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SEC Warns SPAC Targets the Road May be Difficult By
April 1, 2021
The SEC issued two pieces of guidance on special purpose acquisition companies, or SPACs. One piece, styled as a statement by Paul Munter, Acting Chief Accountant, speaks to financial reporting and auditing considerations of companies merging with SPACs. The other statement, issued by the Division of Corporation Finance, is labeled “Staff Statement on Select Issues Pertaining to Special Purpose Acquisition Companies.”
As to financial reporting and auditing matters the SEC notes, among other things:
Companies acquired by SPACs need to be prepared to transition from being a private company to a public company very quickly. Do not underestimate the challenges.
Proxy Statement Adequately Described Purpose of Equity Incentive Plan By
In
Pascal v. Czerwinski et al, the Delaware Court of Chancery considered whether disclosures in Columbia Financial’s 2019 proxy statement related to the adoption of an equity incentive plan, or EIP, were adequate. The directors of the company granted awards to themselves as compensation for past efforts to take the company public.
The plaintiffs claimed the director defendants:
planned to use the EIP to retroactively reward themselves for taking the Company public (the “go-public conversion”),
had been planning to do so even before issuing the 2019 Proxy, which solicited the stockholders’ vote for the EIP, but
ISS Issues Compensation and Equity Compensation Plan FAQs for 2021 By
ISS has posted its usual suite of interpretive material for the upcoming proxy season.
The Compensation FAQs note exceptional circumstances of the COVID-19 pandemic and its impact on company operations will be considered in ISS’ qualitative evaluation. The FAQs then point you toward ISS’ previously released COVID-19 FAQs.
The Equity Compensation Plan FAQs note that passing scores of the Equity Plan Scorecard (EPSC) will increase for the S&P 500 model (from 55 points to 57 points) and the Russell 3000 model (from 53 points to 55 points). The threshold passing scores are unchanged for other models. There are no new factors or factor score adjustments.
Exceptions to Beneficial Ownership Disclosure of Private Companies in Corporate Transparency Act By
December 15, 2020
The pending National Defense Authorization Act (NDAA) for Fiscal Year 2021 (H.R. 6395) will require many private companies to confidentially report the beneficial ownership of their common stock in many circumstances. The beneficial ownership provisions are included in what is named the “Corporate Transparency Act.”
The Corporate Transparency Act excludes the following types of companies from reporting beneficial ownership:
an issuer:
of a class of securities registered under section 12 of the Securities Exchange Act of 1934; or
that is required to file supplementary and periodic information under section 15(d) of the Securities Exchange Act of 1934;