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Preparing to Raise Capital in Volatile Markets Using a Shelf Registration - Anna T. Pinedo, Morrison & Foerster LLP

LegalMinds Editor — Fri, 17 Dec 2010 15:03:42 +0000

In today’s volatile market, companies are under increased pressure to time their capital-raising needs with changes in the market. One of the more effective ways for public companies to approach this challenge, says Morrison & Foerster’s Anna Pinedo is through a shelf registration – often referred to as a short-form registration statement – a type of registration statement that an issuer can use to register for sale publicly any combination of securities for sale at some future time.

According to Ms. Pinedo, who works closely with financial institutions to create and structure innovative financing techniques, “if an issuer has a shelf and it’s effective, an issuer then has maximum advantage in terms of when it can decide to do a deal.”

In an Exclusive LegalMinds.TV interview filmed at the NASDAQ MarketSite, Pinedo discusses some of the key considerations and requirements in filing a shelf registration, including eligibility requirements, timing, market perceptions, and recent regulatory changes.

“In terms of our best advice to clients, it’s always to be prepared and to be well-positioned to take maximum advantage of market windows,” says Pinedo. “And the best way to do that is by having a shelf up, by keeping a shelf current, and to make sure that all of its SEC filings are submitted in a timely way so that the company doesn’t become ineligible to use a shelf registration statement.”

View and download a PDF transcript of the full interview here. (Coming soon.)

VIDEO SECTIONS (Click link to advance video to specific topic.)

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ATTORNEY INFORMATION

Anna T. Pinedo
Partner, Morrison & Foerster LLP

Anna Pinedo has concentrated her practice on securities and derivatives. She represents issuers, investment banks/financial intermediaries, and investors in financing transactions, including public offerings and private placements of equity and debt securities, as well as structured notes and other structured products.

Ms. Pinedo works closely with financial institutions to create and structure innovative financing techniques, including new securities distribution methodologies and financial products. Ms. Pinedo has particular financing expertise in certain industries, including working with technology-based companies, telecommunications companies, healthcare companies, financial institutions, REITs and consumer finance companies. Ms. Pinedo has worked closely with foreign private issuers in their securities offerings in the United States and in the Euro markets. She also has worked with financial institutions in connection with international offerings of equity and debt securities, equity- and credit-linked notes, and hybrid and structured products, as well as medium-term note and commercial paper programs.

In the derivatives area, Ms. Pinedo counsels a number of major financial institutions acting as dealers and participants in the commodities and derivatives markets. Ms. Pinedo advises on structuring issues, as well as on regulatory issues, monetization, and hedging techniques. Her work focuses on foreign exchanges, equity and credit derivatives products, and structured derivatives transactions. Ms. Pinedo has experience with a wide range of transactions and structures, including collars, swaps, forward and accelerated repurchases, forward sales, hybrid preferred stock, equity- and credit-linked notes, and off-balance sheet structures. Ms. Pinedo also has advised derivatives dealers regarding their Internet sites and other Internet and electronic signature/delivery issues.

Practices:

Capital Markets
Banking & Financial Services
Corporate

Admissions:

New York

Education:

Georgetown University (BSFS, 1990)
University of Chicago Law School (J.D., 1993)

Contact:

1290 Avenue of the Americas
New York, NY 10104
(212) 468-8179
apinedo@mofo.com

To see a full bio, visit: http://www.mofo.com/anna-pinedo/

Publications:

“Frequently Asked Questions about Shelf Registration Offerings,” Updated 2010

“SEC Proposes to Relax Restrictions on ‘Wall-Crossed’ WKSI Offerings,” January 4, 2010 – by Anna T. Pinedo, David M. Lynn, Lloyd S. Harmetz and Nilene R. Evans

“Upcoming Expiration of Shelf Registration Statements: Avoiding a Blackout Period,” August 25, 2008 – by Anna T. Pinedo, David H. Kaufman, Lloyd S. Harmetz and Elise Kim

FIRM INFORMATION

We are Morrison & Foerster—a global firm of exceptional credentials. Our clients include some of the largest financial institutions, investment banks, Fortune 100, technology and life science companies. We’ve been included on The American Lawyer’s A-List for seven straight years, and Fortune named us one of the “100 Best Companies to Work For.” Our lawyers are committed to achieving innovative and business-minded results for our clients, while preserving the differences that make us stronger.

