SEC Proposes Optional Semiannual Reporting Regime: What Companies Should Consider Now

In a move Chairman Paul Atkins characterized as “just the first step of the larger, comprehensive effort to review and reshape the current SEC rules governing public companies with respect to their ongoing reporting obligations and their ability to raise capital in the public markets,” the U.S. SEC has proposed to give all Exchange Act reporting companies that currently file quarterly reports on Form 10-Q the option to file instead semiannual reports on new Form 10-S. The proposal is framed as a way to give issuers flexibility to select the interim reporting cadence that best fits their circumstances, including business stage and investor expectations. For most established public companies, however, the practical change is likely to be smaller than the headlines suggest — and the strategic and governance questions the proposal raises are larger.

What the Proposal Provides. Key elements of the proposing release include the following:

• The proposal would permit, not require, semiannual reporting. Electing issuers would file one semiannual report on new Form 10-S for the first six months of the fiscal year rather than a Form 10-Q for each of the first three fiscal quarters. Form 10-S would be due 40 or 45 days after the end of the first semiannual period, depending on filer status. The Form 10-K and Form 8-K reporting regimes generally would not be affected other than to reflect conforming changes, and nonelecting issuers would continue to file quarterly Forms 10-Q.
• Form 10-S would require the same narrative disclosures and financial information as Form 10-Q, adjusted to cover the first six months of the fiscal year rather than a fiscal quarter. The semiannual financial statements would be prepared in accordance with U.S. generally accepted accounting principles (GAAP) (or International Financial Reporting Standards or home-country GAAP, to the extent that foreign private issuers (FPIs) are using Form 10-S), reviewed by the company’s auditor but not audited, and tagged using Inline XBRL, and the existing disclosure-control, internal-control, and certification requirements would apply.
• Companies would make the election through a checkbox on the cover page of Form 10-K or Securities Act registration statements on Forms S-1, S-3, S-4, and S-11 and Exchange Act registration statements on Form 10. The reporting cadence would be determined annually and could not be changed midyear except to correct an inadvertent election error by amendment within the specified period.
• The option would be available to all Exchange Act reporting companies that currently file Form 10-Q, not only smaller or newer issuers.
• The proposal includes corresponding changes to registration statement staleness rules and Item 2.02 of Form 8-K, Results of Operations and Financial Condition, and acknowledgment of the likely need to coordinate with securities exchanges and auditing standard-setters to enact related rule changes.

Practical Limitations on Impact. Even if the proposed rule changes are adopted, established public companies are likely to continue releasing quarterly results. Quarterly releases of financial information drive trading-window openings, support active secondary trading, and underpin shelf takedowns, credit agreements, and other capital-raising activity. The SEC’s analysis recognizes that some issuers may continue quarterly reporting because of investor, contractual, or regulatory expectations or because they view more frequent reporting as supporting liquidity, valuation, or access to capital. The experience of FPIs is also instructive: FPIs are not subject to the domestic Form 10-Q regime, but U.S. exchange rules typically require at least semiannual financial information, and many FPIs provide more frequent updates where home-country rules or market expectations call for them. In practice, the semiannual option may be most relevant for smaller, newer, or development-stage companies for which quarterly reporting imposes relatively higher fixed costs or for which investors are focused on other matters (e.g., clinical or regulatory milestones) rather than financial results.

What to Do Now. In light of the 60-day comment period set forth in the proposing release, any final rules remain at least several months away from adoption but could be in effect by the time most calendar-year companies are filing their fiscal 2026 Form 10-Ks (and are thus determining whether to check the semiannual reporting box). Although any final rules may differ from those proposed, public companies and their boards may begin to consider whether moving from Form 10-Q to Form 10-S is desirable. Factors to consider include the following:

