Last week, the Ninth Circuit Court of Appeals granted part of an appeal by the US Chamber of Commerce and other trade organizations, arising out of their challenge to California’s climate disclosure laws. Here’s more detail from PracticalESG.com:
On Tuesday, the Ninth Circuit issued an order temporarily staying California’s SB-261 requiring biennial climate risk reporting by companies “doing business” in the state. Prior to the court’s ruling, companies were to publish their initial SB-261 report by January 1, 2026. This blog from Gunderson Dettmer gives background and explains what happens now:
“The motion was denied for SB-253 (GHG emissions reporting). SB-261 enforcement is now paused while the Ninth Circuit considers whether to reverse the district court’s August decision.
The case is scheduled for oral argument on January 9, 2026 — after the January 1 compliance date — though this date could change or the court could decide on the briefs. During today’s CARB workshop, staff indicated they are reviewing the order, and it remains unclear whether updated SB-261 guidance will be issued.”
The emergency application to the US Supreme Court Zach wrote about Tuesday has been withdrawn, although the industry groups that filed the original application stated they may “renew[] their request for relief if necessary at a later stage of the litigation.”
Members of PracticalESG.com can learn more about California’s climate disclosure laws here.
The case is Chamber of Commerce of the United States of America v. California Air Resources Board. As noted above, the court issued its order at the same time that CARB was holding a public workshop about implementation of the laws. This King & Spalding memo summarizes takeaways from the workshop and says:
It is possible CARB may issue an advisory following the Court’s injunction. In the meantime, while some companies may decide to report on or before January 1, 2026, at least by posting a link on their website, many other companies are likely to wait for further developments from the appellate Court or CARB. Notably, the Ninth Circuit did not stay a second California disclosure law, SB 253, that requires certain companies to disclose Scope 1 and 2 greenhouse gas emissions. Since the Ninth Circuit declined to also stay SB 253, companies should continue to plan for compliance with that law by August 10, 2026 (based on recent guidance from CARB).
We’re continuing to track the ins & outs of these developments – and share practical guidance about what companies should be doing – on PracticalESG.com. If you aren’t already a member of that site, email info@ccrcorp.com, call 800-737-1271, or start your membership online today.
On the heels of the federal antitrust probe that Dave wrote about earlier this month, the Florida Attorney General also has now announced an enforcement action against ISS and Glass Lewis – alleging violation of state consumer protection and antitrust laws. Here’s more detail about the complaint, as summarized by the AG’s announcement:
The lawsuit outlines how ISS and Glass Lewis—who together control almost the entire proxy-advisory industry—assured investors, pension funds, and Florida’s more than one million retirement participants that their recommendations were objective and evidence-based. Instead, the firms allegedly injected controversial environmental, social, and governance (ESG) demands into nearly every voting recommendation they delivered, pressuring companies to adopt race- and gender-based quota policies, ideological climate mandates, and other directives that expose businesses to legal and financial risk. The complaint alleges that the two firms did not simply arrive at these positions independently—they acted in lockstep, standardized their products, and denied consumers any meaningful alternative in a market they dominate.
The lawsuit asserts that Florida’s consumers, businesses, and retirees were misled about the nature and purpose of these recommendations, many of which are untethered from traditional financial analysis. The complaint also alleges that ISS and Glass Lewis made material omissions, pushing corporate actions that could violate federal law while claiming that their guidance supported good governance and regulatory compliance.
The Florida Attorney General had announced an investigation into ISS and Glass Lewis earlier this year, and this litigation adds to the challenges that ISS and Glass Lewis have filed in Texas against a state law that would make it difficult for them to provide “non-financial” recommendations. Earlier this year, the proxy advisors won a court battle against the SEC’s attempt at regulating them on the basis of their recommendations being a “solicitation.” But when it comes to that traditional business model, it currently looks like they might be losing the war.
In this program, you will hear directly from Staff in the SEC’s Division of Corporation Finance about important takeaways from the Statement, the Staff’s procedural expectations for this year, and common questions. There are a few important things to know about this webcast that are different from our typical programming:
1. It’s free for anyone who wants to attend, even if you aren’t currently a member of this site. We want to do what we can to get the word out about the Staff’s approach so that the season is as smooth as possible for everyone (especially given the Staff’s workload after the shutdown).
