All posts by George Wilson

How to Pull the SEC’s Disclosure Update and Simplification Details All Together?

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Over the last several weeks we have done a series of blog posts discussing changes from the SEC’s Disclosure Update and Simplification Final Rule on individual Form 10-K and 10-Q items.

To help folks implement the changes we compiled what we think are all the relevant portions of the Final Rule together with our step-by-step review of the changes into this PDF document, which you can use as you update your reports.  This link will bring you to a page with a link to the PDF.

We hope it helps in this process and feel free to share it with colleagues.

As always, your thoughts and comments are welcome!

A Bit of Trivia, Some Terminology and an SEC Comment- Pro-Forma Versus Non-GAAP

Reporting

Thanks to Gary Brown, Partner at  Nelson Mullins Riley & Scarborough LLP, who is also a workshop leader and speaker here at PLI, for finding the comment below and planting the seed for this post!

Way back when, in the days before Sarbanes-Oxley (and yes, that really is way back when!), the SEC was concerned about the use of what was then called “pro-forma” information.  The term “pro-forma” was used to describe information that started with GAAP measures which were then “adjusted” to present what companies maintained (or perhaps hoped), was more relevant information to investors.

In those pre-SOX days the SEC was concerned that such “pro-forma” presentations could be misleading. For example, some companies would maintain that presenting operating results with the impact of restructuring charges removed was a better way to evaluate the future earnings potential of a business.  This may be the case, but some companies that had restructuring charges every year, and sometimes in multiple quarters within a year, would present such measures in this fashion.  Clearly such a presentation could be misleading.

In response to this situation Congress, in the Sarbanes-Oxley Act, gave the SEC the power and responsibility to regulate the use of such measures.  Here is where the terminology had to be clarified.  Companies, in their earnings releases, would use the term “pro-forma” when presenting such adjusted measures.  However, the SEC’s guidance already used this term, particularly in Regulation S-X Article 11.  As a result, the SEC had to create new terminology.

This Final Rule for the use of Non-GAAP measures was effective on March 28, 2003.  It is where the pendulum of non-GAAP guidance started swinging back and forth, and is still a great summary of both Regulation G(applicable to any presentation anywhere of a non-GAAP measure) andS-K Item 10(e)(for presentations in filed documents).  If you read footnote 12in the Final Rule you will see this language:

Section 401(b) of the Sarbanes-Oxley Act directs the Commission to adopt rules concerning the public disclosure or release of “pro forma financial information” by a company filing reports under Section 13(a) [15 U.S.C. § 78m(a)] or 15(d) [15 U.S.C. § 780(d)]. Because the Commission’s rules and regulations address the use of “pro forma financial information” in other contexts, particularly in Regulation S-X, and use that term differently from its use in the Sarbanes-Oxley Act, we are adopting the term “non-GAAP financial measures” to identify the types of information targeted by Section 401(b) of the Sarbanes-Oxley Act.

Why all this historical trivia?  Check out this comment from an August 22, 2018 comment letter:

Selected Historical Consolidated Financial and Other Data 

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures, page 17

1.  We note that you have titled several of your non-GAAP measures as “pro forma.” Based on the information in the filing, it does not appear that this information is pro forma financial information based on the guidance in Article 11 of Regulation S-X. If true, please revise your presentation to more clearly present your non-GAAP measures eliminating the use of the words pro forma.

As always, your thoughts and comments are welcome!

Disclosure Update and Simplification – A Welcome Change for Debt Issuers

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The SEC’s required disclosure of the ratio of earnings to fixed charges has been a sometimes overly complex disclosure of questionable use.  And, as the SEC noted on page 57 of the Disclosure Simplification and Update Final Rule:

“Other ratios that accomplish similar objectives include other variations of the ratio of earnings to fixed charges, the interest coverage ratio, and the debt-service coverage ratio, which can be calculated based on information readily available in the financial statements.”

The Disclosure Update and Simplification Rule eliminated this disclosure.

The starting point for the change is in Regulation S-K Item 503, where paragraph (d) and all the related instructions were eliminated:

(d) Ratio of earnings to fixed charges. If you register debt securities, show a ratio of earnings to fixed charges. If you register preference equity securities, show the ratio of combined fixed charges and preference dividends to earnings. Present the ratio for each of the last five fiscal years and the latest interim period for which financial statements are presented in the document. If you will use the proceeds from the sale of debt or preference securities to repay any of your outstanding debt or to retire other securities and the change in the ratio would be ten percent or greater, you must include a ratio showing the application of the proceeds, commonly referred to as the pro forma ratio.