• Timing and content of earnings releases and guidance. If the company moved to Form 10-S, would the company continue to issue quarterly earnings releases and provide quarterly guidance? If so, would the earnings releases be more comprehensive than they are today, and how would the company communicate updates tracking performance against the guidance it provides? How much would the company ultimately save in terms of reporting costs and time devoted to quarterly reporting by moving to Form 10-S if it continued to issue quarterly earnings releases?
• Impact on repurchases, insider trading, and investor communications (Regulation FD). Form 10-Q is the principal vehicle for disclosing material developments — such as updates to material litigation, changes in risk factors, and evolving liquidity concerns — that are not otherwise required to be reported on Form 8-K and are not customarily included in earnings releases. Moving to Form 10-S would leave longer intervals in reporting this information. Until disclosed, such information may constitute material nonpublic information, restricting the company and its insiders from entering into Rule 10b5-1 plans and trading in the company’s securities outside of Rule 10b5-1 plans, potentially lengthening blackout windows and quiet periods. Would the company voluntarily disclose this type of information on Form 8-K or in expanded earnings releases? How and when would the company disclose material developments arising between semiannual reports? Would the company need to implement more rigorous Regulation FD protocols? Is the company willing to introduce greater management discretion with respect to public disclosures? Would the company need to implement new disclosure controls and procedures, and would more audit committee oversight be advisable, at least during the transition?
• Disclosure controls and reporting infrastructure. Notwithstanding a shift to semiannual SEC reporting, would the company maintain substantially similar quarterly disclosure committee, subcertification, and management review processes to support earnings releases, Form 8-K disclosures, Regulation FD compliance, and insider trading controls? If so, would operational and cost savings associated with eliminating Form 10-Q filings be more limited than initially expected? If not, how likely is it that the company would switch back to quarterly reporting in a later year, which may require preparing and obtaining auditor review of prior-year quarterly financial information that was not previously reviewed or separately presented while the company was reporting semiannually?
• Analyst coverage and investor expectations. Would less frequent periodic reporting of regular, standardized financial information result in less analyst coverage? Would investors or credit rating agencies continue to expect the company to provide fulsome quarterly reporting? If the company has a fiscal year ending other than on June 30 or December 31, would investors struggle to compare the company’s results with companies having a fiscal year ending on December 31? Could a move to semiannual reporting increase the risk of shareholder activism (on the theory that the move to semiannual reporting decreases management accountability and transparency)?
• Anticipated peer/industry norms. Would the company expect its peers to move to Form 10-S? Would there be competitive advantages or disadvantages to using Form 10-S rather than Form 10-Q? The proposing release expressly identifies prerevenue biotechnology issuers as likely candidates for the semiannual reporting option, citing the view that such issuers trade on clinical and regulatory milestones rather than quarterly financial results.
• Seasonality and volatility. Does the company’s quarterly performance vary dramatically due to seasonality or other factors? Do investors focus on consecutive quarter-over-quarter results more than results over corresponding prior-year periods? Companies with results that vary dramatically quarter to quarter would likely face longer trading blackout periods and longer quiet periods under a semiannual reporting regime absent voluntary Form 8-K filings or expanded earnings releases.
• Cost of capital. Would less frequent periodic reporting result in a higher cost of capital? If auditors are reviewing semiannual rather than quarterly financial statements, there may be greater risk of inaccuracy and of issues going undetected longer. Would investors be less inclined to invest in companies that do not report quarterly financial results with the structured data tagging requirements applicable to Form 10-Q filings?
• Capital markets readiness. Does the company anticipate accessing the capital markets? Less frequent periodic reporting may complicate shelf takedowns, comfort-letter delivery, incorporation-by-reference timing, and financial statement staleness analysis. The proposal would add Form 10-S to the relevant registration statement and incorporation-by-reference frameworks, but issuers anticipating capital-raising activity may still need to plan “flash” interim disclosures around offerings and confirm that interim financials remain available when needed. In addition, companies will need to confirm that auditors stand ready to provide comfort letters, “circle-ups,” and other customary deliverables around financial information in connection with offerings between semiannual reports. In particular, the proposal acknowledges but does not address the 135-day window under Public Company Accounting Oversight Board Auditing Standard 6101 for negative assurance in comfort letters, instead requesting comment on whether changes to the auditing standard are needed. If the company runs continuous at-the-market (ATM) offerings or is otherwise active in the capital markets between interim reports, should the company obtain voluntary quarterly reviews of interim financial information to preserve comfort-letter capability under the existing standard?
• Debt and other contractual covenants; regulatory reporting. Do the company’s credit agreements, indentures, or similar instruments require delivery of quarterly financial statements and compliance certificates such that moving to semiannual reporting would require amendments or waivers? Is the company subject to any other contractual or regulatory regime requiring quarterly reporting?
• Litigation risk. Would semiannual reporting increase litigation risk? Particularly for companies that do not continue to issue quarterly earnings releases, there could be greater stock price volatility around semiannual reporting, increasing the likelihood of “stock drop” and similar litigation. In addition, any delayed disclosure of adverse material information could expand the class of shareholder plaintiffs who could sue in the event of a significant stock price reaction to a disclosure.
• Cost of quarterly versus semiannual reporting. Would semiannual reporting meaningfully reduce the cost and burden of periodic reporting in light of existing practices and in light of whether it is realistic to stop issuing quarterly earnings releases?

The proposing release also includes numerous questions set forth as part of a request for comment. Please contact us if you would like assistance in submitting a comment letter in response to the proposing release. Sidley is also available to discuss semiannual reporting considerations and implications or comment-letter strategy and will continue to monitor developments and will issue further updates as the SEC’s proposal proceeds through the rulemaking process.