2. It’s happening from 11:00 am – 12:00 pm Eastern.
3. Since this is a pop-up webcast, we aren’t offering CLE credit for this one. Members of this site can get lots of live and on-demand credits through our other programs, though! As you can see on our home page, we have several good upcoming programs in December – including a program with former high-level Corp Fin Staff on December 11th, which will include practical guidance for companies to navigate this Rule 14a-8 process and other important SEC and Corp Fin initiatives.
As John noted last week – and as reflected in the memos posted in our “Shareholder Proposals” Practice Area – there are a number of open issues to consider when it comes to how this year’s shareholder proposal process will play out. For example, as mentioned in this Cooley memo, companies should remember the possibility of floor proposals. We’ll be continuing to track insights and dynamics as practices develop.
After the Staff issued its November 17th statement on how it would handle the Rule 14a-8 process this year, one of the questions people were asking was, “Will the Rule 14a-8(j) notices be posted on the SEC’s website?” The answer to that question appears to be “yes” – at the very least, for pending no-action requests that had been submitted before the new approach was announced.
On November 17th – which was the same day Corp Fin issued its statement about the Rule 14a-8 process for the 2026 proxy season – a company furnished a supplemental notice about a pending no-action request that it had submitted prior to the statement being issued. The supplemental notice followed the instructions for the new process. The company requested a response from the Staff – so in accordance with the Staff’s statement, the company included an unqualified representation about having a reasonable basis to exclude the proposal at issue. In this case, the company’s position was that the proposal could be excluded on procedural grounds.
On November 19th, Corp Fin posted its response. You can see the company’s supplemental notice on page 18. Corp Fin’s response says in part:
You represent that the Company has a reasonable basis to exclude the Proposal. Based solely on that representation, we will not object if the Company excludes the Proposal from its proxy materials.
Copies of all of the correspondence on which this response is based will be made available on our website.
This is something we’ll know more about soon, but for now it’s reasonable to expect the notices to be posted, even if a company isn’t requesting a response. In addition to submitting the Rule 14a-8(j) notice to the Commission, remember that you also have to send it to the proponent. We’d expect that any no-action requests submitted this season under Rule 14a-8(i)(1) would also be posted in the typical way.
We’ve been talking a lot about Rule 14a-8 shareholder proposals for obvious reasons – but there are also a host of other disclosures to think through for your upcoming proxy statement, which are relevant even if your company doesn’t regularly receive shareholder proposals.
Thankfully, we don’t have to worry about new rule requirements for upcoming proxy statements and Form 10-Ks – no disclosure rules have changed since last year. But as this 31-page Mayer Brown memo observes, shifting SEC priorities and other policy dynamics may affect your disclosures. Compared to this time last year, everything feels different. The memo gives thoughts on how to handle that:
Against the backdrop of heightened macro volatility in 2025, including introduced and threatened tariffs, rapid developments and emerging risks in artificial intelligence (“AI”), and broader political and geopolitical instability, companies should review and recalibrate their approach to disclosures for the upcoming annual report and proxy season with renewed discipline. As we discuss in further detail below, companies should reassess and refine their Form 10‑K disclosures with an emphasis on specificity, materiality, and cross‑document consistency.
In Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), companies should address known trends and uncertainties that are reasonably likely to materially affect liquidity, capital resources, supply chains, pricing, customer demand, or segment performance, making clear the timing, magnitude, and drivers of impacts (e.g., tariff exposure by product or geography, mitigation strategies, and sensitivities). Risk factor drafting should avoid boilerplate and describe company‑specific risks, including tariff‑related trade restrictions and retaliatory measures, regulatory shifts in AI (such as use of generative AI tools and evolving compliance expectations for AI governance), cybersecurity threats, and policy unpredictability affecting environmental, social and governance (“ESG”) matters and diversity, equity and inclusion (“DEI”) initiatives. Companies should also consider whether any of these developments warrants updates to its cautionary language related to forward-looking statements.
Much like in 2025, we expect that a number of high-profile issues will receive attention from investors, companies and other stakeholders during the 2026 proxy season. These issues, including ESG matters and climate-based disclosure, among others, reflect the changing political landscape and highlight the differences between the current SEC administration’s priorities and those of the prior administration.
The memo takes a close look at how these issues (and others) affect various sections in the proxy statement and Form 10-K. It also points out that you should pay extra attention to Item 405 disclosures this year, since the Edgar Next transition may have caused some folks to miss Section 16 deadlines.
