California climate bills SB 253 and SB 261 were sailing along towards implementation. Despite litigation challenging the laws, the lower courts initially refused to issue injunctions against them. Plaintiffs were appealing to the Supreme Court for an emergency injunction that seemed like a long shot. Then, somewhat unexpectedly, the Ninth Circuit Court of Appeals enjoined SB 261, staying the law pending the outcome of litigation. However, confusion remained as to whether this injunction applied to all in-scope companies, or only those parties to the lawsuit. The California Air Resources Board (CARB) clarified this week that it would not enforce SB 261 against any companies at this time. A recent Gibson Dunn memo discusses CARB’s statement:
On December 1, 2025, the California Air Resources Board (‘CARB’), the state agency responsible for enforcing SB 261, responded to the injunction by posting an enforcement advisory stating it would not enforce the law ‘against covered entities for failing to post and submit reports by the January 1, 2026, statutory deadline.’ Instead, CARB ‘will provide further information—including an alternate date for reporting, as appropriate—after the appeal is resolved.’
SB 261 is now in limbo, meaning companies will not be required to report on climate-related financial risk. Its counterpart, SB 253, has not been enjoined and is still set to come into force. SB 253 requires disclosures of emissions data, and the first reports are due on August 10, 2026. It’s unclear if and when SB 261 will be enforceable, but if the law survives its court challenges, then we’ll likely hear more from CARB regarding compliance timelines.
PracticalESG.com members can learn more about SB 261 and SB 253 here. If you’re interested in a full membership to PracticalESG.com with access to the complete range of benefits and resources, sign up now and take advantage of our no-risk “100-Day Promise” – during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. If you are not a member, but you follow PracticalESG.com blogs, beginning January 15, 2026, those blogs will no longer be available without a PracticalESG.com membership. But there’s a new membership level just for the blogs – and sign up is live with a limited time incentive. If you obtain a blog-only membership before January 15, 2026, you can take advantage of a 50% discount off the regular first-year membership ($249.50 for a 2026 membership versus $499 regular price).
Yesterday, Chairman Atkins rang the NYSE opening bell and delivered a speech entitled “Revitalizing America’s Markets at 250.” He was introduced by NYSE president Lynn Martin, who focused her remarks on the declining number of publicly traded companies and the rising cost of going public, noting that the exchange looks forward to working with the SEC to create a simpler framework and reduce the regulatory burdens imposed on public companies.
In his speech, Chairman Atkins outlined his “vision to strengthen U.S. capital markets for the next century and what the SEC is doing now to lay that groundwork” and restated the three pillars of his plan to make IPOs great again – including disclosure reform, “de-politicizing” shareholder meetings and reforming the litigation landscape for securities lawsuits. On disclosure reform, he highlighted two main goals:
– To root disclosure requirements in the concept of financial materiality; and
– That disclosure requirements scale with a company’s size and maturity.
On materiality, he noted:
[O]ur disclosure regime is most effective when the SEC provides, as FDR advocated, the minimum effective dose of regulation needed to elicit the information that is material to investors, and we allow market forces to drive the disclosure of any additional aspects of their operations that may be beneficial to investors.
In contrast, an ineffective disclosure regime would be one where the SEC requires that all companies provide the same information without the ability to tailor the disclosure to their specific circumstances, with the only view that such information should be “consistent and comparable” across companies.
He cites the SEC’s executive compensation disclosure rules as an example of where he feels disclosure requirements have gone off the rails:
[E]arlier this year, the SEC held a roundtable that brought together companies, investors, law firms, and compensation consultants to discuss the current state of the agency’s executive compensation disclosure rules and potential reforms. Somewhat to my surprise, there was universal agreement among the panelists that the length and complexity of executive compensation disclosure have limited its usefulness and insight to investors. We need a re-set of these and other SEC disclosure requirements, and this roundtable was one of the first steps to execute my goal of ensuring that materiality is the north star of the SEC’s disclosure regime.
With respect to the scalability of disclosure requirements, he suggested:
[T]he SEC should give strong consideration to the thresholds that separate “large” companies, which are subject to all of the SEC disclosure rules, and “small” companies that are subject to only some of them. The last comprehensive reform to these thresholds took place in 2005. This dereliction of regulatory upkeep has resulted in a company with a public float of as low as $250 million being subject to the same disclosure requirements as a company that is one hundred times its size.