For additional information, visit: http://www.mofo.com

Other Morrison & Foerster LLP Featured Video Interviews:

Share Repurchase Considerations
David M. Lynn and David H. Kaufman, Partners, Morrison & Foerster LLP

Click image to view the video.

Hybrid Financing: Certain Ideas for Uncertain Times
James Tanenbaum, Chair of Morrison & Foerster’s Global Capital Markets practice

Click image to view the video.

Preparing to Raise Capital in Volatile Markets Using a Shelf Registration
Anna T. Pinedo, Partner, Morrison & Foerster LLP

Click image to view the video.

“Say on Pay” and Other Issues for the Upcoming Proxy Season
David M. Lynn, Partner and Chair of Public Companies and Securities Practice, Morrison & Foerster LLP

Click image to view the video.

“Say on Pay” and Other Issues for the Upcoming Proxy Season - David M. Lynn, Morrison & Foerster LLP

LegalMinds Editor — Sat, 11 Dec 2010 01:56:01 +0000

Each proxy season seems to be getting more and more complicated in terms of the new requirements as to what both the SEC and shareholders expect and this year will be no exception.

According to David Lynn, Co-chair of Morrison & Foersters‘ Public Companies and Securities Practice and former Chief Counsel of the Securities and Exchange Commission, “this year’s proxy season is going to be very interesting for public companies because we’re gonna have a lot of shareholder activism – there’s a lot of attention focused on executive compensation and corporate governance.”

“And now we have the Dodd Frank Act,” adds Lynn, “which was enacted over the summer and will require all public companies to submit to their shareholders an advisory vote on executive compensation as well as a vote on how often they should vote on their executive compensation.”

CONTINUE READING SUMMARY (Click to Expand/Collapse)

This year the proxy season's gonna be very interesting for public companies because, as in prior, as in the last few years, we are going to have a lot of shareholder activism. There's a lot of attention focused on executive compensation and corporate governance.

Now we have the Dodd-Frank act, which was enacted over the summer, which will require all public companies to submit to their shareholders an advisory vote on executive compensation, as well as a vote on how often they should vote on their executive compensation, and this is gonna be something new for many companies.

It's been tried out, sort of lab-tested for companies that received TARP assistance. But for the first time, it's going to be required for all public companies this year.

This new advisory vote on executive compensation, which people call Say on Pay, is effective beginning for meetings occurring on or after January 21, of 2011. And the SEC has now proposed some rules that will essentially implement the provisions of Dodd-Frank that talk about Say on Pay. Now even if those rules don't go effective companies still have to seek this shareholder vote.

Companies need to really think closely about their strategy in preparing for the Say on Pay vote. The Say on Pay concept came to us from abroad in the United Kingdom. It was introduced in 2002 and the idea behind it was really to encourage shareholder engagement over executive compensation issues.

The fact that this vote was going to happen was enough to prompt companies to go out and talk to their institutional investors and find out what concerns they might have with pay programs. This same level of engagement is expected to happen now in the United States as a result of the imposition of the Say on Pay requirement.

And that's one of the first things companies need to know is identify their largest institutional investors, figure out what sort of concerns and policies they might have about compensation programs and go out and start talking to them.

In addition to that, companies are going to have to focus on their disclosure because, before companies had largely been thinking about writing their disclosures for the SEC's benefit or for the public's benefit, but really they need to focus on convincing shareholders that they should support this and cast an affirmative vote for the executive compensation program.

One of the things the Dodd-Frank Act requires is that, not only do you have to get the Say on Pay vote, which happens to happen once every three years, but you also have to seek a vote once every six years on how often you're going to ask shareholders to vote on pay going forward.

