On March 20, 2019, the SEC adopted amendments (Adopting Release) designed to “modernize and simplify” numerous disclosure requirements of Regulation S-K and SEC rules and forms under the Securities Act of 1933, as amended (Securities Act) and the Securities Exchange Act of 1934, as amended (Exchange Act). The amendments are intended to make information in SEC disclosure documents clearer, discourage unnecessary repetition and immaterial disclosure, and leverage technology to make disclosures more accessible to investors and the public.
Originally proposed in October 2017, the SEC adopted most of the amendments as proposed. The amendments are part of the SEC’s ongoing examination of its disclosure requirements, and are largely consistent with the recommendations made by the SEC staff in its November 2016 FAST Act Report. The amendments follow an earlier round of disclosure simplification amendments adopted in August 2018, which we discussed in an earlier client alert.
The amendments are more substantive than the earlier round of disclosure simplification amendments, and, taken as a whole, both reporting companies and investors are likely to welcome the streamlined disclosure requirements. Some of the more significant amendments are highlighted below. In addition, all of the amendments are summarized under the heading “Analysis of Amendments” in Appendix 1 that follows this alert. Appendix 2, "Changes in SEC Forms 10-K, 10-Q and 8-K," presents a concise table showing how the amendments will change the form and contents of these reports. Note that this alert discusses only amendments that apply to domestic and foreign operating companies.
Cover Page of Forms 10-K, 10-Q and 8-K
- Companies will be required to tag all cover page data in Inline eXtensible Business Reporting Language, or XBRL.
- Companies will be required to disclose on the cover page the national exchange or principal U.S. market, trading symbol, and title of each class of securities registered under Section 12 of the Exchange Act.
- The checkbox relating to missed or late Section 16 reports has been eliminated.
Financial and Business Disclosure – MD&A and Properties
- Companies will generally be able to exclude discussion of the earliest of three years in MD&A if they have already included the discussion in a prior filing.
- Companies will be required to provide disclosure about a physical property only to the extent that the property is material to the company.
Material Contracts and Other Exhibits; Confidential Treatment Requests
- Companies will be required to file a new exhibit to Form 10-K reports that briefly describes each class of securities that is registered under Section 12 of the Exchange Act; to the extent that a company has previously filed an exhibit to a Form 10-K containing this disclosure, the company can incorporate that exhibit by reference.
- Companies will not be required to file attachments to their material agreements if the attachments do not contain material information or were not otherwise disclosed.
- Only newly reporting companies will be required to file material contracts that were entered into within two years of the applicable registration statement or report.
- Companies will no longer be required to file as an exhibit any document or part of a document that is incorporated by reference in a filing, but instead will be required to provide hyperlinks to documents incorporated by reference.
- Companies will be able to omit confidential information in material contracts and certain other exhibits without submitting a confidential treatment request to the Commission, so long as the information is (i) not material and (ii) would likely cause competitive harm to the company if publicly disclosed.
Registration Statements and Prospectuses
- Prospectus cover page disclosure requirements were amended in technical respects relating to the inclusion of trading symbol and market information, preliminary prospectus legends, and offering price disclosure.
- Companies will no longer be required to include several of the previously required undertakings in registration statements.
- Companies will be required to include hyperlinks to all information incorporated by reference in a registration statement or prospectus if the information is publicly available on the EDGAR system, including, for example, in previously-filed reports on Form 10-K, Form 10-Q, and Form 8-K, as well as proxy statements, that are incorporated by reference.
Compliance Dates and Transition Provisions
Except as described below, the amendments are effective on May 2, 2019.
Amendments Permitting Redaction of Confidential Information in Exhibits Effective on Publication. The amendments that permit companies to redact confidential information in certain exhibits became effective on April 2, the date of publication in the Federal Register.
Transitional Relief for Confidential Treatment Requests. Companies that have a confidential treatment request (CTR) pending on April 2, 2019, may withdraw the pending CTR, but are not required to do so. In the Adopting Release, the SEC advises any company that withdraws a CTR application that is pending on the effective date to refile the exhibit or exhibits, in redacted form, in an amended filing with the SEC that conforms to the amended rules.