For newly public companies, the SEC should consider building upon the “IPO on-ramp” that Congress established in the JOBS Act. For example, allowing companies to remain on the “on-ramp” for a minimum number of years, rather than forcing them off as soon as the first year after the initial offering, could provide companies with greater certainty and incentivize more IPOs, especially among smaller companies.
Notably, in his conclusion, Chairman Atkins reiterated the ambitiousness of his agenda, saying, “But these are only the first steps in a broader effort to realign our markets with their most fundamental purpose, which is to place the full measure of American might where it belongs: in the hands of our citizens instead of the regulatory state.”
Late last month, ISS launched a PR campaign in the form of this “Protect the Voice of Shareholders” website, with the goal of correcting “misinformation about ISS and the role of proxy advisers” and helping “ensure investors’ and shareholders’ right to invest how they choose is preserved and protected.” Launched in the wake of various lawsuits and regulatoryinitiatives, the website says:
Excessive or agenda-driven regulation of proxy research firms could impair the ability of institutional investors to help ensure effective corporate governance and accountability at the companies in which they own stock, which in turn can adversely impact the retirement savings of millions of Americans. It can also undermine the free market.
Here are some facts highlighted on the site that you may or may not know:
– Approximately 90% of voted shares processed by ISS globally are tied to voting policies customized by the investor, instead of utilizing ISS’ Benchmark or Specialty policy options.
ISS voting recommendations reflect how its institutional investor clients want to vote the shares they own or manage in public companies, and the factors they deem most relevant to those voting decisions. Clients can choose these criteria by choosing from a wide array of voting guidelines, including ISS’ Benchmark policy, which is developed with input from investors and public comment, thematic ISS policies for those focused on faith-based investing, governance, or other such considerations, or customizable policies reflecting a client’s specific considerations. Clients not only choose their voting policy, but they also receive reports outlining the rationale underlying ISS’ recommendations and do not always choose to vote in accordance with its recommendations. Clients also may elect to receive shareholder meeting research that is informational only and does not include voting recommendations.
– The ISS Benchmark policy voting aligned with board recommendations on management-sponsored resolutions approximately 96 percent of the time for S&P500 companies during the 2025 proxy season.
– ISS has implemented a firewall to segregate the work of ISS-Corporate, the business unit which provides products and services to publicly traded companies, from the ISS teams preparing research on publicly traded companies: ISS Research works independently of ISS-Corporate; ISS-Corporate is physically separated and is separately managed; ISS Research team members do not know the identity of ISS-Corporate clients; and ISS-Corporate maintains a “Blackout Period” during an issuer’s solicitation so that it does not sell to issuers during that period.
To provide transparency and demonstrate the independence of our proxy research, ISS discloses to institutional clients the identity of all ISS-Corporate subscribers, the types of products and services they receive, and the fees paid to ISS-Corporate.
The website also touts ISS’s recent victories in courtrooms — as it now turns to sway the court of public opinion.
Today on CompensationStandards.com at 2:00 pm Eastern, join us for the webcast “Equity Award Approvals: From Governance to Disclosure” to hear Troutman Pepper Locke’s Sheri Adler & David Kaplan and Pay Governance’s Jeff Joyce discuss common foot faults for equity award approvals and share best practices to help you dot your i’s and cross your t’s when awarding equity in 2026. The panel will be covering the following topics:
Not Your Kindergartener’s Math: Share Counting
Planning Ahead: Award Design
Approval Formalities:
Who Approves?
What Gets Approved?
Grant Timing, Sizing and Disclosure
Documenting and Communicating Awards
Members of CompensationStandards.com are able to attend this critical webcast at no charge. If you’re not yet a member of CompensationStandards.com, subscribe now. If you need assistance, contact our team at info@ccrcorp.com or at 800-737-1271. Our “100-Day Promise” guarantees that during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. The webcast cost for non-members is $595.
We will apply for CLE credit in all applicable states (with the exception of SC and NE, which require advance notice) for this 60-minute webcast. You must submit your state and license number prior to or during the program using this form. Attendees must participate in the live webcast and fully complete all the CLE credit survey links during the program. You will receive a CLE certificate from our CLE provider when your state issues approval, typically within 30 days of the webcast. All credits are pending state approval.
This program will also be eligible for on-demand CLE credit when the archive is posted, typically within 48 hours of the original air date. Instructions on how to qualify for on-demand CLE credit will be posted on the CompensationStandards.com archive page.
