Popular Topics
All Topics
- "Gun Jumping"
- "Test-the-Waters" communications
- 2016 SEC Agenda
- ABL
- Accelerated Filer
- Accelerated filers
- Access to Capital and Market Liquidity Report
- Accounting
- Accredited investor
- Advance Notice Bylaws
- Airbnb
- Alternative Trading Systems
- Annual meeting
- Annual reports
- ASC Topic 740
- Asset Management
- asset-based loan
- ATS
- Auction IPOs
- Audit committee
- Auditor attestation
- Authentication document
- BlackRock
- Blank-check companies
- Blockchain
- blue sky
- Board committees
- Board Diversity
- Board independence
- Board of Directors
- Boilerplate
- Boilerplate in securities documents
- borrower
- Broker-dealer
- Broker-dealer registration
- Broker-dealers
- Calculation of Registration Fee
- California
- California Assembly Bill 979
- Capital formation
- capital markets
- Capital raising
- CEO letters
- Certified B corporation
- Chair Mary Jo White
- Chairman’s letters
- Chairperson’s letters
- Climate Change
- coal companies
- coal company IPOs
- coal miners
- coal mining
- collateral
- Columbia Law School
- Commencement of an offering
- Compensation sharing
- Compensatory offerings
- Compensatory sales
- Compensatory securities
- Compensatory securities offerings and sales
- Compliance and Disclosure Interpretation 110.02
- conditions precedent
- conference
- Confidential filings
- Confidential information
- Confidential treatment
- Confidentiality agreements
- coronavirus
- Corporate Governance
- Corporate Law
- Corporate social responsibility
- Corporate social responsibility: CSR
- Corporate Stock-Givaway Program
- covenants
- COVID-19
- credit agreement
- Crowdfunding
- CSR
- Cyber breach
- cyber incident
- Cyber risk
- Cyber-attack
- cybersecurity
- DAO
- December 31 Fiscal year end
- Decimalization
- Definition of a Security
- Delaware corporate law
- Delaware Law
- Delaying amendment
- Description of Business
- Designer stock
- Digital Advertising
- Digital securities
- Direct listings
- Direct marketing programs
- Direct response marketing
- Director Nominees
- Director Questionnaire
- Directors
- Disclosure
- Disclosure and Reporting
- Disclosure Effectiveness Initiative
- Disclosure Obligations
- Disclosure Regime
- Disclosure regulation
- Disclosure Requirements
- Disclosure Rules
- Disclosure simplification
- Disclosure updates and simplification release
- Diversity
- Dodd Frank
- Dodd-Frank Act
- Domino's Piece of the Pie Rewards
- Domino's Pizza
- Donald Trump
- Dual Class Shares
- Dual-class Capitalization
- Dual-Class Common Stock
- Dual-class shareholder voting
- Due diligence
- earnings guidance
- Economic Growth, Regulatory Relief, and Consumer Protection Act
- EDGAR Filing Manual
- EGC
- Electronic signatures
- Emerging growth companies
- Emerging Growth Company
- engagement letter
- environment, social and governance
- Equity Market Structure
- ESG
- event of default
- events of default
- Exchange Act
- Exchange Act Rule 12b-2
- Exchange listing
- Exchanges
- executive compensation
- Exempt offerings
- Exempt securities offerings
- Exhibits to Registration Statement
- FAST Act
- FDA
- Female
- Fictitious regulators
- Filing review comments
- financial forecasts
- Financial intermediaries
- Financial sophistication
- Financial statements
- Financing Alternatives
- Finders
- Finders exception
- Finders exemption
- FINRA
- First-day pop
- Five-factor test
- Form 10-K
- Form 10-Q
- Form D
- Form S-1
- Form S-3
- Form S-4
- Founder’s letters
- Fraudulent activities
- Free Stock
- Free Stock Offerings
- FTC
- General Motors Co.
- General solicitation
- Glass Lewis
- Golden Leashes
- Greenlight Capital, Inc.
