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Legal Proceedings and Indemnification
The SEC requires companies to disclose information regarding lawsuits or pending lawsuits brought against them. Disclose: • The name and location of the court or agency where the proceeding occurred • Date instituted • Parties involved • The company’s exposure to litigation, and a brief description of the facts claimed in the suit If a company has been threatened with a lawsuit, especially from a government agency, include this information. If any proceedings are pending against the company, management or legal counsel need to provide an analysis of the merits of the proceeding and the impact any judgment against the company would have on finances and business operations. According to the SEC, companies pursuing indemnification, (receiving reimbursement for certain expenses after being sued by third parties), is unenforceable. The SEC states that under the Securities Act of 1933, indemnification is against public policy and will not be enforced. Also, in this section, a company will disclose its indemnification policies. |
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