I know, too soon! But here we are. Memos on annual reporting and proxy season are starting to roll in. One of your early questions might be: “Do I need to make any updates to D&O questionnaires?” The answer is: not necessarily. But here are some things you may want to think through:
– Do the independence questions capture close personal friendships and other social ties with management as potentially material relationships for the board’s consideration? As this Mayer Brown alert notes, companies are taking another look at this question after an SEC enforcement action, although you may have already considered this last year.
– Do you need to update questionnaires to address EDGAR Next Form ID requirements for new directors and officers? If you haven’t already added, the alert says you should be including “whether the applicant, any account administrator, or the Form ID signer has been convicted of, or civilly or administratively enjoined, barred, suspended, or banned in connection with federal or state securities violations (noting that this requirement is not subject to a 10-year lookback).”
– Should your questionnaires collect information about skills in cybersecurity and AI? The alert says you may want to supplement your expertise questions to address the board’s fluency in “digital transformation, cyber risk, and AI governance.”
– Is your board diversity question part of a stock exchange section? If so, you may choose to move it to a general section and conform the demographic self-identification categories to the federal EEO-1 form (as Goodwin did in its form D&O Questionnaires).
With few changes, maybe this is the year to invest some time in improving the understandability and usability of your questionnaires.
It’s nice that we have a year where there are no major updates to SEC regs or stock exchange listing standards requiring us to draft entirely new sections of Form 10-Ks or proxy statements. But there are a few funky things about 2025 that will need to be considered for particular disclosure updates, as Liz noted last week. Here’s another great reminder from this Mayer Brown alert that may not be top-of-mind.
– Certifications, Exhibits, Signatures and Consents. Interestingly, growing areas of SEC Staff comments include the certifications, exhibits, signatures and consents to expertised portions of a filing, including consents of subject matter experts and counsel. In terms of the certifications required by Item 601(b)(31) of Regulation S-K, the Staff often comment when the language of the certification does not exactly match the language of Regulation S-K, or when the language has been incorrectly modified.
In terms of exhibits, the Staff will often comment if an exhibit is missing, for example, when a material contract was entered into or amended during the reporting period and not filed as an exhibit. The same stands true for expertized consents—where the findings or opinion of an expert, such as a tax or mining expert, for example, are included or summarized in the filing, the company must include the expert’s consent as an exhibit to the filing.
And here’s more on a topic that Liz mentioned last week:
– EDGAR Next Transition Delays and Regulation S-K Item 405 Implications. Some [EDGAR Next] bottlenecks, combined with the September 15, 2025, deactivation of legacy filing access codes for submissions, resulted in late Section 16(a) reports for many companies and insiders who could not timely complete EDGAR Next onboarding or obtain new credentials. Companies should be mindful of the Regulation S‑K Item 405 implications in their 2026 proxy statements. Item 405 requires disclosure of any known failures to file timely Forms 3, 4 or 5 during the most recent fiscal year, including identification of the reporting persons and the number of late reports and transactions.
In preparing 2026 proxies, issuers should carefully reconcile insider reporting logs against EDGAR timestamps, assess whether delays were attributable to EDGAR Next transition issues, and include required delinquency disclosure where appropriate. Even if transition delays may have been operational in nature, Item 405 is a bright-line, disclosure‑based requirement. Therefore, issuers should treat EDGAR Next-induced late filings no differently from other late filings and make clear, accurate delinquency disclosures in their 2026 proxy statements.
Check out our “Proxy Season” and “Form 10-K” Practice Areas, where we’re posting all the related resources.
If you deal with shareholder proposals in your practice, you do not want to miss today’s webcast – “This Year’s Rule 14a-8 Process: Corp Fin Staff Explains What You Need to Know” – to hear from Corp Fin Chief Counsel, Michael Seaman, and Corp Fin Counsel, Emma O’Hara, on how the Staff will handle the Rule 14a-8 process for the 2026 proxy season in light of Corp Fin’s new statement. Cooley’s Reid Hooper and Gibson Dunn’s Ron Mueller will also give their perspectives on strategy and how issuers should be thinking about and approaching the new process, with our own Liz Dunshee moderating.
I look forward to hearing about how the Staff is working through its post-shutdown backlog, the expected substance of the notice submitted by companies under this year’s approach, what language should be included for the “unqualified representation,” what to do after submission, what happens if there’s a withdrawal and the carve-out for Rule 14a-8(i)(1) requests.
