For any in-house lawyers at public companies who may have been using the Mayan calendar's impending doom as an excuse to not plan for the new year, we have a quick cheat sheet to help get you back up to speed for 2013.
CorpCounsel.com, an ALM affiliate of the Daily Business Review. spoke with Gibson Dunn partner Amy Goodman about the firm's "Key Year-End Considerations for Public Companies" alert, which offers some important issues to consider as 2012 comes to a close.
Goodman, co-chair of the firm's securities regulation and corporate governance practice group and a primary author of the alert, said, "The whole idea of this list was that, if you're a general counsel of a public company, from a securities and governance standpoint, what should you be worrying about?"
1. Assess whether the work of compensation consultants creates conflicts of interest.
Beginning with the 2013 proxy season, Securities and Exchange Commission rules will kick in that require disclosure about compensation consultant conflicts of interest. Although Gibson Dunn attorneys expect such disclosures to be rare, companies must take into account the six factors laid out in SEC Rule 10C-1(b)(4). Because the new definitions are so broad, Goodman says companies will need the help of compensation committee consultants, as well as their officers and directors, to root out any conflicts they may not be aware of.
2. Determine whether the company is subject to the SEC's conflict minerals rules and, if so, begin steps to comply with these rules.
Not all companies are required to provide disclosures about so-called conflict minerals. But all Exchange Act reporting companies will need to undergo a three-step analysis established by the SEC to determine whether they're subject to the disclosure requirement. According to Gibson Dunn attorneys, the SEC requires companies to determine whether conflict minerals are "necessary to the functionality or production of a product" they manufacture or have "contracted to manufacture."
3. Determine whether the company will rely on the new "end-user exception" for swaps and, if so, obtain appropriate board-level approval.
Does the company use swaps to manage risk? The Commodity Futures Trading Commission issued final rules implementing the exception to the clearing requirements available to counterparties who meet certain requirements found in Section 2h(7) of the Commodity Exchange Act, as amended by Dodd-Frank. For more information, see Gibson Dunn's client alert: "Impact and Analysis of the CFTC's Final Rule Relating to the End-User Exception to the Clearing Requirement for Swaps."
4. Prepare for the Public Company Accounting Oversight Board's new standard on auditor-audit committee communications.