On April 13, 2016, the Securities and Exchange Commission (“SEC”) published its long-awaited concept release on the reform of Regulation S-K. Regulation S-K is the primary set of rules that establish disclosure requirements for public companies.
For the SEC, a “concept release” is an advance notice of proposed rulemaking under the Administrative Procedure Act. Thus, before taking any further action to amend its rulebook, the SEC will be required to issue a set of proposed rules, elicit further public comment and then adopt final rules in another release.
Given the time it will take to move from this release to proposed and then final rules, there is no chance that any final rules will be completed during the Obama Administration. But there is a high likelihood that the next administration, irrespective of who wins the presidential election in November, will continue making progress on this issue. Whoever the next President appoints as SEC chairman will heavily influence which direction future disclosure rules take.
Retail and consumer product companies that are publicly traded should review the concept release and consider whether to submit comments to the SEC. Comments will be due 90 days after publication of the concept release in the Federal Register.