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On December 18, the Securities and Exchange Commission announced the adoption of final rules mandating disclosure of “practices or policies…regarding the ability of employees (including officers) or directors to purchase securities or other financial instruments, or otherwise engage in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of equity securities”. The rules were mandated by the Dodd-Frank Act, enacted in 2010, and were originally proposed in 2015, but adoption was delayed due to vacancies on the Commission and other factors. The disclosures will be required in proxy or information statements covering the election of directors beginning for fiscal years ending on or after July 1, 2019 (July 1, 2020, in the case of “smaller reporting companies” and “emerging growth companies”). Listed closed-end funds and foreign private issuers will not be subject to the new requirements.

Many companies have policies on hedging and pledging, and have been disclosing those policies for some time, in response to pressure from investors and proxy advisory firms. As a result, the rules are not likely to generate much, if any, controversy.

If you have any questions, please contact Gunster securities law and corporate governance practice leader Bob Lamm.

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This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.

About Gunster

Gunster, Florida’s law firm for business, provides full-service legal counsel to leading organizations and individuals from its 13 offices statewide. Established in 1925, the firm has expanded, diversified and evolved, but always with a singular focus: Florida and its clients’ stake in it. A magnet for business-savvy attorneys who embrace collaboration for the greatest advantage of clients, Gunster’s growth has not been at the expense of personalized service but because of it. The firm serves clients from its offices in Boca Raton, Fort Lauderdale, Jacksonville, Miami, Orlando, Palm Beach, Stuart, Tallahassee, Tampa, The Florida Keys, Vero Beach, Winter Park, and its headquarters in West Palm Beach. With nearly 200 attorneys and 200 committed support staff, Gunster is ranked among the National Law Journal’s list of the 500 largest law firms and has been recognized as one of the Top 100 Diverse Law Firms by Law360. More information about its practice areas, offices and insider’s view newsletters is available at www.gunster.com.


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