Barnes & Thornburg’s Jay Knight flagged a comment letter exchange in which the Staff questioned the timeliness of a company’s Form 8-K reporting a director’s resignation. Form 8-K CDI 117.01 says that an Item 5.02 8-K reporting obligation is triggered by a director’s notice of a decision to resign. The guidance is pretty clear, but as Klotho Neurosciences’ response to a Staff comment challenging its S-3 eligibility illustrates, the trick is applying it:
The Company respectfully submits that it is eligible to use Form S-3 at this time.
While the Company’s Form 8-K filed on August 30, 2024, originally stated that the resignation of director Edward Cong Wang occurred on August 25, 2024, this was later clarified and corrected in Amendment No. 1 to the Form 8-K, filed on July 22, 2025. As explained in that amendment, although Mr. Wang submitted a written resignation via e-mail on Sunday, August 25, 2024, the Company contacted him on Monday, August 26, 2024, to confirm his resignation and ask whether he intended to exercise his contractual right to designate a successor. Mr. Wang responded later that day and confirmed that he would not be appointing a replacement. Accordingly, the Company reasonably determined that the resignation became finalized and effective on Monday, August 26, 2024—the date on which the necessary corporate steps were complete and the Company could determine the resulting board vacancy and compliance implications.
Thus, the Company filed the original Form 8-K within four business days of August 26, 2024, consistent with Item 5.02 of Form 8-K and Instruction I.A.4 to Form S-3, which requires timely filing of all required reports. The correction made in the amended Form 8-K/A was intended solely to clarify the effective date in line with the Company’s good-faith interpretation of when the resignation was finalized.
The good news is that the Staff didn’t comment further on this issue, but Jay says there are some lessons in this comment letter exchange that all public companies should keep in mind. These include the need to provide directors and officers with a “rules of the road” memo that helps them understand nuances associated with determining when a director resignation triggering event has occurred, and the need to ensure that appropriate disclosure controls and procedures are in place related to director resignations.
If you’re looking for some guidance on director and NEO resignation issues, check out our Form 8-K Handbook. We have Q&As in the Handbook that address a bunch of different “did they or didn’t they?” scenarios.
According to Woodruff Sawyer’s “Looking Ahead Guide 2026,” the D&O market remains favorable for mature public companies, but not quite to the same extent that it has in recent years:
Pricing continues to decline for mature public companies, though the rate of those decreases has steadily moderated. This trend is especially evident when focusing on pricing for the primary layer of coverage. In 2025, the median premium reduction in this segment is 5%. That’s a notable shift from the high single-digit decreases seen in 2024 and the steeper 14%–22% median reductions experienced in 2023. The market appears to be stabilizing, even as buyers continue to benefit from favorable conditions.
For the excess layers on D&O program towers, two dynamics are shaping the market. For starters, new entrants are still struggling to gain traction and market share. In a competitive soft market, these unproven carriers are rarely chosen for primary layers or for critical excess positions. That’s because established carriers are aggressively moving down the tower to secure layers with more rate. As a result, buyers are seeing reductions across their total programs—but carrier appetite for the high excess layers could be close to capacity.
The Guide also has good news for less mature companies, finding that premiums for IPO issuers and mature public companies have converged and that the large gap in premium rates that existed prior to the first quarter of 2024 has mostly been eliminated.
Despite the continuing good news for D&O buyers, there may be storm clouds on the horizon. The Guide says that 83% of underwriters surveyed said that the risk environment is increasing, and ” an overwhelming majority of underwriters believe that increasing complexity and global volatility will inevitably lead to more D&O claims.”
October is here, and that means our Proxy Disclosure & 22nd Annual Executive Compensation Conferences are just around the corner. We hope to see you in person in Las Vegas on October 21st and 22nd or to have you join us virtually if travel isn’t an option. Not sure about attending? Here’s a taste of what you’ll miss out on if you don’t:
– Two “SEC All-Stars” panels featuring insights from former senior SEC staff members on today’s most pressing proxy disclosure, governance and executive compensation issues.
– Our “Year of the Clawback” panel will share insights from leading practitioners about the lessons learned from the restatements announced and clawbacks instituted in 2025 — plus ongoing considerations for your own clawback policy.
– Our “Navigating ISS & Glass Lewis” panel will offer insights from representatives of both proxy advisors to help you prepare for the 2026 proxy season, including key policy changes, disclosure dos and don’ts, tips for engaging with proxy advisors and more.
