February 8, 2022
Disclosure also remains an important part of the “political spending” picture. This Mayer Brown blog looks at where disclosures are showing up in filings (MD&A, risk factors, business section) – and suggests ways to enhance transparency.
– Liz Dunshee
February 8, 2022
Tune in at 2pm Eastern tomorrow for the webcast – “Activist Profiles & Playbooks” – when Joele Frank’s Anne Chapman, Okapi Partners’ Bruce Goldfarb, Spotlight Advisors LLC’s Damien Park and Abernathy MacGregor’s Dan Scorpio discuss lessons from 2021’s activist campaigns & expectations for what the 2022 proxy season may have in store. We are making this DealLawyers.com webcast available as a bonus to members of TheCorporateCounsel.net.
If you attend the live version of this 60-minute program, CLE credit will be available. You just need to fill out this form to submit your state and license number and complete the prompts during the program.
Members of TheCorporateCounsel.net are able to attend this critical webcast at no charge. The webcast cost for non-members is $595. If you’re not yet a member, subscribe now by emailing sales@ccrcorp.com – or call us at 800.737.1271.
– Liz Dunshee
February 7, 2022
When we last checked in on Corp Fin’s review of filings for climate change disclosure, many of the reviews appeared to be ongoing. This Bloomberg Law article highlights a few companies’ amendments to registration statements in response to climate disclosure scrutiny last spring & fall. Here’s an excerpt (edited with links to the amended disclosures):
Morgan Stanley, for example, added to its risk factor disclosures (pg. 81) that laws requiring mortgaged commercial properties to comply with Energy Star, Leadership in Energy and Environmental Design (LEED), and other green building certification programs may hurt borrowers’ ability to pay their loans.
Verizon (pgs. 59 & 69), Nissan (pgs. 16 & 25), and Toyota (pgs. 39 & 43) updated their filings to say extreme weather conditions resulting from climate change could delay customers’ payments, lowering the value of the asset-backed securities they’re offering to investors. Ford (pg. 31) changed its filing to say investors could lose money if its reputation is harmed by public perception about greenhouse gas emissions from its gas-powered vehicles.
Morgan Stanley Capital I Inc., Verizon ABS II LLC, Ford Credit Auto Receivables Two LLC, Nissan Auto Leasing LLC II, and Toyota Auto Finance Receivables LLC filed the registration statements to help their parent companies sell securities backed by mortgages, auto lease contracts, and other assets.
While comment letters are always company-specific, the nature of amendments sheds some light on what the Staff could be looking for in its Exchange Act filing reviews – and it may also give clues as to what a climate disclosure proposal would touch on. The article notes that the original comment letters to these companies were generic and that the agency didn’t engage in multiple rounds of letters with the companies – so the amendments appeared to resolve the Staff’s questions.
– Liz Dunshee
February 7, 2022
John blogged last fall about the SEC’s new rules to modernize the filing fee process. The new rules went effective last week – and as this Mayer Brown blog notes, the changes will affect all shelf takedowns:
For capital markets practitioners, it is important to now that all Rule 424 final prospectus filings for shelf takedowns from either Form S-3 or Form F-3 will require a separate filing fee exhibit, whether or not fees were prepaid. For “pay as you go” filers relying on Rule 456(b), amended Rule 424(g)(1) and the relevant form (S-3 or F-3) requires a very specific table format. General Instruction II.F. and Item 16(b) of Form S-3 have been amended, as have been General Instruction II.G. and Item 9(b) of Form F-3. Examples of the new tables and detailed instructions are in Item 16(b) of Form S-3 and Item 9(b) of Form F-3.
The amendments move the filing fee table update for “pay as you go” from the cover of the prospectus supplement to a separate exhibit. For Rule 424 filings that are not using “pay as you go,” Rule 424(g)(2) does not require the use of a table, but the maximum aggregate amount or maximum aggregate offering price of the securities to which the prospectus relates, and a statement that the prospectus is a final prospectus for the offering, are required to be included in the narrative.
We’ve also updated our 77-page “Filing Fees Handbook” to reflect the ins & outs of the new rules.
– Liz Dunshee
February 7, 2022
Tune in at 2pm Eastern tomorrow for the webcast – “Whistleblowers: Best Practices in a New Regime” – to hear from Cooley’s Zach Hafer, WilmerHale’s Susan Muck and Gibson Dunn’s Harris Mufson discuss the latest best practices for whistleblower policies and procedures. We’ll be discussing what companies need to know to get ahead of the “new normal,” in light of the possibility that the SEC’s current penalty posture signals a willingness to grant more awards, and that recent data and high-profile incidents show employees are more willing to submit tips.
If you attend the live version of this 60-minute program, CLE credit will be available. You just need to fill out this form to submit your state and license number and complete the prompts during the program.
Members of TheCorporateCounsel.net are able to attend this critical webcast at no charge. The webcast cost for non-members is $595. If you’re not yet a member, subscribe now by emailing sales@ccrcorp.com – or call us at 800.737.1271.
