KMK Law 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 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”). 

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. 

As mandated by 2012’s Jumpstart Our Business Startups Act (“JOBS Act”), the Securities and Exchange Commission has proposed amendments to the thresholds at which a company will be required to register its equity securities under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”) and thus be subject to the Exchange Act’s periodic reporting obligations. Exchange Act registration would now be required only when a company has more than $10 million in assets and a class of equity securities “held of record” by either: (a) 2,000 persons (up from 500 persons), or (b) 500 persons or more who are not “accredited investors” under SEC rules (with the determination being made as of the last day of the fiscal year). The proposal would also amend the threshold requirements for banks or bank holding companies to terminate or suspend the registration of a class of securities under the Exchange Act from 300 to 1,200 persons. 

On April 14, 2014 the U.S. Court of Appeals for the D.C. Circuit struck down part of the U.S. Securities and Exchange Commission’s (“SEC”) controversial new “Conflict Minerals Rules” requiring publicly-traded companies to disclose whether their products contain certain minerals from certain central African countries. Despite this decision, until further notice public companies should continue to carry out efforts to comply with the SEC’s rules. 

In January 2013, the SEC approved the new listing standards proposed by NASDAQ for independent compensation committees and compensation consultants, legal counsel and other advisors. In November 2013, NASDAQ amended those listing standards and required companies to certify their company’s compliance with, or exemption from, these amended compensation committee listing rules. In January 2014, NASDAQ released the certification form. The certification must be provided to NASDAQ no later than 30 calendar days after the company’s first annual shareholder’s meeting occurring after January 15, 2014, or October 31, 2014, whichever is earlier.