The SEC Pulse

SEC Requires "Inline XBRL"

Posted by Howard Berkenblit on June 28, 2018 at 4:52 PM

Today the SEC adopted amendments to eXtensible Business Reporting Language (XBRL) requirements for operating companies and funds. The amendments are intended to improve the quality and accessibility of XBRL data by replacing the existing requirements for tagged data to be filed as exhibits to certain SEC filings and posted as separate files on companies’ websites. The amendments, which will go into effect in phases, require the use of Inline XBRL for financial statement information and risk/return summaries.    

While the amendments modify existing XBRL requirements, they do not change the categories of filers or scope of disclosures subject to XBRL requirements, nor do they change the relevant liability standards.

Operating companies that are currently required to submit financial statement information in XBRL will be required, on a phased basis, to transition to Inline XBRL, with large accelerated filers that use U.S. GAAP being required to comply beginning with fiscal periods ending on or after June 15, 2019, accelerated filers that use U.S. GAAP being required to comply beginning with fiscal periods ending on or after June 15, 2020, and all other filers being required to comply beginning with fiscal periods ending on or after June 15, 2021. Filers will be required to comply beginning with their first Form 10-Q (not 10-K) filed for a fiscal period ending on or after the applicable compliance date.

Funds that are currently required to submit risk/return summary information in XBRL will be required, on a phased basis, to transition to Inline XBRL, with large fund groups (net assets of $1 billion or more as of the end of their most recent fiscal year) being required to comply two years after the effective date of the amendments and all other funds being required to comply three years after the effective date of the amendments. The amendments also eliminate the 15 business day filing period for risk/return summary XBRL data, so that the data will be more timely available to the public.

Topics: Securities and Exchange Commission, SEC, Inline XBRL, eXtensible Business Reporting Language, GAAP

SEC issues guidance on cybersecurity disclosures

Posted by Howard Berkenblit on February 21, 2018 at 3:07 PM

The SEC posted today an interpretive release regarding its latest guidance public companies’ disclosure obligations under existing law with respect to matters involving cybersecurity risk and incidents. It also addresses the importance of cybersecurity policies and procedures and the application of disclosure controls and procedures, insider trading prohibitions, and Regulation FD and selective disclosure prohibitions in the cybersecurity context.

The timing of the release was a bit unusual. Initially, the SEC was scheduled to consider the guidance at an open meeting on February 21st. It abruptly cancelled the meeting and instead put out a press release saying the interpretive guidance had been approved on February 20th. Sounds like the SEC may be having its own issues with disclosure controls and procedures!

Topics: Securities and Exchange Commission, cybersecurity, SEC, Regulation FD

NYSE Rule Change: Material News at End of the Day

Posted by Howard Berkenblit on December 6, 2017 at 11:11 AM

The SEC has approved a NYSE rule that will prohibit listed companies from issuing material news after the official closing time of trading until at least 5 minutes after closing (unless the company’s official closing price is published sooner).

Topics: NYSE, New York Stock Exchange, SEC, Securities and Exchange Commission

Confidential IPO Filing System to be Expanded

Posted by Howard Berkenblit on June 30, 2017 at 10:29 AM

GettyImages-506172508.jpgAs of July 10th, the SEC’s Division of Corporation Finance will permit all companies to submit draft registration statements relating to initial public offerings for review on a non-public basis. Previously, this process was only available for “emerging growth companies” under the JOBS Act, although that covered a substantial majority of IPO candidates. 

More notably, this process will now be available for most offerings made in the first year after a company has entered the public reporting system. 

More information can be found at:  https://www.sec.gov/corpfin/announcement/draft-registration-statement-processing-procedures-expanded

Topics: SEC, Division of Corporation Finance, Jobs Act

Auditor Reports to Require Additional Information

Posted by Howard Berkenblit on June 2, 2017 at 11:00 AM

GettyImages-182188675.jpgThe Public Company Accounting Oversight Board has approved a new standard (though still subject to SEC approval) designed to enhance the relevance and usefulness of the Auditor's Report with additional information for investors.

The new standard and related amendments require auditors to include in the auditor's report a discussion of the critical audit matters (CAMs), which are matters that have been communicated to the audit committee, are related to accounts or disclosures that are material to the financial statements, and involved especially challenging, subjective, or complex auditor judgment. Under the new standard, the auditor's report will disclose, among other things, the tenure of an auditor, specifically, the year in which the auditor began serving consecutively as the company's auditor. It also will include the phrase, "whether due to error or fraud," in describing the auditor's responsibility under PCAOB standards to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements.

