Recently, Nasdaq sent out a notice reminding listed companies that they must be using a transfer agent and have governing documents that enable them to participate in the Direct Registration Program, even if they don’t intend to actually participate in the Program. To be DRS-eligible, a company must allow for investors to hold their securities in book entry-only form (aka “uncertificated shares”).
All the exchanges adopted similar rules regarding the Direct Registration Program last summer, with a long phase-in period to enable companies to find new transfer agents or make changes to their by-laws if they needed to do so (eg. see the NYSE’s approval at page 3 and the SIA dematerialization guide on page 26).
There is a standard section in most by-laws about certificates that addresses form and it’s possible that some companies have a section that doesn’t provide for uncertificated securities. In this case, a by-law amendment would be in order (and I guess it’s also possible some by-laws that don’t permit uncertificated certificates and would require shareholder approval for such an amendment, but most by-laws have a provisions that permit the board to amend the by-laws).
However, few companies have needed to make by-law changes, since many companies already allow for uncertificated shares through ESOPs or DRIP programs, etc. Here is an example of one company that needed to make a by-law amendment recently to comply with the new DRS-eligible requirement: Watts Water Technologies filed a Form 8-K under Item 5.03.
IT Forensic Audits
In this podcast, Don Cox of Cyber-Tech Forensics explains how to protect a company’s assets, including:
– What should companies do to protect themselves against employees misusing computers?
– If someone deletes a document, is it really gone?
– What is involved with an IT computer audit?
Yes, blogs can live on even when their founders move on…meaning this blog may very well live well past my own lifetime and my mortality fades. Anyways, Bruce Carton has left ISS to join claims administrator Garden City Group and just started up the new “Best in Class” Blog.
But even without Bruce, ISS has put the defibrillator paddles on his old “Securities Litigation Watch” Blog and revive it by hiring Adam Savett, who in turn is shopping his old “Lies, Damn Lies and Forward-Looking Statements” Blog if you want to assume a blogging platform to express your pent-up rages and rants…
[Kidnapping redux, don’t let it happen to you! Another round of airplanes sitting on the ground for 10 hours with no food, etc. Sign the petition today and support the “Stranded Passengers Bill of Rights”!]