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By: David J. Goldschmidt and Michael J. Schwartz SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
The planning and preparation that each public company must undertake in connection with periodic and current reporting is substantial in terms of time, effort, and resources. Managing the reporting process can be a daunting task for a company as members from several departments within the organization typically are involved in addition to service providers. A company’s internal legal team and outside counsel play critical roles in the reporting process. Below are 10 practice points for attorneys that can help ensure you are best positioned to effectively and efficiently assist with a company’s periodic and current reporting.
It seems simple to say that lawyers need to know the rules; however, there is a broad and complex tapestry of rules and regulations that apply to periodic reporting. The three primary reports that all domestic public companies are required to file are Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Merely reviewing a form itself is not enough to sufficiently familiarize yourself with the applicable form requirements. The forms direct the user to rules and regulations outside of the form, such as Regulation S-K or Regulation S-X, for much of the substance of the required disclosure. Further, if the company has securities listed on a stock exchange, the stock exchange may have additional requirements for disclosure items to be contained in certain periodic reports of which you must be aware.
In addition to understanding the substance of what goes into each report, it is critical to know when the report is due. Late filings can have a number of implications for a company. A late filing may affect a company’s ability to use a short form registration statement on Form S-3 or cause a company to lose its status as a well-known seasoned issuer, each of which could have a significant impact on the company’s capital raising activities. Filing delinquencies could also subject a company to liability under the securities laws, including the antifraud provisions; affect the company’s ability to remain listed on the New York Stock Exchange or NASDAQ; or trigger a default under the company’s debt or other agreements. While a company can plan in advance to meet the filing deadlines for Form 10-Q and Form 10-K, Form 8-Ks, which typically are due within four business days from the applicable triggering event, often can be problematic. Each company must have a process in place to ensure that it can identify when a Form 8-K triggering event occurs and is able to draft and file the report (including any necessary exhibits) by the reporting deadline. Equally important is the ability of outside counsel to quickly advise on (and often flag for the company) triggering events and the correlating reporting requirements.
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David J. Goldschmidt and Michael J. Schwartz are partners in the New York office of Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Goldschmidt represents investment banks and U.S. and international issuers in a variety of financing matters, including public offerings and private placements of debt and equity securities, and international securities offerings. He counsels U.S. and international clients on an ongoing basis, including advising on corporate governance, SEC filings, and disclosure issues. Mr. Goldschmidt also serves on Skadden’s Policy Committee. Mr. Goldschmidt is very active in representing and advising real estate investment trusts (REITs) in connection with capital market transactions, including many initial public offerings and general corporate matters. Michael Schwartz represents U.S. and international issuers, private equity and hedge fund sponsors, REITs, and underwriters in a wide variety of public and private finance transactions. He has worked on numerous high-yield and investment grade debt offerings, initial public offerings, spin-offs, and other public and private equity and equity-hybrid securities offerings, as well as debt tender offers, exchange offers, and other refinancing transactions. Mr. Schwartz also counsels corporate clients on an ongoing basis, assisting with the review and preparation of SEC filings, corporate governance matters, and interactions with security holders, stock exchanges, and other regulatory bodies.
For an overview on the major items of disclosures for Form 10-K, see
> DRAFTING AND REVIEWING FORM 10-K
RESEARCH PATH: Capital Markets & Corporate Governance > Public Company Reporting > Periodic Reports > Practice Notes
For guidance on preparing Form 10-Q, see
> DRAFTING AND REVIEWING FORM 10-Q
For more information on seeking extensions for filings and the consequences of late filings of periodic reports, see
> PREPARING A LATE PERIODIC REPORT
For additional details on the periodic and current reporting obligations of public companies, see
> PERIODIC AND CURRENT REPORTING RESOURCE KIT