– Liz Dunshee
February 4, 2022
Late last month, the Delaware legislature amended Section 145(g) of the Delaware General Corporation Law to clarify that the definition of insurance includes captives, which are licensed insurance companies that provide insurance for certain risks to their corporate parent companies. As this Woodruff Sawyer blog notes, this change will open the way for captives to become a viable alternative to traditional D&O insurance (even Side A D&O insurance) for claims that are not directly indemnifiable by a Delaware corporation. This legislation sought to address a persistent concern that using a parent company’s captive instead of purchasing traditional D&O insurance looks like the corporation is attempting to fund non-indemnifiable losses, because the corporation itself funds the captive insurance company.
As Kevin LaCroix notes in The D&O Diary, the legislation also includes several limitations on the use of captive insurance. Section 145(g)(1) specifies that the captive insurance must contain several exclusions mirroring equivalent provisions in third-party D&O insurance policies:
Thus, the policies must provide that the insurer may not make any payment in respect of loss arising out of, based upon or attributable: (1) any personal profit to which the covered person was not legally entitled; (2) any deliberate criminal or deliberate fraudulent act; and (3) any knowing violation of law.
It seems that opinions are mixed as to whether large well-capitalized companies will be rushing out to set up their own captive D&O insurers, but rising costs and more difficulty obtaining D&O insurance could make this alternative more attractive.
We’ve also posted several memos about this development in our “D&O Insurance” Practice Area.
– Dave Lynn
February 4, 2022
As Liz notes on the Proxy Season Blog, the WSJ recently highlighted the annual meeting plans of a number of large companies and the fact that companies may still need to pivot from planned in-person meetings to virtual meetings. It seems that some companies are very anxious to return to the in-person meeting as a sign that things are getting back to normal, but the vagaries of COVID-19 and its variants keep hijacking those plans. While virtual seems like the safest course right now, I can certainly see the benefits of at least attempting to schedule an in-person meeting even if it has to be shifted to virtual due to unforeseen circumstances.
– Dave Lynn
February 4, 2022
As I mentioned last month, I am looking back on 15 years of contributing to CCRcorp publications and reflecting on some of my favorite blogs, podcasts, webcasts, conferences and publications over the years. Shortly after I first joined the organization back in 2007, Broc sent me to the Radio Shack store in my local mall (yes, there were still Radio Shack stores in existence in 2007) to purchase a device that would allow me to record calls on a landline telephone. With that device in hand, I was able to start participating in the “Inside Track” podcast series. At that time, I don’t think I had ever listened to a podcast, so it was certainly all new to me and I was a bit nervous recording my first few podcasts. I came to really like the podcast format – it is a great way to cover a topic or a series of topics in a way that does not involve writing something, which can be very painful sometimes!
My favorite podcasts were far and away the Dave & Marty Radio Show podcasts. Our first “broadcast” was back in December 2009, and we sounded surprisingly subdued in that first recording! In the first of the Fond Farewell Episodes of the Dave & Marty Radio Show, I recounted how the podcast came about and how much we enjoyed recording it over the years. I am so glad now that we recorded all of the episodes that we did, because it is really comforting to go back and hear my great friend’s voice again and listen to his stories. I knew that Marty would have wanted me to carry on with podcasting, so that inspired me to launch the Deep Dive with Dave podcast series that I record today.
– Dave Lynn
February 3, 2022
Yesterday, Ceres announced new guidance for investor engagement with companies on governance of climate risk. Ceres notes that investors and proxy advisors can use the 2022 Ceres Guidance for Engaging on Climate Risk Governance and Voting on Directors for engaging with portfolio companies on the risks and opportunities emerging in the transition to a net zero emissions economy and to inform their voting decisions on electing board directors. The reports states:
The Guidance provides details on topics that investors and proxy advisory firms may want to consider to inform their company engagements and decisions on whether to support the election of directors responsible for climate change risk oversight. The Guidance covers practices in governance, reporting, and lobbying around climate change-related risks and opportunities, i.e., the direction in which all U.S. public companies should be moving on their journeys to address the net zero transition. Depending on their respective internal practices, investors and proxy advisory firms may determine if voting against or making a recommendation to vote against directors is appropriate for companies that lack one or more of these practices. As climate risk oversight continues to evolve, Ceres expects to update this Guidance.
Ceres emphasizes that disclosing climate-related risk governance is called for in the Task Force on Climate-related Financial Disclosures recommendations, and that the 2021 TCFD Status Report found that the these disclosures remain among the least implemented of the TCFD recommendations.
– Dave Lynn
February 3, 2022
The Principles for Responsible Investment recently released its publication “The Investor Case for Responsible Political Engagement.” The PRI describes this publication as follows:
This paper sets out the PRI’s views on the investor case for responsible corporate political engagement. We explain why investors working towards sustainability objectives must ensure that their portfolio companies are conducting political engagement in a responsible manner. We include high-level principles on what this activity entails, based on existing views in academic and practitioner literature. We also discuss the key findings from the PRI-supported research, undertaken by the OECD, that maps out political engagement regulations across selected jurisdictions.
The PRI notes that corporate political engagement can be responsible when the company’s activities:
The PRI expresses a concern that “unchecked political involvement can raise governance risks at a company level and increase risks of policy capture” and suggests key steps that investors can take to understand and address these risks.
– Dave Lynn