As publicly traded retailers begin to prepare their annual reports and 2020 proxy statements, they should keep in mind a number of new and amended SEC disclosure items. As detailed in our recent client alert, hot topics for proxy statements include hedging policy disclosure, board diversity disclosure and overboarding of directors. In annual reports on Form 10-K, public retailers must consider new cover page requirements; new disclosure rules for material property, management’s discussion and analysis (MD&A) and exhibit filings; and most retailers will now disclose critical audit matters, or CAMS, as identified by their independent auditors.
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Innovation and developments in technology bring both opportunities and challenges for retailers, and Hunton Andrews Kurth has a sophisticated understanding of these issues and how they affect retailers. On January 23, 2020, our cross-disciplinary retail team, composed of over 200 lawyers, released our annual Retail Industry Year in Review.
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New Hart-Scott-Rodino (HSR) reporting requirements took effect September 25, 2019. The Federal Trade Commission (FTC) recently made changes to the HSR form. Retail clients exploring a merger or acquisition should be aware that the FTC requires updated codes for Item 5 of the HSR form. Clients will need to provide 6-digit North American Industry Classification System (NAICS) codes and 10-digit North American Product Classification System (NAPCS) codes when reporting manufacturing revenues. The FTC will require 2017 NAICS codes for reporting non-manufacturing revenues.
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As reported in our previous client alert, on September 6, 2019, the staff in the Securities and Exchange Commission’s Division of Corporation Finance (the Division) announced important changes to the Division’s process for administering Rule 14a-8 no-action requests regarding shareholder proposals. Specifically, the staff may respond orally rather than in writing to no-action requests. Moreover, the staff may decide not to take a position on the merits of certain requests, thus leaving to the company the decision of whether to include or exclude the shareholder proposal.
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A recent successful effort by a public company to exclude an environmental proposal from its proxy statement may signal a new approach for boards of directors to consider when managing shareholder proposals. Because retailers and consumer products companies routinely receive shareholder proposals on environmental and sustainability issues, similar arguments for exclusion may be persuasive to the staff of the Securities and Exchange Commission (SEC) in the future.
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On March 20, 2019, the Securities and Exchange Commission adopted amendments to simplify and modernize disclosure requirements. These amendments implement recommendations from the Fixing America’s Surface Transportation (FAST) Act and are intended to make disclosures easier to read and navigate and to reduce repetitive and immaterial information.
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Activist investors continue to make liberal use of the SEC’s Rule 14a-8 to submit proposals for inclusion in company proxy statements. One of the most important shareholder trends to emerge from 2018 is the increasing involvement and support of large institutional investors in certain campaigns. Crisis management was one area in particular that institutional investors prioritized and sought disclosure on in 2018.
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On January 17, 2019, Hunton Andrews Kurth’s retail industry team, composed of more than 200 lawyers across practices, released their annual Retail Industry Year in Review publication.
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