I don’t know about you, but I feel like this year has been a sort of tipping point in terms of the importance of state laws and regulatory initiatives. From the corporate law perspective, the “DExit” conversation has been forcing me to pay attention to more than just the Court of Chancery and the DGCL – even beyond the “primary” challengers of Nevada and Texas.
All that to say, it seems fitting that 2025 also marks 75 years for the Model Business Corporation Act. This paper from Steven Haas and Jonathan Lipson – published by the ABA Corporate Laws Committee – walks through the MBCA’s history and responsiveness to changes affecting companies – such as technology updates, the financial crisis, and pandemic-era issues.
According to the ABA’s MBCA Resource Center, 36 jurisdictions have adopted some form of the MBCA. The white paper explains why that’s a good thing – here are a few paraphrased reasons:
1. It’s a free-standing statute that can be enacted in its entirety or tailored as appropriate. It’s a “model” – rather than a “uniform” – statute.
2. It’s designed to be modern, complete, flexible, and relatively simple. Experienced lawyers drafted the MBCA and regularly review and update it – so states can rely on that work product instead of reinventing the wheel.
3. The MBCA is regularly updated to reflect corporate law developments, including judicial decisions, new federal or state laws, evolving corporate governance practices, new technology, and the changing needs of businesses.
4. The Model Act distills numerous corporate law issues into “black letter” law – including when there is not judicial precedent. This helps increase certainty in planning transactions. The black letter approach also reduces the need to rely on common law, which is particularly valuable to jurisdictions that lack a large body of judicial precedent or experienced business courts.
5. There’s an “Official Comment” – and annotated statute – that provide valuable guidance in interpreting the MBCA. You can also look at courts in other states to see how they’ve interpreted the MBCA. These extra resources are key if you’re an associate in an MBCA jurisdiction, where the commentary around your state’s statute may not cover every issue. (Ask me how I know…)
6. The MBCA allows for a lot of private ordering, through articles, bylaws and shareholder agreements.
If you’re wondering why we waited until November to celebrate the Model Act, it’s not just because the relevance of state law exceeded what we may have expected back in January, or that this paper only recently came to my attention. It’s also because I’m focused on birthdays this week. My middle child turned 8 earlier this week, and – as I’ve previously shared – it’s the only time of year he gets our full attention!
There’s been a noticeable shift in the SEC enforcement environment this year. John shared that the “September surge” didn’t materialize in 2025 – and as predicted when SEC Chair Paul Atkins took the helm, the Enforcement Division has been more focused on individual bad actors and “bread & butter” types of offenses. This Bloomberg article gives stats:
The SEC brought at least 91 new enforcement suits from Inauguration Day through the end of September, down from 126 actions filed during the same period in 2024, according to Bloomberg Law’s review of agency litigation releases and filings.
The overall drop comes as Atkins’ enforcers focus more on individual offenders than household name companies.
“The types of entities that have been under scrutiny in the Atkins administration have been SEC registrants, registered investment advisers, and broker-dealers,” said Haima Marlier, a partner at Morrison & Foerster LLP and former senior trial counsel at the SEC.
Nearly 33% of enforcement actions brought under this administration so far have focused on offering fraud or insider trading, up from 26% during the same period last year.
The shutdown and staffing cuts are probably also affecting the SEC Enforcement Division – but don’t get rid of your compliance program just yet. Earlier this week, FINRA announced a $10 million fine on a financial services firm for improper client gift practices. Over on the Radical Compliance blog, Matt Kelly shared recordkeeping and compliance lessons from that enforcement action that apply across industries and regulators.
In this 24-minute episode of our Women Governance Trailblazers podcast, Courtney and I spoke with Dottie Schindlinger – who is Executive Director of Diligent Institute and recently co-authored “Governance in the Digital Age: A Guide for the Modern Corporate Board Director.”
Dottie has been a real trailblazer with technology in the boardroom, founding BoardEffect back in 2009 and growing it into the basis for tools used by many boards today. We discussed:
1. Dottie’s career path in building technology platforms for boards and helping boards oversee technology risks and opportunities.
2. How directors and their advisors can stay informed in a time of rapid change.
3. Governance frameworks and ethical guardrails, including board AI usage frameworks, that balance stakeholder protection with strategic innovation.
