Corporate & Securities Blog

On July 1, 2016, the Securities and Exchange Commission (“SEC”) approved changes to Nasdaq Listing Rules 5250 and 5615 requiring Nasdaq-listed companies to publicly disclose compensation or other arrangements by third parties to directors or nominees for director. The new requirements take effect July 31, 2016.

On June 1, 2016, the Securities and Exchange Commission published an interim final amendment to implement Section 72001 of the Fixing America’s Surface Transportation Act (the “FAST Act”), permitting an issuer to submit a summary page on Form 10-K filings. The amendment adds new Item 16, which expressly allows an issuer, at its option, to include a summary in its Form 10-K filings, provided that each item on the summary page must include cross-references to related, more detailed information disclosed in the issuer’s Form 10-K.   

On May 3, 2016, the Securities and Exchange Commission (“SEC”) adopted final amendments to implement certain sections of the Jumpstart Our Business Startups Act (“JOBS Act”) and certain securities regulation provisions of the Fixing America’s Surface Transportation Act (“FAST Act”). The amendments were adopted substantially as proposed in December 2014 (summarized in our prior blog post, here). The amendments revise SEC rules to reflect the new, higher thresholds for registration, termination of registration and suspension of reporting that were included in the JOBS Act and the FAST Act. SEC Chair, Mary Jo White, announced in a press release that, “With the adoption of these amendments, the Commission has completed all of the rulemaking mandates under the JOBS Act.” 

On December 4, 2015 President Obama signed into law the Fixing America’s Surface Transportation Act (the “FAST Act”) which, despite its name, includes a number of provisions designed to facilitate capital formation and modernize and simplify certain disclosure obligations under federal securities laws. The changes were effective immediately. 

A new tool to raise capital is now available for small business and startup owners who may have previously believed that raising funds through selling an interest in their business to be too cumbersome or expensive.   

In a recent decision of the Delaware Supreme Court, the court reversed a Chancery Court determination that a Director was sufficiently independent such that a demand on the Board of Directors was not excused.  The court clarified that directors whose deep friendship also involved financial ties may not be deemed independent in order to excuse a demand on a Board of Directors. 

On August 5, 2015, the Securities and Exchange Commission approved its final “Pay Ratio Disclosure” rules as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The final rules require annual disclosure of the ratio of a reporting company’s principal executive officer’s total annual compensation to the median of the total annual compensation of all its employees. Most public companies will be required to make the pay ratio disclosure following their first full fiscal year beginning on or after January 1, 2017. Specifically, for a calendar-year reporting company, the first pay ratio disclosure must be made in the proxy statement for its 2018 annual meeting. 

On July 1, 2015, the U.S. Securities and Exchange Commission proposed rules which would require exchange-listed companies to adopt a policy for the recovery of incentive-based compensation in the event of an accounting restatement. These rules would implement Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. 

On April 29, 2015, the U.S. Securities and Exchange Commission (“SEC”) approved the issuance of proposed rules to implement Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), regarding the disclosure of pay versus performance. The proposed rules would require reporting issuers to disclose the relationship between named executive officer “actual” pay and the issuer’s and its peer’s total shareholder return (“TSR”). 

While several years have passed since the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Jumpstart Our Business Start-Ups Act took effect, several high-profile provisions of each act have not yet been implemented as final rules await adoption by the Securities and Exchange Commission. This advisory reviews certain provisions of each act and summarizes other related securities regulation developments.