August 2, 2016

Proxy Access Shareholder Proposals: Is Corp Fin Back to Square #1?!?

This blog by Cooley’s Cydney Posner describes the circumstances surrounding this new no-action response given to H&R Block a few weeks ago (also see this blog from Ning Chiu). It involves a proposal from Jim McRitchie asking the company to amend its existing proxy access bylaw provisions – and the company sought to exclude the proposal under Rule 14a-8(i)(10)’s “substantially implemented” basis.

Corp Fin did not allow the exclusion – but that doesn’t necessarily mean the tactic of a company implementing their own version of proxy access to stave off a possible shareholder proposal on the topic is dead. So Corp Fin isn’t back to “Square #1,” as explained in this blog. And here’s the conclusion from Cydney’s blog:

Arguably, depending on your point of view, the practical effect of the staff’s new position may be to repudiate the prior line of 14a-8(i)(10) no-action letters issued commencing in February, even though it is not technically doing so. Whether this position will be repeated or could possibly be anomalous remains to be seen. In any event, given the proponent involved, companies that adopted versions of proxy access that McRitchie et al would view as “proxy access lite” may well be seeing new proposals for revisions to proxy access bylaws.

Audit Report Reform: The PCAOB’s Resource Page

Yesterday, the PCAOB launched this resource page dedicated solely to its re-proposal regarding audit reports. The format is friendly for mobile – but a little difficult to navigate on a laptop as the font is huge and requires much scrolling. Scrolling feels natural on a smart phone; not so much for a laptop…

Conflict Minerals: IPSA Uncertainty Likely to Carry Over to ’17

Here’s the intro from this note from Elm Sustainability Partners:

With the Securities and Exchange Commission’s decision earlier this year to forego an appeal to the US Supreme Court of NAM v. SEC, much uncertainty hangs around the requirement for filers of Form SD and Conflict Minerals Reports (CMRs) to conduct an Independent Private Sector Audit (IPSA) for filing year 2016. We expected the question to be resolved once and for all before the end of CY2016. However, that now appears doubtful.

As of last Friday, a judge had not yet been assigned to the case in the lower court that is to provide the SEC direction. And the SEC’s Flex Agenda published June 6, 2016 does not list the matter as a rule making activity currently planned by the Commission.

So for the time being, it appears the the CY2016 IPSA trigger will be identical to CY2015 – the IPSA is necessary only when an issuer voluntarily chooses to classify a product as “DRC Conflict Free” or “not DRC Conflict Free” after due diligence. It is important to understand that when the Reasonable Country of Origin (RCOI) indicates that there is no reason to believe that tin, tantalum, tungsten or gold in a product did originate – or may have originated – in the Covered Countries, only a Form SD is to be filed and no IPSA is required in such instances.

Broc Romanek