SEC Chair Jay Clayton has repeatedly made a point of his intent to take the Regulatory Flexibility Act Agenda ”seriously,” streamlining it to show what the SEC actually expected to take up in the subsequent period. (See this PubCo post and this PubCo post.) The agenda has just been released, and it certainly appears that Clayton has been true to his word: several items that had taken up long-term residency on numerous prior agendas seem to be absent from this one.
Among the items on the new agenda:
- Amendments to Financial Disclosures About Acquired Businesses—Corp Fin is considering recommending that the SEC propose amendments to Reg S-X that affect the disclosure of financial information of acquired businesses.
- Amendments to Implement FAST Act Report—Corp Fin is considering rule amendments that would implement recommendations made in the staff’s 2016 Report on Modernization and Simplification of Regulation S-K, a report to Congress required by Section 72003 of the FAST Act. (See this PubCo post.)
The proposed amendments are intended to modernize and simplify a number of disclosure requirements in Reg S-K, and related rules and forms, in a way that reduces the compliance and cost burdens on companies while continuing to provide effective disclosure for investors, including improvements designed to make the disclosures more readable, less repetitive and more easily navigable. Some of the recommendations include a new approach to confidential treatment, permitting the omission of attachments and schedules filed with exhibits and limiting the two-year look back requirement for exhibits to apply only to newly reporting companies.
- Disclosure of Payments by Resource Extraction Issuers—The SEC has until February 14 to issue new rules implementing this provision of Dodd-Frank; prior rules were disapproved by Congress under the Congressional Review Act. (See this PubCo post.)
As you may recall, the resource extraction rules have had a long and troubled history. Originally adopted in 2012 at the same time as the conflict minerals rules, the resource extraction rules faced an immediate challenge in litigation brought by the American Petroleum Institute and the Chamber of Commerce. The U.S. District Court, in a fairly scathing opinion, vacated the SEC’s rule. The SEC then adopt new final rules in June 2016, with which resource extraction issuers would have been required to comply for fiscal years ending on or after September 30, 2018. However, on February 14, the President signed his first piece of legislation, the bill tossing out the resource extraction payment disclosure rules.
- Amendments to the Financial Disclosures for Registered Debt Security Offerings—Corp Fin is considering recommending that a proposal to amend Rules 3-10 (guaranteed) and 3-16 (collateralized with affiliate securities) of Reg S-X.
- Auditor Independence With Respect to Loans or Debtor-Creditor Relationships—OCA is considering recommending an amendment to Rule 2-01(c)(1)(ii)(A) of Reg S-X regarding the independence of an accountant when the accountant has a lending relationship with an entity that holds equity securities of the accountant’s audit client.
- Amendments to the SEC’s Whistleblower Program Rules—The staff is considering recommending that the SEC propose certain amendments to the existing whistleblower rules to clarify various issues that have arisen based on the SEC’s experiences to date in implementing the whistleblower award program that was established in July 2010.
- Amendments to Interactive Data (XBRL) Program—The SEC has proposed amendments to the XBRL rules requiring the use of Inline XBRL. (See this PubCo post.)
- Disclosure Update and Simplification—The SEC has proposed rules to update certain disclosure requirements in Regs S-X and S-K that may have become redundant, duplicative, overlapping, outdated or superseded in light of other SEC disclosure requirements. (See this PubCo post.)
- Amendments to Smaller Reporting Company Definition—The SEC has proposed revisions to the definition of “smaller reporting company” and related provisions that would raise the financial cap from “less than $75 million” in public float to “less than $250 million,” allowing more companies to take advantage of the scaled disclosures permitted for companies that meet the definition. (See this PubCo post.)
So what’s not on the agenda? Well, some of the remaining Dodd-Frank rulemakings for one, namely:
- Amendments to listing standards requiring policies for recovery of erroneously awarded compensation, i.e., implementing the Dodd-Frank clawback provisions.(See this PubCo post.)
- Amendments implementing the Dodd-Frank pay-for-performance provisions, which require issuers to disclose information that shows the relationship between executive compensation actually paid and the issuer’s financial performance. (See this PubCo post.)
- Amendments to the proxy rules requiring disclosure of whether employees or directors may engage in hedging transactions. (See this PubCo post.)
Also missing, amendments to the proxy rules to require additional disclosure about the diversity of board members and nominees (see this PubCo post and this PubCo post) and amendments to Item 407 of Reg S-K arising out of the concept release regarding audit committee disclosure requirements (see this PubCo post).