In 2018, the Securities and Exchange Commission (the “SEC”) solicited comment on ways to modernize Securities Act Rule 701 (“Rule 701”), the registration statement on Form S-8 (“Form S-8”), and the relationship between the two regulations. Following up on this effort, the SEC recently published several amendments to Rule 701 and Form S-8 to simplify and redesign the manner in which issuers grant securities to employees in compensatory transactions. Separately, the SEC issued proposed temporary rules (the “Proposed Temporary Rules”) that would apply Rule 701 and Form S-8 to persons providing services in the “gig economy” on a temporary, trial basis. The principal proposed amendments to Rule 701 and Form S-8, and the Proposed Temporary Rules, are each summarized in turn below.

Please click here to read the full alert memorandum.

 

On November 19, 2020, the Securities and Exchange Commission adopted amendments to Regulation S-K, including changes to its MD&A requirements that will make significant and long-overdue improvements to a central disclosure requirement of the U.S. securities laws. The twin themes of the amendments are dropping outmoded requirements and taking a more principles-based approach.

The amendments will become effective 30 days after they are published in the Federal Register, so probably in January 2021. At that time advance voluntary compliance is permitted, so long as registrants provide disclosure responsive to an amended item in its entirety. Compliance is not mandatory until a registrant reports on its first fiscal year ending on or after 210 days following publication – so for a calendar-year end filer, the Form 10-K for 2021 – but we would expect that many issuers will find the new rules congenial and begin complying sooner.

Please click here to read the full alert memorandum.

On October 26, 2020, the European Commission launched a public consultation on a possible EU-level regulatory initiative dedicated to sustainable corporate governance. The consultation is open to a wide range of possible stakeholders incorporated or having activities in the EU until February 8, 2021.

The initiative is proposed further to Action 10 of the European Union’s 2018 Action Plan on sustainable finance, and stems from the essential premise that sustainability should be embedded into corporate governance so that companies focus on long-term objectives and contribute to a more shock-resilient economy.

This alert memorandum explores some of the possible regulatory implications of this initiative and the ways in which it might affect the day-to-day business and internal policies of companies registered or listed in Europe in the near future.

Much has been written of late about the growing prevalence of books and records demands by stockholders under Section 220 of the Delaware General Corporation Law, and the increased willingness of Delaware courts to expand the boundaries of stockholders’ inspection rights conferred by that statute.[1]  A recent decision from the Delaware Court of Chancery exemplifies this trend and introduces an additional risk that companies should consider when determining how to respond to a Section 220 demand.  Specifically, the court’s suggestion that it would consider awarding attorneys’ fees to plaintiffs’ counsel for its costs to litigate the Section 220 action adds a new twist to the already delicate balance that companies must strike when deciding whether (and to what extent) to comply with a stockholder’s Section 220 demand.

Continue Reading Fee-Shifting—A Potential New Tool In Stockholders’ Toolbox When Seeking Books And Records

We are pleased to bring you a substantial update to “Going Public: A Guide to U.S. IPOs for Founders, Officers, Directors and Other Market Participants,” which provides a complete overview of the U.S. IPO process for these and other market participants.

This edition expands on developments relating to:

  • Environmental, Social, and Governance (ESG) trends
  • Direct listings
  • “Testing the waters”
  • Roadshows in the COVID-19 era

This alert memo is adapted from Adam E. Fleisher & Sophie Grais, “Going Public: A Guide to U.S. IPOs for Founders, Officers, Directors and Other Market Participants,” in Financial Product Fundamentals: Law, Business, Compliance, ch. 1 (Clifford E. Kirsch, ed., 2d ed., 2012 & Supp. 2021) (© 2020 by Practising Law Institute), www.pli.edu.

Please click here to read the full alert memorandum

The EU Taxonomy Regulation, which entered into force on 12 July 2020, introduces an EU-wide taxonomy (or combined glossary and classification system) of environmentally sustainable activities, as well as new disclosure requirements for certain financial services firms and large public interest entities.

In short, the Taxonomy Regulation is intended to provide certain businesses and investors with a common language to identify the extent to which an investment may be considered environmentally sustainable – and more broadly yet, which economic activities can be considered environmentally sustainable (or “green”).

This alert memorandum provides an overview of the Taxonomy Regulation (including as to status, scope and conceptual and technical framework), explores the upcoming regulatory implications of this initiative for European companies (and, in particular, financial sector firms), and provides a comparative analysis of similar regulatory developments in other jurisdictions.

The 2020 ‘perfect storm’ of global economic fallout caused by the COVID-19 pandemic, renewed global political focus on the Black Lives Matter movement and the workers of the gig economy, plus the pall of smoke from unprecedented wildfires on five continents, is reinvigorating scrutiny from consumers, regulators and employees on ecological and social sustainability considerations, providing fresh impetus to sustainable finance.

Regulatory developments are moving in tandem, particularly with respect to ESG labelling and transparency obligations, which the ever-growing pool of sustainable investors rely on to determine the extent to which financial products and investee companies meet their predetermined ESG investment criteria.

Against this backdrop, Cleary is launching a series of thought leadership pieces that will focus on recent and ongoing developments in the regulations that govern sustainable finance and ESG reporting by financial firms, with a particular focus on European regulatory efforts.

Please click here to read the full alert memorandum.

On November 11, the UK Government proposed a new national security screening regime that would allow the Government to intervene in “potentially hostile” foreign investments that threatened UK national security while “ensuring the UK remains a global champion of free trade and an attractive place to invest.”

If approved by Parliament, the National Security and Investment Bill would introduce a mandatory and suspensory CFIUS-like regime. We expect the new regime will come into force in the first half of 2021, assuming it receives Parliamentary approval. Given its broad scope and retrospective application, foreign investors considering transactions that may raise national security issues should already consider engaging with the Government and taking account of the new regime in deal negotiations and transactional documents.

Please click here to read the full alert memorandum.

Over the weekend, former Vice President Joseph R. Biden, Jr. was declared the winner of the U.S. presidential election. Although President Trump has yet to concede and press reports suggest he will continue to make his case in court, thoughts have turned to what the Biden administration will mean for federal regulation of business and finance.

In many ways, the future will depend on whether the centrist, coalition-building Biden of yesteryear will show up, or if he will embrace the more progressive wing of the Democratic party that has since grown in influence. Below we lay out our initial reactions on how the Biden presidency is likely to reshape the corporate landscape. Continue Reading What to Expect From the Biden Administration

Special purpose acquisition companies or “SPACs” are an increasingly popular way for an existing private company to become publicly traded without undergoing a traditional initial public offering, and for investors in public markets to invest in growth-stage companies. There can be generous returns for SPAC sponsors, but they should be aware of the liability risk in connection with their role. Indeed, litigation arising from several recent SPAC acquisitions, most prominently against Nikola Corporation, underscores the risks for SPAC sponsors. They therefore should be mindful of steps they can take to mitigate these risks in the reverse merger process.

Please click here to read the full alert memorandum.