Tagging of Cover Page Data. Compliance with the requirements to tag data on the cover pages of Form 10-K, Form 10-Q, Form 8-K, Form 20-F, and Form 40-F in Inline XBRL will be phased in over a three-year period as follows:
|Large accelerated filers that prepare their financial statements in accordance with U.S. GAAP
||Reports for fiscal periods ending on or after June 15, 2019|
|Accelerated filers that prepare their financial statements in accordance with U.S. GAAP
||Reports for fiscal periods ending on or after June 15, 2020
|All other filers
||Reports for fiscal periods ending on or after June 15, 2021
For domestic companies, the tagging requirement initially applies to the first Form 10-Q report for a fiscal period ending on or after the applicable compliance date, rather than the first filing for a fiscal period ending on or after that date. The Adopting Release provides two examples. A company in the first phase-in group with a December 31 fiscal year end must comply with the cover page XBRL tagging requirement with its Form 10-Q for the period ending June 30, 2019. A company in the first phase-in group with a June 30 fiscal year end must comply with the cover page XBRL tagging requirement with its Form 10-Q for the period ending September 30, 2019.
Cover Pages of Exchange Act Reports and Securities Act Registration Statements and Prospectuses
Cover Page XBRL Data Tagging and Trading Symbol – Form 10-K, Form 10-Q and Form 8-K
Current Requirement. SEC rules require an operating company to file its financial statements as an exhibit in a machine-readable format using XBRL. SEC rules also require a company to tag specific data points on the cover page of filings in Inline XBRL. As an example, the cover page of Form 10-K contains approximately 25 data points. Current XBRL tagging requirements apply only to approximately half of those data points, including information such as form type, company name, company size, and public float. Other information, such as the exchange on which securities are registered and the state or other jurisdiction of incorporation, was not tagged.
Amendment. The amendments require all of the information on the cover pages of Form 10-K, Form 10-Q, and Form 8-K to be tagged in Inline XBRL.
The amendments also add a new requirement to include the trading symbol for each class of the company’s registered securities on the cover page of these reports. Because Form 10-Q and Form 8-K did not require disclosure of the title of each class of securities and each exchange on which the securities are registered, the amendments revise the cover pages of Form 10-Q and Form 8-K to include that disclosure in addition to the trading symbol.
To implement these changes, the SEC amended the relevant forms. The amendments include a new exhibit under Item 601(b)(104) of Regulation S-K for the cover page interactive data exhibit, and add new Rule 406 to Regulation S-T, which governs electronic filings. Similar changes have been made to Form 20-F and Form 40-F for foreign private issuers.
Company Name – Item 501(b)(1)
Current Requirement. Item 501(b)(1) included an instruction stating that if a company’s name was the same as that of a well-known company or could lead to a misleading inference about the company’s line of business, the company must include information to eliminate possible confusion, and might be required to change its name, subject to a limited exception.
Amendment. The amendment to Item 501(b)(1) eliminates the portion of the instructions that discussed when a name change may be required and the exception to that requirement. The Adopting Release states that the amendment does not signal a change in SEC policy with respect to potentially misleading company names, which will be addressed on a case-by-case basis in SEC staff comments and exercise of the SEC’s discretion when declaring registration statements effective.
Offering Price of Securities – Item 501(b)(3)
Current Requirement. Item 501(b)(3) requires disclosure of the price of the securities being offered, the underwriter’s discounts and commissions, and the net proceeds to be received by the company and any selling stockholders. Instruction 2 to Item 501(b)(3) permits companies to explain the method by which the price will be determined.
Amendment. As amended, the instructions to Item 501(b)(3) will explicitly permit companies to include a clear statement on the cover page that the offering price will be determined by a particular method or formula that is more fully explained in the body of the prospectus, rather than on the cover page, if applicable. The company must include a cross-reference to the location (including the page number) of this disclosure, highlighted by "prominent type" or in another manner.