And what the SEC has proposed is that that would be cast essentially like a poll. You would ask the shareholders, "Do you want to vote on the Say on Pay resolution every one year, every two years, or every three years?" And that's what companies are going to have to put in their proxy statements.

The SEC hasn't prescribed exactly how you should write that resolution or whether the company needs to make a recommendation, but by and large, I've been advising people the company should make a recommendation as to what frequency they should use and a lot of factors go into deciding what's the best frequency.

Some companies have very long term compensation programs that work on two or three year performance cycles and for them it might make more sense to have a vote every three years.

Contrast to that a lot of institutional investors think that shareholders should have a voice every year, and as such, you should have a Say On Pay vote every year, so that the focus can be on the executive compensation, disclosure, and the pay decisions that are made by the compensation committee.

Another aspect of the Dodd-Frank act was to require a separate vote on golden parachute arrangements, and golden parachute arrangements are essentially arrangements that are triggered by a merger, a disposition of major transaction. And what the Dodd-Frank act said is, when that merger is put up to a vote of shareholders, the shareholders also should give an advisory vote on the golden parachute compensation itself.

Now, they also said that you could put that golden parachute compensation up for a vote under the regular Say on Pay vote that happens at the annual meeting, and thereby avoid having to put it up later at the time of the merger, or other extraordinary transaction. It seems unlikely that people would want to put the golden parachute votes up for a vote on an annual basis, and really just wait to see what happens if there is a merger or other transaction.

But this is something we'll have to see play out over time. In terms of generating shareholder support for the Say on Pay vote, I think the keys are engagement with the shareholders, actually talking to them, understanding what they want. And that may not just be with the institutional shareholders, it may be going out and taking a poll of what the what the retail shareholders are very interested in.

It may also be going out and trying to figure out are there elements of my pay program that when looked at from the outside, may be viewed adversely by proxy advisory surfaces such as ISS as well as shareholders. And, are there ways I can make adjustments now that will lead to support for the Say on Pay going forward.

And another major consideration is really focusing on the disclosure itself, and trying to streamline the disclosure; make it a lot less hard to get through in the proxy statement, which has really been a problem writing in the last few years, because people keep adding more and more information, and so people put things like executive summaries in their compensation disclosure to try and really emphasize and ask for support of a Say on Pay resolution.

In terms of trying to interpret the vote on, the advisory vote on executive compensation that will happen at the company's annual meeting and then the vote in terms of how often they should vote on that advisory vote on compensation.

It's a bit of a blunt instrument and that's one of the problems, I think, with the Say on Pay vote that people struggle with. It's not a line item vote on each executive officer's compensation, nor or is it really specific to any elements of compensation, as well, whether it be equity awards, or cash awards, or the like.

So, when people get a Say on Pay vote that may be adverse or not strong support, they're going to really have to figure out what was it that caused this problem. In terms of the frequency of the advisory vote on compensation, I think that will be something people will have to work out because it really is a poll.

It doesn't necessarily, because there's three choices, it doesn't mean one will get the clear majority. And people are struggling with what would be the best way to interpret that. Whether to apply sort of a plurality standard where whatever carries the most votes would indicate to the company what is the appropriate frequency.

One question, in terms of how these votes will impact director elections, is, I think, what will the proxy advisory services like ISS do? And what they have done in the past proxy season is if a company has a Say on Pay vote on its ballot, that's the target it'll shoot at and if it has problems is what the company's compensation programs it will recommended a vote against the Say-on-Pay. And then if that problem isn't remedied the next proxy season, it will shift the focus to the compensation committee the members of the board that are served on the compensation committee and seek to withhold votes for those directors as a signal that we are still unhappy with the Say-on-Pay vote.

So as a result of all this, I think in some ways Say on Pay will take the pressure off the Compensation Committee elections, because there will be some other mechanism in which shareholders can express concern and displeasure with executive compensation programs.

Each proxy season seems to be getting more and more complicated in terms of the new requirements in terms of what the SEC expects and what shareholders are expect.