- Hart-Scott-Rodino
- HSR Act
- Impersonators of genuine firms
- Incorporation by reference
- Indications of Interest
- Influencer Marketing
- Information asymmetry
- Initial coin offering
- Initial listing requirements
- Initial public offerings
- Insider Trading
- Integration
- interest
- Interest rate system
- Interest rates
- Intrastate offerings
- Investment banking
- Investment Company Act
- Investor Advisory Committee
- Investor Alert
- IPO
- IPO disclosure
- IPO drawbacks
- IPO pricing
- IPOs
- ISS
- Item 101
- Item 103
- Item 103 of Regulation S-K
- Item 105
- Item 401 of Regulation S-K
- Item 501(b)(7)
- Item 601(b)(24) of Regulation S-K
- James Mackintosh
- JOBS Act
- Ken Langone
- Large Accelerated Filer
- Larry Fink’s 2019 letter to CEOs
- Legal proceedings
- lender
- LGBTQ+
- LIBOR
- line of credit
- loan agreement
- Loan Agreements
- Loan transactions
- Loans
- Loyalty Programs
- Lyft, Inc.
- MAE
- Management
- management disclosure and analysis
- Management; Executive officers and directors
- Mark Cuban
- Material contract exhibits
- Material nonpublic information
- MD&A
- Mergers & Acquisitions
- Modernization
- Multi-Class Shares
- NASDAQ
- Nasdaq Independence Rules
- Nasdaq Listing Rules
- Nomination Letter
- Non-accelerated Filer
- Non-GAAP Financial Measures
- NSMIA
- NYSE
- Offering fees
- Offering statement on Form 1-A
- Offering statement on Form C
- Ordinary Course Covenant
- OTC
- OTC Market Group
- OTC Pink
- OTC quoted companies
- OTCQB
- Paid-for Research
- pandemic
- Pay Ratio Disclosure
- Pay Ratio Rule
- perfection certificate
- Periodic reports
- Perpetual dual-class stock
- Power of Attorney
- Prescriptive-based disclosure
- Primary issuances
- Principal Executive Offices
- Principles-based disclosure
- Private Equity
- Private fund knowledgeable employees
- Private placements
- Prof. John C. Coffee, Jr.
- Proposed Rule 5605(f)
- Prospectuses
- proxy advisory firms
- Proxy Contests
- Proxy fights
- Proxy materials
- Proxy statement
- Proxy voting
- Public benefit corporation
- Public Companies
- Public company acquisitions
- Public Float
- Public M&A
- Public offerings
- Purpose & Profit
- Purpose of the corporation
- Qualified institutional buyer
- Reference interest rates
- Reg S-K
- Registered offerings
- Registration Filing Fee
- Registration statement
- Registration statements
- Regulation A activity
- Regulation A+
- Regulation Crowdfunding
- Regulation D
- Regulation FD
- Regulation of finders
- Regulation S
- Regulation S-K
- Regulation S-K Item 10(f)(1)
- Regulation S-T
- Regulations S-K
- Regulatory Entrepreneurship
- Release No. 34-90112
- Reporting Category
- representations
- resource extraction antigraft rule
- restricted stock
- Reverse mergers
- revolver
- Rights offerings
- Risk Factors
- Rule 10b-5
- Rule 10b5-1 plan
- Rule 144A
- Rule 14a-4
- Rule 163B under the Securities Act of 1933
- Rule 21F-17
- Rule 24b-2 under the Securities Exchange Act of 1934
- Rule 253(f)
- Rule 302(b)
- Rule 4(a)(2) offering
- Rule 406 under the Securities Act of 1933
- Rule 473 under the Securities Act of 1933
- Rule 483 under the Securities Act of 1933
- Rule 506(b)
- Rule 506(c)
- Rule 701
- S&P Dow Jones
- Safe Harbor
- SAFEs
- Sarbanes-Oxley Act §404(b)
- Say-on-Pay Frequency Vote
- SEC
- SEC approval of offerings
- SEC Comments
- SEC Commissioner Robert J. Jackson Jr.
