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
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
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
As if you needed another sign that life isn’t “back to normal” quite yet, Corp Fin has once again updated its guidance for conducting shareholder meetings in light of COVID-19 concerns. The section on “presentation of shareholder proposals” now encourages issuers to continue to provide shareholder proponents or their representatives with the ability to present their proposals through alternative means, such as by phone, during the 2022 proxy season.
We blogged about the original guidance way back in March 2020, as well as updates that the Staff made in April 2020. The guidance was also updated last year in regards to the 2021 proxy season. It would have been great to share this new update with my blog yesterday on annual meeting formats, but oddly Corp Fin’s announcement didn’t arrive in our inboxes until mid-morning yesterday. Based on the poll I ran yesterday, it’s looking like many meetings will continue to be “virtual only” this year – but don’t rule out the outdoor “foam party” option, which is making a strong showing of 7% of votes (more than hybrid!).
– Liz Dunshee
The NYSE has sent its “annual compliance guide” to listed companies to remind them of their obligations on a variety of topics and summarize developments since last year. The letter points out these two changes:
On April 2, 2021, the SEC approved changes to the NYSE’s shareholder approval rules. The changes eliminated related party limitations and bona fide private financing requirements in Listed Company Manual Section 312.03 for market price cash transactions. (Approval Order Amendment No. 1 to Sections 312.03 and 312.04) The related party transaction rules in Section 314.00 were also clarified in connection with this and a subsequent amendment on August 26, 2021. (Approval Order Amendment to Section 314.00)
On November 19, 2021, the SEC approved changes to NYSE’s policy on how abstentions are treated in votes cast on matters requiring shareholder approval. Issuers now must calculate the votes cast in accordance with their own governing documents and any applicable state law. (Approval OrderAmendment to Section 312.07)
The NYSE’s annual letter is a good resource to have on hand – all the NYSE email and telephone number contact information is provided and the letter explains when and how listed companies should contact the exchange for various matters. For links to NYSE resources, as well as memos & analysis on NYSE compliance issues, visit our “NYSE Guidance” Practice Area.
– Liz Dunshee
This is something that won’t come around again: Bonhams announced that it is running a “single owner” online auction for items from the personal library of Justice Ruth Bader Ginsberg, which runs until Thursday, January 27th. Here’s the full catalogue. Highlights include:
• Ginsburg’s personal copy of the 1957-58 Harvard Law Review, the year that she was a member, heavily annotated by her. Estimate: $2,500 – 3,500.
• Ginsburg’s personal copies of the Reports on the 1978 Equal Rights Amendment Extension Hearings before the House and Senate subcommittees. Estimate: $600 – 900.
• Offprints of Ginsburg’s own articles, including “Women in the Federal Judiciary” (1995), inscribed by Ginsburg to Senator Nancy Kassebaum. Estimate: $800 – 1200. A Sandra Day O’Connor legal article “They Often Are Half Obscure: The Rights of the Individual and the Legacy of Oliver Wendell Holmes” (1992), a presentation copy from the Justice to Ruth Bader Ginsburg, just days before her nomination, and subsequently quoted from in her nomination acceptance speech. Estimate: $800 – 1200.
• Toni Morrison’s Beloved inscribed by the author to Ruth and Martin Ginsburg. Estimate: $300 – 500.
• Books relating to important cases adjudicated by Ginsburg, including Citizens United (Estimate: $200 -300), Bush v. Gore (Estimate: $400 – 600), and Lilly Ledbetter’s fair pay lawsuit (Estimate: $250 – 350), all inscribed to Ginsburg. A deluxe copy of Antonin Scalia’s Reading Law, warmly inscribed to Ginsburg. Estimate: $600 – 900.
• Ginsburg’s copy of her book, My Own Words, with her personal bookplate. Estimate: $1000 – 2000.
Here’s another write-up about the auction from “The Art Newspaper” that includes a pic of the inside cover page of the first edition of Gloria Steinem’s My Life on the Road, inscribed “To Dearest Ruth” and signed by Steinem. The pic is the closest I’ll ever get to seeing that inscription, but it could be yours for the right price. Hat-tip to Cooley’s Cydney Posner (self-declared “auction junkie”) for alerting us all to this very unique opportunity!
