Issuers Need to be Prepared to Provide More Accurate and Consistent Disclosures of the Material Risks Associated with Climate Change
On January 30, 2020, the Securities and Exchange Commission (“SEC”) proposed a series of new amendments to the Regulation S-K requirements. The proposed amendments seek to modernize, simplify, and enhance certain financial disclosure requirements primarily by reducing duplicative disclosure and focusing issuers’ efforts on material information. The proposal would eliminate Items 301 and 302, which deal with selected financial data and supplementary financial data, respectively. The SEC’s primary focus is on Item 303. This item addresses disclosure requirements in the Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section of issuers’ periodic reports (i.e., Forms 10-K and 10-Q) and registration statements.
While the SEC favors a more flexible principles-based approach to disclosure of business descriptions and risk factors as determined by a company’s management, a lack of bright-line, quantitative rules to specify when disclosure is required may lead to second guessing by regulators, among others.
Fraudsters may use SEC forms and filings to falsely claim SEC registration or that an offering was approved by the SEC. Don’t confuse that with the actual vetting by the SEC staff of disclosure during the review process and acceleration of effectiveness of a registered securities offering.
Letters to prospective investors like those included in the Lyft and Uber IPO prospectuses may be symbolic gestures by founders, chairpersons and CEOs to lead the selling effort, but nonetheless provide an insight into the unique mission, core beliefs and “karma” of today’s newest IPO companies, with the SEC closely monitoring the bounds of this informal disclosure.
New SEC rules adopted in 2018 simplify certain disclosure requirements and amend the definition of smaller reporting company.
First open meeting under Chair Clayton includes unanimous approval of proposed revisions to SEC disclosure rules and forms
This post first appeared in Securities Regulation Daily, a Wolters Kluwer publication, on August 29, 2017.
Item 401 of Regulation S-K requires that companies disclose the business experience of its directors, officers, nominees and significant employees in order for investors and stockholders to evaluate the management of a public company
As recommended by the SEC’s Advisory Committee on Small and Emerging Companies and the Forum on Small Business Capital Formation, the SEC has proposed expanding the pool of registrants that can take advantage of the scaled disclosure accommodations under SEC regulations.
Seeking public comment on how the SEC’s business and financial disclosure requirements in Regulation S-K can best be modernized from both an optimal content and scope and a presentation and delivery perspective.
This post discusses the SEC’s approval of two interim final rules mandated by the capital markets aspects of the Fixing America’s Surface Transportation Act, signed into law on December 4, 2015. These rules address the timing and cost challenges faced by smaller publicly traded companies and are designed to ease disclosure requirements in connection with IPOs of emerging growth companies and certain registration statements filed by smaller reporting companies.