The SEC’s stated goal was to update and simplify its disclosure requirements without materially changing the total mix of information available to investors. The amendments are part of the ongoing Disclosure Effectiveness Initiative led by the SEC’s Division of Corporation Finance to review and improve the effectiveness of its disclosure requirements for the benefit of companies and investors. The SEC is also adopting the amendments as part of its efforts to implement the Fixing America’s Surface Transportation (FAST) Act.
| The amendments adopted in August 2018 are separate from the rules proposed by the SEC in October 2017 to modernize and simplify certain Regulation S-K requirements as mandated by the FAST Act. The most noteworthy of those rule proposals would (i) streamline MD&A disclosure by eliminating discussion of the earliest of the three years covered in the financial statements in certain situations and (ii) significantly reduce the need to submit confidential treatment requests when public companies omit information from their exhibit filings. See our Sidley Update, available here, for a detailed summary of those rule proposals, which will be the subject of future SEC rulemaking. |
The amendments are substantially similar to those proposed by the SEC in July 2016 and do not impose any new significant disclosure obligations. In addition to the 314-page adopting release, the SEC published a 205-page marked version highlighting the specific changes adopted. The SEC estimates that the amendments will reduce slightly the reporting burden on roughly 7,570 U.S. public companies and 745 foreign private issuers. The amendments will be effective 30 days after the adopting release is published in the Federal Register.
The amendments affect various Regulation S-K items, Regulation S-X rules and other SEC rules and forms. Personnel responsible for SEC reporting should familiarize themselves with the amendments, which will affect the disclosures made in periodic reports and registration statements filed after the amendments take effect. The table below summarizes the most significant amendments relevant to U.S. public companies.
The SEC is also referring certain disclosure requirements that overlap with, but require more information than, GAAP to the Financial Accounting Standards Board (FASB) for consideration to be incorporated into GAAP reporting requirements. The SEC is asking the FASB to consider the referrals within 18 months of the adopting release being published in the Federal Register. The SEC will retain these disclosure requirements while the FASB considers whether to add the referred disclosure items to its agenda of projects for potential standard-setting.
