At its open meeting today, the SEC proposed for public comment these amendments to Reg. S-K based on staff's recommendations encompassed in the FAST-Act mandated Report on Modernization and Simplification of Regulation S-K - which was released in November 2016, and a broader review of the agency's disclosure scheme.
According to the SEC's Fact Sheet, among other things, the proposed amendments:
- Revise rules or forms to update, streamline or otherwise improve the Commission’s disclosure framework by eliminating the risk factor examples listed in the disclosure requirement and revising the description of property requirement to emphasize the materiality threshold;
- Update rules to account for developments since their adoption or last amendment by eliminating certain requirements for undertakings in registration statements;
- Simplify disclosure or the disclosure process, including proposed changes to exhibit filing requirements and the related process for confidential treatment requests and changes to Management's Discussion and Analysis that would allow for flexibility in discussing historical periods; and
- Incorporate technology to improve access to information by requiring data tagging for items on the cover page of certain filings and the use of hyperlinks for information that is incorporated by reference and available on EDGAR.
This memo from Weil summarizes key technical and substantive recommendations encompassed in the FAST-Act mandated report, including:
- Clarifying that a description of property is required only to the extent that physical properties are material to a company’s business ( S-K Item 102)
- Clarifying that a registrant need only provide a period-to-period comparison for the two most recent fiscal years presented in the financial statements and may hyperlink to the prior year’s annual report for the additional period-to-period comparison (MD&A Item 303)
- Allowing companies to rely solely on a review of Section 16 reports submitted on Edgar for any disclosable reporting delinquencies, and eliminating the requirement that reporting persons furnish Section 16 reports to the company (Item 405)
- Expressly (as an addition to Item 405) requiring companies to include a Section 16(a) Beneficial Ownership Reporting Compliance section only if they have delinquencies to report
- Allowing companies to omit attachments and schedules to filed exhibits unless the attachments/ schedules contain information that has not been otherwise disclosed and is material to an investment decision (Item 601)
The comment period on the SEC's release will be open for 60 days. Comments may be submitted here.