Glossary

SOX Section 906

What is SOX Section 906?

SOX Section 906 of the Sarbanes-Oxley (SOX) Act requires a written statement from the CEO and CFO declaring that the financial report fairly presents, in all material respects, the financial condition and results of operations of the issuer. Section 906 also outlines that there are criminal penalties for failing to produce a report that matches these requirements and potential prison time for those who deliberately attempt to obfuscate information. For support and additional information, explore our automated SOX compliance solution. 

Special Purpose Acquisition Company (SPAC)

Special purpose acquisition companies (SPACs) have no commercial operations. They are formed strictly to raise capital through an initial public offering (IPO) that it can then use to acquire or merge with another company. After a period of relative obscurity—they were most popular in the lead-up to the 2007–2009 financial crisis—SPACs had a remarkable resurgence in the early 2020s, with a record-breaking number of SPAC IPOs and mergers, before quieting down in the mid-2020s.

SPACs operate on a straightforward premise: They raise capital through an IPO, place the funds in a trust, and then have a limited time frame (usually 18 to 24 months) to identify and merge with a target company.

If a suitable target isn’t found within this period, the SPAC is liquidated, and funds are returned to investors. This structure offers unique advantages and risks for sponsors and target companies.

For support and additional information, explore our SPAC and de-SPAC Solutions.

Spin-Off

What is a spin-off?

A spin-off happens when a company separates a division or component of its business into an entirely new business entity. There are many reasons for a spin-off. Spin-offs can assist in growth trajectory through the development of a high-growth division or business. This could be done to sell a part of the business. The part was not related to the company’s focus.

Some occur when a company wants to sell a portion of itself and can’t find a buyer. No matter the situation, when a spin-off transpires, shareholders in the parent company are compensated through the issuance of new company stock equivalent to their equity loss from the spin-off

General Electric has recently undergone a spin-off, which divided it into three separate entities. These entities focus on aviation, healthcare, and energy. The aviation business will keep the General Electric name. The reasons given for the spin-off by General Electric included greater strategic business-specific focus and flexibility to drive long-term growth and value for the three business units.. For support and additional information, explore our Capital Markets Transactions solutions.

Summary of Benefits and Coverage

What is the Summary of Benefits and Coverage (SBC) document? 

Specific to plans offered under the Affordable Care Act (ACA), the Summary of Benefits and Coverage (SBC) is a required document based on a model template issued by Centers for Medicare & Medicaid Services (CMS) to outline in plain language information about each health plan’s benefits and coverage. This document serves as a standardized health plan comparison tool with coverage examples similar to the Nutrition Facts label required for packaged goods. These examples illustrate how the insurer would cover care for common benefits scenarios. The SBC is not to be confused with the Summary of Benefits document, which is required for Medicare Advantage and Part D plans, and other plans subject to the Medicare Communications and Marketing guidelines. For support and additional information, explore our solutions for Health Plans Regulated Communications.

Tailored Shareholder Report

What is a tailored shareholder report?

A tailored shareholder report is a new requirement for investment companies filing under the Securities Act of 1940. Mandated by the SEC in January 2023 and beginning July 2024, all mutual funds and ETFs filing under Form N-1A will be required to produce a new, 4-page tailored shareholder report designed to increase transparency of fund performance for shareholders. The tailored shareholder report must be tailored to each investor class, featuring variable information related to that investor share class. The report will also require iXBRL tagging. These reports must be mailed to investors, with additional information available online and in paper format upon request. For support and additional information, explore our investment company compliance solutions.

Tender Offer

What is a tender offer?

A tender offer is an offer from an investor, or investor group, to purchase a specified minimum of the company’s shares at a price point that is typically higher than the stock price, making the offer attractive to current shareholders. Since the offer is made to current shareholders, the purchase of a controlling interest in the company stock may be done without the company’s approval. With no required company involvement, tender offers can be hostile takeovers. Shareholders of the acquired entity may realize a significant return on the transaction and the acquiring company benefits can include increased revenue as well as decreased competition. For support and additional information, explore our Capital Markets Transactions solutions. 

Transfer Agent

What is a transfer agent?

A transfer agent is a financial institution named by a corporation to maintain records of investors, or registered shareholders, who own certificate-form shares. If the transfer agent is handling the registered shareholder’s proxy material distribution, they will coordinate the distribution process for the issuer, print registered proxy cards, and mail proxy materials to registered shareholders and employee plans​. Transfer agents maintain the registered shareholder information and are generally responsible for facilitating the proxy distribution for the registered shareholder and employee plan participants​. They also can not facilitate the beneficial shareholder proxy distribution​. For support and additional information, explore our Annual Meeting and Proxy Solutions.

Underwriter

An underwriter is any party, usually a member of a financial organization, that evaluates and assumes another party’s risk in mortgages, insurance, loans, or investments for a fee, usually in the form of a commission, premium, spread, or interest.

Underwriting Agreement

An underwriting agreement is a contract between a group of investment bankers who form an underwriting group or syndicate and the issuing corporation of a new securities issue.

XBRL

What is XBRL?

XBRL stands for eXtensible Business Reporting Language. It is an open-source, XML-based standard for communicating and exchanging financial and business information.

The main purpose of XBRL is to facilitate the sharing of financial and business information in a standardized and efficient manner. It allows for the tagging of individual pieces of data within financial statements, making it easier to analyze and compare data across different companies and industries.

XBRL has gained widespread adoption around the world, particularly in the realm of financial reporting. It is used by regulatory bodies, such as the SEC in the United States, to require public companies to file financial statements in XBRL format, and by companies to communicate their financial results to investors and other stakeholders.