- SEC disclosure
- SEC disgorgement
- SEC Division of Economics and Risk Analysis
- SEC Filing Deadlines
- SEC Filing Reviews
- SEC Form 10
- SEC Office of Investor Education and Advocacy
- SEC Release No. 33-10591
- SEC Report of Investigation
- SEC Rule 152
- SEC shutdown
- Section 11(a) of the Securities Act of 1933
- Section 21F
- Section 8(a) of the Securities Act of 1933
- securities
- Securities & Exchange Commission
- Securities Act
- Securities Act of 1933
- Securities Act Rule 257
- Securities Act Rule 405
- Securities Act Section 17(b)
- Securities Exchange Act
- Securities Exchange Act of 1934
- Securities litigation
- Securities offerings
- securities transactions
- Severance Agreements
- Sexual harassment
- Sexual misconduct
- Shareholder Activism
- shareholder activists
- Shareholder nominations
- Shareholder rights
- Shareholder voting
- Shareholder Voting Rights
- Signatures in Registration Statement
- Simple Agreement for Future Equity
- Small business
- Small-cap
- Small-cap Companies
- Small-cap Issuers
- Smaller reporting companies
- Smaller reporting company
- Snap IPO
- Social Capital Hedosophia
- Social Media
- Social Media Marketing
- SOFR
- SPAC
- SPAC's
- Special Purpose Acquisition Company
- Special situations
- Spin-offs
- Sponsorship
- Spotify
- SRC
- Staff Accounting Bulletin (SAB) No. 118
- Staleness date
- Startups
- State securities laws
- stock options
- Stock Ownership Guidelines
- Stock Promotion Schemes
- Strategic spin-offs
- Sunset provisions
- Supreme Court
- Sustainability
- Switch, Inc.
- T+2
- Targeted stocks
- Tax Cuts and Jobs Act
- Tech IPOs
- Tech M&A
- Tech unicorns
- term loan
- term sheet
- Termination or Completion of an offering
- The CLS Blue Sky Blog
- The Wall Street Journal
- Third Party Payments
- Tick Pilot
- Tick Size
- Tick Size Pilot Program
- Tick Sizes
- Token sales
- Tracking stocks
- Trade Settlement
- Trading
- trading platforms
- Transaction-based compensation
- U.S. dollar LIBOR
- U.S. federal income tax reform
- Uber Technologies, Inc.
- Underrepresented Minority
- Underwriting allocations
- Underwriting fees
- Undisclosed Fees
- Unequal Voting Rights
- Universal proxy ballots
- Unregistered finders
- Unregistered offerings
- Unregistered Soliciting Entities
- Uplisting
- US Supreme Court
- Use of boilerplate
- venture capital
- venture capital investors
- venture capital terms
- Venture exchanges
- Verification of accredited status
- Virtual currency
- voting control
- voting power
- warranties
- Whistleblower Program
- Whistleblowers
- “Tandy” Representations
- “Testing the Waters”
Recent Posts
- Leadership Change at the SEC: What Activists Could Expect from Gary Gensler and the Biden Administration
- Delaware Chancery Court Provides Important Guidance on COVID-19’s Impact on a Buyer’s Obligation to Close:
- New York State Updates State Securities Regulations
- Nasdaq Proposes New Listing Rules Related to Board Diversity
- SEC Adopts Amendments to Permit the Use of Electronic Signatures for SEC Filings
- The SEC Rebuilds the Integration Principles Guiding Concurrent Private and Public Offerings of Securities
- The SEC Proposes a Safe Harbor for Permissible Capital-Raising Activities by Unregistered Finders
- SEC Issues 100th Whistleblower Award Just Days after Adopting Amendments to Whistleblower Program
- SEC Reduces Registration Filing Fee Beginning in October 2020
- The SEC Amends Regulation S-K Disclosure Rules to Empower Companies to Determine What and How Much Disclosure is Appropriate for Shareholders and Investors
Archives
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
Contact Us
(212) 451-2300
www.olshanlaw.com
Institutional Shareholder Services Releases Updated Voting Guidelines Relating to Problematic Capital Structures at Newly Public Companies, Independent Board Chair Proposals and Board Diversity
Institutional Shareholder Services (“ISS”), the leading proxy voting advisory firm, recently released its 2020 proxy voting guidelines updates for the U.S. and other jurisdictions (effective for meetings on or after February 1, 2020) following its annual global benchmark policy survey and comment period that ran from July 22, 2019 to October 18, 2019. ISS addressed various topics in its updated guidelines, which included three guideline revisions that are relevant to shareholder activism in the U.S. and are the focus of this client alert.
