At the 2018 National Conference of the Society for Corporate Governance, partner Pamela L. Marcogliese moderated a panel on Disclosure Committees and the current market practice at public companies.

The panelists engaged in a discussion about the reasons for establishing a Disclosure Committee including centralizing and organizing disclosure responsibilities, helping to comply with disclosure obligations under the federal securities laws and supporting the Chief Executive Officer and Chief Financial Officer certifications under Sarbanes-Oxley in providing oversight of the company’s disclosure controls and procedures.

Although practice varies from company to company depending on size of the company and the team, complexity of reporting and available resources, a few key takeaways from the discussion included:

  • Typically the Disclosure Committee includes a mix of finance, legal, investor relations, internal audit, tax and treasury personnel but may also include the heads of certain business units depending on the structure of the company. The CEO and CFO are usually not members of the Disclosure Committee.
  • The external auditor customarily does not attend the full Disclosure Committee meetings but may be invited to attend certain portions as an observer and to provide perspective on certain accounting related matters.
  • Meetings are generally held quarterly, with some companies holding additional meetings on a regular basis or in connection with certain other disclosures (e.g., filing of the proxy statement or certain Form 8-K filings).
  • Minutes are kept at the meeting and are drafted to memorialize the items discussed and considered and who participated in the discussion.
  • Helpful to prepare an agenda or checklist prior to the meeting in order to help facilitate the discussion and keep track of follow-up items. Privilege concerns should be considered when drafting the minutes. Disclosure Committee meetings are not a drafting session.
  • Companies may use sub-committees to discuss other disclosure items such as certain Form 8-K filings or non-financial press releases.
  • An increasing number of Disclosure Committees review the Social Responsibility Report or other related documents but the practice is still developing and depends on the company and the nature of its business.
  • Following the Securities and Exchange Commission’s February 2018 guidance on cybersecurity, Disclosure Committees are reviewing and revising their disclosure controls and procedures to reflect cybersecurity risk and incidents and some are adding the Chief Technology Officer/Chief Information Officer as a member of the Disclosure Committee or having these individuals sub-certify as part of the quarterly sub-certification process.