TheCorporateCounsel.net

November 4, 2003

November Eminders is Up! The

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ABA Comments on Possible Retroactive Application of Shareholder Access Proposal

Yesterday, members of the ABA’s Federal Regulation of Securities – those that comprise the Task Force on Shareholder Proposals – submitted a comment letter to the SEC objecting to the use of the Rule 14a-8 requirements to the opt-in requirements of proposed rule 14a-11 – as well as objecting to the possibilitity that the proposed triggering event that consists of a 35% withheld vote could be effective before the SEC adopt a final rule.

Essentially, these members of the ABA are saying that the proposed rule should be finalized so that the parameters and implications of an opt-in proposal or withholding of votes is fully understood before shareholders are asked to take action. The 12-page comment letter is in the form of interim comments, with more extensive comments on the proposing release to come later.

This comment letter is not yet on the SEC’s website, but we have the letter posted in our “Shareholder Access Portal.”

FASB Defers SFAS 150 Provisions Relating to Mandatorily Redeemable Noncontrolling Interests – and Requires Restatements in Some Cases

Last week, the FASB decided to defer the application of paragraphs 9 and 10 of SFAS 150 as they apply to mandatorily redeemable noncontrolling interests. Those paragraphs require that mandatorily redeemable minority interests be classified as a liability on a parent company’s financial statements in certain situations, including when a finite-lived entity is consolidated.

This deferral is expected to last so long as they are addressed in either Phase II of the FASB’s Liabilities and Equity project or Phase II of the FASB’s Business Combinations Project. No early adoption for noncontrolling interests is allowed during the deferral period – and any financial statements that have applied these paragraphs must be restated. Ouch!