The title of S-K Item 503 was also changed:

(Item 503) Prospectus summary, and risk factors, and ratio of earnings to fixed charges.

Along with these changes the SEC made other adjustments to eliminate this disclosure from the Exhibits in S-K Item 601 and from all the related forms (particularly Form 20-F) which had included this ratio.

As always, your thoughts and comments are welcome!

Another Disclosure and Simplification Update Issue for Form 10-Q

Reporting

Contingency disclosures have historically been specifically addressed in the SEC’s interim financial statement requirements.  Regulation S-X Article 10’s interim financial statement disclosure requirements included this language:

(a)

*****

(5) The interim financial information shall include disclosures either on the face of the financial statements or in accompanying footnotes sufficient so as to make the interim information presented not misleading. Registrants may presume that users of the interim financial information have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation, except in regard to material contingencies, may be determined in that context. Accordingly, footnote disclosure which would substantially duplicate the disclosure contained in the most recent annual report to security holders or latest audited financial statements, such as a statement of significant accounting policies and practices, details of accounts which have not changed significantly in amount or composition since the end of the most recently completed fiscal year, and detailed disclosures prescribed by Rule 4-08 of this Regulation, may be omitted. However, disclosure shall be provided where events subsequent to the end of the most recent fiscal year have occurred which have a material impact on the registrant. Disclosures should encompass for example, significant changes since the end of the most recently completed fiscal year in such items as: accounting principles and practices; estimates inherent in the preparation of financial statements; status of long-term contracts; capitalization including significant new borrowings or modification of existing financing arrangements; and the reporting entity resulting from business combinations or dispositions. Notwithstanding the above, where material contingencies exist, disclosure of such matters shall be provided even though a significant change since year end may not have occurred.

 Interestingly, essentially duplicating this disclosure requirement for continencies from the SEC, US GAAP (ASC 270-10-50-6) requires disclosure in interim financial statements of material information about contingencies:

50-6     

Contingencies and other uncertainties that could be expected to affect the fairness of presentation of financial data at an interim date shall be disclosed in interim reports in the same manner required for annual reports. Such disclosures shall be repeated in interim and annual reports until the contingencies have been removed, resolved, or have become immaterial. The significance of a contingency or uncertainty should be judged in relation to annual financial statements. Disclosures of such items shall include, but not be limited to, those matters that form the basis of a qualification of an independent auditor’s report.

Because this requirement is part of US GAAP, the SEC decided to remove this requirement from S-X Article 10 in their Disclosure Update and Simplification Rule.  The marked version of paragraph 5 from the demonstration version(page A-59) shows this deletion:

 

(5) The interim financial information shall include disclosures either on the face of the financial statements or in accompanying footnotes sufficient so as to make the interim information presented not misleading. Registrants may presume that users of the interim financial information have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation, except in regard to material contingencies, may be determined in that context. Accordingly, footnote disclosure which would substantially duplicate the disclosure contained in the most recent annual report to security holders or latest audited financial statements, such as a statement of significant accounting policies and practices, details of accounts which have not changed significantly in amount or composition since the end of the most recently completed fiscal year, and detailed disclosures prescribed by Rule§4-08of this Regulation, may be omitted. However, disclosure shall be provided where events subsequent to the end of the most recent fiscal year have occurred which have a material impact on the registrant. Disclosures should encompass for example, significant changes since the end of the most recently completed fiscal year in such items as: accounting principles and practices; estimates inherent in the preparation of financial statements;  status of long-term contracts; capitalization including significant new borrowings or modification of existing financing arrangements; and the reporting entity resulting from business combinations or dispositions. Notwithstanding the above, where material contingencies exist, disclosure of such matters shall be provided even though a significant change since year end may not have occurred.

This is a great example of a simplification that is more perhaps a “clean-up” in the SEC’s rules where an issue is already addressed by GAAP.

And, the key issue here is that even though the SEC’s rules have changed for disclosures about contingencies in interim financial statements, the disclosure requirements have not changed!

As always, your thoughts and comments are welcome!

Filed Versus Furnished Redux

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Way back in May of 2015 we postedabout the difference between documents that are furnished versus filed.  This important distinction came up in the post just before this onethat explores the impact of Disclosure Update and Simplification on the ARS.  So, to help us all recall what filed versus furnished is all about, here is a review.