U.S. Guideline Relating to Problematic Governance Structures at Newly Public Companies (See Redlined Guideline in Annex A - click here)
ISS’ existing guideline in this area provided that for newly public companies, ISS would generally recommend a vote against or withhold from one or more directors (except new nominees, who would be considered on a case-by-case basis) if, prior to or in connection with the company’s public offering, the company adopted charter or bylaw provisions that are materially adverse to shareholder rights or implemented a multi-class capital structure with classes having disparate voting rights. In making its determination, ISS would consider various factors enumerated in the guideline, including the level of impairment of the shareholder rights, the ability of shareholders to reverse the impairment of such rights (e.g., by way of a charter or bylaw amendment), the ability of shareholders to hold directors accountable through annual director elections and any sunset provisions applicable to the offending governance structure.
Recognizing the growing prevalence of newly public companies with multi-class capital structures with disparate voting rights and that a significant proportion of such companies provided for a sunset of these “discriminatory provisions” in their governing documents (most with time-based sunsets ranging from three to 10 years), ISS sought to “provide clarity” on the application of its policies for newly public companies by reformulating the existing guideline into two separate policies. The first policy specifically addresses problematic governance provisions. The second policy specifically addresses multi-class capital structures with disparate voting rights and provides a framework for assessing whether a sunset provision is reasonable and acceptable (no sunset period in excess of seven years from the IPO date will be considered reasonable). The revised guideline also “clarifies and narrows the focus” of the policy to specified “highly problematic” governance provisions.
U.S. Guideline Relating to Shareholder Proposals Requiring Independent Board Chairs (See Redlined Guideline in Annex B - click here)
ISS’ existing guideline in this area provided that ISS will generally recommend a vote in favor of shareholder proposals requiring that the board chair position be filled by an independent director after taking into consideration various enumerated factors, including the scope of the proposal, the company’s current board leadership and governance structures, the company’s performance and other relevant factors. The guideline also provided an overview of how ISS would analyze and apply the foregoing factors.
Recognizing that shareholder proposals requiring independent board chairs are “one of the most prevalent types of shareholder proposals” in the U.S., the guideline was updated to codify ISS’ existing policy application with respect to these proposals. As revised, the guideline now explicitly sets forth various factors that will increase the likelihood of ISS recommending in favor of proposals requiring an independent board chair. Consistent with input from investors, support for such a proposal “will be likely at companies where boards rely on a weak lead independent director role or there is evidence that directors failed to oversee material risks facing the company or did not adequately respond to shareholders’ concerns.” Components of the overview in the existing guideline of how ISS will analyze the scope of the proposal, the company’s current board leadership and governance structures, the company’s performance and other relevant factors will be updated and moved to the relevant Policy FAQ separately published by ISS.
U.S. Guideline Relating to Board Diversity in Uncontested Elections (See Redlined Guideline in Annex C - click here)
Given the heightened relevance of board gender diversity to shareholder activism, last year ISS issued a guideline stating that during a one-year transition period, it would highlight boards with no gender diversity, but no adverse vote recommendation would be made due to a lack of gender diversity until after the conclusion of the 2019 proxy season. Effective for uncontested meetings held on or after February 1, 2020, the guideline provided that ISS would generally recommend a vote against or withhold from the nominating committee chair (or other directors on a case-by-case basis) at Russell 3000 or S&P 1500 companies where there are no women on the board, subject to certain mitigating factors. These mitigating factors included a firm commitment by the company to appoint at least one female to the board in the near term or the presence of a female on the board at the preceding annual meeting.
The board diversity guideline was updated to reflect the expiration of the one-year transition period and to refer consistently to “women” rather than “females.” In addition, the guideline was revised to provide that a firm commitment by the company to appoint at least one woman to the board would only be a mitigating factor until February 1, 2021 and that such commitment must be to appoint a woman to the board within a year (as opposed to in the near term). Finally, the presence of a woman on the board at the prior annual meeting will no longer be a mitigating factor on its own – the company will also need to make a firm commitment to appoint at least one woman to the board within a year.
* * *
Please contact the Olshan attorney with whom you regularly work or one of the attorneys listed below if you would like to discuss further or have questions.