On October 11, 2017, the Securities and Exchange Commission (SEC) voted unanimously to propose amendments to modernize and simplify certain disclosure requirements in Regulation S-K applicable to public companies, investment advisers, and investment companies. The vote represents the latest step by the SEC to implement its mandate under the Fixing America's Surface Transportation (FAST) Act, which was signed into law in December 2015. The proposed amendments are intended to "further scale or eliminate requirements... [in order] to reduce the burden on emerging growth companies, accelerated filers, smaller reporting companies, and other smaller issuers, while still providing all material information to investors" and to "eliminate provisions... that are duplicative, overlapping, outdated, or unnecessary."1
Highlights
The proposed amendments would, among other things:
- revise rules or forms to update, streamline, or otherwise improve the SEC's disclosure framework by eliminating the risk factor examples listed in the disclosure requirement and revising the description of property requirement to emphasize the materiality threshold;
- update rules to account for developments since their adoption or last amendment by eliminating certain requirements for undertakings in registration statements;
- simplify disclosure or the disclosure process, including through proposed changes to exhibit filing requirements and the related process for confidential treatment requests and changes to Management's Discussion and Analysis that would allow for flexibility in discussing historical periods; and
- incorporate technology to improve access to information by requiring data tagging for items on the cover page of certain filings and the use of hyperlinks for information that is incorporated by reference and available on EDGAR.
Although most of the proposed amendments are not likely to have a large effect individually, the changes as a whole should nevertheless prove helpful in reducing disclosure burdens.
The SEC's proposal also includes parallel amendments to several rules and forms applicable to investment companies and investment advisers, including proposed amendments that would require certain investment company filings to submit each exhibit in HTML format and to include a hyperlink to each exhibit listed in the exhibit index.
The SEC is accepting public comments on the proposed amendments within 60 days of their publication in the Federal Register, which can be submitted here. The final amendments are not likely to be adopted until at least mid-2018.
For more information about the SEC's proposed amendments or any related matter, please contact a member of the corporate governance practice at Wilson Sonsini Goodrich & Rosati.
