SEC Adopts Rules to Modernize and Simplify Disclosure

The SEC adopted amendments to modernize and simplify disclosure requirements for public companies, investment advisers, and investment companies. The SEC indicated that these “amendments are expected to benefit investors by eliminating outdated and unnecessary disclosure and making it easier for them to access and analyze material information.”

The amendments are based on recommendations in the SEC staff’s FAST Act Report and as well as a broader review of the agency’s disclosure rules. The amendments are intended to improve the readability and navigability of company disclosures, and to discourage repetition and disclosure of immaterial information. Specifically, the SEC indicated that the amendments will, among other things:

  • Increase flexibility in the discussion of historical periods in Management’s Discussion and Analysis;
  • Allow companies to redact confidential information from most exhibits without filing a confidential treatment request; and
  • Incorporate technology to improve access to information on the cover page of certain filings.

Among other things, the amendments make changes to SEC Regulations S-K, M-A, AB, S-T, and various forms. Specific changes include:

  • Registrants will generally be able to exclude discussion of the earliest of three years in MD&A if they have already included the discussion in a prior filing.
  • Registrants will be able to omit confidential information in material contracts and certain other exhibits without submitting a confidential treatment request to the Commission, so long as the information is: (i) not material; and (ii) would likely cause competitive harm to the registrant if publicly disclosed.
  • Only newly reporting registrants will be required to file material contracts that were entered within two years of the applicable registration statement or report.
  • Registrants will not be required to file attachments to their material agreements if such attachments do not contain material information or were not otherwise disclosed.
  • Registrants will need to provide disclosure about a physical property only to the extent that it is material to the registrant.
  • Registrants will be required to disclose on the form cover page the national exchange or principal U.S. market for their securities, the trading symbol, and title of each class of securities.

The amendments relating to the redaction of confidential information in certain exhibits will become effective upon publication in the Federal Register. The rest of the amendments will be effective 30 days after they are published in the Federal Register, except that the requirements to tag data on the cover pages of certain filings are subject to a three-year phase-in, and the requirement that certain investment company filings be made in HTML format and use hyperlinks will be effective for filings on or after April 1, 2020.

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