June Edition 2023

72 Safe Harbor for Common Stock Repurchases – Exchange Act Rule 10b18. Exchange Act Rule 10b-18 provides conditions that, if met, provide a non-exclusive safe harbor for repurchases of common stock from market manipulation claims under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Under the Existing Rules, there is no additional, specific disclosure required for repurchases made pursuant to Rule 10b-18. The Amendments introduce a new requirement that an issuer must disclose in tabular form the aggregate total number of shares repurchased that were intended to qualify for the safe harbor of Rule 10b-18. Checkbox. The Amendments require a checkbox above the tabular daily buyback disclosures indicating whether directors or Section 16 reporting officers (or, in the case of FPIs, senior management) purchased or sold shares that are the subject of the issuer’s share repurchase program four business days before or after the announcement of such program or the announcement of an increase of an existing share repurchase plan or program. In assessing whether the checkbox disclosure is needed, the Amendments allow an issuer to rely on the following, unless the issuer knows or has reason to believe that a form was filed inappropriately or that a form should have been filed but was not: • A review of Forms 3 and 4 (17 CFR 249.103 and 249.104) and amendments thereto filed electronically with the SEC during the issuer’s most recent fiscal year; • A review of Form 5 (17 CFR 249.105) and amendments thereto filed electronically with the SEC with respect to the issuer’s most recent fiscal year; • Any written representation from the reporting person that no Form 5 is required, which representation must be maintained in the issuer’s records for two years, with a copy made available to the SEC or its staff upon request; and • For FPIs, any written representations from the directors and senior management who would be identified pursuant to Item 1 of Form 20F, provided that the reliance is reasonable, and the issuer maintains the representation in its records for two years, with a copy made available to the SEC or its staff upon request. Objectives or rationales for the buyback and policies and procedures for issuer’s directors and officers. Under the Amendments, an issuer will be required to narratively disclose in its periodic reports the objectives or rationales for its buybacks and the process or criteria used to determine the repurchase amounts. It also must disclose policies and procedures relating to purchases and sales of the issuer’s securities by its directors and officers during a repurchase program, including any restriction on such transactions.