– Our “Delaware Hot Topics” panel featuring insights from leading lawyers within and outside of Delaware to help get you up to speed on the latest developments in Delaware law and share practical tips for Delaware corporations.
Of course, this just scratches the surface of what our world-class speakers will cover during our two full days of timely & topical panels at our PDEC Conferences – so sign up today! You can register online or reach out to our team by emailing info@ccrcorp.com or calling 1.800.737.1271.
If you’re attending in person, please join us on Monday, October 20th from 4:00 to 7:00 pm for a casual reception celebrating CCRcorp’s 50th anniversary and offering you an opportunity to network with your fellow attendees, sponsors, exhibitors and our CCRcorp team!
The SEC’s decision to change its policy on mandatory arbitration bylaws has received favorable reviews from public companies and their advisors, but this Mintz memo cautions companies considering such a bylaw that there are some advantages to litigating securities cases in federal court that they need to keep in mind. This excerpt discusses the PSLRA’s automatic stay provisions, which don’t apply to arbitration:
Congress designed the PSLRA in part to deny serial securities plaintiffs the opportunity to leverage strike suits and frivolous class claims to extract sometimes-handsome nuisance settlements from companies. One strategy a plaintiff may use to gain leverage in such negotiations is to exploit the significant time and expense that defendants must bear in responding to plaintiff’s discovery requests for documents, testimony and information at the outset of most lawsuits.
To correct that imbalance, the PSLRA, where applicable, imposes an automatic stay of discovery in all cases where defendants have filed a motion to dismiss, which ensures that cases that are not well-pled (i.e., that are likely frivolous) are thrown out before they cost the parties substantial sums. Arbitration, however, has no stated rule or mechanism for staying discovery. Defendants therefore may be required to pay to meet discovery obligations even when moving to dismiss a frivolous arbitration claim.
Other benefits of a federal forum noted in the memo include the PSLRA’s heightened pleading standards, the finality offered by the resolution of a class action lawsuit, the right to appeal an adverse ruling, and the possibility that in some cases, arbitration may prove to be a more expensive process than litigation.
With the possibility of eliminating mandatory quarterly reporting moving to the top of the SEC’s agenda, this Debevoise memo discusses some of the potential pros and cons of moving to a semi-annual reporting regime.
On the positive side, the memo cites the possibility of a greater long-term focus for public companies, lower regulatory compliance costs, and potential alignment with non-US jurisdictions and with the obligations of foreign private issuers. On the negative side, the memo cites the possibility of decreased transparency and lower information quality, and the absence of uniform standards for more frequent reporting.
This excerpt raises the possibility that public companies may, ironically, find themselves with more frequent public reporting obligations if quarterly reports were eliminated:
Quarterly information released by companies serves to prevent fraud and market manipulation. A broad range of investors rely on quarterly reporting to cleanse material nonpublic information in connection with their asset-management and trading. Less frequent reporting could lengthen trading blackouts and reduce trading activity generally unless companies disseminate regular, voluntary financial and other updates.
To prevent this, lenders and the markets in general could push for a greater transparency and frequency of cleansing disclosures than Form 8-K—which is generally filed only when specifically triggered—presently affords them. For example, investors and lenders may advocate for an immediate reporting regime, similar to the Market Abuse Regulation in other jurisdictions, pursuant to which issuers would have to monitor continuously and proactively for inside information and be ready to disclose such information via a regulatory news service without delay.
If this sounds familiar, it may be because Dave raised this possibility when he blogged about the potential move to a semi-annual reporting system last month. Also, be sure to check out Liz’s recent blog on what this all may mean for securities lawyers.
Ideagen Audit Analytics recently published its annual report on audit fee trends. The report covers the period from 2005 – 2024 and includes data from more than 6,600 registrants. Here are some of the highlights:
– Average audit fees reached a record high of $3.26 million in 2024, representing a 9% increase from the previous year
– The Big Four firms control 69% of the audit market, with PwC leading at 21% market share and $5.5 million average fees
– Finance industry companies pay the highest average audit fees at $4.1 million, while life sciences companies pay the most relative to revenue
– Foreign private issuers consistently pay higher audit fees as a proportion of revenue compared to domestic filers
The report notes that public company audit fees have increased steadily over the past 20 years, reflecting the increasing complexity of audits and heightened regulatory oversight. The report suggests that industry consolidation and the ability of private equity funds to invest in accounting firms are likely to impact audit fee trends over the coming years.
Yom Kippur begins this evening, and we’d like to extend our best wishes for an easy and meaningful fast to all our friends who are observing the holiday.
