SEC’s New Regulatory Agenda Goes Back to the Future

The Securities and Exchange Commission is welcoming 2024 by making what was old new again. In its updated regulatory agenda released on December 6, 2023, the agency included big-ticket items that headlined agendas in previous years, such as climate change disclosure, special purpose acquisition companies (SPACs), and amendments to rule 14a-8 concerning shareholder proposals. In many instances, the only changes to these items from previous years are finalization delays.

The updated agenda includes a total of 43 rules – 29 of which are in the final rulemaking stage and 14 in the proposed stage. Here are some of the highlights.

Climate Change Disclosure

The most notable item on the agenda concerns the controversial climate change disclosure rule proposed in March 2022 that would establish three levels of reporting for greenhouse gas emissions:

• Scope 1 refers to a company’s direct emissions;
• Scope 2 includes emissions produced by a company’s energy provider;
• and Scope 3 consists of emissions attributed to the company’s supply chain and end users.

SEC Chair Gary Gensler has staunchly defended the project despite significant pushback from public companies, interest groups and lawmakers. The updated agenda moves the target date for finalizing the rules from October 2023 to April 2024.

Special Purpose Acquisition Companies

The agenda also delays action on rule changes proposed in March 2022 for SPACs. Final consideration is now being pushed from October 2023 to April 2024. The new rules would, among other things, impose additional disclosure requirements on initial public offerings by SPACs and in business combination transactions involving SPACs. They would also require disclosures regarding compensation paid to sponsors, conflicts of interest, and dilution.

Rule 14a-8 on Shareholder Proposals

The agency also postponed the target date on finalizing amendments to Exchange Act Rule 14a-8, which were first proposed in July 2022, from October 2023 to April 2024. The proposed rule lays out the procedural and substantive requirements by which companies can exclude shareholder proposals from their proxy statements. Among the proposed amendments, the SEC is calling for revisions to three of the substantive bases for excluding proposals and measures intended to enhance communication between companies and their shareholders.

Additional Proposed Rule Delays

The updated agenda also indicated that the target dates for issuing the following proposed rules would be delayed:

• Corporate Board Diversity – delayed from April 2024 to October 2024
• Rule 144 Holding Period – delayed from April 2024 to October 2024; and
• Human Capital Management Disclosure – delayed from October 2023 to April 2024.

Gensler Working to Beat the Clock?

The fact that 2024 is an election year can only add to the pressure on SEC chair, Gary Gensler, and his regime to finish up the main items on their to-do list. Although critics might want to paint Gensler as a busybody reformer, the commission has issued and adopted new regulations at a laborious pace during the Biden administration relative to his predecessors. With time ticking away until voters hit the polls in November, the SEC appears poised to get some of Gensler’s priority projects across the finish line.