Category Archives: Disclosures

SEC staff clarifies new Form 10-Q requirement

Yesterday the SEC staff issued CD&I 105.09, which clarifies the date by which issuers must comply with the new requirement to present changes in stockholders’ equity in their interim financial statements.  Initially, there was concern that the requirement would be effective shortly before many companies would ordinarily file their Forms 10-Q for the quarter ending on September 30.  The new CD&I clarifies that the staff will not object if issuers comply with the new requirement for the first quarter that begins after the effective date of the new rule,… More

Related-party transaction disclosures aren’t always obvious

Related-party transactions are often easy to spot:  the company is on one side of a contract, and a director or officer, or a company they control, is on the other side. But some transactions are less obvious.

The SEC recently brought a settled proceeding against John D. Schiller, Jr., the former CEO of Energy XXI Ltd., a now-defunct Nasdaq-listed issuer, for failing to disclose millions in personal loans from companies that did business with EXXI or the owners of those companies.… More

The SEC amends rules to simplify some disclosures

On August 17, the SEC adopted amendments to its rules and regulations to simplify public company disclosures by eliminating duplicative, outdated or overlapping requirements. Most of the changes are highly technical, and in many cases SEC rules will still require substantially the same disclosure, although perhaps in a new location. Some of the minor but helpful changes for most companies include:

  • in the company’s description of its business,…
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SEC approves higher thresholds for smaller reporting companies

  Yesterday, the Securities and Exchange Commission approved changes to the definition of a “smaller reporting company,” or SRC, that will significantly increase the availability of the less burdensome, scaled disclosure requirements applicable to companies qualifying as SRCs .  The amendments increase the public float threshold for qualification as an SRC from less than $75 million to less than $250 million, in each case regardless of the company’s revenues.  In addition,… More

Most executives are probably underpaid

Every day it seems there is another outcry over excessive executive compensation at public companies.  This year, for the first time, public companies are disclosing ratios of CEO compensation to median employee compensation, and both the media and politicians are quick to highlight pay ratios in excess of 1,000-to-one as evidence of everything that is wrong with executive compensation.

Yet these complaints have a certain air of unreality to them,… More

SEC Staff Expands Non-GAAP Relief for Business Combinations

This week the SEC staff expanded relief for the disclosure of non-GAAP financial forecasts used in business combinations.

In these transactions, public companies routinely obtain fairness opinions from an investment bank regarding the value of the consideration to be paid to shareholders, and the fairness opinions normally rely on financial projections provided by the company.  These projections are often prepared in a way that varies from GAAP and,… More

Pre-IPO companies can have disclosure obligations, too.

A recent SEC enforcement action should serve as a potent reminder to pre-IPO and other private companies that SEC rules sometimes impose affirmative disclosure obligations on private companies that offer and sell securities to their employees.

Most well-advised start-ups and other emerging companies know that they need an exemption from the registration requirements of the Securities Act of 1933 in order to grant options or issue other equity awards to their employees.… More