Filed versus furnished is essentially a legal distinction. It does not impact how information appears on the EDGAR system (as they look the same) or other practical filing issues (as they are filed in EDGAR the same way). For example, an Item 2.02 Form 8-K is a “furnished” document, but an Item 2.01 Form 8-K is a “filed” document. To learn what is going on with this distinction, let’s explore:

What is the legal difference?

How to determine if a document is furnished or filed?

Filed

When a document is “filed” it is formally “filed” with the SEC to meet the disclosure requirements under the laws the SEC administers, principally the 1933 and 1934 Acts. This means a “filed” document is subject to the liability provisions of the Acts.  This is the principal difference between filed versus furnished.

Furnished

When a document is furnished, generally to shareholders, it is not actually filed with the SEC under one of the Acts (even though it may be “filed” in the EDGAR system), so it is not subject to the liability provisions of the Acts.

This liability difference can be a substantial issue. For example, it is far easier to establish scienter in a 34 Act fraud case then in a non-34 Act fraud case. Generally, in a non-34 Act action, to establish scienter it must be shown that the accused deliberately set out to cause harm. In a 34 Act action, gross negligence or reckless disregard can establish scienter, a much lower level of proof.

Another difference – if something is furnished rather than filed, it cannot be incorporated by reference into later filings. In the shelf registration process this is very important as furnished documents are not incorporated by reference into the S-3 on the shelf, and hence do not expose the company to the strict liability standards of the 33 Act! And, if you do later incorporate a furnished document into a filed document, it loses its furnished status, usually not a good thing!

So, how do you tell if something is filed or furnished? When they appear on the EDGAR system they look exactly the same! As discussed earlier, it is really a legal distinction, so you go back to the legal sources, in particular, the instructions to the forms.

Here is an excerpt from the Form 8-K instructions:

  1. The information in a report furnished pursuant to Item 2.02 (Results of Operations and Financial Condition) or Item 7.01 (Regulation FD Disclosure) shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, unless the registrant specifically states that the information is to be considered “filed” under the Exchange Act or incorporates it by reference into a filing under the Securities Act or the Exchange Act.

So, this legal distinction is actually spelled out in the instructions.

As a concluding thought, the most commonly encountered furnished documents are:

The Annual Report to Shareholders
Form 8-K Item 2.02
Form 8-K Item 7.01

There are others, so when in doubt, consult the instructions!

As always, your thoughts and comments are welcome!

Disclosure Update and Simplification and the Annual Report to Shareholders

Reporting

One of the topics that frequently surprises folks in our workshops is that the annual report to shareholders (ARS) is a formal requirement in the Proxy Rules.  Rule 14a-3(b)  states, that when a company is soliciting proxies for a meeting (or process in lieu of a meeting), which will include the election of directors:

(b)  ****  each proxy statement furnished pursuant to paragraph (a) of this section shall be accompanied or preceded by an annual report to security holders  ***

The rule then goes on to enumerate what must be included in the ARS, including S-X financial statements, selected financial data, MD&A and more.  Almost all the requirements for the ARS encompass information that is also required in Form 10-K.  This is why many companies use the economical strategy of meeting this requirement with a “10-K wrap”.

(Check out our next post for another important aspect of the ARS, namely, that the ARS is “furnished” rather than “filed”.)

Rule 14a-3 was not changed by the SEC’s Disclosure Update and Simplification Rule.  That said, the rule does include these requirements:

***

(7) The report shall contain information relating to the registrant’s industry segments, classes of similar products or services, foreign and domestic operations and exports sales required by paragraphs (b), (c)(1)(i) and (d) of Item 101 of Regulation S-K (§229.101 of this chapter).

***

(9) The report shall contain the market price of and dividends on the registrant’s common equity and related security holder matters required by Items 201(a), (b) and (c) of Regulation S-K (§229.201(a), (b) and (c) of this chapter). If the report precedes or accompanies a proxy statement or information statement relating to an annual meeting of security holders at which directors are to be elected (or special meeting or written consents in lieu of such meeting), furnish the performance graph required by Item 201(e) (§229.201(e) of this chapter).

Both S-K Item 101 and 201 were changed by the Disclosure Update and Simplification rule.  Among the changes were the elimination of the segment and foreign operations disclosures in Item 101 and the market price information in Item 201.

