A company must also declare its formation, significant modification and/or termination of an equity settlement plan, contract or contract in which an employee participates, not approved by shareholders, unless this is insignificant in amount or importance. Compensation plans, contracts or arrangements in which no director or designated officer (including the Chief Executive Officer and other officers for whom disclosure of compensation is to be included in the Company`s proxy circular for an annual general meeting) participates, if insignificant in amount or size; and usually an 8-K submission consists of only two main parts: the name and description of the event and all relevant exhibits. The name and description of the event contain any information that the Company deems relevant to shareholders and the SEC. It is important to read this information because it has been classified as «material» by the company. All relevant exposures may contain financial reports, press releases, data tables or other information referenced in the event description. If point 1.01 is triggered, the registrant must file a Form 8-K containing certain information about the acquisition agreement (including the essential terms of the agreement) within four working days of the conclusion of the agreement. In addition, the notifier must file the agreement, either as an attachment to Form 8-K or as an attachment to the periodic report that covers the period during which the agreement is entered into. Companies should bear in mind that failure to file a Form 8-K to declare the information required under paragraphs 1.01 or 1.02 in relation to an important final agreement: lessons from the Siebel case. In the SEC`s recent lawsuit against Siebel Systems, Inc., the SEC asserted that Siebel should have filed a Form 8-K to disclose material non-public information that the CEO selectively disclosed. Given that Siebel did not do so and did not use any other FD-compliant disclosure method to comply with its obligation, the failure to file a Form 8-K was a violation of Rule 13a-15 of the Securities Act, which requires companies to maintain disclosure controls and procedures «designed to ensure that the information that must be disclosed by the issuer in the reports it submits or files» under the Exchange Act.
«be recorded, processed, summarized and reported within the time limits set by the rules and forms of the Commission.» For more information on the Siebel case, see www.sec.gov/litigation/litreleases/lr18766.htm. To avoid liability, companies must comply with appropriate disclosure controls and procedures to ensure that the required information is disclosed correctly and in a timely manner, including the information required by all points of the amended Form 8-K. The SEC requires disclosure of many changes related to a registrant`s activities and transactions. Changes to a major definitive agreement or the bankruptcy of a company must be declared. Other financial reporting requirements include the completion of an acquisition, changes in the company`s financial condition, divestiture activities and material impairments. The SEC requires the filing of an 8-K for the write-off of a share, non-compliance with listing standards, unregistered sale of securities, and material changes to shareholder rights. With regard to the comparisons of the income statement, assets and purchase prices mentioned in the first three indents above, a rule of thumb used by some practitioners is that if one or more of these comparisons exceed 5 % or 10 % (there are different views on the appropriate threshold, 5 % being more cautious), this can be seen as an indication of materiality (recognizing, that qualitative factors are also relevant). If an acquisition is significant to a registrant but item 2.01 is not triggered, the holder may have a disputing judgment as to whether the acquisition agreement should trigger a filing pursuant to section 1.01 of Form 8-K. In this context, the relevant factors may be: the conclusion of a significant new definitive agreement which was not concluded in the ordinary course of business (paragraph 1.01); An 8-K is a report of unforeseen material events or corporate changes in a company that may be material to shareholders or the Securities and Exchange Commission (SEC).
The report, also known as Form 8K, informs the public of events, including acquisitions, bankruptcies, resignation of directors, or changes during the fiscal year. Given that individual options granted or bonuses to directors or designated officers (generally the Chief Executive Officer and other highest-paid officers for whom disclosure of compensation is to be included in the Company`s proxy circular) and other officers (if their amount or significance is significant) may be «material contracts» under section 601(b)(10)(iii) of the Regulation S-K, These awards may have to be disclosed in accordance with point 1.01 of the amended Form 8-K, even if the compensation plan on the basis of which the award is made has been previously accepted and disclosed. Determining whether entering into a definitive acquisition agreement triggers point 1.01 is a subjective determination based on general standards of materiality as defined in SEC rules, court decisions, and administrative guidelines (e.B Levinson`s test, which defines disclosure as material where «there is a high probability that a reasonable investor will consider it important in making an investment decision. » by significantly changing the mix of available information). There is a relative lack of SEC authority as to whether an acquisition agreement (or more generally) should be considered an essential definitive agreement for the purposes of Article 1.01. However, there are certain guidelines and considerations that a declarant acquirer should consider when determining whether an acquisition agreement constitutes a material definitive agreement for the purposes of section 1.01. This update provides practical guidance on how to account for final agreements, submit exhibits, and enforce the Safe Harbor. For a list of the amended report elements and the due dates for Form 8-K, see our table and a summary of other important provisions in our March 30, 2004 update. Possible liability under Section 10(b), Rule 10b-5 and Section 13(a) of the Exchange Act. The Anti-Fraud Limited Safe Harbor applies only to your failure to file a required report on Form 8-K; It does not protect you from any liability under Rule 10b-5 resulting from material inaccuracies or omissions in a report filed on Form 8-K. In addition, the Safe Harbor does not affect the SEC`s ability to enforce the Filing Requirements of Form 8-K under Section 13(a) or 15(d) of the Exchange Act.
Identification of officers and others to whom the Board of Directors has delegated authority to sign significant final agreements or take action that triggers a requirement to disclose Form 8-K; Consider limiting the number of people authorized to act on behalf of the company. Determine whether officers and directors require additional training on when their actions may trigger such obligations and how the specific terms of an agreement may affect disclosure requirements. Disclosure of compensation agreements in connection with executive appointments. If the Company appoints a new Chief Executive Officer, a President, a Chief Financial Officer, a Senior Accountant, a Chief Operating Officer or a person performing similar functions, item 5.02(c) of Form 8-K also requires disclosure of the material terms and conditions of any employment or compensation contract. The SEC encourages companies, but does not require them to file a copy of the agreement declared as an attachment to Form 8-K. Any agreement not filed as Form 8-K must be filed as an attachment to the Company`s next periodic report or registration statement. Agreements can become essential over time. An agreement that is not important at the time of closing may become important over time as the business relationship between the parties develops, for example by.
B the bias of the revenue growth of a particular client. If the parties do not amend the agreement in relation to the amended relationship, no Form 8-K appears to be required, although the agreement must be filed with the Company`s next periodic report. If the parties amend the Agreement in these circumstances, the Company must declare the amended Agreement on Form 8-K. A useful first step in this analysis is whether acquisition (after completion) will trigger element 2.01 based on the quantitative tests of the clear line (see below). In most cases, when item 2.01 of Form 8-K is triggered, a registrant will determine that a Form 1.01 Form 8-K is required as part of the execution of the Final Agreement. Given that management contracts and compensation plans and agreements are generally considered «material contracts» under paragraph 601(b)(10)(iii) of Regulations S-K, an entity must report within four business days its formation, significant modification and/or termination of a management contract or stock-based compensation, an option, pension, retirement, deferred compensation, bonus, incentive, profit sharing or other compensation plan. Contract or agreement in which a director or officer is involved. However, some exceptions to this general requirement are as follows: the instructions in point 601(b)(10) provide for an exemption from the disclosure obligation for agreements concluded under a remuneration plan where copies of the plan and forms of agreements (if the agreements contain substantial conditions in addition to the terms of the plan) have been submitted and the individual agreements do not contain any other provision, that must be disclosed in order for an investor to benefit from the compensation scheme. .