Form 8-K

NASDAQ Provides Additional Relief To Shareholder Approval Requirements For Companies Affected By Covid-19

Nasdaq has provided additional relief to listed companies through temporary rule 5636T easing shareholder approval requirements for the issuance of shares in a capital raise. The rule was effective May 4, 2020 and will continue through and including June 30, 2020. The purpose of the rule change is to give listed companies affected by Covid-19 quicker access to much-needed capital.

Temporary Rule 5636T is limited to the transactions and shareholder approval requirements specifically stated in the rule. If shareholder approval is required based on another rule, such as a change of control, or another Nasdaq rule is implicated, those other rules will need to be complied with prior to an issuance of securities.

The Nasdaq shareholder approval rules generally require companies to obtain approval from shareholders prior to issuing securities in connection with: (i) certain acquisitions of the stock or assets of another company (see HERE); (ii) equity-based compensation of officers, directors, employees or consultants (see HERE); (iii)

May 19, 2020

SEC Publishes FAQ On COVID-19 Effect On S-3 Registration Statements

The SEC has issued FAQ on Covid-19 issues, including the impact on S-3 shelf registration statements. The SEC issued 4 questions and answers consisting of one question related to disclosure and three questions related to S-3 shelf registrations.

SEC FAQ

Disclosure

Confirming prior guidance, the SEC FAQ sets forth the required disclosures in the Form 8-K or 6-K filed by a company to take advantage of a Covid-19 extension for the filing of periodic reports. In particular, in the Form 8-K or Form 6-K, the company must disclose (i) that it is relying on the COVID-19 Order (for more information on the Order, see HERE); (ii) a brief description of the reasons why the company could not file the subject report, schedule or form on a timely basis; (iii) the estimated date by which the report, schedule or form is expected to be filed; and (iv) a company-specific risk factor or factors explaining the impact, if material, of

May 12, 2020

Small Business Advocate Urges Capital Raising Relief

On March 4, 2020, the SEC published proposed rule changes to harmonize, simplify and improve the exempt offering framework. The proposed rule changes indicate that the SEC has been listening to capital markets participants and is supporting increased access to private offerings for both businesses and a larger class of investors. Together with the proposed amendments to the accredited investor definition (see HERE), the new rules could have as much of an impact on the capital markets as the JOBS Act has had since its enactment in 2012.

I’ve written a five-part series detailing the rule changes, the first of which can be read HERE. My plan to publish the five parts in five consecutive weeks was derailed by the coronavirus and more time-sensitive articles on relief for SEC filers and disclosure guidance, but will resume in weeks that do not have more pressing Covid-19 topics.

On April 2, 2020, the SEC Small Business Capital Formation Advisory Committee

April 7, 2020

Relief For Persons Affected By The Coronavirus

Last week I published a blog summarizing the relief granted by the SEC for public companies and capital markets participants impacted by the coronavirus (Covid-19) (see HERE). Just as Covid-19 rapidly evolves, so have the regulators response. The SEC has now expanded the relief and issued guidance on public company disclosures related to Covid-19.

While we work to complete the usual filings while in quarantine, a new conversation is starting to develop at a rapid pace. That is, the conversation of opportunity and the accelerating of a more technologically driven economy than ever before. Businesses and service providers must stay nimble and ready to serve the ever changing needs of entrepreneurs and the capital markets – I know we are!

Extension in SEC Reporting Filing Deadlines

On March 25, 2020, the SEC extended its prior conditional relief order such that periodic filings that would have been due from between March 1 and July 1, 2020 can avail themselves of

March 31, 2020

Conditional Relief For Persons Affected By Coronavirus

As the whole world faces unprecedented personal and business challenges, our duty to continue to run our businesses, meet regulatory filing obligations and support our capital markets continues unabated. While we stay inside and practice social distancing, we also need to work each day navigating the new normal. Thankfully many in the capital markets, including our firm, were already set up to continue without any interruption, working virtually in our homes relying on the same technology we have relied on for years.

We all need to remember that the panic selling frenzy will end. Emotions with even out and the daily good news that comes with the bad (for example, the number of cases in China is falling dramatically; some drugs are working to help and the FDA is speeding up review times for others; early signs China’s economy is starting to recover already; scientists around the world are making breakthroughs on a vaccine; etc.) will begin to quell the

March 24, 2020

SEC Testifies At House Financial Services Committee Hearing

On September 24, 2019, all five SEC commissioners gave testimony to, and were questioned by, members of the U.S. House of Representatives Committee on Financial Services. Commissioner Robert J. Jackson, Jr. also gave an opening statement at the Committee hearing.

