Public Company Reporting (Series: Securities Law Made Simple (Not Really)

Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™
Receive our free weekly newsletter at www.financialpoise.com/subscribe
Insert the cover image for this webinar on this slide entirely
1

Practical and entertaining education for
attorneys, accountants, business owners
and executives, and investors.
2

DISCLAIMER
The material in this webinar is for informational purposes only. It should not be
considered legal, financial or other professional advice. You should consult with an
attorney or other appropriate professional to determine what may be best for your
individual needs. While Financial Poise™ takes reasonable steps to ensure the information
it publishes is accurate, Financial Poise™ makes no guaranty in this regard.
About this PowerPoint: if you are looking at this PowerPoint without the benefit of
listening to the conversation that surrounded it then you are doing yourself a disservice.
This PowerPoint was prepared in contemplation of being viewed in conjunction with
listening to a one hour webinar on the topic
3

MEET THE FACULTY
Moderator:
Vanessa Schoenthaler – Sugar Felsenthal Grais & Helsinger
Panelists:
Robert Rapp – Case Western Reserve University School of Law
Michael Gold – Saul, Ewing, Arnstein, & Lehr LLP
Craig Mordock – Sheppard, Mullin, Richter & Hampton LLP
4

ABOUT THIS WEBINAR:
Public Company Reporting
Once public, a company is subject to a continuously evolving landscape of disclosure and reporting
requirements. Recent disclosure developments have addressed everything from executive
compensation to cybersecurity. In addition, the prevalence of social media has made it such that a
company must now consider not only the nuances of what to disclose but also how to deliver that
disclosure. Is your company tweeting its earnings reports; are you using your corporate Facebook
page to make Regulation FD disclosures?
In this webinar our expert panel provides you with a high-level overview of key public company
reporting and disclosure requirements, including the latest developments brought about by the
Dodd-Frank Act, JOBS Act, FAST Act and, most recently, the SEC’s Disclosure Effectiveness
Initiative, as well as provide you with tangible examples and practical advice on how to comply with
the ever-changing means of delivering that disclosure.
5

ABOUT THIS SERIES:
Securities Law Made Simple (Not Really)
The federal securities laws, made up of a interwoven collection of Congressional statutes, rules and
regulations promulgated by the Securities and Exchange Commission and federal judicial
precedent, play a ubiquitous role throughout a company’s life-cycle, relevant from the first issuance
of founder shares at organization, to the use of equity compensation to reward and incentivize
directors, employees and consultants, to offerings of equity and debt in corporate finance
transactions, to initial, secondary and alternative public offerings, in mergers and acquisitions,
strategic transactions and beyond.
This webinar series of leading securities law experts discusses both the fundamentals of the federal
securities laws and the latest developments in this ever-evolving area of law.
6

EPISODES IN THIS SERIES
2/20/19 Episode #1:
Securities Law: An Overview
3/27/19 Episode #2:
Private Offering Exemptions and Private Placements
4/24/19 Episode #3:
7
Dates shown are premiere dates.
All webinars will be available
On Demand approximately 4 weeks
after they premiere.

Episode #3:
8

HOW DOES AN ISSUER BECOME A
REPORTING COMPANY?
• An issuer becomes subject to reporting obligations under Section
13(a) or Section 15(d) the Securities Exchange Act of 1934 by
having a class of securities registered under Section 12 or being
subject to Section 15(d).
• This creates three general categories of reporting companies:
9

REPORTING COMPANY? (con’t)
• Securities Exchange Listing - Companies with securities listed on a national
securities exchange, such as the NYSE or NASDAQ (Section 12(b)).
✓ Company must register that class of securities under the Exchange Act
by filing application with exchange and a registration statement with
SEC under Section 12(b).
✓ Applies to debt and equity registrations.
1
0

• Size Thresholds - Companies that satisfy certain size thresholds (Section 12(g))
✓ Total assets exceeding $10 million and:
o For issuers that are not banks or bank holding companies, there are 2,000
or more record holders of that class of equity securities or 500 persons who
are not accredited investors; or
o For banks and bank holding companies, there are 2,000 or more record
holders of that class of equity securities.
1
1

