April 13, 2021

“Deep Dive with Dave” Podcast: Confidential Treatment Workshop

If you’re looking for an easy way to get up to speed on rules and guidance relating to the confidential treatment process, check out the latest “Deep Dive with Dave” podcast.

In this 28-minute episode, Dave Lynn and Dave Meyers of Troutman Pepper provide a confidential treatment workshop with tips about how to navigate the confidential treatment process. Topics include:

– Overview of the Confidential Treatment Process

– The 2019 SEC Rule Changes – The “Ask for Forgiveness” Approach

– The Filing Review Process

– Seeking Extensions of Confidential Treatment Requests

– Farewell to Competitive Harm

Last week, John blogged about the March-April Issue of “The Corporate Counsel,” and the companion 22-minute podcast is now also available.

SEC Approves NYSE Amendments Easing Shareholder Approval Requirements

Earlier this month, following a comment period during which it received no comments, the SEC approved amendments to the NYSE Listed Company Manual relating to shareholder approval requirements for related-party equity issuances and private placements exceeding 20% of a company’s outstanding stock or voting power. The amended requirements bring the NYSE’s shareholder approval rules into closer alignment with Nasdaq rules and provide listed companies with greater flexibility to raise capital.

The NYSE initially issued a waiver to its shareholder approval requirements back in April 2020 as companies were trying to raise capital during the Covid-19 pandemic – the waiver was extended a couple of times and the rule amendments are substantially the same as the waivers.  Steve Quinlivan’s blog details the amendments relating to Sections 312.03, 312.04 and 314.00 of the NYSE Listed Company Manual. This excerpt summarizes changes to Section 312.03(b):

– Shareholder approval would not be required for issuances to a Related Parties’ subsidiaries, affiliates or other closely related persons or to any companies or entities in which a Related Party has a substantial interest (except where a Related Party has a five percent or greater interest in the counterparty, as described below).

– Shareholder approval would be required for cash sales to Related Parties only if the price is less than the Minimum Price.

– Issuances to a Related Party that meet the Minimum Price would be subject to shareholder approval for any transaction or series of related transactions in which any Related Party has a five percent or greater interest (or such persons collectively have a 10 percent or greater interest), directly or indirectly, in the company or assets to be acquired or in the consideration to be paid in the transaction and the present or potential issuance of common stock, or securities convertible into common stock, could result in an increase in either the number of shares of common stock or voting power outstanding of five percent or more before the issuance.

“Robust” Disclosure about Virtual Shareholder Meetings: Glass Lewis Expectations

Earlier this year, I blogged about some refinements Glass Lewis made to its disclosure expectations for virtual shareholder meetings. Virtual shareholder meetings were new for many last year and this year, expectations relating to information about the meetings are likely higher. For companies short on resources, some may have relied on an if-it-ain’t broke, don’t-fix-it-model, which we’ve heard may have caught some companies off-guard when receiving a Glass Lewis recommendation “against” members of their nominating committee. As a reminder, here’s an excerpt from a Glass Lewis blog entry describing their expectations:

From 2021, our expectations of companies holding virtual meetings globally are as follows:

Glass Lewis believes that virtual-only meetings have the potential to curb the ability of a company’s shareholders to meaningfully communicate with company management and directors. However, we also believe that the risks of a reduction in shareholder rights can be largely mitigated by transparently addressing the following points:

  • When, where, and how shareholders will have an opportunity to ask questions related to the subjects normally discussed at the annual meeting, including a timeline for submitting questions, types of appropriate questions, and rules for how questions and comments will be recognised and disclosed to shareholders.
  • In particular where there are restrictions on the ability of shareholders to question the board during the meeting – the manner in which appropriate questions received prior to or during the meeting will be addressed by the board; this should include a commitment that questions which meet the board’s guidelines are answered in a format that is accessible by all shareholders, such as on the company’s AGM or investor relations website.
  • The procedure and requirements to participate in the meeting and/or access the meeting platform.
  • Technical support that is available to shareholders prior to and during the meeting.

We believe that shareholders can reasonably expect clear disclosure on these topics to be included in the meeting invitation and/or on the company’s website at the time of convocation.

In the most egregious cases where inadequate disclosure of the aforementioned has been provided to shareholders at the time of convocation, we will generally recommend that shareholders hold the board or relevant directors accountable. Depending on a company’s governance structure, country of incorporation, and the agenda of the meeting, this may lead to recommendations that shareholders vote against:

  • Members of the governance committee, or equivalent (if up for re-election);
  • The chair of the board (if up for re-election); and/or
  • Other agenda items concerning board composition and performance as applicable (e.g. ratification of board acts).

For resources to help when preparing for virtual shareholder meetings, check out our “Virtual Shareholder Meetings” Practice Area. We have memos about “best practices” and a virtual shareholder meeting checklist to help you through some of the logistical issues.

– Lynn Jokela