This week in the blog, I want to take some time to acknowledge and celebrate 50 years of The Corporate Counsel and the constellation of publications that were created in its wake. While I have been associated with CCRcorp (and its predecessor Executive Press) for the past 18 years, I have been an avid reader of the publications for all of the 30 years that I have been practicing law. We all owe a deep debt of gratitude to Jesse Brill and Mike Gettelman for their efforts in launching The Corporate Counsel newsletter 50 years ago, with Vol. I, No. 1 dated November 1975. We had a chance to celebrate this incredible milestone last month at the October Conferences, and it was great to hear from Jesse about his memories of those early days. If you would like to hear more, check out my “Deep Dive with Dave” podcast from back in 2022.

As part of my tribute, I am looking back on some of my favorite articles that I contributed to The Corporate Counsel over the past 18 years. I especially like these articles because they address practical topics that come up from time to time in my practice, and I go back and refer to them frequently.

For today, I highlight an article from the September-October 2010 issue of The Corporate Counsel titled “The Requirement to File Revised Financials Ahead of a Shelf Filing — A Trap for the Unwary.” The article addresses the now long-standing Staff position that an issuer may need to retroactively revise its audited financial statements due to a subsequent change in accounting principle, the occurrence of discontinued operations after year-end, or as a result of a change in segment reporting after year-end. The Staff has said that revised financial statements (as well as affected disclosures, such as MD&A) must be on file (for Form S-3 incorporation by reference purposes) prior to filing of the registration statement. For this purpose, issuers file an Item 8.01 Form 8-K that puts the updated audited financial statements into the Exchange Act filing stream. The article highlights some of the practical implications of this Staff position:

The Staff’s retrospective revision approach to dealing with a change in accounting principle (as well as discontinued operations and a change in segment reporting) creates a potentially significant new impediment to timely getting an S-3 on file in anticipation of going to market soon thereafter. The need to file the retrospectively revised audited annual financial statements in advance of filing a new registration statement means that the auditors have to now look at the new financials and provide a new report and consent, a time consuming exercise that needs to be factored into the filing/offering timeframe (these dynamics, of course, can be especially intense in the context of a pending 1933 Act filing). Moreover, if retrospectively revised financial statements involve financial statements that were audited by a prior auditor, then the issuer needs to go to that prior auditor to get an updated report and consent from the former auditor which, in addition to cost and timing issues, may be problematic if there are any independence, PCAOB-registration or auditor existence issues (in which case, a re-audit would be necessary by the new auditor). [There is no need to file SOX Section 302 or 906 certifications with the retrospectively revised financial statements, because the financial statements are being filed under cover of Form 8-K and not with a Form 10-K or Q or as an amendment to a 10-K or Q. Issuers subject to XBRL filing requirements, however, must include in the 8-K the interactive data files that are required to accompany the traditional format financial statements.]

Stay tuned this week for some more highlights from my time contributing to The Corporate Counsel!

– Dave Lynn

Please note that there will be no blog tomorrow in observance of Veteran’s Day. We wish to express our deepest gratitude to our veterans for their unwavering service to our country.