The NASPP Blog

February isn’t just time to be thinking about your sweetheart, it’s also the deadline for Form 5 filings for many companies. If your company year-end is December 31st, then the Form 5 filing deadline for 2010 is Tuesday, February 16 (Feb 14, the 45th day after December 31, is a Sunday and Feb 15 is a federal holiday).

While it is true that the responsibility for reporting ownership and transactions falls squarely on the Section 16 insiders themselves, it is in the best interest of the company to manage the SEC filings on behalf of the Section 16 insiders. This blog is written with the assumptions that your company is managing the SEC filings for your insiders and that you have a December 31st year-end.

Confirm List of Reporting Persons

Take a moment to review who your filing persons are. Once you have your list together, confirm it with your legal department and have your board of directors formally approve the list.

Verify Current Holdings

Although you should be verifying all equity securities held by your Section 16 insiders every time you file a Form 3 or Form 4, take time at the end of the year to do a final reconciliation. Remember that their holdings include not only the shares held in their name, but may also include securities owned by immediate family members or by business entities in which the Section 16 insider has a controlling interest. If you discover any inconsistencies, confirm that the discrepancy isn’t the result of a transaction that should have been reported on a Form 4 or that was reported incorrectly.

Review 2009 Transactions and Filings

Review all known transactions for your Section 16 insiders and confirm that they were correctly reported. Be sure to include insiders who left the company in 2009 in your transaction audit. Verify the transactions in your stock plan administration database against the brokerage records to ensure that the details are all correct. In addition, review any Rule 10b5-1 trading plans to check for transactions that may have been overlooked. Some transactions, such as gifts/inheritances or “small acquisitions”, are not required to be reported on a Form 4. In conducting your review, be sure to include these types of transactions. In addition, be sure to check your Form 4 filing dates for any delinquent filings that will need to be disclosed in your proxy and Form 10-K.

Include each insider’s individual transaction list as an attachment to his or her D&O questionnaire. That way, your insiders will be able to focus their attention on any missed transactions. If any transaction that was required to be reported on a Form 4 was overlooked, you will need to include it on the Form 5.

“No Filing Due” Statements

Where Form 5 reportable transactions were not voluntarily reported early on a Form 4, you will need to include them on the insider’s Form 5. Obtain “No Filings Due” statements for insiders that don’t have any transactions to report on Form 5. Like the transaction list, the “no filing due” statement can be included as an attachment to the D&O questionnaire. Don’t forget about anyone who ceased to be a Section 16 insider during 2009! If you didn’t get a representation from the individual when they ceased to be a Section 16 insider, then you will need to get a “no filing due” statement at year-end.

Administrative

There are also a couple administrative points to focus on at the end of your fiscal year.

First, make sure that your own EDGAR password has been renewed (for more on this, check out Barbara’s March 10 entry from last year).

Finally, review the power of attorney for each of your Section 16 insiders and confirm that all are filed with the SEC and are still effective. Pay special attention to who is named as appointee in the power of attorney, if the agreement includes reference to the EDGAR filing system, and to confirm that the agreement indemnifies the company and/or appointees.

Don’t Miss Today’s Webcast!

Of course, the number one resource for Section 16 reporting is Romeo & Dye’s Section 16 Treatise and Reporting Guide. Today, you have the opportunity to catch the one and only Alan Dye in our “Latest Section 16 Developments” webcast. Remember, all our webcasts are free to NASPP members!

-Rachel