SEC Adopts Hedging Policy Disclosure Requirements

On December 18, 2018, the Securities and Exchange Commission (SEC) adopted final rules that will require hedging policy disclosures. The new rules, mandated by Section 955 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and found in new Regulation S-K Item 407(i), will require additional disclosures in certain proxy and information statements beginning no earlier than the second half of 2019.

In particular, Item 407(i) will require companies to describe their policies or practices regarding the ability of their employees, officers, directors or any of their designees to purchase financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) or otherwise engage in transactions designed to hedge or offset decreases in the market value of the company's equity securities. Under the rules, a company's equity securities include those of the company and of its parents, its subsidiaries and subsidiaries of the