March 19, 2019

March 18, 2019

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SEC Adopted Final Rules for Disclosure of Hedging Policies

The U.S. Securities and Exchange Commission recently announced that it has approved final rules implementing Section 955 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The new rules, promulgated under new Item 407(i) of Regulation S-K, require issuers to disclose in their proxy or information statements for the election of directors the issuer’s policies on transactions that involve an employee (including officers) or directors purchasing securities or other financial instruments or other transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of equity securities granted as compensation or held, directly or indirectly, by the employee or director.

Issuers have the option of summarizing their practices or policies or disclosing their full policies. If an issuer does not have a hedging policy, it must disclose that fact or disclose that hedging transactions are generally permitted in the proxy or information statement. The new rules apply to securities of the issuer, any parent of the issuer, any subsidiary of the issuer and any subsidiary of the issuer’s parent. It is important to note that the new rules only require disclosure and do not prohibit transactions or mandate that an issuer adopt a hedging policy.

Most issuers must begin to comply with the new rules in their proxy or information statements for the election of directors during the fiscal years beginning on or after July 1, 2019. However, smaller reporting companies and emerging growth companies need not comply until they file proxy or information statements for the election of directors during the fiscal years beginning on or after July 1, 2020.

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Joshua A. Agen, Foley Lardner, Litigation Lawyer, Attorney,
Of Counsel

Joshua A. Agen is a senior counsel and business lawyer with Foley & Lardner LLP, where he focuses his practice on assisting public and private companies in the areas of executive compensation, employee benefits, corporate transactions and securities law compliance. He is a member of the firm’s Employee Benefits & Executive Compensation, Transactional & Securities, Commercial Transactions & Business Counseling, and Labor & Employment Practices.

414.297.5535
Benjamin F. Rikkers, Foley, venture capital funds lawyer, aviation related matters attorney
Partner

Benjamin F. Rikkers is a partner and business lawyer with Foley & Lardner LLP. Mr. Rikkers’ practice covers a broad range of business matters, including mergers and acquisitions, securities law, general corporate business law, investment of private equity and venture capital funds, and aviation-related matters. He is a member of the firm’s Transactional & Securities and Private Equity & Venture Capital Practices.

Mr. Rikkers regularly represents buyers and sellers in public and private mergers, acquisitions, and other strategic alliances. He also represents issuers and investment banks in public and private equity and debt securities offerings. He provides continuing advice to public companies regarding their federal securities law compliance, disclosure, and reporting obligations.

414-319-7348
Collin M. Scheuermann, Foley Lardner Law Firm, Milwaukee, Corporate Law Attorney
Associate

Collin M. Scheuermann is an associate and business lawyer with Foley & Lardner LLP. Mr. Scheuermann regularly represents public and private companies on general corporate and business law matters. He is a member of the firm’s Transactional & Securities Practice.

Mr. Scheuermann’s work has focused on mergers and acquisitions transactions, corporate reorganizations, debt offerings, SEC disclosure requirements, shareholder proposals, proxy advisory services, activism preparedness planning and general corporate governance matters. He also...

414-319-7074