– Liz Dunshee
State Street Global Advisors announced on Wednesday of this week that President & CEO Cyrus Taraporevala, age 54, is planning to retire later this year. He’ll remain in his role through the completion of the search for his successor and the transition process.
The announcement came only one week after Taraporevala sent SSGA’s annual letter to portfolio companies that set forth 2022 priorities. This Bloomberg article says that State Street CEO Ron O’Hanley does not expect any broad strategic change in connection with this change to SSGA leadership.
SSGA’s investment management pre-tax earnings grew by 67% during Taraporevala’s tenure. Its assets under management are up to $4.1 trillion, a nearly 50% increase from when Taraporevala was appointed SSGA’s President & CEO in late 2017.
– Liz Dunshee
Several in-house people I’ve spoken with have said that having to plan a hybrid annual shareholder meeting would be the “worst of both worlds.” This format requires planning two simultaneous events and fretting about both in-person and technical mishaps. At the same time, some shareholders have grown to enjoy the easier attendance format for virtual meetings – while others still prefer the option of in-person interaction with directors. Some state corporate laws also require companies to conduct meetings in person, versus virtual-only.
There are signs that the meeting format is going to be a point of contention. A few months ago, I blogged on our members-only “Proxy Season Blog” that a majority of the voting power at Cracker Barrel had approved a shareholder proposal requesting the company to ensure it would hold its annual meeting in whole or in part through virtual means. This was after Corp Fin denied no-action relief to exclude the proposal on the basis of “ordinary business” in light of public health issues and technological advancements.
Now, as I mentioned earlier this week, Vanguard has added a section to its 2022 voting policies to address its stance on the topic. Here’s more detail – from page 18:
Hybrid/virtual meetings. A fund will generally support proposals seeking to conduct “hybrid” meetings (in which shareholders can attend a meeting of the company in person or elect to participate online). A fund may vote for proposals to conduct “virtual-only” meetings (held entirely through online participation with no corresponding physical meeting). To date, data show that virtual meetings can be an effective way to increase shareholder participation and reduce costs. Virtual meetings should not curtail rights — e.g., by limiting the ability for shareholders to ask questions. A fund will consider support if:
– Meeting procedures and requirements are disclosed ahead of a meeting;
– A formal process is in place to allow shareholders to submit questions to the board;
– Real-time video footage is available and attendees can call into the meeting or send a recorded message; and
– Shareholder rights are not unreasonably curtailed.
Vanguard’s move suggests that it anticipates more proposals on this topic, although it doesn’t specifically say that this policy is limited to proposals from shareholders. The conditions for support are factors that appear to be under management’s control.
– Liz Dunshee
What’s in store for your 2022 annual shareholder meeting? Please participate in this anonymous poll to show what’s trending:
surveys
– Liz Dunshee
We’ve posted the transcript for our recent webcast for members, “Understanding LTSE Listings.” LTSE Services’ Martin Alvarez and Jane Storero, Asana’s Katie Colendich and Eleanor Lacey, and Twilio’s Mariam Sattar shared practical tips about the listing process and what it means to be traded on the LTSE, including this nugget from Mariam:
Unlike Asana, we were already a public company when we started to have internal discussions around listing with LTSE. The champions internally for our organization were our IR organization. They were intrigued both about and around aligning the values of LTSE with those that Twilio already has; particularly with respect to our social impact and DEI initiatives, which we’ve been championing and are proud of internally. Additionally, we wanted to attract long-term capital and some of the technological solutions that would allow us to target and build a shareholder base that’s consistent with our social values and our DEI initiatives.
Our board was excited about LTSE in general. The practicalities of the listing process from our perspective were a minimal lift, and that will be an overarching theme here. The principles-based approach enabled us to produce one LTSE policy in which we addressed all the different principles: the long-term stakeholder policy, compensation, strategy, investor policy and board policy. Within that one policy and those overarching values, we leveraged what we were already doing internally. There weren’t shifts that we had to make as a company to bring ourselves into alignment with LTSE.
When we had made the decision to do one policy, we created an internal working group that consisted of our head of social impact, our head of DEI, our chief people officer, our head of IR, myself as the legal person and outside counsel. Together, we brainstormed on what that policy would look like and the ways in which it spoke to our organization and was consistent with Twilio’s ideologies. For us, that ended up being not a significant lift.
– Liz Dunshee
