SEC approves enhanced hedging disclosure
11 February 2015 Washington DC
Image: Shutterstock
The US Securities and Exchange Commission (SEC) has approved the issuance of proposed rules to enhance corporate disclosure rules around hedging policies for officers, directors and employees.
Disclosure is mandatory under the Dodd-Frank Wall Street Reform and the Consumer Protection Act. The amendments will mean that companies will have to disclose who is permitted to hedge or offset any decrease in the market value of those equity securities that are granted by the company as compensation, or that are held by employees or directors.
It would also require disclosure in proxy and information statements for the election of directors.
The disclosure rules would apply to not only the equity securities of the company, but also to those if any parent, subsidiary, or subsidiary of a parent that is registered under section 12 of the Exchange Act.
Amendments would apply to companies subject to federal proxy rules, including closed-end investment companies with shares listed and registered on a national securities exchange.
SEC Chair Mary Jo White, said: “The proposed rules would provide investors with additional information about the governance practices of the companies in which they invest.”
She added: “Increasing transparency into hedging policies will help investors better understand the alignment of the interests of employees and directors with their own.”
Once the proposed amendments are published on the Federal Register, the SEC will seek public consultation for a period of 60 days.
Disclosure is mandatory under the Dodd-Frank Wall Street Reform and the Consumer Protection Act. The amendments will mean that companies will have to disclose who is permitted to hedge or offset any decrease in the market value of those equity securities that are granted by the company as compensation, or that are held by employees or directors.
It would also require disclosure in proxy and information statements for the election of directors.
The disclosure rules would apply to not only the equity securities of the company, but also to those if any parent, subsidiary, or subsidiary of a parent that is registered under section 12 of the Exchange Act.
Amendments would apply to companies subject to federal proxy rules, including closed-end investment companies with shares listed and registered on a national securities exchange.
SEC Chair Mary Jo White, said: “The proposed rules would provide investors with additional information about the governance practices of the companies in which they invest.”
She added: “Increasing transparency into hedging policies will help investors better understand the alignment of the interests of employees and directors with their own.”
Once the proposed amendments are published on the Federal Register, the SEC will seek public consultation for a period of 60 days.
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