• Size Thresholds – continued …
✓ Applies to equity securities only.
✓ Such company must file a registration statement under Section 12(g) of
the Exchange Act within 120 days after the last day of its first fiscal year
in which it exceeds the above thresholds.
1
2

• Effective ’33 Act Registration Statement - Companies that have an effective ’33 Act
registration statement for debt or equity securities, even if securities are not listed
on an exchange (Section 15(d)):
✓ Section 15(d) companies are subject to current and periodic reporting only
(Forms 8-K, 10-Q and 10-K).
✓ Do not have to comply with other Exchange Act obligations (proxy and tender
offer rules, Section 16 reporting and short-swing profit restrictions and
Schedule 13 beneficial ownership reporting).
1
3

HOW DID THE JOBS ACT AND THE FAST
ACT CHANGE THE THRESHOLD AND
ON-RAMP FOR BECOMING A
REPORTING COMPANY
• Final Rules adopted May 3, 2016 - implementing JOBS Act and FAST Act
changes.
• “Backdoor” public company thresholds before the JOBS Act:
✓ $10 Million in assets and 500 shareholders of record.
1
4

HOW DID THE JOBS ACT AND THE FAST ACT
CHANGE THE THRESHOLD AND ON-RAMP FOR
BECOMING A REPORTING COMPANY (con’t)
• “Backdoor” public company thresholds after the JOBS Act:
✓ $10 Million in assets and 2,000 shareholders of record, including 500
“unaccredited” investors and excluding holders of compensatory equity awards,
with de-registration threshold remaining at 300 holders; or
✓ For banks and bank holding companies, $10 Million in assets and 2,000
equityholders of record, with de-registration threshold at 1,200 holders.
• FAST Act changed thresholds for savings and loan holding companies to match the
above.
1
5

CHANGE THE THRESHOLD AND ON-RAMP
FOR BECOMING A REPORTING COMPANY
(con’t)
• Other main benefits created by the JOBS Act for IPO on-ramp:
✓ New “Emerging Growth Company” – EGC – category;
✓ Confidential initial registration statement filing;
✓ Two, rather than three, years of audited financials;
1
6

CHANGE THE THRESHOLD AND ON-RAMP
FOR BECOMING A REPORTING COMPANY
(con’t)
• Other main benefits created by the JOBS Act for IPO on-ramp:
✓ Scaled executive compensation disclosures;
✓ Opportunity for “testing the waters” before or after filing; and
✓ Other benefits, opt-outs and alternative treatments.
1
7

HOW HAS THE DEFINITION OF SMALLER
REPORTING COMPANY CHANGED?
• Large accelerated filers:
✓ Public float of $700 million or more
• Accelerated filers:
✓ Public float of $75 million or more but less than $700 million
1
8

HOW HAS THE DEFINITION OF SMALLER
REPORTING COMPANY CHANGED?
• Smaller reporting companies:
1
9

WHAT ARE THE CONSEQUENCES OF
BECOMING A REPORTING COMPANY?
• Public disclosure duties - periodic reports (10-K, 10-Q, 8-K).
• Annual meeting process - proxy rules, stockholder proposals.
• Insider trading regulation - Rule 10b-5, Section 16 reports and short-swing
trading.
• Investor communications - earnings releases, Regulation FD.
2
0

WHAT ARE THE CONSEQUENCES OF
BECOMING A REPORTING COMPANY?
(con’t)
• SRO regulation - NYSE & Nasdaq listing standards.
• Williams Act - Schedule 13D/G, tender offer regulation.
• Other substantive regulations – Sarbanes-Oxley, Dodd Frank, FCPA.
2
1

WHAT ARE SOME OF THE REQUIRED
REPORTS?
• Form 10-K - Annual Report;
• Form 10-Q - Quarterly Report;
• Form 8-K - Current Report;
• Schedules 14A and 14C - Proxy and Information Statements;
2
2