Market for the Securities – Item 501(b)(4)
Current Requirement. Item 501(b)(4) requires a company to disclose the name of any national securities exchanges that list the securities being offered, and the trading symbol for the securities. Item 501(b)(4) did not require companies to identify any securities market that is not a registered national securities exchange.
Amendment. As amended, Item 501(b)(4) expands the requirement to disclose the national securities exchange(s) on which the securities are listed to include the principal U.S. market(s) on which the company has actively sought and achieved quotation through engagement of a registered broker-dealer, if the securities are not listed on a national securities exchange. The amendment also requires disclosure of the corresponding trading symbol(s) on the outside cover page of the prospectus.
“Subject to Completion” Legend – Items 501(b)(10) and 501(b)(11)
Current Requirement. Item 501(b)(10) requires the “subject to completion” legend to include references to state law. Item 501(b)(11) requires references to Rule 430A, where applicable.
Amendment. As amended, a company may exclude the portion of the legend that refers to state law if appropriate (for example, if the National Securities Markets Improvement Act, also known as NSMIA, preempts state blue sky laws). The amendments consolidate the requirements of Item 501(b)(11), which relates to Rule 430A, into Item 501(b)(10) without substantive changes.
Regulation S-K Disclosure Items
Description of Property – Item 102
Current Requirement. Item 102 requires a company to disclose “the character of [its] principal plants, mines and other materially important physical properties.” The mixture of disclosure standards in Item 102 and its instructions has led to disclosure that was not consistently material to investors.
Amendment. As amended, Item 102 will require disclosure of physical properties only “to the extent material” to the company, and will refer to a consistent materiality threshold. Companies may provide disclosure under Item 102 on a collective basis, if appropriate. The SEC retained the existing instructions that are specific to the real estate, mining, and oil and gas industries without change.
Management’s Discussion and Analysis, Year-to-Year Comparison – Item 303(a), Instruction 1
Current Requirement. Instruction 1 to Item 303(a) requires that MD&A should cover the three-year period covered by the financial statements.
Amendment. As amended, a company may omit the discussion of the earliest year in the three-year period if the company satisfies specified conditions. Instruction 1, as amended, also states that a company may use any presentation that would, in its judgment, enhance a reader’s understanding. The amendments also deleted the reference to five-year selected financial data for trend information in Instruction 1, but other existing requirements continue to require trend disclosure in MD&A.
The conditions for omitting discussion of the earliest year include: (1) the omitted discussion must not be material to an understanding of the company’s financial condition, changes in financial condition, and results of operations and (2) the company must have included the omitted discussion in a prior EDGAR filing. The company must also clearly identify the location in the prior filing where the omitted discussion may be found. The amendments to Item 5 of Form 20-F provide similar relief for foreign private issuers.
The amendments do not affect smaller reporting companies, which can elect to limit financial disclosures to a two-year period. The amendments also do not affect an emerging growth company if the company provides two years of audited financial statements in the Securities Act registration statement for its initial public offering.
Information About Executive Officers – Item 401
Current Requirement. Item 401 contains disclosure requirements about the identity and background (biographical) information of the company’s executive officers and directors. Form 10-K permits the company to incorporate the required information (as well as all of the other information required by Part III of Form 10-K) from the company’s definitive proxy or information statement. Instruction 3 to Item 401(b) permits a company to include required information about executive officers (but not directors) in Part I of the company’s Form 10-K report. If the company elects to include the Item 401 disclosure about its executive officers in the Form 10-K report, Instruction 3 states that the company is not required to repeat that information in its definitive proxy statement or information statement.
Amendment. As amended, Instruction 3 has been moved from Item 401(b) and is now a general instruction for Item 401. This amendment clarifies that information about executive officers required by Item 401 is not required in a company’s proxy statement if it is included in the company’s Form 10-K annual report. The SEC intends this change to clarify that this instruction applies to all executive officer disclosure required by Item 401. If the company includes this disclosure in its Form 10-K, the amended instruction requires the company to provide this disclosure in a separate section in Part I of the Form 10-K annual report and changes the caption for this information to “Information about our Executive Officers” from the prior caption, “Executive Officers of the Registrant.”