Keep in mind these few important differences from our typical programming:
1. This webcast is free for anyone who wants to attend, even if you aren’t currently a member of this site. We want to do what we can to get the word out about the Staff’s approach so that the season is as smooth as possible for everyone (especially given the Staff’s workload after the shutdown).
2. It’s happening from 11:00 am – 12:00 pm Eastern.
3. Since this is a pop-up webcast, we aren’t offering CLE credit for this one.
If you’re hunting for CLE credits by the end of the year, remember that members of this site can earn live and on-demand credits through our other programs. As you can see on our home page, we have two live CLE programs in December, including:
– “The (Former) Corp Fin Staff Forum” webcast at 2 pm ET on December 11th featuring former Corp Fin Senior Staffers discussing the SEC’s regulatory agenda, recent Staff guidance, shareholder proposals, filing reviews and what might be coming down the pipe in 2026; and
– Our “Anatomy of a Shelf Takedown” webcast at 2 pm ET on December 18th featuring experienced capital markets partners discussing legal and practical issues involved in a shelf takedown of debt or equity securities.
Last week, the website on SEC.gov that houses shareholder proposal no-action letters was updated. To reflect the new process for the 2026 season, the shareholder proposal no-action letter page now directs to this site, which gives a quick summary of the past and present approaches:
Companies intending to exclude shareholder proposals from their proxy materials must notify the Commission and provide the information required by Exchange Act Rule 14a-8(j) no later than 80 calendar days before filing their definitive proxy materials.
Historically, most Rule 14a-8(j) notifications took the form of no-action requests where companies asked the Division of Corporation Finance to state its informal, non-binding views on whether it concurred that there was a legal basis to exclude shareholder proposals from their proxy materials under Rule 14a-8. On November 17, 2025, the Division announced that during the 2025-2026 proxy season it will not respond to no-action requests related to any basis for exclusion other than Rule 14a-8(i)(1). The Division will continue to respond to Rule 14a-8(i)(1) no-action requests until such time as it determines that there is sufficient guidance available to assist companies and proponents in their decision-making process.
The Division also will respond to Rule 14a-8(j) notifications when a company or its counsel includes, as part of the notification, an unqualified representation that the company has a reasonable basis to exclude the proposal.
The site then directs you here for Rule 14a-8 correspondence and Division responses, which includes four separate sites for:
As Liz shared last week, at least one Rule 14a-8(j) notice & response had already been posted on the SEC’s website, although it related to a pending, and already posted no-action request submitted prior to the Staff’s statement, so it wasn’t entirely clear until this page was rolled out that all the notices & responses would be posted. It now looks like they will be.
There are a number of other procedural questions floating around, and I’m excited to hear from SEC Staff during tomorrow’s TheCorporateCounsel.net webcast, “This Year’s Rule 14a-8 Process: Corp Fin Staff Explains What You Need to Know.” Tune in from 11:00 am – 12:00 pm Eastern to hear Corp Fin Chief Counsel, Michael Seaman, and Corp Fin Counsel, Emma O’Hara, address some frequently asked questions from our own Liz Dunshee, Cooley’s Reid Hooper and Gibson Dunn’s Ron Mueller, who will also give their perspectives on strategy and how issuers should be thinking about and approaching the new process.
Keep in mind that this webcast is free — even for folks who aren’t members of TheCorporateCounsel.net. There’s no need to register in advance, even if you are not a member. But head to the webcast landing page linked above to add the webcast to your calendar so you don’t miss it! (I know if I don’t get a 15 min. prior reminder pop-up, I won’t show up anywhere!) This webcast also won’t be eligible for CLE credit — but we have lots of other options, both coming up live (see the home page) and on-demand — if you need that!
Stock buybacks — which were already trending in 2025 toward an all-time high — are getting another boon. The Treasury Department & the IRS recently released final regulations, effective on November 24, 2025, that provide guidance on the application of the 1% excise tax on stock buybacks by public companies. As this Debevoise article explains, the final regulations pare back many provisions that attracted taxpayer comments on the 2024 proposal. For example:
Funding Rule: The Final Regulations limit the international reach of the Buyback Tax by removing a controversial “funding rule” which appeared nowhere in the statute and which applied the Buyback Tax to the repurchase of public foreign stock by a foreign issuer if the proceeds of the repurchase were sourced from its U.S. affiliates.
Comment: The removal of the “funding rule” is a welcome relief, as it might have applied to buybacks that were determined to be funded with distributions from U.S. subsidiaries and ordinary course cash management and treasury functions. However, the Buyback Tax still applies to purchases of public foreign corporation stock by the corporation’s U.S. affiliates.
