KMK Law Corporate & Securities Blog

Recently, the European Union Court of Justice invalidated a Safe Harbor Framework (established in 2000), which thousands of companies relied upon to facilitate the transfer, processing and storage of data from the EU to the U.S.  Any company that processes and stores data from the EU, including customer and employee personal data, should be reviewing its contracts and procedures and monitoring these developments. 

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”). 

Cyber insurance
The risk of a data breach now tops the list of concerns of many in-house counsel and C-suite executives. Cyber insurance is an important component in managing this risk and mitigating the damages and loss that follow a data breach.

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.

On March 23, 2015, Ohio’s recently enacted amendments to the receivership statute will go into effect, creating certainty and consistency for various existing receivership practices previously developed and used by Ohio courts.  The revised receivership law amends, among other things, certain sections of Ohio Revised Code Chapter 2735 – Receiverships, including sections 2735.01 (Appointment of Receiver), 2735.02 (Qualifications of Receiver) and 2735.04 (Powers of Receiver).

This week, the SEC released proposed rules intended to implement Section 955 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), which would require SEC reporting companies to disclose in their annual meeting proxy statements whether the company permits its employees (including officers) and directors to hedge equity securities of the company. 

Pursuant to Section 1502 of the Dodd-Frank Act, the SEC promulgated new disclosure and reporting requirements concerning the use of certain conflict minerals (tantalum, tin, tungsten and gold) originating in the Democratic Republic of the Congo and certain adjoining countries (each a “Covered Country”). The new rule requires reporting companies to disclose whether conflict minerals are present in their products, whether they originated in a Covered Country, and the extent of the company’s due diligence effort with respect to the inquiries made and the measurers taken to determine the origin of the minerals and whether the products are conflict free. Reporting companies must file their annual Form SD and, depending upon the outcome of the due diligence, a Conflict Minerals Report, by the June 1, 2015 deadline. As companies prepare for the second year of filings, and in light of the pending litigation challenging the rule, many companies are looking for guidance.