USA Trends and Developments Contributed by: Matt Hurd, Melissa Sawyer and Scott Crofton, Sullivan & Cromwell LLP
Introduction Corporate governance reforms continue to be an important topic for US companies. This article will cover the key topical issues at the time of publication in 2025. Companies Face Continued Political and Economic Uncertainty Companies are facing an increasingly challeng - ing business environment driven by ongoing political and regulatory developments, policy shifts and economic volatility. For example, President Trump has already issued multiple executive orders that alter the regulatory land - scape, including orders directing all executive departments and agencies to (i) freeze all rule - making activity (including the issuance, pro - posal and publication of any new rules or other regulatory actions) until they can be reviewed and approved by a presidential appointee; and (ii) initiate processes to identify and rescind/ modify regulations deemed to be inconsist - ent with the administration’s policies. While it is not uncommon for incoming administrations to implement regulatory freezes or rescind prior rules, the high amount of regulatory activity dur - ing the Biden administration, including in key areas such as cybersecurity/data privacy, AI and consumer protections, means these orders could meaningfully impact a number of new and pending regulations with which companies may have already started to comply. Major policy shifts at the U.S. Securities and Exchange Commission (the SEC) are also expected under the direction of new Chair Paul Atkins. To date, the SEC has dropped several of its high-profile cases and enforcement actions against crypto companies and ended its defence of the landmark climate disclosure rules adopt - ed under the prior administration (which have not yet become effective due to ongoing legal
challenges). In February, the Staff of the SEC’s Division of Corporation Finance also issued new guidance and interpretations that may make it more difficult for shareholders to engage with companies on ESG-related issues going forward, including (i) a new legal bulletin rescinding 2021 guidance that had narrowed the ability of com - panies to exclude shareholder proposals with “broad societal impact” from their proxy state - ments; and (ii) a revised Compliance and Disclo - sure Interpretation addressing circumstances in which a shareholder’s engagement with a com - pany’s management on ESG and other matters could result in the shareholder losing its eligibility to report beneficial ownership on the short-form Schedule 13G and instead require reporting on the more disclosure-intensive Schedule 13D. These changes have already started to impact the 2025 proxy season, with shareholder pro - ponents withdrawing environmental and social proposals at much higher rates, and the SEC granting no-action requests for such proposals far more frequently than in previous years. In terms of future SEC priorities, according to Chair Atkins’ testimony during his Senate confirma - tion hearing, key focus areas during his tenure will include matters like developing a regulatory framework for digital assets, facilitating capital formation and scaling back “[u]nclear, overly politicized, complicated, and burdensome regu- lations” to instead focus more on disclosure of financially material information. In addition to political and regulatory shifts, com - panies are also facing uncertainty as a result of rising geopolitical tensions and concerns over issues like tariffs, trade policies and taxation. Given the impact such factors can have on cor - porate performance, investors are increasingly looking for companies to disclose how their boards and management oversee and man - age macroeconomic risks, and investors have
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