United States: What happened in 2020 and significant events in 2021
Capital Markets & Corporate
Easing of public company requirements: In 2020, the SEC amended its disclosure rules for public offerings, including:
- Moving towards principles-based disclosure in certain Reg. S-K requirements (read more...)
- Easing the financial disclosure rules regarding acquisitions and dispositions (read more...)
- Simplifying the financial disclosure required regarding guaranteed securities (read more...)
- Rescinding Guide 3 (Bank Holding Companies) and replacing it with new Reg. S-K provisions (read more...)
Although some of the amendments do impose additional disclosure requirements (in particular with respect to risk factors), for the most part, they reduce and simplify the disclosure burdens on companies. In March 2020, the SEC also amended certain definitions that resulted in hundreds of more U.S. public companies being exempt from the Sarbanes-Oxley Act auditor attestation requirements.
Chinese companies targeted: Not only has the U.S. government taken a hostile position toward China in general, a series of actions in 2020 – including the Holdings Foreign Companies Accountable Act, a Trump administration report, proposed Nasdaq amendments and prohibition on investments in certain Chinese military companies – are forcing Chinese companies to make difficult decisions regarding their U.S. listings.
Opening up private offerings: In August 2020, the SEC adopted amendments expanding the definition of “accredited investor” to include additional means of measuring a natural’s person financial sophistication, rather than focusing only on the person’s income or net worth. The SEC declined to raise the financial thresholds for natural person accredited investor status.
The SEC also adopted other changes to make private offerings easier, including shortening the integration safe harbor, liberalizing the communications restrictions on offerings and increasing the dollar limits on certain private offerings.
Delaware upholds federal forum provisions: The Delaware Supreme Court issued an opinion in Salzberg v. Sciabacucchi, upholding the validity of “federal forum provisions” in corporate charters that require any claims brought under the federal Securities Act of 1933 to be pursued in federal court, rather than in state court.
SPACs and direct listings as traditional IPO alternatives: Listing via special purpose acquisition companies (“SPACs”) grew significantly in popularity in 2020 as companies sought more certainty in pricing as compared to traditional IPOs. Both the NYSE and Nasdaq have recently amended their rules to make listing via SPAC merger more attractive. The SEC Chair indicated, however, that the SEC is taking a close look at disclosure in such transactions. The NYSE and Nasdaq have also tried to make direct listings a viable alternative to the traditional IPO by proposing to allow a capital raise in connection with a direct listing. While the SEC staff has approved the NYSE’s proposal, the SEC has decided to stay the rule change following a petition from the Council of Institutional Investors requesting full SEC review of the staff’s rule approval.
Proxy amendments further protect companies: The SEC took steps this year to further protect companies during the shareholder proxy process, by making it more difficult for shareholders to include their proposals in the company's proxy materials (read more...) and by further regulating proxy advisors (read more...).
SEC amends whistleblower program and continues to hand out significant awards: In September, the SEC adopted amendments to its whistleblower program that some critics say will disincentivize whistleblowers from reporting tips to the SEC.
In the meantime, however, the SEC continued to reward whistleblowers, including with its two largest-ever whistleblower awards to one person, of more than US$114m and US$50m.