If approved by the SEC, the new auditor's report format, tenure, and other information would be effective for audits for fiscal years ending on or after December 15, 2017. The communication of CAMs for audits of large accelerated filers would be effective for audits for fiscal years ending on or after June 30, 2019 and the communication of CAMs for audits of all other companies would be effective for audits for fiscal years ending on or after December 15, 2020.

Communication of CAMs is not required for audits of emerging growth companies, brokers and dealers, investment companies other than business development companies, and employee stock purchase, savings and similar plans.

A fact sheet on the new rules also is available: https://pcaobus.org/News/Releases/Pages/fact-sheet-auditors-report-standard-adoption-6-1-17.aspx

Topics: SEC, audit committee, Public Company Accounting Oversight Board, fraud, Critical Audit Matters

Sullivan & Worcester Advises Select Income REIT in Offering of $350 Million of Unsecured Notes

Posted by Leah Schloss on May 16, 2017 at 8:55 AM
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An S&W team represented Select Income REIT (Nasdaq: SIR) in its underwritten public offering of $350 million of 4.25% senior unsecured notes due May 15, 2024. SIR expects to use the net proceeds from this offering to repay amounts outstanding under its revolving credit facility and for general business purposes.

The offering press release can be viewed here.

The S&W team included Benjamin Armour, Howard Berkenblit and William Curry.

Sullivan & Worcester is a leading corporate law firm advising clients ranging from Fortune 500 companies to emerging businesses. With more than 175 lawyers in Boston, London, New York and Washington, D.C., the firm offers services in a wide range of areas, including corporate finance, banking, trade finance, securities and mutual funds, litigation, mergers and acquisitions, intellectual property, tax, real estate and REITs, private equity and venture capital, bankruptcy, environment and natural resources, climate change, renewable energy and water resources, regulatory law, and employment and benefits. For more information please visit www.sandw.com

Contact:

Leah Schloss
617.338.2448
lschloss@sandw.com

Topics: SEC, NASDAQ, offering

SEC Announces New Changes to Covers of Periodic Reports and Registration Statements

Posted by Howard Berkenblit on April 4, 2017 at 12:54 PM

The SEC adopted technical rule and form SEC graphic.jpgamendments (https://www.sec.gov/rules/final/2017/33-10332.pdf) under the JOBS Act that impact almost every periodic report and registration statement by adding an additional “check the box” item on the covers (as well as the introductory language prior to such item.

Specifically, in the section where companies check off what type of issuer they are, there is now a new box for emerging growth company (“EGCs” - they will also still check the other relevant box for accelerated filer, smaller reporting company, etc.). In addition, to provide a uniform way to identify if EGCs have elected to take advantage of JOBS Act rules permitting them to defer adoption of accounting standards, the covers will also include an additional check the box item regarding such election. An example is below.

These rules go into effect as soon as they are published in the Federal Register, which should be in the next few days – in other words, for upcoming 10-Qs for the quarter ended March 31, 2017, companies will need to reflect this change (if not sooner for other reports). The forms impacted include, among others:  S-1, F-1, S-3, F-3, S-4, S-8, S-11, 20-F, 8-K (note this was not previously on the 8-K cover at all), 10-K, 10-Q – see the end of the rule release linked above for the forms and formats.

Example:

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer 􀀀
Accelerated filer 􀀀
Non-accelerated filer 􀀀 (Do not check if a smaller reporting company)
Smaller reporting company 􀀀
Emerging growth company 􀀀

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Inflation Changes for EGCS and Crowdfunding Amounts:

The JOBS Act requires the SEC to revisit certain definitions that contain dollar amounts to index them for inflation every 5 years. These include the $1 billion revenue threshold in the EGC definition, as well as certain limits in Regulation Crowdfunding on the dollar amount raised and invested. As a result the technical rule amendments have now raised each of these amounts slightly. For example, to qualify as an EGC, an issuer’s revenues must now be less than $1,070,000,000 and the maximum amount of crowdfunding in any 12 month period cannot now exceed $1,070,000 (increased from $1 million). With respect to the EGC definition, many issuers describe this definition in their registration statements or periodic reports and should be mindful to make the updates to such description.

Other Changes:

The technical amendments also update various rules in Regulation S-K and S-X (in areas such as required financial statements, MD&A, executive compensation and others) to include references to various JOBS Act provisions that benefit EGCs. These are not new rules, but make it more convenient when checking the rules for particular filings to see what applies (or more likely does not apply) to EGCs by directly including instructions within the applicable rule provisions.