WHAT ARE SOME OF THE REQUIRED
REPORTS? (con’t)
• Schedule 14-F - Information Statement for Change in Majority of Directors;
• Schedules 13D and 13G - 5% Beneficial Ownership;
• Forms 3, 4 and 5 - Section 16 Insider Reporting; and
• Schedule TO - Tender Offer Statements.
2
3

SEC AMENDMENTS AND PROPOSED
IDEAS TO MODERNIZE DISCLOSURE
2
4
Rule Summary Description of Amended Rules
Regulation S-K, Item 303 and Form
20-F
Issuers will generally be able to exclude discussion of the earliest of three
years in MD&A if they have already included the discussion in a prior filing.
Regulation S-K, Items 601(b)(10)
and 601(b)(2) and investment
company registration forms
Issuers will be able to omit confidential information in material contracts and
certain other exhibits without submitting a confidential treatment request to
the SEC, so long as the information is (i) not material and (ii) would likely
cause competitive harm to the issuer if publicly disclosed.
Regulation S-K, Item 601(b)(10)
Only newly reporting issuers will be required to file material contracts that
were entered within two years of the applicable registration statement or
report.

2
5
Regulation S-K, Item 601(a)(5)
and investment company forms
Issuers will not be required to file attachments to their material agreements if
such attachments do not contain material information or were not otherwise
disclosed.
Regulation S-K, Item 102
Issuers will need to provide disclosure about a physical property only to the
extent that it is material to the issuer.
Forms 8-K, 10-Q, 10-K,
20-F and 40-F
Issuers will be required to disclose on the form cover page the national
exchange or principal U.S. market for their securities, the trading symbol, and
title of each class of securities.

2
6
Securities Act Rule 411(b)(4);
Exchange Act Rules 12b-23(a)(3),
and 12b-32; Investment Company
Act Rule 0-4; and Regulation S-T
Rules 102 and 105
Issuers will no longer be required to file as an exhibit any document or part
thereof that is incorporated by reference in a filing, but instead will be required
to provide hyperlinks to documents incorporated by reference.
Forms 10-K, 10-Q, 8-K,
20-F and 40-F.
Issuers will be required to tag all cover page data in Inline XBRL.
Regulation S-T Rules 102 105, 201,
202 and 311;
Form N-CSR; and investment
company registration forms
Investment companies will be required to file reports on Form N-CSR and
registration statements and amendments thereto in HTML format and
provide hyperlinks to exhibits and other information incorporated by
reference.

WHAT KIND OF EXECUTIVE
COMPENSATION DICLOSURE IS
REQUIRED AND IN WHICH REPORTS?
• Part III of Form 10-K and Proxy Statement incorporation timing
• Who is covered: mainly, Named Executive Officers – based on total compensation
(Summary Compensation Table)
• What is covered: salary, bonuses, certain benefits and perquisites, equity awards
value and change of control or termination benefits - “all compensation must be
disclosed”
2
7

WHAT KIND OF EXECUTIVE
COMPENSATION DICLOSURE IS
REQUIRED AND IN WHICH REPORTS?
(con’t)
• What does it look like: CD&I, tables, narrative descriptions
• JOBS Act impact – scaled disclosure for EGCs, smaller reporting companies
2
8

WHAT IS A CURRENT REPORT AND
WHEN ARE THEY FILED?
• General
✓ Report intended to supplement recurring filing requirements when material
events occur that should be brought to prompt attention of investing public.
• Timing
✓ Company generally must file Form 8-K within four business days after
occurrence of reportable event.
2
9

WHEN ARE THEY FILED? (con’t)
• Timing – continued …
✓ Form 8-K filed in accordance with SEC’s fair disclosure rules (Regulation FD)
must be filed in time frame specified under those rules.
✓ Company may voluntarily file Form 8-K upon occurrence of any event deemed
of importance to shareholders (no deadline).
✓ Don’t file late! Cannot use Registration Statement on Form S-3.
3
0

• Mandatory reportable items include:
✓ Entry into/amendment/termination of material definitive agreement not made
in ordinary course of business;
✓ Bankruptcy events;
✓ Mine safety events;
✓ Results of operations and financial conditions;
3
1