Companies should note that this amendment applies only to disclosure about executive officers, and is limited to Item 401 disclosure. It does not apply to other disclosures, such as disclosures about directors, or other Part III disclosure about executive officers.
Section 16(a) Compliance – Item 405
Current Requirement. Item 405 requires a company to disclose each director, executive officer, or other “reporting person” who failed to file beneficial ownership reports under Section 16(a) of the Exchange Act on a timely basis during the most recent fiscal year. The required disclosure is required to appear under the caption “Section 16(a) Beneficial Ownership Reporting Compliance.” Item 405(a) instructed the company to provide this disclosure based solely on (1) review of copies of these reports that Rule 16a-3(e) requires each reporting person to furnish to the company and (2) any written representations provided to the company by the reporting person. If the company was not disclosing any delinquent filers in its Form 10-K report and did not expect to disclose any delinquent filers in its definitive proxy statement, the company checked a box on the cover page of Form 10-K to so indicate.
Amendment. The amendments make the following changes:
- Rule 16a-3(e) no longer requires reporting persons to furnish Section 16 reports to companies because they are available on the SEC’s EDGAR system;
- Rule 405 changes the required caption for disclosure of delinquent filers to “Delinquent Section 16(a) Reports” and encourages companies to exclude this heading completely if there are no Section 16(a) delinquencies to disclose;
- Rule 405 now clarifies that companies may (but are not required to) rely only on Section 16(a) reports filed on EDGAR, instead of copies of reports provided by reporting persons, and continues to permit companies to rely on written representations by reporting persons; and
- The checkbox on the cover page of Form 10-K has been eliminated.
Audit Committee Discussions With Independent Auditor – Item 407(d)(3)(i)(B)
Current Requirement. Item 407(d)(3)(i)(B) requires a company’s audit committee to state whether it has discussed with the company’s independent auditor the matters required by AU Section 380, Communications with Audit Committees. This disclosure is required in the company’s proxy or information statement relating to an annual or special meeting of security holders at which directors would be elected. The reference to AU Section 380 has been outdated for several years.
Amendment. As amended, Item 407(d)(3)(i)(B) replaces the reference to AU Section 380 with “the applicable requirements of the Public Company Accounting Oversight Board and the Commission.”
Compensation Committee Report – Item 407(e)(5) and Item 407(g)
Current Requirement. Item 407(e)(5) requires a company’s compensation committee to state whether it has reviewed and discussed the Compensation Discussion and Analysis (CD&A) required by Item 402(b), and whether the compensation committee recommended to the company’s board of directors that the CD&A be included in the company’s annual report, proxy statement or information statement.
Amendment. As amended, Item 407(e)(5) explicitly excludes EGCs from this requirement because EGCs are not required to include CD&A in their public disclosures. The SEC effected this amendment by adding a reference to EGCs in Item 407(g), which previously excluded only smaller reporting companies from Item 407(e)(5), among other provisions of Item 407.
Risk Factors – Item 503(c) Relocated to New Item 105
Current Requirement. Item 503(c) requires disclosure of the most significant factors that made an offering risky or speculative, and included examples of risk factors originally articulated in 1964. Since 2005, risk factor disclosure has been extended from Securities Act registration statements covered by the disclosure requirements of Subpart 500 to Exchange Act periodic reports and Form 10 registration statements.
Amendment. As amended, the risk factor disclosure requirement has been relocated from Item 503(c) to new Item 105 because Subpart 100 covers business information generally in both Securities Act and Exchange Act filings. Item 105 will no longer include the examples of risk factors that were included in Item 503(c), consistent with the SEC’s principles-based risk factor disclosure requirements.
Plan of Distribution – Item 508
Current Requirement. Item 508 requires disclosure about the plan of distribution of securities in offerings, including information about underwriters. Item 508(h) requires disclosure about discounts and commissions to be allowed or paid to dealers, including any additional discounts or commissions for acting as a “sub-underwriter.” SEC rules did not define “sub-underwriter.”
