TheCorporateCounsel.net

Believe it or not, disclosure committee practices are always a hot topic. Clients often ask what other companies are doing in their disclosure committees, and it is often hard to benchmark disclosure committee practices because companies are not required to disclose those practices or post their disclosure committee charter. That is why I was pleased to see the recent report, Disclosure committee report: practices and trends, which was released last month and completed jointly by EY, the Society for Corporate Governance, and the Financial Education & Research Foundation, which is the independent nonprofit research affiliate of Financial Executives International. This report is an update to a previous report from 2014, Unlocking the potential of disclosure committees: leading practices and trends.

Key findings from the report include:

• Formal disclosure committees are a corporate norm, with nearly all respondents indicating they have one in place.
• Staffing of committees is fairly consistent, with members generally being appointed by senior executives.
• Written disclosure committee protocols, such as charters, reporting and minutes, have become more prevalent.
• Member roles are diverse, spanning, on average, more than 10 different job functions.
• Most disclosure committees meet at least quarterly and approximately 60% maintain formal minutes.
• Approximately one-third of disclosure committee representatives regularly report to audit committees.
• Disclosure committees may have subcommittees and multilayered structures.
• While disclosure committees’ focus continues to be primarily on SEC financial reporting and related disclosures, many also review other types of documents, such as proxy statements, sustainability reports and website content.

Overall, the findings in the report highlight common and trending practices regarding disclosure committees’ structure, composition and activities, and the report offers further insight into how companies have been using their disclosure committees to address disclosure requirements and facilitate more effective disclosures.

– Dave Lynn