TheCorporateCounsel.net

With new Item 404(b) requiring that the proxy statement describe a company’s “policies and procedures for the review, approval, or ratification of any transaction required to be reported” by Item 404(a), our latest survey on these policies and procedures was popular. Below are the results from that survey (and please participate in our new survey on director resignations!):

1. Indicate which of the following you have in place (or are proposing) to implement for approval of related party transactions:

– A stand-alone policy statement regarding related person transactions – 42.5%
– Approval procedures regarding related person transactions covered in one or more board committee charters – 20.4%
– Approval procedures regarding related person transactions covered in our Code of Conduct – 19.5%
– Approval procedures regarding related person transactions covered in our corporate governance guidelines – 14.2%
– Approval procedures not included as part of any of the documents noted above – 10.6%

2. Indicate what process do you use (or are proposing) to use for approval of related party transactions:

– Pre-approval or pre-clearance of related person transactions – 61.8%
– Monthly review of related person transactions after-the-fact – 0%
– Quarterly review of related person transactions after-the-fact – 5.6%
– Annual review of related person transactions after-the-fact – 12.4%
– Periodic review of related person transactions, with timing tied to board/board committee meetings after-the-fact – 14.6%
– Other – 5.6%

3. If someone is responsible for reviewing related person transactions, which of the following will undertake that task:

– Full board – 12.2%
– Board committee – 76.7%
– Board committee chair – 8.9%
– General counsel – 35.6%
– Securities counsel – 23.3%
– Other type of inhouse lawyer – 1.1%
– Head of human resources – 2.2%
– Chief compliance officer – 7.8%
– CFO or controller – 11.1%
– Other – 2.2%

SAB 108 Disclosure Trends

As we were reminded by Corp Fin Chief Accountant Carol Stacey during “SEC Speaks,” the one-time relief granted in connection with restatements under SAB 108 is not a general amnesty for prior period restatements. The Staff expects companies to restate prior period financial statements for material errors if management failed previously to appropriately apply either the iron curtain or rollover method (whichever method it had previously selected to use) including the proper consideration of all relevant quantitative and qualitative factors.

In our “Restatements” Practice Area, we have posted a new 8-page Glass Lewis research report which analyzes a bunch of the disclosures made under SAB 108 so far…

SEC Urges Higher Pleading Standard

Recently, the SEC and the DOJ jointly filed an amicus curie brief in the Tellabs case pending on writ of certiorari before the US Supreme Court, in which the agencies urge the Court to adopt a restrictive test that plaintiffs must satisfy in order to meet the heightened pleading standard under the Private Securities Litigation Reform Act. Kevin LeCroix does a great job exploring what this means in his “D&O Diary” Blog – and here is a related article from Business Week and an article from NY Times.