The board of directors of SEC-reporting companies must have knowledge of many complex legal requirements affecting a reporting company and its directors, officers and major stockholders under the federal securities laws, including the Sarbanes-Oxley Act, the Dodd-Frank Act and the SEC rules promulgated under those laws. Some of the issues that may impact the board members include:

Practical Law has numerous resources that help directors understand their company's reporting obligations, their personal reporting obligations and the restrictions on and potential liabilities of board members and the company.

The number of IPOs during 2014 has drastically increased and the perceived backlog of filings suggests that this trend will continue for the remainder of the year. This means many new directors must become familiar with the implications of being on a board of a public company both in terms of the company's obligations and the restrictions on and potential liabilities of board members.

Our Standard Document, Memorandum to Board: Now That You Are Public is a memorandum intended to be delivered to a US public company's board of directors, board committee or senior management outlining certain federal securities laws applicable to a company with a class of securities registered under Section 12 of the Exchange Act. This memorandum addresses:

It also includes an overview of:

A similar memorandum, Standard Document, Memorandum: Understanding Obligations under Section 16 of the Exchange Act, focuses on Section 16, educating the directors on their obligations to file certain beneficial ownership reports, avoiding generating short-swing profits from short-term trading and informing the directors of company programs that can assist them with their obligations. This memorandum can be tailored and delivered to directors of newly public companies, directors of already public companies as a reminder of ongoing Section 16 obligations and company compliance procedures and newly elected or appointed directors.

We also have several other resources in this area that can save time and offer a deeper understanding of Section 16 issues, including:

Rule 10b-5 of the Exchange Act prohibits the purchase or sale of securities if either of the parties to the transaction are aware of material nonpublic information. The federal securities laws also prohibit a person from disclosing any material nonpublic information to others (or recommending that others purchase the company's securities), including that person's family members, friends or acquaintances who trade in the company's securities. This prohibition applies whether or not the person receives any benefit from the other person's use of that information.

In addition, under Regulation FD, whenever the company or certain persons acting on its behalf discloses material nonpublic information to securities professionals and certain other persons who are likely to purchase or sell the company's securities, the company must make simultaneous public disclosure of that same information.

The company should therefore require that all sales or purchases of company securities and disclosure of material nonpublic information by directors and officers be pre-cleared by the company. This pre-clearance procedure helps avoid appearances of trading on illegal inside information and to comply with applicable disclosure rules. Practical Law's resources on this issue include:

Our Standard Document, Registration Process: Memorandum on Publicity and Websites explains the federal laws relating to the dissemination of information on the company's website before, during, and after an IPO of the company's common stock. While this memorandum is focused on IPOs, it may be tailored for any follow-on offering of debt or equity securities because the publicity restrictions are equally applicable.

We also have several resources covering the quickly transforming area of social media and its complicated interaction with securities and disclosure laws, including:

The securities laws limit unregistered sales of company securities by any "affiliate" of the company, which includes the directors of the company. To safely monetize their holdings of company securities, directors generally comply with the safe harbor conditions specified in Rule 144 of the Securities Act. Rule 144 applies to all company securities held by affiliates, whether acquired in private transactions, on the open market or from the exercise of stock options. The SEC has also adopted complex rules for the attribution to affiliates of stock owned by persons or entities related to them.

Rule 144 ordinarily should cause only a minor inconvenience to insiders in selling company securities unless the amount of the proposed sale is substantial. Practical Law's Practice Note, Resales Under Rule 144 discusses the Section 4(a)(1) exemption for resales of securities from the registration requirements of the Securities Act and the safe harbor provided by Rule 144. It describes the conditions that must be satisfied to rely on Rule 144, including any holding period and applicable volume limitations.