In addition to compensation, people are very much focused on corporate governance and whether a company has implemented majority voting or whether it still has a classified board or whether the Chairman and CEO are in separate positions, or the same individual serving as both and those situations continue to be hot button issues for shareholders that affect the outcome of votes for many idfferent kinds of proposals.

You can scroll through the transcript and click on any text in the CaptionBox above to go directly to that part of the video. [To start, click on Expand Transcript.] Or click on the links below to view by topic.

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ATTORNEY INFORMATION

David M. Lynn
Partner, Morrison & Foerster LLP

David Lynn is a co-chair of the firm’s Public Companies and Securities Practice. Mr. Lynn’s practice is focused on advising a wide range of clients on SEC matters, securities transactions and corporate governance. Mr. Lynn is well known in the area of executive compensation disclosure, having co-authored, “The Executive Compensation Disclosure Treatise and Reporting Guide.” While serving as Chief Counsel of the Securities and Exchange Commission’s Division of Corporation Finance, Mr. Lynn led the rulemaking team that drafted sweeping revisions to the SEC’s executive compensation and related party disclosure rules.

Mr. Lynn re-joined the SEC as Chief Counsel shortly after adoption of the Sarbanes-Oxley Act of 2002, and served in that position until 2007. As a result, he was intimately involved in implementing and interpreting the record amount of SEC rulemaking that occurred in the wake of SOX. Mr. Lynn initially served on the SEC staff from 1995-2000 as an Attorney-Advisor and subsequently a Special Counsel in the Division of Corporation Finance. While in private practice from 2000-2003, he advised clients on SEC investigations, securities transactions, mergers and acquisitions and corporate governance.

Mr. Lynn serves as co-editor of TheCorporateCounsel.net, where he co-authors one of the most widely-read blogs on securities, governance and corporate law matters, and regularly contributes to publications such as The Corporate Counsel, The Corporate Executive, and Borges & Lynn’s Proxy Disclosure Updates.

Mr. Lynn currently serves as the Chair of the Subcommittee on Securities Registration of the ABA Business Law Section’s Federal Regulation of Securities Committee. Mr. Lynn was also an adjunct Professor of Law at the Georgetown University Law Center, where he taught a course in corporate governance.

Admissions:

Maryland
District of Columbia

Education:

Loyola College In Maryland (B.B.A., 1989)
Loyola College In Maryland (MSF, 1991)
University of Maryland School of Law (J.D., 1995)

Contact:

2000 Pennsylvania Avenue, NW
Washington, DC 20006-1888
(202) 887-1563
dlynn@mofo.com

To see a full bio, visit: http://www.mofo.com/david-lynn/

Publications:

“Jumping Through the Market Window: The Value of a Shelf Registration Statement,” Business Law Today, August 2, 2010

“Telling Your Story: The SEC Offers Advice on Non-GAAP Measures,” INSIGHTS, March 2010

“A Boost Over the Wall,” Corporate Financing Week, January 25, 2010

“XBRL is Now Mandatory – A Primer for Security Lawyers,” The Review of Securities & Commodities Regulation, October 2009

“Impact of Recent Events on Mark-to-Market Accounting,” BNA Accounting Policy and Practice Report, June 26, 2009

“Section 3(a)(9) Exchange Offers,” INSIGHTS, June 2009

“Timely ‘Best Practice’ Disclosures for Your Compensation Discussion & Analysis,” The Corporate Counsel, Vol XXIII Issue 1, January/February 2009

FIRM INFORMATION

For additional information, visit: http://www.mofo.com

Other Morrison & Foerster LLP Featured Video Interviews:

Share Repurchase Considerations
David M. Lynn and David H. Kaufman, Partners, Morrison & Foerster LLP

Click image to view the video.

Hybrid Financing: Certain Ideas for Uncertain Times
James Tanenbaum, Chair of Morrison & Foerster’s Global Capital Markets practice

Click image to view the video.

Preparing to Raise Capital in Volatile Markets Using a Shelf Registration
Anna T. Pinedo, Partner, Morrison & Foerster LLP

Click image to view the video.

