On March 20, 2019, the SEC continued modernizing and simplifying their disclosure rules as they adopted a final rule that will:
- Simplify disclosure and disclosure processes,
- Revise rules to update and streamline and improve the SEC’s disclosure framework,
- Update other rules to account for developments since their adoption or amendment.
The changes in the final rule include:
Companies will generally be able to exclude discussion of the earliest of three years in MD&A if they have already included the discussion in a prior filing.
Companies will need to provide disclosure about a physical property only to the extent that it is material to the registrant.
Registrants will be required to tag all cover page data in Inline XBRL on Forms 10-K, 10-Q, 8-K, 20-F and 40-F.
Companies will be able to omit confidential information in material contracts and certain other exhibits without submitting a confidential treatment request, so long as the information is (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed.
Companies will not be required to file attachments to their material agreements if such attachments do not contain material information or were not otherwise disclosed.
Companies will no longer be required to file as an exhibit any document or part thereof that is incorporated by reference in a filing, but instead will be required to provide hyperlinks to documents incorporated by reference.
The descriptions above are, of course, only a summary. There are many details about which forms are affected and other matters in the final rule. We will go into more detail in subsequent posts.
The rule will generally be effective 30 days after publication in the Federal Register.
The provisions of the new rule are also applied for the most part to investments companies.
The foundations for these changes go back to the congressional mandates in the JOBs Act and the FAST Act requiring the SEC to review its disclosure regimen and this next step continues the process of last August’s Disclosure Update and Simplification Final Rule. Whether you call it disclosure update or disclosure modernization, it is clear the Commission will continue this process. And with this kind of regulatory activity shortly after year-end, it will be interesting to see what the rest of the year brings!
As always, your thoughts and comments are welcome!