February 6, 2023
Amended Rule 10b5-1: Preparing For Your “Insider Trading Policy” Exhibit
Dave blogged last week that you’ll need to make sure your insider trading policy is ready for “prime time” in light of the increased transparency that will result from the SEC’s recently adopted rules on on Rule 10b5-1 and insider trading (here are memos that lay out the requirements).
There’s been some confusion around when exactly a copy of these policies will need to be filed as an exhibit. With all of the other triage happening on securities compliance right now, people have been asking, “how urgent is this?”
At the Northwestern Pritzker School of Law’s Securities Regulation Institute last week, Corp Fin Director Erik Gerding said the Staff may issue additional guidance about the effective dates for disclosures under the new rules. He clarified that for annual disclosures, the phrase “the first filing that covers the first full fiscal period” would mean the first annual report that covers the 2024 year – which calendar-year companies will file in spring 2025. So, as John summarized in a recent post in our “Q&A Forum” (#11,400):
– Companies with a calendar year end will be required to disclose the information required by Item 408(a) of Regulation S-K beginning with their second quarter 2023 Form 10-Q filing (i.e., the 10-Q for the period ending June 30, 2023).
– Companies with a calendar year end will be required to provide the disclosures called for by Item 408(b) and 402(x) of Regulation S-K and Item 16J of Form 20-F in the Form 10-K filing for their 2024 fiscal year (i.e., the 10-K covering the year ended December 31, 2024, which will be filed in 2025). Copies of their insider trading policies will also need to filed as exhibits to that filing.
If this helps you breathe a sigh of relief, great – but don’t get too comfortable. Some folks still want to see a CDI from Corp Fin before planning for a 2025 exhibit. And even if we do have a two-year runway, the insider trading policy is a sensitive document – so it will take time to socialize and approve amendments. That means you need to dust it all off sooner rather than later. Don’t wait till the eleventh hour!
In his blog last week, Dave suggested several issues to consider. We’ll be providing even more guidance in the forthcoming issue of The Corporate Counsel newsletter. Email sales@ccrcorp.com if you want immediate access to that resource and aren’t already subscribed.
– Liz Dunshee