January 11, 2021

Effective Date For Amended MD&A And Other Financial Disclosure Rules

The amendments to the financial disclosure requirements for Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A,” Regulation S-K Item 303), Supplemental Financial Information (Item 302) and Selected Financial Data (Item 301) that were recently adopted by the U.S. Securities and Exchange Commission were published in the Federal Register on Monday, January 11, 2021. The effective date of the amendments will therefore be Wednesday, February 10, 2021. The amendments were summarized in an earlier Goodwin client alert that includes a link to a copy of Items 301-303 that has been redlined to show the text of the amended rules.

Compliance Date. The amendments do not require companies to comply with the amended rules until the first fiscal year that ends on or after the date that is 210 days after the effective date, which will be August 9, 2021. For calendar year-end companies, this means that the first Form 10-K report that must comply with these amendments will be the Form 10-K annual report filed by companies for calendar year 2021.

Voluntary Early Compliance. The amendments permit a company to comply with Item 303, Item 302 and/or Item 301 on a voluntary basis in Form 10-K reports filed on or after the effective date, provided that the company complies with all of the requirements of the individual disclosure item(s) as amended. This means that a company may voluntarily comply with the amended MD&A disclosure requirements (Item 303) in a Form 10-K filed on or after February 10, 2021, but in that case must comply with all of Item 303, as amended. As another example, a company could voluntarily comply with Item 301, as amended, in such a filing and eliminate the current Selected Financial Data section, but would not be required to comply with the amended versions of Item 302 and/or Item 303. Note that the MD&A amendments change existing disclosure requirements in some relatively nuanced ways, so companies that have not already begun to address the amended MD&A disclosure requirements and their disclosure controls and procedures (and, potentially, their internal control over financial reporting) may find compliance with the amended MD&A requirements in a Form 10-K report to be filed in February or Mach 2021 challenging.