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Debt versus equity classification for complex financial instruments has caused more public company restatements over the last 15 years than almost any other issue.  SPACs almost always issue warrants in their original formation and subsequent IPO.  These warrants, as it turns out, frequently have complex features that raise debt versus equity questions. On April 12, 2021, the Acting Director of the Division of Corporation Finance and the Acting Chief Accountant issued a statement – “…
On April 8, 2021, Acting CorpFin Director John Coates issued a Public Statement – “SPACs, IPOs and Liability Risk under the Securities Laws.” Mr. Coates briefly reviews how SPACs, as shell companies, raise capital in an IPO and use this capital to acquire a private company in a “de-SPACing transaction.”  The de-SPACing transaction is structured so that the SPAC’s public company status and exchange listing survive to the combined entity.  Given the volume and complexity of…
On April 6, 2021, BlackRock filed an Item 2.03 Form 8-K disclosing a new credit agreement.  Generally, this is not a particularly newsworthy event.  This agreement though, while increasing the company’s revolving credit line by $400,000,000 to $4,400,000,000, also includes provisions linking the interest rate and commitment fee to various ESG factors. BlackRock’s lending costs can increase or decrease depending on how well it meets or fails to meet targets related to: Black, African American,…
On March 31, 2021, the SEC published two SPAC related statements: The SEC’s Acting Chief Accountant, Paul Munter, issued a Public Statement titled “Financial Reporting and Auditing Considerations of Companies Merging with SPACs,” and The Division of Corporation Finance issued a “Staff Statement on Select Issues Pertaining to Special Purpose Acquisition Companies.” Here are highlights of the issues addressed in the two pronouncements. The Chief Accountant’s Statement addressed considerations in several…
In recent months the SEC has announced a number of ESG iniatives ranging from an increasing focus on ESG matters in the review process to an ESG focused task force in the Enforcement Division. To help “bring together agency actions and the latest information about environmental, social and governance investing” the SEC has added a new web page – “SEC Response to Climate and ESG Risks and Opportunities.”  You can find a…
Thanks to the ever-vigilant Alyson Claybaugh of Intelligize, below are two recent SEC comments focused on human capital resources disclosures.  Both comments relate to Form S-1 disclosures: Employees, page 132 Please amend your disclosure to describe any human capital measures or objectives that you focus on in managing your business, if material. See Item 101(c)(2)(ii). Business Employees, page 100 Please amend your disclosure to provide a more detailed discussion of your human capital resources, including…
Thanks to Gary M. Brown of Nelson Mullins Riley & Scarborough LLP and frequent SEC Institute workshop leader, we have three publications that provide practical SEC reporting tools:  Master the 8-K, Master the 10-K and 10-Q, and Master the Proxy Statement.  These practice guides help you answer SEC reporting questions by organizing the SEC’s guidance for a particular reporting issue in a logical and easy-to-use format.  Each book also includes practical reporting…