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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 8 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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During 2021, the SEC has placed a much greater focus on environmental, social and governance (ESG) issues than in the past, to the degree that issues traditionally considered compliance areas, such as insider trading and stock repurchases, are now falling under the ESG umbrella. In addition, climate-based and other ESG rulemaking has been a top priority on the SEC’s agenda during 2021.

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Today the SEC kicked off its ESG rulemaking by issuing proposed rules regarding <a href="https://www.sec.gov/rules/proposed/2021/34-93783.pdf?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noopener">stock repurchases</a> and Rule 10b5-1 plans and insider trading. Comments are due on both proposals within 45 days after publication in the Federal Register.

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In light of these proposed changes, companies should begin reviewing their controls and procedures to incorporate these changes, especially as they relate to equity grants and insider trading policies, plans and practices.

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Companies often repurchase their outstanding equity securities (also referred to as buybacks) through a variety of methods, including open market purchases and private transactions. The proposed rules would require more frequent and detailed disclosures regarding such buybacks, as well as iXBRL tags for certain information.

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Rule 10b5-1 Trading Plans, Insider Trading Policies and Section 16 Beneficial Reporting Changes

Rule 10b5-1 is a safe harbor established to allow company insiders to trade shares during trading blackouts pursuant to a written plan adopted while not in possession of material non-public information. In light of concerns regarding potential abuse of such plans, the proposed amendments to Rule 10b5-1 are intended to enhance disclosure requirements and investor protections against insider trading.

Proposed amendments to Rule 10b5-1 include:

The proposed rules would also impose new disclosure requirements regarding insider trading policies and procedures, option grants and Rule 10b5-1 and other trading arrangements. Some of the proposed disclosures would require iXBRL tags.

Jurgita Ashley 216.566.8928 <a href="mailto:Jurgita.Ashley@ThompsonHine.com">Jurgita.Ashley@ThompsonHine.com</a>

Julia Miller 216.566.5831 <a href="mailto:Julia.Miller@ThompsonHine.com">Julia.Miller@ThompsonHine.com</a>

or another member of our&nbsp;<a href="https://www.thompsonhine.com/services/securities" target="_blank" rel="noopener">Securities, Capital Markets &amp; Corporate Governance</a> team. For ESG matters, please contact a member of our <a href="https://www.thompsonhine.com/services/esg-collaborative" target="_blank" rel="noopener">ESG Collaborative</a>.

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel. This document may be considered attorney advertising in some jurisdictions.

https://admin.thompsonhine.com/wp-content/uploads/2022/04/ESG_Collaborative_Update_-_SEC_Issues_Proposed_Rules_on_Stock_Repurchases_and_Rule_10b5-1_Plans_and_Insider_Trading.pdf

SEC Issues Proposed Rules on Stock Repurchases and Rule 10b5-1 Plans and Insider Trading

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