribers, there is a webcast program on "Comparing the Section 16 Filers" on April 8th. Learn how to best use the SEC's test site from key SEC staffers and hear the pros and cons of nine different third party web filers. More information is at http://www.section16.net/webcast0403/.Those who are not yet Section16.net subscribers can access the webcast (or the transcript) by taking advantage of the no-risk trial at www.section16.net. Thursday, March 20, 2003
The SEC staff is expected to provide FAQs on Regulation G issues before the March 28th effective date. Here are some conversations we have heard that have taken place with the staff regarding transition issues (although don't rely on them unless you speak with the staff or the FAQs are issued): - so long as annual report is mailed before 3/28, providing other copies after 3/28 does not mean the report must comply with Reg G - if 10-K is filed before 3/28, the fact that its posted and on a website after 3/28 does not mean the 10-K must comply with Reg G (however, if the 10-K is posted after 3/28, it must comply) - if 10-K filed before 3/28 and annual report is delivered after 3/28 that repeats information from 10-K, the repeated information does not need to comply with Reg G - shelf registrations filed after 3/28 that incorporate information from a 10-K that does not comply with Reg G would then need to comply with Reg G - this can be done by amending the 10-K or by filing a 8-K or 10-Q that is incorporated by reference and complies with Reg G (note that shelfs filed before 3/28 are not impacted by Reg G) Yesterday, the SEC took enforcement action against HealthSouth for alleged accounting fraud that included a 2 day trading suspension - that is a fairly stiff sanction by itself for the company and rare for the SEC to impose such a sanction on a large cap company. See http://www.sec.gov/news/press/2003-34.htm. For TheCorporateCounsel.net subscribers, we have posted an interview with Bob Juceam on D&O insurance at http://www.thecorporatecounsel.net/member/InsideTrack/03_19_03_Juceam.htm. Wednesday, March 19, 2003
In its newly posted proposing release, the Public Company Accounting Oversight Board has released its estimates of the levels of fees that companies would pay to fund the Board. As proposed, fees would be based on the relative average monthly market capitalization for the 12 months preceding the fiscal year. The allocation of the fees is top-heavy. The Board estimates that the largest companies would be allocated $260,000 for every $10 million of accounting support fees. The 1,500th largest issuer would be allocated $500 for each $10 million of fees. To understand the order of magnitude, based on market capitaliztions at the end of 2001, the 5th largest company would pay about 63% of the fee paid by the largest market cap company, the 25th largest company would pay about 22%, and the 50th largest company would pay about 11%. The proposing release is at http://www.pcaobus.org/pcaob1/Rules/Release2003-002.pdf. For TheCorporateCounsel.net subscribers, we have posted an interview with Mark Bergman of Paul Weiss regarding the impact of the new SEC rules on non-US companies at http://www.thecorporatecounsel.net/member/InsideTrack/03_18_03_Bergman.htm. Tuesday, March 18, 2003
At the 75 day mark for 12/31 companies - which will be next year's 10-K deadline - over 1000 companies have already filed their 10-Ks. Considering that there are slightly less than 10,000 companies with 12/31 year-ends, this is a sizable percentage. On the SEC's website - under "Regulatory Actions" there is a new section called "PCAOB Rulemaking." So far it only includes proposed Bylaws for the Public Company Accounting Oversight Board - not the proposals the PCAOB has issued which is available on its website. The SEC's PCAOB portal is at http://www.sec.gov/rules/pcaob.shtml. The PCAOB's website is at http://www.pcaobus.org. For TheCorporateCounsel.net subscribers, we have posted model Pre-Approval Policies for Non-Audit Services from Wachtell Lipton and Ernst & Young at http://www.thecorporatecounsel.net/member/Sarbanes/SampleNon-AuditPolicies.htm. We also have posted sample disclosures from companies that have significant deficiencies and material weaknesses in their internal controls at http://www.thecorporatecounsel.net/member/Disclosure/03_14_03_deficiencies.htm. |