• Mandatory reportable items – continued …
✓ Creation of, or acceleration or increase in, material, direct financial obligation
or obligation under off-balance sheet arrangement;
✓ Costs associated with exit plan activities;
✓ Material impairments to assets;
✓ Acquisition or disposal of assets not in ordinary course of business;
3
2

✓ Change in control;
✓ Receipt of notice of delisting or failure to satisfy continued listing rule or
standard or transfer of listing from a exchange or inter-dealer quotation
system;
✓ Non-reliance on financial statements or related audit report;
✓ Changes in certifying accountant;
3
3

✓ Unregistered sales of equity securities aggregating at least 1% of the
outstanding class;
✓ Material modifications to the rights of security holders;
✓ Departure of directors or principal officers;
✓ Election of directors other than by shareholder vote;
3
4

✓ Appointment of principal officers;
✓ Certain amendments to charter or bylaws and changes in fiscal year;
✓ Temporary suspensions of trading under employee benefit plans;
✓ Amendment or waiver of Code of Ethics;
✓ Change in shell company status;
3
5

✓ Certain shareholder director matters for companies with proxy access
procedures;
✓ Shareholder voting results;
✓ Certain disclosures related to asset-backed securities; and
✓ Disclosures to satisfy Regulation FD.
3
6

WHAT DOES THE SEC’S PROCESS FOR
REVIEWING AND COMMENTING ON
DISCLURE ENTAIL?
• Regular review by SEC – some level of review every 3 years (SOX mandate).
• SEC discretionary review triggers – new registrants, outliers, largest companies.
• Full review vs. limited scope review.
• Public availability of SEC comments and issuer responses.
• Areas of focus – MD&A, exec comp, segment reporting, goodwill, risk factors.
3
7

WHAT DOES THE SEC’S PROCESS FOR
REVIEWING AND COMMENTING ON
DISCLURE ENTAIL? (con’t)
• Best practices:
✓ Coordination of players (management, board, auditors, counsel);
✓ Careful analysis of comments and tailored response;
✓ Escalation process – use wisely and appropriately;
✓ Confidential treatment – Rule 83; and
✓ Choose your battles wisely.
3
8

WHAT ARE SOME TOPICS THAT
SHOULD BE ON YOUR RADAR?
• Board diversity initiatives (California’s S.B. 826).
• Pay ratio disclosure.
• Possible amendments to Rule 10b5-1 (Promoting Transparent Standards for
Corporate Insiders Act)
3
9

ABOUT THE FACULTY
4
0

Michael Gold – michael.gold@saul.com
Michael Gold is a partner at Saul Ewing Arnstein & Lehr LLP where he also serves as co-chair of the Corporate
Practice. For more than 20 years, Michael has helped clients in a wide variety of industries with public and
private securities transactions, stock and asset acquisitions, mergers and joint venture arrangements. He also
advises boards of directors and outside shareholders regarding corporate governance practices, proxy
solicitations and tender offers.
Michael has extensive experience with private equity, hedge fund and venture finance transactions,
representing both investors and issuers. He also counsels clients on SEC disclosure requirements and securities
regulatory matters.
In addition, Michael has represented companies and individuals in connection with internal investigations,
corporate crisis situations and enforcement actions brought by the Securities and Exchange Commission, the
NYSE and FINRA (formerly the NASD). He handles issues related to structuring complex securities
transactions, and trading practices and policies within different securities markets and firms.
Prior to law school, Michael was a financial analyst for Goldman, Sachs & Co. in New York City, specializing in
mortgage finance.
4
1

Craig Mordock – CMordock@sheppardmullin.com
Craig Mordock is a partner at Sheppard Mullin, where he maintains a corporate and securities practice with
special on private and public securities offerings, corporate governance, and mergers and acquisitions. His
corporate finance experience ranges from representing venture capitalists, institutional investors, and start-up
companies in early-stage financings to representing issuers and investment banks in public offerings of equity
and debt securities. He advises purchasers and sellers of companies in a variety of industries, including
software, communications, semiconductors, life sciences, renewable energy, consumer products, and financial
services.
Craig has extensive experience representing public companies in connection with disclosure and compliance
matters under the Securities Act of 1933 and the Securities Exchange Act of 1934 and provides general
corporate and business counseling to several privately held companies. He regularly counsels boards of
directors and board committees in connection with their duties under state and federal law as well as their
compliance with the rules of self-regulatory organizations such as the New York Stock Exchange and NASDAQ.
Craig has been a speaker at numerous conferences on securities and corporate governance matters and has
published articles on various topics in these areas.
4
2