Amendment. As amended, Rule 405 defines the term “sub-underwriter” as a dealer that participates as an underwriter in an offering by agreeing to purchase securities from a principal underwriter – that is, an underwriter with a direct contractual relationship to the company issuing the securities – but does not itself have a contractual relationship to the issuer.
Undertakings – Item 512
Current Requirement. Item 512 provides various undertakings that a company must include in Part II of a registration statement. The requirements vary depending on the registration form and type of offering.
Amendment. The amendments eliminate the following undertakings:
- Item 512(c) required an undertaking to supplement the prospectus for a warrant or rights offerings to existing security holders where any securities not purchased would be reoffered to the public to disclose the results of the subscription offer and the terms of any subsequent reoffer to the public.
- Item 512(d) required a company offering securities at competitive bidding to include an undertaking to use best efforts to distribute a prospectus to prospective bidders, underwriters, and dealers and to file a post-effective amendment reflecting the results of any bidding.
- Item 512(e) required an undertaking to deliver the company’s latest annual report to security holders with a prospectus that directly incorporates by reference the annual report.
- Item 512(f) required an undertaking by a company that prior to the offering had no obligation to file reports with the SEC under Section 13(a) or 15(d) of the Exchange Act to provide securities certificates required by the underwriter at the closing of the offering to permit prompt delivery of the certificates to purchasers.
Exhibits, Incorporation by Reference, and Confidential Treatment Requests
Omitting Schedules and Attachments to Exhibits – Item 601(a)(5)
Current Requirement. With the exception of Item 601(b)(2), which applies to material plans of acquisition, reorganization, liquidation, and similar documents, Item 601 requires a company to file a complete copy of every required exhibit, including schedules, appendices and other attachments, regardless of materiality.
Amendment. As amended, Item 601(a)(5) provides that a company may omit entire schedules and similar attachments to exhibits if the omitted portions (1) do not contain material information and (2) are not otherwise disclosed in the exhibit or the disclosure document.
The filed exhibit must contain a list that briefly identifies the contents of any omitted schedules and attachments, but the SEC clarified that Item 601(a)(5) does not require a company to prepare a separate list if that information is already included within the exhibit in a manner that conveys the subject matter of the omitted schedules and attachments. The amendment to Item 601(a)(5) will therefore expand the existing accommodation of Item 601(b)(2) to all exhibits filed under Item 601. The SEC adopted similar amendments to Item 1016 of Regulation M-A.
Unlike Item 601(b)(2), Item 601(a)(5) does not require a company to include an explicit agreement to furnish a supplemental copy of any omitted schedule upon request of the SEC staff, although other SEC rules require companies to comply with such a request.
Omitting Personally Identifiable Information – Item 601(a)(6)
Current Requirement. As a matter of practice, the SEC staff has not objected when a company omits personally identifiable information such as bank account numbers, social security numbers, home addresses, and similar information from an exhibit without submitting a confidential treatment request.
Amendment. The SEC has adopted new Item 601(b)(6) to codify existing SEC staff practice. The SEC adopted similar amendments to Item 1016 of Regulations M-A.
Description of the Company’s Securities – Item 601(b)(4)
Current Requirement. Item 202 requires a company to describe briefly its registered equity and debt securities, warrants, rights, American depositary receipts, and other securities. This disclosure has been required in Securities Act registration statements but not in Form 10-K or Form 10-Q periodic reports.
Item 601(b)(3) requires a company to file a complete copy of its charter and bylaws, as amended, as an exhibit to Form 10-K and Form 10-Q. Item 601(b)(4) requires a company to file any instrument that defines the rights of equity or debt security holders.
Amendment. As amended, Item 601(b)(4) requires a company to provide the disclosure required by Item 202(a)-(d) and (f) for each class of securities that is registered under Section 12 of the Exchange Act as of the end of the period covered by the report as an exhibit to the company’s annual report on Form 10-K. To the extent that a company has previously filed an exhibit to a Form 10-K containing the Item 202 disclosure describing these securities, the company can incorporate that exhibit by reference and hyperlink to the previously filed exhibit in future Form 10-K filings, as long as the company’s prior disclosure remains unchanged. Modifications and amendments during a fiscal year would be reflected in the Item 601(b)(4) exhibit filed with the company’s Form 10-K annual report for that year. This exhibit is not required for Form 10-Q reports.
