On March 20, 2019, the Securities and Exchange Commission (SEC) adopted amendments to modernize and simplify certain disclosure requirements for public companies, investment advisers, and investment companies in Regulation S-K, related rules and forms.
These amendments were adopted in connection with the 2015 Fixing America’s Surface Transportation Act (FAST Act), which was based on the SEC’s report to Congress. The FAST Act Report was published in 2016.
The adopted rules are mostly technical, but reflect a broader approach by the SEC to reduce costs and burdens on registrants and improve the readability and navigability of disclosure documents, while continuing to provide material information to investors. The amendments are expected to benefit investors by eliminating outdated and unnecessary disclosures, making it easier for them to access and analyze such material information.
Specifically, the amendments will, among other things, increase flexibility in the discussion of historical periods in the Management’s Discussion and Analysis (MD&A) section of a registrant’s periodic filings under the Securities Exchange Act of 1934 and registration statements under the Securities Act of 1933. The amendments will allow a company to omit discussion of the oldest year in a three-year period if that information was previously reported and is no longer considered material. The MD&A section is among the most labor-intensive responsibilities a registrant has when drafting periodic filings and registration statements, and the changes are intended to ease that process.
Here are a few of the most critical amendments:
- Companies will be allowed to omit confidential information from most exhibits to periodic filings and registration statements without filing a confidential treatment request (CTR). This will represent a significant change for many companies that have filed CTRs in the past to protect competitively sensitive information in material contracts and other exhibits filed with the SEC.
- Companies’ rights to seek confidential protection of personally identifiable information will be expanded.
- Companies will be encouraged to incorporate technology to improve access to information on the cover page of certain filings and to expand the use of hyperlinks.
- Certain other revisions to the risk factor and property disclosure requirements in Regulation S-K.
The amendments will be effective 30 days after they are published in the Federal Register, except that the amendments relating to CTRs will become effective upon publication in the Federal Register.
The information in the following table highlights some of the more significant aspects of the amendments described above. It does not reflect all of the amendments or all of the rules and forms that are affected.