On May 3, 2023, the SEC adopted a Final Rule requiring new disclosures about share repurchases.  The new rule includes quantitative disclosures such as daily repurchases and qualitative disclosures such as the objectives or rationales behind repurchases.  The new rule is intended to “enhance information to assess the purposes and effects” of share repurchases.

Companies that file Forms 10-Q and 10-K will be required to provide these new disclosures beginning with the first filing that covers the first full fiscal quarter that begins on or after October 1, 2023.  Foreign private issuers that file Form 20-F will be required to provide this information via a new Form F-SR beginning with the first full fiscal quarter that begins on or after April 1, 2024.  Form F-SR will be due within 45 days after the end of each fiscal quarter.

The new rule requires companies that file Forms 10-K and 10-Q to:

• • Disclose share repurchases on a daily basis in each Form 10-Q and in Form 10-K for their fourth quarter
  • Include this information in new exhibit 26
  • Provide details using a format for exhibit 26 such as the table below from S-K Item 601, which will also be tagged using iXBRL:

This new exhibit will include language disclosing whether officers or directors subject to Section 16 reporting traded within four business days of certain company announcements about a repurchase plan:

Use the checkbox to indicate if any officer or director reporting pursuant to Section 16(a) of the Exchange Act (15 U.S.C. 78p(a)), or for foreign private issuers as defined by Rule 3b-4(c) (§ 240.3b-4(c) of this chapter), any director or member of senior management who would be identified pursuant to Item 1 of Form 20-F (§ 249.220f of this chapter), purchased or sold shares or other units of the class of the issuer’s equity securities that are registered pursuant to section 12 of the Exchange Act and subject of a publicly announced plan or program within four (4) business days before or after the issuer’s announcement of such repurchase plan or program or the announcement of an increase of an existing share repurchase plan or program. □

The amendments also add this language to S-K Item 703 to require disclosure in Forms 10-Q and 10-K of:

“(1) The objectives or rationales for each repurchase plan or program and the process or criteria used to determine the amount of repurchases;

(2) The number of shares (or units) purchased other than through a publicly announced plan or program, and the nature of the transaction (e.g., whether the purchases were made in open-market transactions, tender offers, in satisfaction of the issuer’s obligations upon exercise of outstanding put options issued by the issuer, or other transactions);

(3) For publicly announced repurchase plans or programs:

(i) The date each plan or program was announced;
(ii) The dollar amount (or share or unit amount) approved;
(iii) The expiration date (if any) of each plan or program;
(iv) Each plan or program that has expired during the period covered by the table in § 229.601(b)(26) (Item 601(b)(26) of Regulation S-K); and
(v) Each plan or program the issuer has determined to terminate prior to expiration, or under which the issuer does not intend to make further purchases.

(4) Any policies and procedures relating to purchases and sales of the issuer’s securities by its officers and directors during a repurchase program, including any restrictions on such transactions.”

As mentioned above, Foreign Private Issuers that file Form 20-F will provide this same information each quarter on Form F-SR.

The new rule adds a requirement to S-K Item 408 for quarterly disclosure in Forms 10-K and 10-Q regarding company adoption and termination of 10b5-1 trading arrangements.

The new rule eliminates the existing share repurchase disclosure requirements in Regulation S-K Item 703.

Listed Closed-End Funds will include this repurchase data in their annual and semi-annual reports on Form N-CSR.

You can learn more in the related Final Rule and Fact Sheet.

As always, your thoughts and comments are welcome.