Two-Year Lookback for Material Contracts – Item 601(b)(10)(i) and Instruction 1
Current Requirement. Item 601(b)(10)(i) requires every company to file every material contract not made in the ordinary course of business if the material contract met either of two conditions:
- the contract is to be performed in whole or in part at or after the filing of the registration statement or report; or
- the contract was entered into not more than two years before the filing date, even if fully performed before the filing date.
Amendment. As amended, Item 601(b)(10)(i) and Instruction 1 will apply the two-year lookback requirement only to “newly reporting registrants.” All companies will remain subject to the requirement to file material contracts to be performed in whole or in part at or after the filing date of the registration statement or report. Existing Instructions 1 and 2 have been renumbered as Instructions 2 and 3.
The amendments define “newly reporting registrant” as:
- A company that is not subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act at the time of filing;
- A company that has not filed an annual report since the revival of a previously suspended reporting obligation; and
- Any company that was a shell company and has not filed a registration statement or Form 8-K Item 2.01 and 5.06 current report (or, in the case of an FPI, a Form 20-F), subject to certain exceptions.
The amendments revise Form 20-F to conform the exhibit requirements of that form to the amendments that apply to domestic companies.
Incorporation by Reference
Elimination of Five-Year Limitation – Item 10(d)
Current Requirement. Item 10(d) generally prevents a company from incorporating a document by reference if the document had been on file with the SEC for more than five years and did not fall within one of the exceptions provided.
Amendment. The amendments eliminate the five-year limitation on incorporation of exhibits by reference in Item 10(d).
Exhibit and Other Filing Requirements – Securities Act Rule 411, Exchange Act Rule 12b-23 and Rule 12b-32
Current Requirement. These rules generally govern incorporation by reference for Securities Act registration statements, Exchange Act registration statements and reports, and exhibits filed with registration statements and reports.
Amendment. The amendments make SEC rules for incorporation by reference more consistent and reflect the public availability of most SEC filings on EDGAR. The amendments change the following requirements under SEC rules:
- Rule 411(b)(4) – companies are no longer required to file information to be incorporated by reference if the incorporated information did not comply with the five-year limit of Item 10(d);
- Rule 12b-23(a)(3) – companies are no longer required to file copies of any information to be incorporated by reference as an exhibit;
- Rule 12b-32 – companies are no longer required to comply with prior limitations on incorporation by reference for exhibits filed with registration statements or reports;
- Rule 610(b)(13) – companies are no longer required to file a Form 10-Q as an exhibit when it is specifically incorporated by reference into a prospectus;
- Item 601(b)(99)(ii) – the amendments eliminate the requirement to file any document (except for an exhibit) or part of a document that was incorporated by reference in the filing and is not otherwise required to be filed or was not an SEC-filed document incorporated by reference in a Securities Act registration statement; and
- Prohibit cross-references to disclosure in other parts of a filing, and incorporation by reference of information from other filings, in financial statements unless specifically permitted or required by other SEC rules, by GAAP, or by IFRS; for examples of permitted or required incorporation by reference, see footnote 79 in the Adopting Release.
Hyperlinks to Information Incorporated by Reference – Securities Act Rule 411 and Exchange Act Rule 12b-23
As discussed in an earlier Goodwin alert, in 2017 the SEC adopted rules requiring hyperlinks to most exhibits filed pursuant to Item 601 and Form 20-F.
Amendment. The amendments expand the requirement that companies include hyperlinks to information on EDGAR if it has been incorporated by reference into a registration statement or prospectus by amending Rule 411 and Rule 12b-23. The SEC indicated in the Adopting Release that the amendments are “solely meant to introduce a navigation feature and do not impose additional or modified requirements regarding what information may be incorporated by reference.” Filings that are subject to the amended hyperlinking requirements in Rules 411 and 12b-23 must be filed in HTML format.