What does this mean for the ARS requirements?  Do companies still need to provide this information in the ARS even though it is no longer required in the Form 10-K? 

A first reading of the two paragraphs above might leave that question a bit up in the air, but a very literal reading would be that since S-K Items 101 and 201 no longer require information about segments and stock prices, the information is no longer required in the ARS.

But, perhaps more appropriately, the rational for these changes in the Final Rule(check out page 101 of the final rule for an example) clearly also apply to the ARS.  So, a common sense reading also would say that even though Rule 14a-3 still refers to this information, the elimination of this information in Form 10-K means it is also eliminated in the ARS.

Lastly, as a bit of ARS trivia, and a reminder to never read these rules too literally (and also to make sure you look for related guidance), the same proxy rule has this requirement in paragraph c:

(c) Seven copies of the report sent to security holders pursuant to this rule shall be mailed to the Commission, solely for its information, not later than the date on which such report is first sent or given to security holders or the date on which preliminary copies, or definitive copies, if preliminary filing was not required, of solicitation material are filed with the Commission pursuant to Rule 14a-6, whichever date is later. The report is not deemed to be “soliciting material” or to be “filed” with the Commission or subject to this regulation otherwise than as provided in this Rule, or to the liabilities of section 18 of the Act, except to the extent that the registrant specifically requests that it be treated as a part of the proxy soliciting material or incorporates it in the proxy statement or other filed report by reference.

If you stopped reading here, you might think this is still a requirement.  As we blogged about a while back, an important source of information is the Compliance and Disclosure Interpretations, in which this Corp Fin statement provides relief from the requirement to submit seven copies:

Proxy Rules and Schedule 14A (Regarding Submission of Annual Reports to SEC under Rules 14a-3(c) and 14c-3(b))

Last Update: November 2, 2016

Question: Exchange Act Rule 14a-3(c) and Rule 14c-3(b) require registrants to mail seven copies of the annual report sent to security holders to the Commission “solely for its information.” A similar provision in Form 10-K requires certain Section 15(d) registrants to furnish to the Commission “for its information” four copies of any annual report to security holders. Can a registrant satisfy these requirements by means other than physical delivery or electronic delivery pursuant to Rule 101(b)(1) of Regulation S-T?

 Answer: Yes. The Division will not object if a company posts an electronic version of its annual report to its corporate web site by the dates specified in Rule 14a-3(c), Rule 14c-3(b) and Form 10-K respectively, in lieu of mailing paper copies or submitting it on EDGAR. If the report remains accessible for at least one year after posting, the staff will consider it available for its information. [November 2, 2016]

As always, your thoughts and comments are welcome!

 

Integrated Reporting – A Perspective on Short-Term Versus Long-Term and More!

Reporting

One of the hot topics in the world of public company reporting right now is the interaction between quarterly reporting and whether or not management makes decisions with a short-term focus that could be less beneficial in the long-term.  Bob Laux, an Associate Director at SEC Institute, conducts programs on various reporting and financial accounting topics, and also serves as the North American Lead for the International Integrated Reporting Council (the IIRC).  Bob shares his insights along with a substantial amount of background about the complex relationship between quarterly reporting in short-term thinking in this blog posted on the IIRC’s web page.  You can also learn much about IIRC at their web page after you read Bob’s post.

As always, your thoughts and comments are welcome!

SEC Issues “Investigative Report” – Time to Build Cyber Threats Into ICFR

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On October 16, 2018 the SEC issued a Report of Investigation dealing with cyber threats and ICFR.  These are unusual reports from the Division of Enforcement.  They generally result from a formal investigation that identifies a significant concern on the part of the SEC but in their judgment does not warrant enforcement against a company.

As an example, you might remember this Report of Investigation that dealt with the use of social media by Netflix’s CEO.

The new Report of Investigation deals with one of the current environment’s hot topics, cyber-crime, focusing specifically in email related frauds.  The SEC investigated frauds at nine companies, each of which was victimized in an email related cyber-attack.  In total the companies lost almost $100 million.

In light of all the surrounding facts and circumstances (the companies were the victims also), the SEC did not enforce against the companies.  But as this type of crime becomes more and more common, ICFR should change and evolve to be appropriately designed to protect assets from such cybercrimes.  In the words of the SEC:

 “these cyber-related threats of spoofed or manipulated electronic communications exist and should be considered when devising and maintaining a system of internal accounting controls as required by the federal securities laws”.