Topics: SEC, Compliance Rules, reporting requirements, Filing Rules

SEC Approves Rules to Require Hyperlinks in Exhibit Lists

Posted by Howard Berkenblit on March 2, 2017 at 11:37 AM

As anyone who has ever tried to find an exhibit to an SEC filing that is incorporated by reference knows, it is not always easy or quick! 

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Help is on the way - yesterday, the SEC approved
rule changes that will require companies to include a hyperlink to each exhibit (other than XBRL exhibits and certain other limited exemptions) in their filings' exhibit indexes. The rules will also require all filings to be in HTML format since ASCII format cannot support functional hyperlinks.

The final rules will take effect on September 1, 2017 (September 1, 2018 for smaller reporting companies and non-accelerated filers).

 

Topics: SEC, Filings, Filing Rules

ZAG-S&W Represents Pluristem Therapeutics in $17.3 Million Stock Offering

Posted by Leah Schloss on January 27, 2017 at 10:58 AM

A ZAG-S&W team represented Pluristem Therapeutics Inc. (NASDAQCM: PSTI, TASE: PLTR), a leading developer of placenta-based cell therapy products, in its $17.3 million underwritten public offering of common stock and warrants, which included a full exercise of the underwriter’s over-allotment option. Pluristem intends to use the net proceeds of the offering for research and product development activities, clinical trial activities, investment in capital equipment and for working capital and other general corporate purposes.

The offering press releases can be viewed here and here, and the prospectus related to the offering can be found here.

The ZAG-S&W team included Oded Har-Even, Howard Berkenblit, Shy Baranov and Ron Ben-Bassat.

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Law firm ZAG-S&W represents U.S. and foreign businesses, as well as sources of equity capital and debt financing such as banks and other financial institutions, individual and institutional investors. The firm facilitates a full range of financing transactions, including: initial public offerings (IPOs), secondary public offerings, venture capital investments, leveraged buyouts, private placements of securities, strategic partnerships and joint ventures. It also regularly handles shelf registrations, periodic SEC filings, stock exchange listings and compliance solutions. "ZAG-S&W's work for clients transcends distance, culture and language," said Oded Har-Even. "Our bilingual team members in Israel and the U.S. understand the dynamics of two very different markets and can deftly bridge cultural differences on business practices, regulatory, securities and other legal issues to achieve your business goals."

Contact: 

Leah Schloss
617.338.2448
lschloss@zag-sw.com

 

 

Topics: SEC, NASDAQ, offering

Sullivan & Worcester Advises Hospitality Properties Trust in Offering of $600 Million of Unsecured Notes

Posted by Leah Schloss on January 26, 2017 at 11:10 AM

An S&W team represented Hospitality Properties Trust (Nasdaq: HPT) in its underwritten public offerings of $400 million of 4.95% unsecured senior notes due February 15, 2027 and $200 million of 4.50% unsecured senior notes due June 15, 2023, the latter of which consisted of a re-opening of an outstanding series of HPT’s notes. HPT expects to use the net proceeds from these offerings to repay amounts outstanding under its unsecured revolving credit facility, for general business purposes and possibly to redeem some or all of its outstanding 7.125% series D cumulative redeemable preferred shares of beneficial interest.

The offering press release can be viewed here and the prospectus related to the offerings can be found here.

The S&W team included Howard Berkenblit, Bill Curry, Jeff Morlend and Rick Goulding, as well as Ameek Ponda and Brian Hammell on tax matters.


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Sullivan & Worcester is a leading corporate law firm advising clients ranging from Fortune 500 companies to emerging businesses. With more than 175 lawyers in Boston, London, New York and Washington, D.C., the firm offers services in a wide range of areas, including corporate finance, banking, trade finance, securities and mutual funds, litigation, mergers and acquisitions, intellectual property, tax, real estate and REITs, private equity and venture capital, bankruptcy, environment and natural resources, climate change, renewable energy and water resources, regulatory law, and employment and benefits. For more information please visit www.sandw.com.   

Contact: 

Leah Schloss
617.338.2448
lschloss@sandw.com

Topics: SEC, offering, NASDAQ

About the Blog


The SEC Pulse provides updates and commentary from our Capital Markets Group on issues affecting publicly traded and privately owned businesses, investment banks and foreign companies who trade or raise capital in the United States, and boards of directors and company officers in securities transactions and corporate governance matters. 

The material on this site is for general information only and is not legal advice. No liability is accepted for any loss or damage which may result from reliance on it. Always consult a qualified lawyer about a specific legal problem.

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