The amendments do not require a company to file an amendment to a document solely to correct an inaccurate hyperlink unless that hyperlink was included in a pre-effective registration statement, similar to the existing requirements for exhibit hyperlinking. An inaccurate hyperlink alone will neither render the filing materially deficient nor affect a company’s eligibility to use Form S-3 or Form F-3. In addition, a company is not required to refile information that is incorporated by reference from a document that was previously filed with the SEC in paper form.
Unlike the requirements for exhibit hyperlinking, however, the amended rules do not require a company to correct inaccurate hyperlinks to information incorporated by reference in an effective registration statement by including a corrected hyperlink in a subsequent periodic report or a post-effective amendment. The SEC believes that the requirement in amended Rule 411 and Rule 12b-23 to describe the location of the information incorporated by reference will mitigate the impact of any inaccurate hyperlinks.
Confidential Treatment Requests for Exhibits
Material Contract Exhibits – Confidential Information Redaction (Item 601(b)(10) and 601 (b)(2); Form 8-K)
Current Requirement. Item 601(b)(10) requires companies to file certain material contracts as an exhibit to various SEC reports and registration statements. Under certain circumstances, companies may request treatment of sensitive information; if the SEC granted the request, companies were permitted to redact specific information from the material contract exhibit publicly filed on EDGAR.
Amendment. Effective April 2, 2019, as amended, companies may omit confidential information from material contracts exhibits filed under Item 601(b)(10) and certain other exhibits without submitting a confidential treatment request to the SEC if the information satisfies specified conditions. Conditions include: the information (1) must not be material and (2) must be likely to cause competitive harm to the company if publicly disclosed. Companies must limit redactions to no more information than necessary to prevent competitive harm to the company.
Companies will continue to be required (1) to indicate omitted information with brackets in the filed version of the exhibit, (2) to mark the exhibit index to indicate that portions of the exhibit have been omitted, and (3) to submit marked copies of exhibits for review by SEC staff and provide supplemental materials to the SEC staff promptly upon request. The SEC staff may request that the company file an amendment that includes some or all of the previously redacted information.
For consistency, the SEC has amended Item 601(b)(2) and certain exhibit requirements in specified SEC forms (including, among others, Item 1.01 of Form 8-K, and Form 20-F for foreign private Issuers) in a similar manner.
Proposed Amendments Not Adopted
The SEC did not adopt two of the proposed amendments.
Captions and Item Numbers in Form 10-K, Form 10, and Form 20-F
The SEC had proposed to allow a company to exclude item numbers and captions in these SEC forms, or alternatively to create captions tailored to the company’s disclosure. The proposed amendments were intended to reduce repetitive disclosure and unnecessary cross-reference when information may be responsive to more than one item in the filing. A majority of the comments on this proposal cautioned that this change could make navigating filings more difficult for investors, making it harder to locate and compare information that was important to an investor. In response to these comments, the SEC decided not to adopt this proposal.
Subsidiaries of the Company and Entity Identifiers
Item 601(b)(21)(i) requires a company to list all of its subsidiaries, the state or other jurisdiction of organization, and the names under which the subsidiaries do business in an exhibit. The SEC proposed to amend this requirement to include the legal entity identifier, if the company has obtained one, for the company and each listed subsidiary. In response to comments expressing concern about the benefits of this requirement and the potential cost and time required to obtain and maintain legal entity identifiers, the SEC decided not to adopt this proposal.
