May 11, 2021

Volume XI, Number 131


May 10, 2021

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Update: Recent SEC Amendments to Disclosure Rules Regarding Business Description, Legal Proceedings, and Risk Factors Are Effective November 9, 2020

On October 8, 2020, the amendments to modernize disclosure requirements in Regulation S-K Item 101 (business description), Item 103 (legal proceedings), and Item 105 (risk factors), which we previously discussed here, were published in the Federal Register. The amendments go into effect 30 days after publication in the Federal Register and therefore will be effective on November 9, 2020.[1] For registrants with a calendar fiscal year-end, the effective date of the amendments falls on the third quarter Form 10-Q filing deadline for accelerated filers and large accelerated filers, and prior to the November 16, 2020, filing deadline for non-accelerated filers.

While the new rules will be effective for the third quarter 2020 Form 10-Q filings of some calendar fiscal year-end registrants, practically speaking, the only amended rule potentially impacting filers with respect to their Form 10-Qs is Item 103 (legal proceedings). The amendments to Item 103 allow for filers to comply with an increased threshold of $300,000 for disclosure of environmental proceedings involving potential monetary sanctions to which the government is a party. Alternatively, the amendments allow filers to comply with a threshold of the registrant’s choice, within the parameters of amended Item 103.

Amended Item 101 of Regulation S-K will have no impact on upcoming third quarter 2020 Form 10-Qs filed on or after November 9, 2020, because Form 10-Q does not require disclosure under Item 101.

Part II Item 1A of Form 10-Q requires disclosure of “any material changes from risk factors as previously disclosed in the registrant’s Form 10-K.” Disclosures of material changes to risk factors in most cases will not implicate any of the changes to Regulation S-K Item 105 (risk factors). To the extent companies choose to modify a significant number of their previously disclosed risk factors, those changes disclosed in filings on or after the effective date of the new rules should comply with the new rules, which address the organization, presentation, and length of risk factors.

The full text of the final rules, conformed to the Federal Register version, can be found here.

[1] Note that filings made after the EDGAR filing deadline of 5:30 p.m. ET on Friday, November 6, 2020, will have a filing date of Monday, November 9, 2020, and will be subject to the new rules.

© 2021 Jones Walker LLPNational Law Review, Volume X, Number 287



About this Author

Dionne M. Rousseau, Jones Walker, acquisitions transactions lawyer, public private companies attorney

Dionne Rousseau has served as the lead outside corporate and securities counsel for 12 public companies, and as boardroom lawyer for three of those companies. She has more than 25 years of experience handling corporate finance and mergers and acquisitions transactions for public and private companies. Representative transactions handled as lead counsel include two $1-billion at-the-market common stock offerings for a Fortune 500® Company; a $1-billion debt refinancing, including $300 million in senior subordinated notes and a $200-million debt tender offer...

Alexandra Clark Layfield Corporate Attorney Jones Walker Law Firm

Alexandra Layfield joined Jones Walker's Corporate & Securities Practice Group in 2008. Ms. Layfield's practice is exclusively transactional, concentrating principally on the areas of securities law, mergers and acquisitions, general corporate law and corporate governance matters. Alexandra Layfield is a partner in the Corporate Practice Group.

At Jones Walker, she leads the firm’s corporate, securities and executive compensation team. Alex serves as outside corporate and securities counsel for public companies, including acting as boardroom...

Kaitlyn Daniel McGowan Associate Corporate Practice Group

Kaitlyn Daniel McGowan is an associate in the Corporate Practice Group.

While in law school, Kaitlyn externed for Judge John W. deGravelles of the US District Court for the Middle District of Louisiana and served as a research assistant. She also served as a production editor for the LSU Journal of Energy Law and Resources.