Update: Will the Bezos Divorce Impact SEC Disclosure Obligations for Public Companies?
On February 20, 2019 we posted about whether the Bezos’ divorce would impact SEC disclosure requirements for public companies. In this regard, Amazon’s recent filing may offer additional support to those who wish to argue that personal matters impacting management, or a shareholder who owns a controlling stake in the company, should be disclosed.
On April 4, 2019, Amazon announced via a Form 8-K filing that MacKenzie Bezos will receive as part of a divorce settlement approximately 4% of the company’s outstanding common stock, or one-quarter of the couples’ holdings, with Jeff Bezos to hold sole voting authority over those shares. The company made the filing under item 8.01, “other events,” which is reserved for voluntary filings regarding events “that the registrant deems of importance to security holders.”
Clearly, then, Amazon believes that the consequences of its founder and largest shareholder’s divorce is “of importance”—read: “material”—to investors.
Amazon’s 8-K gives further ammunition to those who would suggest that information about possible divorces or other personal matters impacting a major shareholder, or a company’s key managers, may well be an appropriate—and sometimes required—subject for disclosure. The filing indicates that it was triggered by Jeff Bezos’s informing Amazon of the divorce settlement on April 4.
The question remains, what duty did Amazon’s board have to make proactive inquiries regarding the possibility of a divorce and, later, the state of the divorce settlement negotiations? The answer may have to wait until the next tech billionaire’s divorce, which might not be resolved so cleanly as the Bezos’.