The Securities and Exchange Commission (“SEC”) announced on June 1, 2016 that it has approved an interim final amendment to Form 10-K, implementing Section 72001 of the Fixing America’s Surface Transportation (“FAST”) Act,1 to expressly permit issuers to provide a summary of business and financial information contained in the annual report, provided that each item in the summary includes a crossreference by hyperlink to the material in the report to which the item relates. This amendment will take effect immediately upon publication in the Federal Register. The SEC also requests comments on the amendment within 30 days after publication, including on whether it should be revised to include specific requirements as to the form of the summary and whether other annual reporting forms should be similarly amended.


New Item 16 of Form 10-K

Although the current rules do not prohibit it, very few issuers currently include a summary section in their Form 10-K reports. The adopting release notes that most issuers do include a table of contents with hyperlinks to the items in the report, which arguably serves a similar purpose. Form 10-K is being amended to add a new Item 16, which will expressly allow an issuer, at its option, to include a summary in the Form 10-K, but only if each item in the summary “is presented fairly and accurately” and includes a hyperlink to the related, more detailed disclosure in the Form 10-K. New Item 16 provides issuers with flexibility in preparing the summary and does not prescribe the length of the summary, specify the Form 10-K disclosure items that should be covered by the summary, or dictate where the summary must appear in the Form 10-K. Although Item 16 is permissive, we would expect any issuer choosing to add a summary to conform to Item 16’s conditions.

Incorporation by Reference

Rule 12b-23 under the Securities Exchange Act of 1934 (“Exchange Act”) allows issuers to incorporate information by reference in answer, or partial answer, to any item of an Exchange Act report. Generally, the incorporated information must be filed as an exhibit to the report. The adopting release makes clear that where summarized information appears in such an exhibit to a Form 10-K report, the Item 16 summary must include hyperlinks to that exhibit. The SEC has also included an instruction to new Item 16 stating that a registrant need not update the summary to reflect information required by Part III of Form 10-K that the registrant incorporates by reference from a proxy or information statement filed after the Form 10-K, but must state in the summary that the summary does not include the Part III information.