Preferred Stock: While the Final Regulations continue to apply the Buyback Tax to repurchases of preferred stock, they exempt the redemption of nonvoting, debt-like preferred stock from the application of the Buyback Tax. The Final Regulations also exempt the redemption of stock issued prior to the passage of the Buyback Tax on August 16, 2022, if such stock is subject to a mandatory redemption by the issuer or a unilateral put by the holder.
Comment: Public issuers of PIPEs or SPACs with redeemable shares that were issued prior to August 16, 2022, will now be able to redeem such shares without paying the Buyback Tax.
There’s other good news:
A corporation that has previously paid the Buyback Tax but would not be required to do so under the Final Regulations may receive a refund by filing an amended quarterly return after the effective date of the Final Regulations.
While most of us public company securities lawyers may not spend our day-to-day thinking about how audit firms might be subject to liability for statements in their clients’ IPO registration statements, that potential for liability certainly does impact the day-to-day of public companies and their lawyers because (I assume) it is something the higher-ups at audit firms think about. So here’s an interesting development out of the 9th Circuit, explained by this Morgan Lewis alert:
After Bloom Energy issued revisions to its 2016 and 2017 financial statements and a restatement of its 2018 and 2019 financial statements, Bloom stockholders amended an existing securities class action to add claims under Section 11 against the accounting firm that audited Bloom’s 2016 and 2017 financial statements. The case centers on the accounting for Managed Services Agreements (MSA) that Bloom used in connection with sale-leaseback arrangements . . .
In their complaint, plaintiffs alleged the accounting firm was liable under Section 11 for purportedly actionable statements and omissions in Bloom’s registration statement regarding its accounting for MSAs because the audit opinion did not identify that Bloom should have classified the MSAs as capital leases instead of operating leases. The accounting firm moved to dismiss, and the District Court granted the motion. Rather than amend their complaint, plaintiffs appealed to the Ninth Circuit.
On appeal, plaintiffs did not challenge the District Court’s dismissal of their claim that the audit opinion itself was false or misleading apart from its certification of the financial statements. . . Rather, plaintiffs argued that the accounting firm should be strictly liable under Section 11(a)(4) of the Securities Act for the misstatements in Bloom’s financial statements.
In early November, in Hunt v. PricewaterhouseCoopers LLP, the 9th Circuit rejected this argument and reiterated the negligence standard for accountant liability under Section 11:
Section 11 includes a due diligence defense, which requires that “accountants … exercise due diligence in investigating the materials provided to them using the accepted practices of their profession.” Accordingly, Section 11 imposes a negligence standard for an accountant’s liability, and in order for plaintiffs to prevail on a Section 11 claim, they must establish that an accounting firm did not have a “reasonable ground to believe” and did not believe, “at the time such part of the registration statement became effective, that the statements therein were true.”
But what about the claim that the audit opinion itself was false or misleading?
The Ninth Circuit next addressed applicability of the Supreme Court’s 2015 decision in Omnicare . . . in which the Supreme Court excluded statements of opinion from liability under Section 11 . . . Hunt was the first time the Ninth Circuit had occasion to consider applicability of Omnicare to auditors.
Without hesitation, the Ninth Circuit “extend[ed]” the holding in Omnicare to accountants and noted that doing so is consistent with Section 11’s due diligence defense. The Ninth Circuit held: “accountants may be liable for statements of fact if they did not act with due diligence; however, accountants will not be liable for statements of opinion, even if they reflect a subjective belief that admits there is a possibility of error, as long as the statement of opinion was sincerely held.”
Finally, the Ninth Circuit clarified that an “accountant’s certification of financial statements is nothing more than an opinion,” and held that, in this case, the accounting firm could not be liable for its audit opinion because that opinion “did not make any material misstatements of fact or omissions but rather was merely a statement of opinion based…upon the subjective judgment of the MSA classification.”
[Plus] Bloom’s determination of whether the accounting standards mandated that Bloom treat the MSAs as capital leases or operating leases involved significant accounting judgments, which rendered those determinations opinions, not facts. [So] Omnicare doubly applied because the accounting firm’s audit report was an opinion on top of company management’s opinion.
And thank goodness! Because the alert says:
Section 11 does not “make accountants guarantors of every statement made by the issuer; to make such a holding would turn the whole accounting world upside down” and make audits prohibitively expensive.
