Capital Markets & Securities Law Watch

The SEC recently adopted rule and form amendments known as EDGAR Next, which will change the existing electronic filing system. Over the next year, companies must alter their current practices to comply with these changes. 

On October 7, 2024, the SEC approved a Nasdaq-proposed rule amendment which impacts Nasdaq’s minimum bid price and reverse stock splits on the exchange. These changes may impose further considerations for companies as they work through the broader impact of such actions on their overall compliance status. 

The New York Stock Exchange recently proposed changes to its Listed Company Manual to clarify how its domestic and international standards for initial listing of common equity securities apply to foreign private issuers.

The SEC adopted a final rule requiring additional prospectus disclosures in SPAC IPOs and de-SPAC transactions, effective July 1, 2024, as well as mandatory iXBRL tagging of such information disclosed pursuant to new Item 1600 of Regulation S-K, effective June 30, 2025.

Effective August 1, 2024, the Delaware General Corporation Law (DGCL) is amended in part to allow corporations to enter into agreements with stockholders that delegate governance rights to stockholders regardless of whether such rights are provided for in the corporation’s certificate of incorporation. Such stockholder agreements were previously found to violate Section 141(a) of the DGCL in the controversial case West Palm Beach Firefighters’ Pension Fund v. Moelis & Co.

On June 24, 2024, the U.S. Securities and Exchange Commission (SEC)’s Division of Corporation Finance released five new Compliance and Disclosure Interpretations (C&DIs) covering the disclosure of cybersecurity incidents under Item 1.05 of Form 8-K.

A wave of substantially similar stockholders’ complaints have recently been filed by plaintiffs’ firms in the Delaware Court of Chancery challenging certain advance notice bylaw provisions commonly included in public companies’ bylaws.

On March 6, 2024, the US Securities and Exchange Commission (SEC or Commission) announced the adoption of final rules requiring registrants – both domestic companies and foreign private issuers (FPIs) – to include climate-related information in their registration statements and annual reports. 

For the past several years, many private companies looking to “go public” utilized special purpose acquisition companies (SPACs) instead of traditional IPOs as an alternate route to the public markets. 

On December 15, 2022, the Public Company Accounting Oversight Board (the PCAOB or the Board) announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong for the first time and issued its 2022 HFCAA Determination Report (collectively, the 2022 Determinations)[i] under the Holding Foreign Companies Accountable Act of 2020 (the HFCAA or the Act).

On December 14, 2022, the Securities and Exchange Commission (SEC) adopted amendments to Rule 10b5-1 under the Securities Exchange Act of 1934. The adopted amendments modify rules applicable to the affirmative defense to insider trading liability available for Rule 10b5-1 trading plans and also impose new disclosure requirements on issuers with respect to these trading plans.

On August 26, 2022, the U.S. Public Company Accounting Oversight Board (the PCAOB) announced a Statement of Protocol (the SOP) with the China Securities Regulatory Commission (the CSRC) and Ministry of Finance of China (MOF) in respect of cooperation on the oversight of PCAOB-registered public accounting firms based in mainland China and Hong Kong. This represents a first and meaningful move to address the decade-long audit oversight conflict between the PCAOB and regulators in the People’s Republic of China (the PRC).

On August 30, 2020, the California State Legislature took another unprecedented step in spearheading the promotion of greater diversity on public company boards by passing a new bill (Assembly Bill (AB) 979) requiring each publicly held corporation whose principal executive offices are located in California—regardless of state of incorporation—to have a minimum number of directors from “underrepresented communities” on its board of directors.

As the COVID-19 pandemic continues to depress stock prices, investment bankers have begun to recommend that public companies consider adopting shareholder rights plans to prevent strategic buyers and private equity firms from being able to acquire them on the cheap—i.e., at prices that do not reflect their long-term intrinsic value.