4. Key topics for board agendas right now.
5. Dottie’s advice for the next generation of women governance trailblazers.
To listen to any of our prior episodes of Women Governance Trailblazers, visit the podcast page on TheCorporateCounsel.net or use your favorite podcast app. If there are governance trailblazers whose career paths and perspectives you’d like to hear more about, Courtney and I always appreciate recommendations! Drop me an email at liz@thecorporatecounsel.net.
Meredith blogged last week about the first operating company to close an IPO during a government shutdown. As Meredith had noted, that company had gone public based on a registration statement that it filed on October 6th – which was before Corp Fin updated its shutdown FAQs to say:
Rule 430A allows for the omission of certain information, including pricing and price-dependent information, from the form of prospectus filed as part of a registration statement that is declared effective. Because the staff is not available to review or accelerate the effectiveness of registration statements during the shutdown, we will not recommend enforcement action to the Commission if a company omits the information specified in Rule 430A from the form of prospectus filed as part of a registration statement during the shutdown and such registration statement goes effective, either during or after the shutdown, by operation of law pursuant to Section 8(a) of the Securities Act.
Late last week, another IPO priced – the first to rely on this updated FAQ, providing a price range in its Form S-1/A that was filed on October 10th and went effective by operation of law 20 days later, under Section 8(a) of the Securities Act. Here’s an excerpt from a Cooley case study about how it played out:
Though a couple of weeks delayed, Navan was still able to price its IPO in October and raise $923.1 million – one of the largest tech IPOs of 2025 – debuting on Nasdaq under the ticker NAVN on October 30, 2025. And importantly, despite the continuing government shutdown, Navan proceeded with a traditional roadshow and pricing.
This IPO confirms that some companies and their deal teams may be able to use Corp Fin’s updated FAQ to get across the finish line during the government shutdown – at least a couple more IPOs have priced this week, which is great news! But it also sounds like it’s a carefully orchestrated process and the stars have to align in the right way.
Earlier this week, the U.S. Travel Association sent a letter to Congressional leaders calling for an end to the government shutdown, which at 37 days is now the longest shutdown in history – surpassing the 35-day shutdown in 2018-2019. Over 500 companies signed the letter, which of course warns of disruption to the travel industry. Sure enough, as reported by Reuters and other outlets, the FAA is now planning to order a 10% cut in flights. With federal workers going unpaid and the general public experiencing the impact, we have to wonder, “When will it end??”
On the securities front, even though we’re very happy to see recent IPO activity defying the “shutdown odds” – that’s likely to get more difficult if the Staff isn’t able to get back to work in the near future.
That’s because Staff plays a key role in the IPO process by reviewing registration statements. Even if folks don’t agree with every comment or want the Staff to be speedier, in the big picture, everyone involved in registered offerings tends to appreciate and rely on the Staff’s review – making it unlikely companies and banks will be eager to go through with IPOs using registration statements that hadn’t gotten very far in the review process.
I hope the Staff returns soon, and I have a feeling they’ll be focused on efficiency when they do.
If the shutdown continues, the Staff’s absence may also end up affecting SEC Chair Paul Atkins’ ambitious rulemaking aspirations. We know from the Spring 2025 Reg Flex Agenda (published in September) that Chair Atkins wants to create a framework for crypto assets, modernize disclosures, make it easier to go and be a public company, reform the shareholder proposal process, and more. That’s a lot!
While rulemaking typically isn’t considered an “essential” function that continues during a government shutdown, this Bloomberg article recaps the creative ways that Chair Atkins has been paving the way for these priorities, even with the Staff on furlough. Here’s an excerpt:
The Securities and Exchange Commission under the Trump appointee in July urged a federal court to toss Biden-era climate reporting requirements, in part to avoid the lengthy rulemaking that would be needed to undo them. The SEC in September then advised companies they can funnel investors’ fraud claims into mandatory arbitration, without new rules. Atkins also suggested in a speech this month that companies could block votes on shareholders’ environmental and social proposals now, using existing Delaware law.
Companies have welcomed these updates – and many of them have been issued in formats that we’ve grown used to through the years, like CDIs and SLBs. But the article points out that while these paths can get the job done in the short-term, a new administration would be more likely to unwind things that didn’t go through the standard notice & comment period. That swinging pendulum is another thing we’re reluctantly growing accustomed to!