You can read the report here.

As always, your thoughts and comments are welcome!

Disclosure Simplification Four – Wither the S-K 201(d) Table? – Updated!

10-K/10-Q Tips, Reporting

From its inception, this table required by S-K Item 201(d) has created confusion:

201Table

Well, the final version of the Disclosure Update and Simplification Rule created a bit more confusion for me.  As you can read in this November 6, 2018 post the original version of the  Final Rule made changes to where to put the table, but the “conformed and corrected” version published after publication in the Federal Register removed those changes.  So, no changes for the S-K Item 201(d) table!

We also updated our overall summary document you can find here.

As always, your thoughts and comments are welcome!

Disclosure Update and Simplification – The Details Continue! Post Number Three – Item 5 – Form 10-K Changes

10-K/10-Q Tips

As we blogged on August 21, September 26, and October 3and October 4, the SEC’s 314-page Final Ruledealing with “Disclosure Update and Simplification” makes a myriad of fairly detailed updates to Regulations S-X and S-K, as well as many of the Forms and other rules.

As you may have heard (and can read in this post),the new rule was published in the Federal Register on October 4, 2018.  This means the changes in the new rule are effective for filings made on or after November 5, 2018.  The one caveat to this effective date, as you may have heard, is for the addition to changes in shareholders’ equity information to Form 10-Q, where the SEC issued a C&DIindicating “the staff would not object if the filer’s first presentation of the changes in shareholders’ equity is included in its Form 10-Q for the quarter that begins after the effective date of the amendments.”

You can read about all the related details for the new 10-Q requirement to present changes in shareholders’ equity in this post.

Just in case you have not seen it, the SEC published what they are calling a “demonstration version” with the final rule that shows all the changes to Regulation S-K, S-X, the Instructions to the Forms and other related guidance. 

In this post we focus on changes to S-K Item 201, which is included in Item 5 of Form 10-K.  Here is the list of changes from the final rule:

Amend § 229.201 by:

a. Revising paragraph (a)(1)(i);

b. Removing paragraph (a)(1)(ii), redesignating paragraph (a)(1)(iii) as paragraph (a)(1)(ii), revising newly redesignated paragraph (a)(1)(ii) and adding new paragraph (a)(1)(iii);

c. Removing paragraphs (a)(1)(iv) and (v);

d. Removing and reserving paragraphs (a)(2)(i) and (c)(1) and Instruction 1 to the Instructions to Item 201;

e. Redesignating Instructions 1 through 5 to Item 201 consecutively as Instruction 1 to Item 201, Instruction 2 to Item 201, Instruction 3 to Item 201, Instruction 4 to Item 201 and Instruction 5 to Item 201; and

f. Revising newly redesignated Instruction 2 to Item 201.

To help you get started making changes for your next Form 10-K and 10-Q, here are the details:

  1. For the first change, paragraph (a)(1)(i), which requires information about stock trading, will now read:

(i) Identify the principal United States market(s) and the corresponding trading symbol(s) for each class of the registrant’s common equity. In the case of foreign registrants, also identify the principal foreign public trading market(s), if any, and the corresponding trading symbol(s) for each class of the registrant’s common equity.

The changes in this paragraph are:

1. The addition of disclosure of your ticker symbol

2. The removal of a requirement to make disclosures where there is no established trading market, which has been moved to new (a)(2)(ii)

  1. The paragraph that has been deleted, (a)(1)(ii), was the requirement to disclose stock price information by quarter for the last two years:

(ii) If the principal United States market for such common equity is an exchange, state the high and low sales prices for the equity for each full quarterly period within the two most recent fiscal years and any subsequent interim period for which financial statements are included, or are required to be included by Article 3-01 through 3-04 of Regulation S-X (§210.3-01 through 3-04 of this chapter), or Article 8-02 through 8-03 of Regulation S-X (§210.8-02 through 8-03 of this chapter) in the case of smaller reporting companies, as reported in the consolidated transaction reporting system or, if not so reported, as reported on the principal exchange market for such equity.

The change here is that disclosure of stock price by quarter for the last two years is no longer required.

 

  1. The new paragraph (a)(1)(ii) now reads:

(ii) If the principal United States market for such common equity is not an exchange, indicate, as applicable, that any over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

The change here is that disclosure of stock price, or absent a market, bid price information for the last two years by quarter is no longer required, similar to the change in number 2 above.

