KMK Law Corporate & Securities Blog

This week, the SEC adoped final rules on proxy access which will require companies to provide certain shareholders or shareholder groups the opportunity to nominate candidates for boards of directors and to include information in the company's proxy materials about, and the ability to vote for, these shareholder nominees.

The Dodd-Frank Wall Street Reform and Consumer Protection Act immediately revised the net worth test for determining whether an individual investor is an “accredited investor” for purposes of Regulation D and Section 4(6) of the Securities Act of 1933. Specifically, as revised, prospective investors can no longer include the value of their primary residence for purposes of satisfying the $1 million net worth test. Historically, many investors have relied on the value of their homes for purposes of qualifying as an accredited investor. This immediately effective provision applies to offerings that are already in progress, including those that have had initial closings.

On July 20, 2010, the Financial Accounting Standards Board issued a new Exposure Draft of a proposed Statement, Contingencies (Topic 450), Disclosure of Certain Loss Contingencies. The FASB has proposed various amendments to Topic 450, formerly known as FASB Statement No. 5, in response to investor concerns about the inadequacy of information currently available regarding the likelihood, timing and amount of future cash flows associated with loss contingencies.

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law.

The Senate recently passed the Consumer Financial Protection Act of 2010 and, like the House financial reform legislation passed back in December, it has a lot to say on corporate governance and executive compensation.

The Patient Protection and Affordable Care Act adds a new provision to the Internal Revenue Code that could provide a significant benefit to small and mid-size companies in the biotechnology industry.  The Act, which was signed by President Obama on March 23, authorizes the Secretary of the Treasury to award up to $1 billion in qualifying therapeutic discovery project credits in 2009 and 2010.  The credit is equal to 50% of an eligible taxpayer’s qualified investment in a qualifying therapeutic discovery project.

Somewhat lost in the excitement of pending healthcare legislation, on March 18, 2010, President Obama signed into law the Hiring Incentives to Restore Employment (HIRE) Act.  The HIRE Act features two new tax benefits designed to incentivize employers to hire and retain workers who were previously unemployed or working part time.

As part of its recently adopted Final Rules on Proxy Disclosure Enhancements, the SEC added a new Item 5.07 to Form 8-K.  Item 5.07 requires a company to report the results of voting at any shareholders meeting within four business days after the meeting at which the vote was held.

As approved by the SEC, the revised rules (more fully described in this SEC Release) basically conform the NYSE corporate governance listing standards to the requirements of Item 407 of Regulation S-K and to Form 8-K by eliminating duplicative disclosure requirements currently included in the NYSE standards and directly incorporating the Item 407 requirements.

On December 16, 2009, the SEC voted to approve final rules on proxy disclosure and solicitation enhancements which had been initially proposed by the SEC in July 2009. As stated in the SEC's adopting release the new rules will be effective February 28, 2010, meaning they will apply to the 2010 proxy season for substantially all calendar year issuers.