Commissioner Jackson’s Opening Statement

Commissioner Jackson’s short opening statement was consistent with his prior public views, consisting of a list of three areas in which he believes legislation should intervene to prevent corporate insiders from spending shareholder money to advance their own interests over those of investors.

His first recommendation is to shorten the current four-day 8-K filing requirement in which a company must notify the public of certain material events. For an overview of 8-K filing categories, including the categories that require an advance filing (Regulation FD) or lesser time period than the standard four days, see HERE. Commissioner Jackson states that there is “evidence that corporate insiders often trade during the ‘gap’ between key business events and

October 22, 2019

NYSE American Compliance Guidance MEMO

In January, NYSE Regulation sent out its yearly Compliance Guidance Memo to NYSE American listed companies. The annual letter updates companies on any rule changes from the year and reminds companies of items the NYSE deems important enough to warrant such a reminder.

The only new item in this year’s letter relates to advance notice of stock dividends and distributions. Effective February 1, 2018, the NYSE requires listed companies to provide ten minutes’ advance notice to the exchange of any announcement with respect to a dividend or stock distribution, whether the announcement is during or outside exchange traded hours. This change is consistent with other NYSE and Nasdaq rules which generally require notifications of announcements, including press releases, that could impact trading, at least 10 minutes prior to such notification.

The NYSE letter also provides a list of important reminders to all exchange listed companies, starting with the requirement to provide a timely alert of all material news. Part 4

February 26, 2019

SEC Solicits Comment On Earnings Releases And Quarterly Reports

On December 18, 2018, the SEC published a request for comment soliciting input on the nature, content, and timing of earnings releases and quarterly reports made by reporting companies. The comment period remains open for 90 days from publication. The request is not surprising as earnings releases and quarterly reports were included in the pre-rule stage in the Fall 2018 SEC semiannual regulatory agenda and plans for rulemaking.

The request for comment seek input on how the SEC can reduce burdens on publicly reporting companies associated with quarterly reports while maintaining disclosure effectiveness and investor protections. The SEC also seeks comment on how the existing reporting system, earnings releases and earnings guidance may foster an overly short-term focus by companies and market participants. In addition, the SEC is looking for input on how to make the reporting process less cumbersome to investors, such as by having to compare an earnings release and Form 10-Q for differences.

This has been a

January 15, 2019

SEC Adopts Amendments to Simplify Disclosure Requirements

In August the SEC voted to adopt amendments to certain disclosure requirements in Regulations S-K and S-X (the “S-K and S-X Amendments”) as well as conforming changes throughout the federal securities laws and related forms. The amendments are intended to simplify and update disclosure requirements that are redundant, duplicative, overlapping, outdated or superseded with the overriding goal of reducing compliance burdens on companies without reducing material information for investors. The new amendments finalize and adopt the proposed rules that had previously been issued on July 13, 2016. See my blog on the proposed rule change HERE. The final rule changes were substantially, but not entirely, as proposed.

The Regulation S-X and S-K Amendments come as a result of the Division of Corporation Finance’s Disclosure Effectiveness Initiative and as required by Section 72002 of the FAST Act. The proposing release also requested public comment on a number of disclosure requirements that overlap with, but require information incremental to, U.S. GAAP

October 16, 2018

Proposed SPAC Rule Changes

With the growing popularity of special purpose acquisition companies (SPACs), both the Nasdaq and NYSE have proposed rule changes that would make listings easier, although on June 1, 2018, the Nasdaq withdrew its proposal. SPACs raised more money last year than any year since the financial crisis. The SEC has been delaying action on the proposed rule changes, now pushing off a decision until at least August 2018.

A company that registers securities as a blank check company and whose securities are deemed a “penny stock” must comply with Rule 419 and thus are not eligible to trade. A brief discussion of Rule 419 is below. A “penny stock” is defined in Rule 3a51-1 of the Exchange Act and like many definitions in the securities laws, is inclusive of all securities other than those that satisfy certain delineated exceptions. The most common exceptions, and those that would be applicable to penny stocks for purpose of the SPAC, include: (i)

July 24, 2018

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Form 8-K

NASDAQ Provides Additional Relief To Shareholder Approval Requirements For Companies Affected By Covid-19

SEC Publishes FAQ On COVID-19 Effect On S-3 Registration Statements

Small Business Advocate Urges Capital Raising Relief

Relief For Persons Affected By The Coronavirus

Conditional Relief For Persons Affected By Coronavirus

NYSE American Compliance Guidance MEMO

SEC Solicits Comment On Earnings Releases And Quarterly Reports

SEC Adopts Amendments to Simplify Disclosure Requirements

Proposed SPAC Rule Changes

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