Cover Page of Forms
|SEC Forms||Requires trading symbol for each class of registered securities
Form 10-Q and Form 8-K: also adds title of class and national exchange or principal U.S. market for each class of registered securities
|May 2, 2019|
|Form 10-K||Reg. S-K Item 405||Eliminates check box for late Section 16(a) reports on Form 10-K cover page||May 2, 2019|
|SEC Forms||Requires Inline XBRL tagging of all information on cover page
Adds related exhibit requirement for “Cover Page Interactive Data File”
|Three-year phase in (matches existing Inline XBRL phase-in)|
|10-K||Reg. S-K Item 105 (formerly Item 503) (Risk Factors)||Renumbers former Reg. S-K Item 503 as Reg. S-K Item 105; deletes examples of risk factors||May 2, 2019|
|10-K||Reg. S-K Item 102 (Description of Property)||
Amended to require disclosure only of material properties
No change in instructions relevant to companies in the real estate, mining, and coal and gas industries
|May 2, 2019|
|10-K||Reg. S-K Item 303 (MD&A)||Companies may omit earliest of three-year discussion, subject to conditions
Deletes reference to five-year selected financial data requirement and trend disclosure, but other requirements for disclosure of known trends and uncertainties continue to apply
|May 2, 2019|
|10-K/Proxy Statement||Reg. S-K Item 401 instructions (Director and Executive Officer background information)||Clarifies that Item 401 executive officer disclosure in Form 10-K need not be repeated in proxy statement; changes required section caption to “Delinquent Section 16(a) Reports” and encourages companies to exclude this section if no delinquencies to report||May 2, 2019|
|10-K/Proxy Statement||Reg. S-K Item 405 (Compliance with Section 16(a))||Deletes checkbox on Form 10-K cover page
Revises required heading for late filer disclosure
Eliminates requirement to provide Section 16 reports to company; modifies company reliance provisions
|May 2, 2019|
|10-K/Proxy Statement||Reg. S-K Item 407(d) (Corporate Governance – Audit Committee)||Replaces outdated reference to AU Section 380 with “applicable requirements” of SEC and PCAOB||May 2, 2019|
|10-K/Proxy Statement||Reg. S-K Item 407(g) (Corporate Governance – Smaller Reporting Companies)||Clarifies that emerging growth companies (EGCs) are not required to provide a compensation committee report under specified conditions||May 2, 2019|
Exhibits and Incorporation by Reference
|Reg. S-K Item 10(d)||Eliminates prohibition against incorporating documents by reference if on file with the SEC for more than five years||May 2, 2019|
|Reg. S-K Item 601(b)(2) and Item 601(a)(5)||Companies may omit schedules and similar attachments from exhibits that do not contain material information if not otherwise disclosed in exhibit or SEC filing; requires list of omitted schedules and attachments unless included within exhibit; no written undertaking required for Item 601(b)(10) exhibits
Permits omission of personally identifiable information such as social security numbers, home addresses, bank account numbers and similar information
|May 2, 2019|
|Reg. S-K Item 601(b)(10) and Item 601(a)(5); Regulation M A Item 1016|
|Reg. S-K Item 601(b)(2) and Item 601(a)(6)||Confidential treatment requests – permits companies to redact immaterial information that would likely cause competitive harm to the company in material contracts and certain other exhibits without submitting a CTR to the SEC staff, subject to conditions
Note that Form 8-K Item 1.01 includes additional conditions
|April 2, 2019|
Form 8-K (Item 1.01)
|Reg. S-K Item 601(b)(10) and Item 601(a)(6); Regulation M A Item 1016|
|Reg. S-K Item 601(b)(10)||Eliminates two-year lookback except for “newly reporting registrants” (as defined)||May 2, 2019|
|Form 10-K||Reg. S-K Item 601(b)(4)||Requires description of each class of registered securities as exhibit to Form 10-K (see Reg. S-K Item 202(a)-(d) and (f)); incorporation by reference of prior year exhibits permitted, subject to conditions||May 2, 2019|
|Rule 411; Rule 12b-23; Reg. S-K Item 601(b)(13);||New requirement to include hyperlinks to all information incorporated by reference in a registration statement or prospectus if the information is publicly available on the EDGAR system (e.g., in previously-filed reports on Form 10-K, Form 10-Q, and Form 8-K, as well as proxy statements, that are incorporated by reference); these reports must be filed in HTML format
Other changes include consolidation of incorporation by reference rules; elimination of certain prohibitions and requirements relating to incorporation by reference; prohibition against incorporating or cross-referencing financial statement disclosure from outside financial statements, subject to conditions
|May 2, 2019|