Last year, Congress required the SEC to review the public company disclosure requirements in Regulation S-K and make detailed recommendations as to how those rules might be changed to modernize and simplify the requirements while still requiring disclosure of all material information. The ultimate goal was to reduce burdens on public companies while improving readability and navigation of public company filings, including through reducing repetition in such filings. On November 23, 2016, the SEC released its initial recommendations in a report (the “2016 Report”). The 2016 Report which served as the basis for proposed rules, which were set forth in a 253 page rules release on October 11, 2017. While the proposed rules largely implement the recommendations from the 2016 Report, the proposed rules deviated in certain respects from the recommendations in the 2016 Report. Specifically, the release contains proposed changes to the following provisions under Regulation S-K:
- Description of Property (Item 102);
- Management’s Discussion and Analysis (Item 303);
- Directors, Executive Officers, Promoters, and Control Persons (Item 401);
- Compliance with Section 16(a) of the Exchange Act (Item 405);
- Outside Front Cover Page of the Prospectus (Item 501(b));
- Risk Factors (Item 503(c));
- Plan of Distribution (Item 508);
- Material Contracts (Item 601(b)(10)); and
- Various rules related to incorporation by reference.
Additionally, Some of the proposed amendments would require additional disclosure or incorporation of new technology. These include proposed changes to:
- Outside Front Cover Page of the Prospectus (Item 501(b)(4));
- Description of Registrant’s Securities (Item 601(b)(4));
- Subsidiaries of the Registrant (Item 601(b)(21)(i)); and
- Various regulations and forms to require all of the information on the cover pages of some Exchange Act forms to be tagged in Inline XBRL format.
While somewhat underwhelming with regard to the actual relief provided, the proposed changes are certainly a step in the right direction for improving the disclosure requirements for public companies. Nevertheless, the proposals seem to be relatively minor in nature and won’t likely do much for public companies as far as reducing their disclosure burdens. Below is a summary description of the material changes proposed in the release: Continue Reading SEC’s Attempt to Modernize and Streamline Disclosures for Public Companies Falls Short