April 2, 2019

CTRs: Corp Fin Issues “Redacted Exhibits” Guidance

Yesterday, Corp Fin issued guidance – in the form of this “announcement” – about the new rules & procedures for exhibits that contain immaterial, competitively harmful information. This guidance is in the wake of the new Fast Act rules (see this horde of memos) that permit companies to file redacted material contracts without applying for confidential treatment of the redacted information provided the redacted information (i) is not material and (ii) would be competitively harmful if publicly disclosed. Those rules become effective upon their publication in the Federal Register, which is expected today.

Here’s a few things to know:

1. Mark Exhibit Index, Provide Statement on Exhibit Cover & Use Brackets for Redaction – You must mark the exhibit index to indicate where redaction occurs, include a prominent statement on the exhibit cover and use brackets within the exhibit to show exactly where redaction occurred.

2. Corp Fin Will Check for Compliance With New Rules – Corp Fin intends to check for compliance with the new rules, using a separate chain of comments from the regular comment process. This includes Corp Fin’s review of the redacted information, which may lead to comments asking for substantiation of immateriality/competitive harm claims. Conclusion of the review process will result in Corp Fin sending a letter to that affect.

3. Edgar Will Only Reveal Bare-Bones of CT Review – Edgar will publicly reveal that Corp Fin initially made a confidential treatment inquiry – and then that its review has been closed. Corp Fin will not upload comments issued during its CT review onto Edgar – so these comments won’t be publicly available.

4. Your Registration Statement Won’t Be Declared Effective Until Exhibit Issues Resolved – As has been the case in the past, acceleration requests will be acted upon only after any comments relating to the redacted exhibits are resolved.

5. If You Have a Pending CTR, You Can Switch to New Rules – If you currently have a confidential treatment request pending, you may – but are not required – withdraw your pending CTR and rely on the new rules. If you don’t withdraw, Corp Fin will continue to process your CTR under the old rules.

6. You Can Still File CTRs Under the Old Rules – The new rules have not changed your ability to request confidential treatment under Rule 406 or Rule 24b-2. If you file a CTR under the old rules, Corp Fin will process them that way.

7. How to Get More Corp Fin Guidance – Here’s where you can send your questions to Corp Fin about this new rule:

Glass Lewis Will Distribute Your Feedback: But It Will Cost Ya…

I blogged recently that Glass Lewis is piloting a new “Report Feedback Statement” that will allow companies & shareholder proponents to express how their opinion differs from what’s in Glass Lewis’ research. Glass Lewis has now published FAQs – and this Morrow Sodali memo highlights how much you’ll have to shell out for the service:

Companies and/or shareholder proponents do not have to be Glass Lewis clients in order to use the RFS service. However, both issuers and shareholder proponents must purchase the relevant annual meeting report (at a cost ranging from $750 to $5,000, depending on size of the issuer) and pay a $2,000 fee for the distribution of the RFS comments.

And if you’re going to participate, don’t forget to also check out the Glass Lewis “Etiquette Guide,” which clarifies that only publicly available & legally vetted info should be shared in the RFS. In addition, it instructs everyone to use the “appropriate level of decorum & civility” – ah, the times we live in…

March-April Issue of “The Corporate Counsel”

We recently mailed the March-April issue of “The Corporate Counsel” print newsletter (try a no-risk trial). The topics include:

1. Board Minutes: Best Practices for Everyone’s Least Favorite Task

– Why Do Minutes Matter?
– The Importance of Setting the Stage: Agendas & Board Materials
– Putting Pen to Paper: Drafting the Minutes
– Address Director Notes to Preserve Minutes as the Definitive Record
– What About the Corporate Secretary’s Notes and Draft Minutes?
– Five Key Takeaways About Your Board Minutes

2. Now, Therefore, It Is RESOLVED: Drafting Board Resolutions

Broc Romanek