On August 26, the Securities and Exchange Commission adopted amendments to the definitions of “accredited investor” in Rule 501(a) and “qualified institutional buyer” in Rule 144A under the Securities Act of 1933 (Securities Act). The amendments expand the definition of accredited investor, a principal test to determine eligibility for participation in private capital markets, even if they do not meet specified income and net worth tests. Amendments to the qualified institutional buyer definition similarly expand the list of eligible entities under that definition. The amendments were adopted generally as proposed with no significant changes. The proposed amendments were previously covered in the December 20, 2019 edition of the Corporate & Financial Weekly Digest.
Continue Reading SEC Amends the Definitions of “Accredited Investor” and “Qualified Institutional Buyer”

On August 26, the Securities and Exchange Commission adopted amendments to modernize the required disclosures under Regulation S-K regarding a company’s business description (Item 101), legal proceedings (Item 103) and risk factors (Item 105) (the Amendments). In a press release, the SEC staff noted that the Amendments are in line with the SEC’s long-standing commitment to a principles-based, registrant-specific approach to disclosure that, although prescriptive in some respects, focuses on materiality and is designed to provide an understanding of each registrant’s business, financial condition and prospects. The staff also noted that the Amendments are intended to result in disclosure that will be presented in a manner that is more readable because of the reduction of immaterial and/or repetitive disclosure and will also be more in line with the way that a registrant’s management and board of directors manage and assess the registrant’s performance. The Amendments reflect the adoption of rule amendments the SEC originally proposed in August 2019 (the Proposals), which were previously discussed in the August 16, 2019 edition of Corporate & Financial Weekly Digest, with certain modifications. The key changes made by the Amendments:
Continue Reading SEC Adopts Rule Amendments to Modernize Business, Legal Proceedings and Risk Factor Disclosures Required by Regulation S-K

On August 26, the Securities and Exchange Commission approved rules proposed by the New York Stock Exchange (NYSE) to allow companies engaging in a direct listing to raise capital directly through the sale of primary shares upon the direct listing, in addition to, or instead of, facilitating sales of shares solely by existing shareholders.
Continue Reading SEC Approves New NYSE Direct Listing Rules

Recently, the Securities and Exchange Commission issued a release (the Release) approving, with immediate effectiveness, the New York Stock Exchange’s (NYSE) proposal to extend through September 30 the NYSE’s temporary and partial waivers from the requirement that NYSE-listed companies obtain stockholder approval in connection with certain related party and 20 percent equity issuances (the Waiver).
Continue Reading SEC Approves Extension of Temporary NYSE Waiver of Stockholder Approval Rules

On June 23, the Division of Corporation Finance (the Division) of the Securities and Exchange Commission issued CF Disclosure Guidance: Topic No. 9A (Topic 9A) providing additional disclosure considerations for public reporting companies regarding operations, liquidity and capital resources disclosures in light of business and market disruptions related to the COVID-19 pandemic. Topic 9A supplements CF Disclosure Guidance Topic No. 9 issued by the Division on March 25, 2020 and discussed in Katten’s advisory “COVID-19 Impact on Public Disclosure on SEC Reporting Companies.”
Continue Reading SEC Division of Corporation Finance Issues Additional Disclosure Guidance Related to COVID-19 Pandemic

On May 22, the Financial Industry Regulatory Authority (FINRA) issued an open invitation for member firms and other interested parties to provide views and information about the security-based swap (SBS) market, with particular focus on broker-dealer SBS activities and the application of FINRA rules to those activities. The invitation, which is not a mandatory information request, includes the following questions:
Continue Reading FINRA Requests Comments on Security-Based Swaps

On May 14, the Securities and Exchange Commission announced the adoption and immediate effectiveness of Section 312.03T of the NYSE Listed Company Manual. Recognizing that existing exceptions to the shareholder approval requirements in the NYSE Listed Company Manual are “not helpful in most situations arising from the COVID-19 pandemic,” Section 312.03T provides a temporary exception to shareholder approval requirements applicable to certain issuances of equity securities (or convertible or other securities that may result in the issuance of equity securities) representing 20 percent or more of a New York Stock Exchange (NYSE)-listed company’s common stock or voting power, as well as narrow exceptions from shareholder approval requirements in connection with issuances to a related party or equity compensation. Section 312.03T is scheduled to expire on June 30, 2020.
Continue Reading NYSE Provides Temporary Relief From Shareholder Approval Requirements Due to COVID-19

On May 21, the Securities and Exchange Commission adopted final rules related to the financial disclosure requirements for acquisitions and dispositions of businesses (i.e., M&A transactions). The SEC’s release adopting the final rules is available here. These rules will be discussed in an upcoming edition of the Corporate & Financial Weekly Digest.

On May 4, the Securities and Exchange Commission’s  Division of Corporation Finance (the Division) issued four frequently asked questions (FAQs) related to the SEC’s conditional relief order (the Order) that was issued in the wake of the Coronavirus Disease 2019 (COVID-19).
Continue Reading SEC Division of Corporation Finance Issues Four FAQs Addressing the SEC’s Conditional Relief Order

As previously discussed in our March 26 advisory titled, “Virtual Shareholder Meetings in the Wake of COVID-19: Legal and Practical Considerations,” the Securities and Exchange Commission issued guidance to public companies on providing notice of a change to a virtual shareholder meeting in the wake of the coronavirus (COVID-19) pandemic.
Continue Reading Proposed Amendments to the Delaware General Corporation Law Concerning Virtual Shareholder Meetings During Emergency Conditions