How to Draft “Section 16 Delinquencies” Disclosure for the Proxy

As part of your proxy statement filed with the SEC, you will disclose whether any of your insiders – your directors and executive officers – were delinquent in filing any of their Form 3s, 4s, or 5s with the SEC over the last fiscal year.

At the 5:02 mark, our guest – Hogan Lovell’s Alan Dye – joins us to discuss these issues:

1. What’s the typical process that a company uses to diligence whether an insider has delinquencies?
2. If a director or executive officer leaves before the end of the company’s fiscal year – do you need to include them in this year’s delinquency disclosure?
3. How do you handle Form 5s since those are due after a company’s year end? If any of those are late, to which year should the delinquency be disclosed?
4. Does an error in a Section 16 filing render that filing delinquent?
5. Do you think companies should skip including a section if there are no delinquencies? Or should they include negative disclosure that there were no delinquencies?
6. What does the disclosure usually say (any mitigating disclosure, attribution of fault)?
7. How often do late filings occur (what % of companies disclose one)?
8. Does the SEC track these disclosures for possible Enforcement actions?

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