April 5, 2020

April 05, 2020

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April 03, 2020

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SEC Division of Corporation Finance Issues C&DIs on Omission of Third Year From MD&A

As previously discussed in the April 12, 2019 edition of Corporate & Financial Weekly Digest, the Securities and Exchange Commission adopted final rules on March 20, 2019, that allow registrants to omit a discussion and analysis of the earliest of the three years of required financial statements from the Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section of their annual reports. Omitting that section from the annual reports filing with the SEC is permissible so long as the discussion of such year is already included in an earlier SEC filing and the registrant includes a statement identifying the location of such discussion in the prior filing. On January 24, the staff of the SEC’s Division of Corporation Finance (the Staff) issued three Compliance and Disclosure Interpretations (C&DIs) to address questions related to the final rule.

C&DI 110.02. The Staff clarified that a statement in a registrant’s filing identifying the location of where the omitted information can be found in a prior filing, in reliance on the rule amendment, does not have the effect of incorporating such prior disclosure by reference, unless the registrant’s current filing expressly provides that the information is incorporated by reference.

C&DI 110.04. The Staff further clarifies, that, when a company updates an effective registration statement by filing a Form 10-K in which the discussion of the earliest of the three years is omitted and there is a statement identifying the location of the discussion in a prior filing, the prior discussion would not be incorporated into the updated registration statement, unless the registrant’s current Form 10-K filing expressly provides that the information with respect to such omitted year is specifically incorporated by reference.

C&DI 110.03. This provides that a registrant may not omit a discussion of the earliest of the three years of financial statements in a filing, in reliance on the rule amendment, if the registrant believes that such discussion would otherwise be required in order to understand the registrant’s financial condition, changes in financial condition and results of operations. In such case, the registrant must either expressly incorporate the discussion by reference from a previous filing or include the discussion in the current filing.

The new C&DIs are available here.

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About this Author

Mark D. Wood, corporate securities lawyer Katten Muchin Chicago Law firm
Partner

Mark D. Wood is head of Katten's Securities practice and concentrates in corporate and securities law. Mark represents public companies, issuers and investment banks in initial public offerings (IPOs) and other public offerings, private investment in public equity (PIPE) transactions, debt securities and other securities matters.

Mark also represents clients in complex corporate transactions, including tender offers, mergers, acquisitions, dispositions, going-private transactions, private equity investments, joint ventures and...

312-902-5493
Mark Reyes Securities Lawyer Katten Muchin law firm Chicago office
Partner

Mark J. Reyes concentrates his practice in corporate and securities matters, including representing issuers and investors in public offerings and private placements of equity and debt securities and advising clients in complex corporate transactions such as mergers, acquisitions, private investments in public equity (PIPEs), private equity investments and joint ventures. He also counsels public companies on securities law compliance, disclosures and corporate governance matters.

Shown below is a selection of Mark’s engagements.

  • Representation of hospitality company in connection with its initial public offering and listing on NYSE, as well as ongoing counseling with respect to compliance with securities laws and NYSE rules, disclosure and corporate governance matters.
  • Representation of NASDAQ-listed public company in the banking industry in connection with strategic transactions, capital raising transactions, compliance with securities laws and NYSE rules, disclosure and corporate governance matters, including strategic acquisitions, notes offering and at-the-market offering.
  • Representation of clean tech manufacturer for industrial equipment in connection with alternative public offering and listing on NASDAQ, as well as ongoing counseling with respect to compliance with securities laws and NASDAQ rules, disclosure and corporate governance matters.
  • Representation of NASDAQ-listed issuer in connection with selling stockholder block trades.
  • Representation of NYSE-listed industrial manufacturer with respect to compliance with securities laws and NYSE rules, disclosure and corporate governance matters.
  • Representation of NASDAQ-listed medical device company with respect to compliance with securities laws and NASDAQ rules, disclosure and corporate governance matters.
312-902-5612
Associate

Alyse Sagalchik concentrates her practice on corporate matters, with an emphasis on mergers and acquisitions, joint ventures, private equity and securities transactions. Alyse also advises companies on a broad range of general corporate, federal securities laws and corporate governance matters, including Securities Exchange Act of 1934 reporting and disclosure matters. She has represented strategic and financial buyers and sellers in M&A transactions ranging in value from $10 million to more than $15 billion and spanning a wide variety of industries, including health...

312.902.5426
Paige M.R. Greene Associate Chicago corporate
Associate

Paige M. R. Greene concentrates her practice on corporate matters.

During law school, Paige served as primary editor of the Journal of Law & Policy, was president of the Women's Law Caucus, a board member of the Black Law Students' Association, a Career Development peer adviser and co-chair of the Dean's Student Advisory Council. Paige also completed an in-house externship at the Emerson Electric Company and was a student attorney for the Washington University School of Law Entrepreneurship & Intellectual Property Clinic where she received a high pass distinction...

312-902-5364