TheCorporateCounsel.net

Earlier this summer, I blogged about how Calvert called on companies and investors to take more tangible steps in addressing racial inequities. SSGA is also pushing for more change and yesterday, the asset manager posted a letter from its Global Chief Investment Officer specifying SSGA’s expectations for public companies relating to diversity, strategy, goals & disclosure.  Many companies disclose some of this information and if companies haven’t starting thinking about disclosure on these issues, this call from SSGA, one of the largest asset managers, might be the nudge that starts the ball rolling.

Addressed to board chairs, the letter says ongoing issues of racial equity have led SSGA to focus on ways racial and ethnic diversity impacts the asset manager as an investor. The letter says that starting in 2021, SSGA is asking companies to disclose more information relating to diversity and it breaks this information into five key areas. SSGA plans to cover these topics in engagement conversations and the letter says engagement is SSGA’s primary tool to understand a company’s plan and how the board carries out its oversight role – but for companies that don’t meet the asset manager’s expectations, it says SSGA is prepared to use its proxy voting authority to hold companies accountable. Here are SSGA’s five key areas for which it’s asking for more diversity disclosure:

Strategy: Articulate what role diversity plays in the firm’s broader human capital management practices and long-term strategy

Goals: Describe what diversity goals exist, how these goals contribute to the firm’s overall strategy, and how these goals are managed and progressing

Metrics: Provide measures of the diversity of the firm’s global employee base and board, such as by disclosing EEO-1 data (or data based on that framework) and at the board level, by disclosing diversity characteristics, including the racial and ethnic make-up of the board

Board: Articulate goals and strategy related to racial and ethnic representation at the board level, including how the board reflects the diversity of the company’s workforce, community, customers and other key stakeholders

Board Oversight: Describe how the board executes its oversight role in diversity and inclusion

SEC Approves NYSE “Direct Listings” Proposal!

It’s been a busy week and late Wednesday, the SEC issued an order giving the go ahead to the NYSE on its “Direct Listings” proposal.  This will allow companies to sell newly issued primary shares on its own behalf into the opening trade and offers an alternative to the traditional underwritten IPO, providing a more cost-effective means to access capital.  Some may recall the NYSE amended the proposal twice after the SEC initially rejected the proposal last December.

The SEC’s order states that “after careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 2, is consistent with the requirements of the Exchange Act and the rules and regulations thereunder applicable to a national securities exchange.”  Last November when the proposal was originally filed, some expressed concern about investor protection issues when not using the traditional IPO process, but the SEC’s order includes discussion rejecting that concern.

For those wondering about Nasdaq, Reuters reported that Nasdaq filed a similar proposal with the SEC earlier in the week.  To help members stay up to date on these developments, we’ll be posting memos in our “Direct Listings” Practice Area.

SEC’s Filing Fees: Going Down Nearly 16% on October 1st!

Earlier this week, the SEC issued this fee advisory that sets the filing fees for registration statements for 2021.  Right now, the filing fee rate for Securities Act registration statements is $129.80 per million (the same rate applies under Sections 13(e) and 14(g)).  Under the SEC’s new order, the rate will decrease to $109.10 per million, a 15.9% decrease.

Last year, the rates went up a little over 7% so it’s nice to see the rates turn the other direction.  As noted in the SEC’s order, the new fees will go into effect on October 1st as mandated by Dodd-Frank – which is a departure from back in the day when the new rate didn’t become effective until five days after the date of enactment of the SEC’s appropriation for the new year – which often was delayed well beyond the October 1st start of the government’s fiscal year as Congress and the President battled over the government’s budget.

– Lynn Jokela