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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  According to the SEC’s press release, the amendments are expected “to benefit investors by eliminating outdated and unnecessary disclosure and making it easier for them to access and analyze material information.”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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CEO Pay-Ratio Mandate | Jay Knight for Law360I provided insight in a recent Law360 article on the CEO pay ratio disclosure requirements mandated by the Dodd-Frank Act. The disclosure requires that public companies disclose the compensation of its chief executive and its median average employee, as well as the ratio between the two. Companies will soon have to comply by disclosing the pay gap for fiscal 2017 in their annual 10-K reports and in their 2018 proxy statements.
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On October 11, the SEC proposed amendments to modernize and simplify disclosure requirements in Regulation S-K, which were mandated by the Fixing America’s Surface Transportation (FAST) Act. In large part, the proposed amendments follow the recommendations of a November 2016 report from the SEC staff.  As one SEC commissioner put it, the incremental adjustments to Regulation S-K are meant to “prune” the SEC’s existing disclosure regime rather than as “an exercise in slash-and-burn clearcutting.”

Below are six highlights from the SEC’s proposed amendments to Regulation S-K:

  1. Rules for Management’s Discussion and Analysis (MD&A) would be amended to clarify 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 additional period-to-period comparison. The proposed amendments would require hyperlinks to information that is incorporated by reference if that information is available on EDGAR. Instruction 1 to Item 303(a).

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For most companies, the end of June means the end of the second fiscal quarter, which means right now you are hard at work finalizing the company’s interim financial statements and preparing its Form 10-Q for an August filing deadline. The end of the second quarter also means that it is time to check the company’s filing status for Exchange Act reports for fiscal 2018.

Know Your Filing Status

While the determination of whether a company will qualify as an “accelerated filer” or “large accelerated filer” for 2018 will not take effect until the date your Form 10-K is filed for fiscal 2017 (or, if earlier, your 10-K due date), the determination of your public float is calculated as of the last business day of the most recently completed second fiscal quarter, or June 30 for companies with a calendar fiscal year. Below are reminders for the different types of filers.

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