April 2025 One-Minute Reads

Nasdaq policy recommendations

On March 31, Nasdaq announced the release of a comprehensive set of policy recommendations in a paper titled, “Advancing the U.S. Public Markets: Unlocking Capital Formation for a Stronger American Economy.” The paper draws insights from a recent survey and ongoing engagement with thousands of Nasdaq-listed companies, and advances critical policy proposals designed to “strengthen the public markets and retain the US capital markets’ status as the global standard for economic innovation and wealth creation.” Nasdaq’s paper recommends pragmatic and results-oriented regulatory changes designed to restore balance between oversight and accessibility in the public markets. The analysis includes views from companies and supports proxy process modernization, scaled disclosure with renewed emphasis on materiality, commonsense litigation reform and increased transparency into short-selling. For more insight, see this Governance Beat post and this TheCorporateCounsel.net blog.

New offerings and registrations of securities in the crypto asset markets

On April 10, the Securities and Exchange Commission (SEC) Division of Corporation Finance published this statement on the application of federal securities laws to crypto assets. The statement provides guidance on how issuers whose operations relate to networks, applications and/or crypto assets can comply with existing Reg S-K disclosure requirements. For more information, see this TheCorporateCounsel.net blog, along with this statement from Commissioner Hester Peirce.

New C&DIs address clawback-related checkboxes, disclosure timing and de-SPAC co-registrants

On April 11, the SEC Division of Corporation Finance posted helpful new compliance and disclosure interpretations (C&DIs) – Question 104.20, Question 104.21, Question 104.22, Question 104.23, Question 104.24 and Question 104.25 – that address the clawback-related checkboxes on Form 10-K and the timing of required Item 402(w)(2) disclosure. In addition, one new Exchange Act Rule C&DI, Question 253.03, addresses co-registrants in a de-SPAC (special purpose acquisition company) transaction. For more information, see this Governance Beat post and this TheCorporateCounsel.net blog.

Fidelity and UBS voting guidelines

Fidelity’s updated proxy voting guidelines for 2025 eliminate expectations for gender and racial or ethnic board diversity and focus instead on a range of experiences, perspectives, skills and personal characteristics relevant to effective corporate governance practices. The guidelines, which were updated in October 2024, also specifically disavow a control intent, possibly in response to the staff guidance on 13G eligibility. See this redline comparison to the October 2024 guidelines and the updated Sustainable Proxy Voting Guidelines – Shareholder Proposals on Natural and Human Capital Issues. UBS’s 2025 proxy voting guidelines eliminate specific board gender and ethnic diversity expectations in favor of diversity in a broad sense. See this redline comparison to the 2024 guidelines.

SEC comment letter regarding no physical principal executive office address

On April 18, TheCorporateCounsel.net shared a post discussing the SEC’s position on remote-only companies with no physical address. The SEC’s position is that companies must maintain a brick and mortar principal executive office and report it in their SEC filings, and the SEC will not accept alternatives.

The Business Roundtable urges SEC to reform shareholder proposal process

On April 23, Law360 published an article, “CEOs Urge SEC to Ban Political Activists’ Proxy Proposals,” reporting that the Business Roundtable urged the SEC and Congress to quickly reform the shareholder proposal process for public companies, including by banning activists’ proposals relating to environmental, social and political issues, saying proxy statements have become “battlegrounds for political debates.”

The Business Roundtable, which is composed of more than 200 CEOs of American companies, published a white paper, “The Need for Bold Proxy Process Reforms,” recommending various policy updates intended to address what it called a “deeply flawed” system beset by ideology-driven shareholder proposals, unaccountable proxy advisory firms and significant costs for companies and their investors. See the list of Business Roundtable members.

Considerations for in-house counsel related to tariffs and trade

A blog from TheCorporateCounsel.net highlighted the following stakeholder engagement excerpts from a recent Governance Beat post, “The ‘Tariff and Trade War’ Playbook: 25 Things for In-House Counsel to Consider”:

• Set up a cross-functional management response team to develop a comprehensive action plan to address tariff impacts under various scenarios (e.g., include leadership from critical areas, including operations, supply chain, investor relations, communications, legal, compliance, finance and pricing).
• Assign responsibility for tracking of tariff developments and evaluating the company’s dependency on affected countries, along with the near-term and longer-term business and financial impacts of tariffs to the company, as well as developing the company’s plan to comply.
• Revisit compliance programs and processes and take reasonable measures to ensure compliance with trade laws.
• Assess the feasibility of diversifying the supply chain to mitigate tariff exposure and potential issues in moving to alternative suppliers (e.g., contractual obligations, logistics, timing).
• Review existing contracts to determine whether price adjustment or force majeure clauses may be implicated, whether changes to contract terms for new contracts/renewals are warranted to address the current environment, and whether any notice or termination provisions should be exercised.
• Finance teams should calculate potential increases in costs at various tariff levels, and determine how this affects pricing, profitability, liquidity and financial covenants under key agreements.
• Decide how any pricing increases will be communicated to customers (e.g., separate “tariff” line-item or surcharge? “Dear customer” note?).

See the full list covered in the Cooley blog, which includes other aspects of board and management crisis governance, risk management and compliance, business strategy and operations, compensation, and public company disclosure. For additional reading, see this Grant Thornton memo, “A new tariff paradigm: How businesses can respond,” which notes that:

• Boards and audit committees will likely demand risk assessments related to tariffs, including scenario analyses and contingency plans.
• They also may want assurance that management is monitoring early warning signals of policy changes, such as treasury announcements, and are engaging with trade counsel.
• Strategic partnerships and joint ventures introduce new risks and monitoring requirements that should be of interest to audit committees.
• Some companies are exploring trade disruption insurance, including policies that cover losses due to supply chain disruptions.
• Legal and risk advisors should review contract clauses, as new contracts may explicitly include or exclude tariffs as force majeure events.

Eighth Circuit holds SEC climate rule litigation in abeyance

On April 24, the US Court of Appeals for the Eighth Circuit ordered that the litigation over the validity of the SEC’s climate disclosure rule be “held in abeyance.” The order directs the SEC “to file within 90 days a status report advising whether the commission intends to review or reconsider the rules at issue in this case. If the Commission has determined to take no action, then the status report should address whether the Commission will adhere to the rules if the petitions for review are denied and, if not, why the Commission will not review or reconsider the rules at this time.” For more information, see this article in The National Law Review.

New C&DIs related to Rule 10b5-1

On April 25, the SEC Division of Corporation Finance announced the revision of 20 C&DIs, the addition of two new ones, and the withdrawal of three to address the amendments to Rule 10b5-1. See the complete set of C&DI updates.

Of particular interest, see new Question 120.33, which confirms that for purposes of Rule 10b5-1(c)(1)(ii)(D)(3), “necessary to satisfy tax withholding obligations” refers to tax withholding payments that are calculated in good faith to satisfy the employee’s or director’s expected effective tax obligation solely with respect to the vesting transaction, consistent with applicable tax law and accounting rules, and does not refer to the minimum tax withholding obligation imposed under the applicable tax rules. The majority of the revisions to the Rule 10b5-1 C&DIs involve changes to rule references and the addition of language regarding compliance with applicable conditions, while more substantive changes were made to the following questions:

• Questions 120.12, 120.15 and 120.16 with respect to limit orders
• Question 120.18 with respect to terminations of Rule 10b5-1 plans
• Question 120.21 with respect to employee contributions to a company stock fund in a 401(k)
• Questions 120.22 and 120.23 with respect to 401(k) fund switching transactions

For more information, see this TheCorporateCounsel.net blog post.

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