 

  1. The new paragraph (a)(1)(iii) now reads:

  (iii) Where there is no established public trading market for a class of common equity, furnish a statement to that effect and, if applicable, state the range of high and low bid information for each full quarterly period within the two most recent fiscal years and any subsequent interim period for which financial statements are included, or are required to be included by 17 CFR 210.3-01 through 210.3-20 (Article 3 of Regulation S-X), indicating the source of such quotations. Reference to quotations shall be qualified by appropriate explanation. For purposes of this Item the existence of limited or sporadic quotations should not of itself be deemed to constitute an “established public trading market.”

This new paragraph essentially continues the old disclosure requirements for situations where a company’s stock does not have an “established public trading market”

  1. The next change is the removal of these two paragraphs, (a)(1)(iv) and (a)(1)(iv):

(iv) Where a foreign registrant has identified a principal established foreign trading market for its common equity pursuant to paragraph (a)(1) of this Item, also provide market price information comparable, to the extent practicable, to that required for the principal United States market, including the source of such information. Such prices shall be stated in the currency in which they are quoted. The registrant may translate such prices into United States currency at the currency exchange rate in effect on the date the price disclosed was reported on the foreign exchange. If the primary United States market for the registrant’s common equity trades using American Depositary Receipts, the United States prices disclosed shall be on that basis.

(v) If the information called for by this Item is being presented in a registration statement filed pursuant to the Securities Act or a proxy or information statement filed pursuant to the Exchange Act, the document also shall include price information as of the latest practicable date, and, in the case of securities to be issued in connection with an acquisition, business combination or other reorganization, as of the date immediately prior to the public announcement of such transaction.

This change removes the requirement for stock price information for companies whose stock trades on a non-US exchange, similar to the change for stock traded on US exchanges, as well as certain stock price information in registration statements.

  1. The next paragraph removed, (a)(2)(i), is part of a 33Act registration statement requirement for disclosures about shares subject to option when a company in registration does not have a currently active public market. Company’s in this situation had to disclose the amount of shares:

(i) That is subject to outstanding options or warrants to purchase, or securities convertible into, common equity of the registrant;

Since this information is readily available in the financial statements, the S-K disclosure is removed.

  1. The next paragraph removed, (c)(1), is information about dividends, which is available in the financial statements, hence the elimination of this paragraph:

(1) State the frequency and amount of any cash dividends declared on each class of its common equity by the registrant for the two most recent fiscal years and any subsequent interim period for which financial statements are required to be presented by §210.3 of Regulation S-X. Where there are restrictions (including, where appropriate, restrictions on the ability of registrant’s subsidiaries to transfer funds to the registrant in the form of cash dividends, loans or advances) that currently materially limit the registrant’s ability to pay such dividends or that the registrant reasonably believes are likely to limit materially the future payment of dividends on the common equity so state and either (i) describe briefly (where appropriate quantify) such restrictions, or (ii) cross reference to the specific discussion of such restrictions in the Management’s Discussion and Analysis of financial condition and operating results prescribed by Item 303 of Regulation S-K (§229.303) and the description of such restrictions required by Regulation S-X in the registrant’s financial statements.

  1. The last changes made for S-K Item 201 are some adjustments to the instructions. First, Instruction 1 is removed as it is no longer relevant:

Registrants, the common equity of which is listed for trading on more than one securities exchange registered under the Exchange Act, are required to indicate each such exchange pursuant to paragraph (a)(1)(i) of this Item; such registrants, however, need only report one set of price quotations pursuant to paragraph (a)(1)(ii) of this Item; where available, these shall be the prices as reported in the consolidated transaction reporting system and, where the prices are not so reported, the prices on the most significant (in terms of volume) securities exchange for such shares

Next, Instruction 2 is revised to reference bid information:

Market prices and dividends Bid informationreported pursuant to this Item shall be adjusted to give retroactive effect to material changes resulting from stock dividends, stock splits and reverse stock splits

 

As we saw with the changes to Item 1, none of the changes here to Item 5 are earth shattering, but there is a fair amount of detail.

You might think this is enough for S-K Item 201, but there is actually another change that is kind of hidden in the other sections of the rule.  It turns out the table required by S-K Item 201(d) for equity compensation plans will move from Item 12 to Item 5 and no longer be required in the proxy statement.  Our next post will have all the details of that change.

As always, your thoughts and comments are welcome!