June 24, 2015

Regulation A/A+: Corp Fin Issues 11 New CDIs

Yesterday, Corp Fin issued 11 new CDIs related to last week’s effectiveness of new Regulation A/A+. Here’s a rundown of the topics:

– Question 182.01: Filing of non-public draft offering statements as exhibits
– Question 182.02: Confidential treatment requests
– Question 182.03: Definition of “principal place of business”
– Question 182.04: Eligibility of companies with suspended Exchange Act reporting obligations
– Question 182.05: Eligibility of voluntary filers
– Question 182.06: Eligibility of wholly-owned subsidiaries of Exchange Act reporting companies
– Question 182.07: Business combination transactions
– Question 182.08: Balance sheet requirements of recently created entities
– Question 182.09: Test the waters
– Question 182.10: Federal preemption
– Question 182.11: Engagement of registered transfer agents

Corp Fin also deleted two Securities Act Form CDIs – 128.01 relating to paper filings & 128.03 relating to delaying notations – that are no longer applicable under the new Regulation A/A+ rules.

As I blogged on Monday, the new/revised Regulation A/A+ Forms are available on our “SEC Rules & Regulations” page. In a few months, we’re holding a webcast – “Regulation A/A+: Developing Market Practices” – to show you how market practice has developed…

“Tenure Voting”: Cure for Activism?

Here’s an excerpt from a Cooley blog:

In “Seeking a Cure for Raging Corporate Activism,” published on March 17, 2015, in the WSJ, the author discusses a technique resurrected from the 1980’s that some believe could, on reexamination, be “a bulwark against short-termers who roam the markets, looking to force buybacks or an untimely company sale.” Known as “tenure voting,” the concept would give investors additional votes if they hold their shares for at least a specified period of time, thus rewarding long-term holders by giving them more say in the future of the company than say, short-term hedge fund activists that may favor short-term profits over long-term business strategies. Will companies begin to pursue this strategy?

The concept of different voting rights is certainly not unique. Preferred stock often carries different voting rights, and many companies that have gone public in the last decade or so allocate disparate voting rights between two classes of common stock, with 10 votes per share attributed to the class of common typically held by founders and management. Tenure voting is positioned in the article as a middle course. According to a law professor cited in the article, with tenure voting “[y]ou still have an opportunity for shareholders to deal with a management that needs to go, but it isn’t going to be decided by a simple majority vote….It gives you more protection…..”

Podcast: Corp Fin Cyber Risk Comments

In this podcast, Yafit Cohn of Simpson Thacher discusses Corp Fin cyber risk comments, including:

– What are the four main types of Corp Fin comments in the cybersecurity area?
– Can you drill down on each?
– What has Corp Fin said lately about updating its Corp Fin disclosure guidance?

Meanwhile, Congressmen Langevin & Himes have sent this letter to the SEC seeking more disclosure guidance on cybersecurity. Here’s the related press release

– Jeff Werbitt