The Bass, Berry & Sims Corporate & Securities Practice Group recently hosted its first in a series of complimentary webinars exploring various public company-related securities law issues.

The first webinar, Key Insights into Financial Reporting Considerations: MD&A, Earnings Releases & Regulation FD, was held on July 18 and shared guidance on the preparation of the Management Discussion & Analysis (MD&A), key disclosure issues regarding earnings releases and calls, and important considerations for public companies under Regulation FD.


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On May 3, 2019, the SEC proposed amendments to its rules and forms which would revise the disclosure requirements for financial statements relating to acquisitions and dispositions of businesses. We believe that most aspects of the proposed amendments, if adopted in current form, are thoughtful revisions to existing rules and will be beneficial to public companies, although we believe that a couple of aspects of the proposed amendments noted below may bear reconsideration by the SEC.

Key aspects of the proposed amendments include the following:

  • Updating the significance tests by:
    • increasing the significance threshold for a disposed business (triggering the requirement to file pro forma financials) from 10% to 20% (mirroring the existing percentage threshold for acquired businesses).
    • revising the “income test” in the definition of “significant subsidiary” under Regulation S-X, particularly to include a revenue as well as (after-tax) income component to such test, which will eliminate anomalies existing under the current rules (which do not include a revenue component) when a registrant has net income close to zero and a filing may be triggered even where a registrant is much larger than an acquired or disposed company.
    • revising the “investment test” in the definition of “significant subsidiary” under Regulation S-X, including to provide that the purchase price in an acquisition or disposition (which is the numerator in such test) will be compared to the equity value of the registrant rather than (as under the current rules) to the book value of the total assets of the registrant.
    • expanding the use of pro forma financial information in measuring significance, which may provide added flexibility to registrants in determining significance under certain circumstances.


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Please join the Bass, Berry & Sims Corporate & Securities Practice Group as they launch a series of complimentary webinars exploring various public company-related securities law issues. Please join the Bass, Berry & Sims Corporate & Securities Practice Group as they launch a series of complimentary webinars exploring various public company-related securities law issues. These quarterly CLE programs will be an extension of our Securities Law Exchange Blog and will feature timely and practical guidance to SEC disclosure counsel on key topics of interest.

The first Securities Law Exchange webinar, hosted by Bass, Berry & Sims attorneys Kevin Douglas and Scott Bell on July 18, 2019 from 12:00 p.m. – 1:00 p.m. CST, will highlight key financial reporting considerations for public companies. The discussion will include practical advice regarding the preparation of the Management Discussion & Analysis (MD&A), key disclosure issues regarding earnings release presentations, and important considerations for public companies under Regulation FD.


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When a public company is contemplating an acquisition, lawyers should consider early in the acquisition process whether the execution of the acquisition agreement and/or the completion of the acquisition may trigger a filing under Item 1.01 or Item 2.01 of Form 8-K.

Item 1.01

Item 1.01 of Form 8-K requires disclosure when a registrant enters into a “material definitive agreement” outside of the ordinary course of business.  In the context of an acquisition, this in most cases would potentially be triggered by the execution of the definitive acquisition agreement (rather than a letter of intent or term sheet).


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While developments with respect to the Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section in SEC disclosure documents have garnered less attention in the legal press in recent years than certain other areas in the SEC disclosure arena, preparing and crafting MD&A disclosures remains a major area of focus for SEC disclosure lawyers.

The MD&A is the section of a periodic report or registration statement in which management provides its analysis of the registrant’s financial condition and results of operations, thereby providing critical insight into the views of management regarding the key drivers and trends impacting a public company’s financial performance.

Disclosure lawyers should note these key tips and observations when preparing or reviewing MD&A:


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On March 20, 2019, nearly a year and a half after proposing them, the SEC adopted amendments to disclosure requirements for reporting companies, as mandated by the 2015 Fixing America’s Surface Transportation Act (the “FAST Act”).  The amendments are a part of an ongoing effort by the SEC to simplify and modernize disclosure obligations.  According to the SEC’s press release, the amendments are expected “to benefit investors by eliminating outdated and unnecessary disclosure and making it easier for them to access and analyze material information.”

Among many other items, the amendments address the following topics:

  • Greater Flexibility When Filing Under Item 601 of Regulation S-K
    • Omission of Immaterial Schedules and Exhibits—The amendments revise Item 601 of Regulation S-K to expand the ability of registrants to omit immaterial schedules and similar attachments to required exhibits, which previously was only available to schedules and exhibits to acquisitions agreements being filed under Item 601(b)(2).


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On December 18, 2018, the SEC issued a request for public comment soliciting input on the nature, content and timing of earnings releases and quarterly reports of companies that are obligated to file reports with the SEC as well as the relationship between the periodic reports that reporting companies must provide and the earnings releases that they choose to distribute. With this request for comment, the SEC is seeking to continue the ongoing dialogue about whether the current reporting regime and practices of reporting companies is overly burdensome or contributing to “short-termism”.

Commenting on the matter, SEC Chairman, Jay Clayton, said “[t]here is ongoing public debate regarding the effects of mandated quarterly reports and the prevalence of optional quarterly guidance.”  “Our markets thirst for high-quality, timely information regarding company performance and material corporate events.  We recognize the importance of this information to well-functioning and fair capital markets.  We also recognize the need for companies and investors to plan for the long term.  Our rules should reflect these realities.  I look forward to receiving thoughtful comments as we think about ways to encourage long-term investment in our country.”


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On June 28, the SEC adopted regulations that could reduce the reporting burden on middle market public companies. In summary, the SEC adopted amendments to the smaller reporting company (SRC) definition to increase the thresholds for eligibility. Under the amendments, companies with a public float of less than $250 million will qualify as SRCs (up from $75 million). The SEC estimates that about 1,000 additional companies will now be eligible for scaled disclosure as a result of the rule amendments. We expect these amendments may also help companies that have undertaken their IPO in the last five years as they roll off emerging growth company eligibility because of the passage of time.

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The U.S. Securities and Exchange Commission (SEC) issued a Valentine’s Day notice to public companies yesterday that the SEC will be holding an open meeting on Wednesday, February 21, 2018, at 10:00 a.m. EST to consider, among other things, “whether to approve the issuance of an interpretive release to provide guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents.”

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