Federal and state laws impacting businesses

Staying up to date with new laws and regulations can be challenging and time-consuming and Computershare endeavors to support you. Below are a few notable regulatory items, some of which will be addressed during the upcoming webinar.

Current SEC environment

From the outside looking in, the SEC appears to be working tirelessly to stay on top of current trends, such as artificial intelligence (AI) and environmental, social and governance (ESG), and to ensure companies are making full and accurate disclosures. There has been a significant amount of rulemaking and enforcement activity, as well as significant advances in the tools and technology the SEC is using to monitor compliance.

Change to Delaware laws

A significant number of public companies are incorporated in the state of Delaware and the state often updates its laws for clarity and to meet the needs of the changing business landscape. There has been significant activity recently, such as clarification on the damages that can arise out of a proposed merger agreement, whether an unsigned final merger agreement can be used as the basis for a lawsuit, and how to proceed when a stockholder agreement provides broad rights that appear to clash with existing state laws.

SEC Rules impacting transfer agents

Amendments to Regulation S-P adopted in August 2024 will increase data privacy requirements on transfer agents. These include:

• Incident response programs to address unauthorized access to or use of customer information
• Notification of incidents to shareholders as “customers” of transfer agents under a new definition
• New reporting requirements to the SEC, both at the time of an incident and annually
• Development of policies and procedures to address oversight of transfer agent service providers

The SEC also proposed a new Cybersecurity Rule applicable to transfer agents that is similar in some respects to the Cybersecurity Rule adopted in 2023 and applicable to public companies. The proposed rule will require written policies and procedures, notification of cybersecurity incidents to the SEC, oversight of service providers and other filings with the SEC on a new Form SCIR.

Rule 10b5-1

SEC Rule 10b5-1 under the Securities and Exchange Act of 1934 provides a safe harbor for insiders of public companies to set up trading plans for selling stocks they own. Corporate executives use 10b5-1 plans to defend against potential claims of insider trading under Rule 10b-5.

According to SEC Chair Gary Gensler, “Over the past two decades…we’ve heard from courts, commenters, and members of Congress that insiders have sought to benefit from the rule’s liability protections while trading securities opportunistically on the basis of material nonpublic information.” ¹

The SEC took action to shore up requirements, including establishing a “cooling off” period between plan set up and trading as well as new disclosures.

Join the discussion

These topics and more, which were discussed at our latest client conference, Access: Austin, will be covered in our upcoming webinar. While not always possible, we are fortunate to be able to recreate this session for those who could not experience it first-hand, as it is important to us that you stay informed on regulations affecting your day-to-day business. This is a great opportunity to learn more about the laws and regulations as well as ask questions of our expert panel.

Register now

We hope you will join us for the webinar. If you have questions prior to this event, reach out to me at peter.duggan@computershare.com.

¹ SEC Press release: “SEC Adopts Amendments to Modernize Rule 10b5-1 Insider Trading Plans and Related Disclosures”

Computershare is not providing, and does not intend to provide, any legal, tax or investment advice.