SEC Announces Rule Proposal to Modernize, Simplify and Increase the Accessibility of Required Disclosure
On October 11, the Securities and Exchange Commission issued a press release announcing that it voted to propose amendments to modernize and simplify disclosure requirements in Regulation S-K, and related rules and forms, by updating, streamlining or otherwise improving the SEC’s disclosure framework “in a manner that reduces the costs and burdens on registrants while continuing to provide all material information to investors.” The proposed amendments are based on recommendations made in the staff of the SEC’s Report on Modernization and Simplification of Regulation S-K, as required by the Fixing America’s Surface Transportation Act (FAST Act). In the press release, SEC Chairman Jay Clayton noted that “an effective disclosure regime provides investors with the information necessary to make informed investment choices without imposing unnecessary burdens of time and money on issuers, and today’s action embodies that goal.”
As highlighted in the fact sheet included in the press release, the proposed amendments would, among other things:
- revise SEC rules and forms to update, streamline or otherwise improve the SEC’s disclosure framework to eliminate the risk factor examples listed in the disclosure requirement and revise the description of property requirement to emphasize the materiality threshold;
- eliminate certain requirements for undertakings in registration statements as a result of recent rule developments;
- simplify both disclosure and the disclosure process, including by (a) revising requirements for the filing of exhibits and the related process for requesting confidential treatment and (b) changing Management’s Discussion and Analysis to allow for flexibility in the discussion of historical periods; and
- improve access to information through required 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 the Electronic and Data Gathering, Analysis and Retrieval system.
The SEC posted the proposing release on October 11, and we plan to cover the proposed amendments in greater detail in the next issue of the Corporate & Financial Weekly Digest.
The press release and fact sheet are available here.