“Say on Pay” and Other Issues for the Upcoming Proxy Season
David M. Lynn, Partner and Chair of Public Companies and Securities Practice, Morrison & Foerster LLP

Click image to view the video.

Challenges & Opportunities Accessing Capital Markets - Steven Khadavi, Dorsey & Whitney LLP

LegalMinds Editor — Thu, 07 Jan 2010 23:25:43 +0000

Changes in the regulatory landscape are having a profound impact on companies seeking to access the capital markets. In this exclusive LegalMindsTV interview, Steven Khadavi, Co-Chair of the Capital Markets practice Group at Dorsey & Whitney LLP, discusses some of the challenges these companies face.

According to Khadavi, “companies considering accessing the capital markets need to carefully weight the costs and benefits of these transactions. In addition to being an expensive and time consuming process, it can create a significant diversion of management’s time, as well as add significant burdens in terms of disclosures and regulatory compliance.”

“Accessing the capital markets is a long process,’ says Khadavi. The lead time to commencing a transaction is probably a year or so and in that time you need to “start thinking like a public company.” This includes engaging PCAOB certified auditors and an accounting firm that’s familiar with SEC reporting and be able to go through the capital markets process. Companies also need to consider the impact of the Sarbanes-Oxley Act, which entails large upfront costs for testing internal controls and procedures – particularly the first time around.

CONTINUE READING SUMMARY (Click to Expand/Collapse)

View and download a PDF transcript of the full interview here.

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ATTORNEY INFORMATION

Steven Khadavi
Partner, Dorsey & Whitney LLP

Steven Khadavi is a partner in Dorsey’s Corporate group and Co-Chair of the firm’s Capital Markets practice group. He has extensive experience in corporate finance and securities law, as well as mergers and acquisitions.

Mr. Khadavi has represented underwriters and issuers in public and private debt and equity offerings, debt tender offers, consent solicitations, exchange offers and public and private acquisitions. He has represented clients in the United States and abroad in various sectors, including telecommunications, healthcare and consumer products. He also advises clients with respect to corporate governance and Sarbanes-Oxley matters.

Admissions:
New York

Education:
George Washington University Law School J.D., 1996, With Highest Honors; Order of the Coif
Clark University B.A., Economics, 1993, With Honors

Contact:
250 Park Avenue
New York NY 10177-1500
(212) 415-9376
khadavi.steven@dorsey.com

To see a full bio, visit: http://www.dorsey.com/people/detail.aspx?Attorney=180&mode=full

Publications:

Changes to New York Power of Attorney Law Could Have Broad Implications, September 2009
SEC Mandates Use of XBRL for Financial Statements, June 4, 2009
Debt Exchange Lowdown, The Deal, April 4, 2009
“Overcoming the Challenges of New Disclosure Regulations,” SEC Compliance Best Practices: Leading Lawyers on Understanding Disclosure Requirements, Developing Compliance Procedures, and Advising Clients on Reporting Practices (Inside the Minds), April 2009
“Exchange-Offer Alternatives for Issuers of Debt Securities,” Andrews Litigation Reporter, February 10, 2009
Companies Should Look Closely at Risk Factor Disclosure in Light of the Current Financial Crisis, February 10, 2009; A version of this article was republished in the March 2, 2009 Andrews’ Litigation Reporter
“The Viability of Maintaining Successful Actions against the RTC and the FDIC.” Volume 63, George Washington Law Review, 1996

FIRM INFORMATION

Clients have relied on Dorsey since 1912 as a valued business partner. With more than 650 lawyers in 19 locations in the United States, Canada, Europe and Asia-Pacific region, Dorsey provides an integrated, proactive approach to its clients’ legal and business needs. Dorsey represents a number of the world’s most successful Fortune 500 companies from a variety of disciplines, including leaders in the financial services, investment banking, life sciences, securities, technology and energy sectors, as well as nonprofit and government entities.

For additional information, visit: http://www.dorsey.com