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Following the increase in the number of special purpose acquisition companies (SPACs) and the related business combinations between SPACs and private target businesses (commonly referred to as “de-SPAC” transactions), an increase in regulatory scrutiny, particularly from the Securities and Exchange Commission, is emerging. As discussed below, in the last week the SEC has issued two statements — one related to the accounting treatment of warrants and one related to liability risk — that have attracted considerable attention from SPACs and other stakeholders.
Continue Reading SEC Statements Regarding SPACs Address Warrants and Projections

Earlier this month, the Securities and Exchange Commission approved amendments (the Amendments) to New York Stock Exchange (NYSE) rules that require listed companies to obtain shareholder approval of certain private placements and equity issuances to “related parties,” as well as requirements related to transactions between a listed company and certain related parties. In particular, the Amendments, which were initially proposed in December 2020 and subsequently modified, modified Sections 312.03, 312.04 and 314.00 of the NYSE Listed Company Manual. According to NYSE, the Amendments to Sections 312.03 and 312.04 are intended to more closely align shareholder approval requirements applicable to NYSE listed companies with comparable requirements for companies listed on Nasdaq or NYSE American and, in doing so, provide greater flexibility to NYSE-listed companies seeking to raise capital. The flexibility provided by such Amendments tracks, in various respects, the flexibility provided through temporary rules adopted by NYSE in response to the COVID-19 pandemic, which are being terminated by the Amendments. The amendments to Section 314.00 clarify the role of the audit committee in approving related party transactions, and expand the scope of transactions to which related party transaction rules apply.
Continue Reading SEC Approves Amendments to NYSE Shareholder Approval Rules for Certain Equity Issuances and Requirements for Related Party Transactions

On March 31, the staff of the Division of Corporation Finance (the Staff) of the Securities and Exchange Commission issued a staff statement (the Staff Statement) relating to accounting, financial reporting and governance issues for private companies to consider before engaging in a business combination with a special purpose acquisition company (SPAC).
Continue Reading SEC Corp Fin Staff Issues Statement on SPAC Transactions

On December 22, 2020, the Securities and Exchange Commission approved the New York Stock Exchange’s proposed new direct listing rules to allow companies engaging in a direct listing to raise capital directly through a primary sale of shares, in addition to, or instead of, only facilitating sales of shares by existing shareholders, as previously permitted.
Continue Reading SEC Again Approves NYSE’s Direct Listing Rules

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

On November 12, the Institutional Shareholder Services (ISS) published its U.S. 2020 Proxy Voting Guideline Updates, which will be effective for shareholder meetings held on or after February 1, 2020. In general, the updates involve clarification of guidelines and formalization of factors to codify ISS’s existing approach on recommendations relating to specific issuers.
Continue Reading ISS Releases 2020 Proxy Voting Guideline Updates

On February 2, the Securities and Exchange Commissions approved a New York Stock Exchange (NYSE) rule change that facilitates the listing of companies on the NYSE without a prior registration statement under the Securities Exchange Act of 1934 (Exchange Act) in connection with an underwritten initial public offering. As previously discussed in the May 5, 2017 and June 30, 2017 editions of the Corporate & Financial Weekly Digest, the NYSE had previously filed and withdrew the proposed rule change. Thereafter, the NYSE elected to move forward with the rule change and filed amendments, including a final Amendment No. 3. The NYSE noted that the proposed rule change would enable the NYSE to compete for listings of companies that the NYSE believes would be able to list on the Nasdaq Stock Market, but would not be able to list on the NYSE under its then-current rules.
Continue Reading SEC Approves NYSE Rule to Facilitate Listing Without an IPO

On June 29, the Division of Corporation Finance (Division) of the Securities and Exchange Commission announced that, beginning on July 10, the Division will permit all issuers to confidentially submit to the Division, for nonpublic review, draft registration statements in connection with initial public offerings (IPOs) and in certain other cases. This was previously only available to emerging growth companies (EGCs) under the Jumpstart Our Business Startups Act for their IPOs.
Continue Reading SEC Expands Nonpublic Review of Draft Registration Statements

On June 19, the New York Stock Exchange (NYSE) filed a notice withdrawing its proposed rule that would have allowed companies to list on the NYSE without an initial public offering. The proposed rule was previously discussed in the May 5, 2017 edition of the Corporate & Financial Weekly Digest. The proposed rule would have amended Footnote (E) of Section 102.01B of the NYSE Listed Company Manual, specifically the provisions related to the qualification of companies listing without a prior registration under the Securities Exchange Act of 1934.
Continue Reading NYSE Withdraws Proposed Rule to Allow Listing Without an IPO