Robert Rapp – rnr@case.edu
Robert N. Rapp is Visiting Assistant Professor of Law at the Case Western Reserve University School of
Law, where he teaches Securities Regulation, Advanced Securities Regulation and Law, Theory and
Practice in Financial Markets. He is a Retired Partner (1975-2017) in the Securities and Capital Markets
Practice of Calfee, Halter & Griswold LLP Cleveland, Ohio. He was previously Distinguished Practitioner
in Residence at the Cornell Law School. Bob’s contributions to legal scholarship include numerous
published articles and papers addressing securities and financial market regulatory topics, many of which
have been cited by state and federal courts, including the United States Supreme Court. He is the author
of Blue Sky Regulation (LexisNexis/Matthew Bender), a definitive four-volume treatise on state
securities regulation in the United States. A graduate of Case Western Reserve University (B.A., 1969)
and the Case Western Reserve University School of Law (J.D., 1972), Bob also holds a Masters of
Business Administration from the Cleveland State University Ahuja College of Business (1989).
4
3

Vanessa Schoenthaler – vschoenthaler@sfgh.com
Vanessa J. Schoenthaler is a partner in the New York office of Sugar Felsenthal Grais & Helsinger LLP. She
focuses her practice on corporate and securities matters with an emphasis on private and public securities
transactions, compliance and disclosure obligations and corporate governance matters. Her clients rely on her
deep experience navigating the complexities of both the public and private securities regulatory
environment. She frequently contributes to publications such as The Corporate Counselor, Buyouts and
Transactional Advisors.
Vanessa’s corporate finance experience ranges from advising investors and development stage companies in early
round financings to representing issuers and intermediaries in registered and exempt offerings of equity and debt
securities. She has worked with foreign and domestic issuers on matters such as periodic and ongoing disclosure
obligations, corporate governance practices, exchange listing standards, joint ventures, equity compensation
arrangements, ESOP transactions, securities offerings and mergers, acquisitions and dispositions.
Vanessa counsels foreign and domestic sponsors, private funds and investment managers with regard to
formation and operation, investment adviser registration, and periodic and ongoing disclosure obligations. She
also guides her clients in structuring investments, compliance with regulatory requirements (including under
Section 13, Section 16 and Rule 144) and addressing insider trading issues.
4
4

QUESTIONS OR COMMENTS?
If you have any questions about this webinar that you did not get to ask during
the live premiere, or if you are watching this webinar On Demand, please do
not hesitate to email us at info@financialpoise.com with any questions or
comments you may have. Please include the name of the webinar in your email
and we will do our best to provide a timely response.
IMPORTANT NOTE: The material in this presentation is for general educational purposes only. It has been prepared primarily
for attorneys and accountants for use in the pursuit of their continuing legal education and continuing professional education.
4
5

ABOUT FINANCIAL POISE
DailyDAC LLC, d/b/a Financial Poise™ provides
continuing education to attorneys, accountants,
business owners and executives, and investors. Its
websites, webinars, and books provide Plain
English, entertaining, explanations about legal,
financial, and other subjects of interest to these
audiences.
Visit us at www.financialpoise.com.
4
6
Our free weekly newsletter, Financial Poise
Weekly, educates readers about business,
business law, finance, and investing. To receive
it simply add yourself by going to:
https://www.financialpoise.com/newsletter/
Email addresses are never sold to or shared
with third parties.

Public Company Reporting (Series: Securities Law Made Simple (Not Really)

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Mehr von Financial Poise

Mehr von Financial Poise (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

Public Company Reporting (Series: Securities Law Made Simple (Not Really)