United States: Life Sciences And Tech Companies Should Take Note Of These New SEC Amendments

The U.S. Securities and Exchange Commission this month adopted amendments to certain disclosure requirements in an effort to streamline rules and regulations, and to remove requirements that are "redundant, duplicative, overlapping, outdated, or superseded." These amendments were adopted as part of a mandate given to the SEC by Congress when it enacted the Fixing America's Surface Transportation Act of 2015, and are largely technical in nature. Despite the number of changes made to various regulations and forms (which were so numerous the SEC provided a 205-page marked copy of the changes), the overall effect on disclosure requirements is minimal. With a few notable exceptions, the amendments conform to other SEC disclosure requirements or U.S. Generally Accepted Accounting Principles, rather than eliminating disclosure requirements.

The rules, adopted on August 17, are effective 30 days after publication in the Federal Register, which is expected to occur in the next couple of weeks, and it is anticipated that they will be effective by the end of September. The majority of the amendments are changes to accounting and financial statement requirements that are either duplicative of or superseded by U.S. GAAP. In some cases, the amendments move disclosure from outside to inside the financial statements. This has the effect of imposing XBRL tagging requirements, subjecting the displaced disclosures to internal control over financial reporting, and eliminating the Private Securities Litigation Reform Act of 1995 safe harbor as to such disclosures. In addition to the amendments, the SEC has also undertaken to refer certain proposed changes to the Financial Accounting Standards Board to consider integration into U.S. GAAP. Finally, there were a few instances in which the SEC declined to make amendments that were originally included in the proposing release based on feedback from commentators that such disclosures were not as duplicative as they originally appeared.

Impact on Technology and Life Sciences Companies

Although many of the amendments will go practically unnoticed by practitioners and companies, there are a few changes of which companies and their counsel should take note:

  • Segment Reporting: Item 101(b) of Regulation S-K and Rule 3-03(e) of Regulation S-X are being eliminated, as they are deemed to be redundant with the requirements of U.S. GAAP. This will eliminate duplicate disclosure in the Business section of certain filings.
  • Geographic Area: Item 101(d) of Regulation S-K, which requires reporting of financial information by geographic area, is being eliminated as redundant with existing financial statement and risk factor disclosure obligations. However, to help underscore that actual disclosure requirements are not changing, Item 303(a) of Regulation S-K has been amended to explicitly state that where a discussion of geographic area would be appropriate to understanding the business of the company, it should be included in the MD&A section of filings.
  • Stock Price: Item 201 of Regulation S-K will be amended to require the disclosure of the company's trading symbol, but the stock price or bid information will no longer be required if the stock trades on an established public trading market. This change is a welcome update in an era where a company's entire stock history is available through numerous free websites.
  • Dividends and Derivative Securities: In addition to removing the stock price disclosure, Item 201 was amended to remove the requirement that dividend payments or any restrictions on dividend payments be disclosed. This information is required by Rule 4-08(e) of Regulation S-X and the redundancy and duplicative disclosure was deemed unnecessary. Likewise, the number of outstanding options, warrants or derivative securities no longer needs to be disclosed under Item 201 as it is required by U.S. GAAP.
  • Development Stage Companies: Another welcome change is the elimination of cumulative financial disclosures for development stage companies, which was previously required by Rule 8-03(b) and Rule 10-01(a) of Regulation S-X. These changes to the regulation bring it in line with the current U.S. GAAP.
  • Ratio of Earnings to Fixed Charges: Item 503(d) and Item 601(b)(12) of Regulation S-K will be amended to eliminate the requirement that companies provide a ratio of their earnings to fixed charges. This change is one of the more major amendments, but these ratios have long been considered immaterial or not very helpful and many companies do not report them as frequently as they were technically required. Like the elimination of the stock price disclosure, it is a modernization of the regulations that acknowledges that there can be better sources of information than periodic SEC filings or registration statements.
  • Where to Find Additional Information: In another nod to modern technology, the SEC is also removing the requirement that the physical address of the SEC public reference room be included in filings, but it requires a company to include its website address. This has become almost standard practice at this point, but companies and their counsel should take care to double check their filings after the rule changes are enacted.

The above list of highlighted changes is only a small fraction of the total changes that the amendments encompass. Despite the fact that these amendments are not expected to have a sweeping impact on disclosure obligations, there are many technicalities that will need to be observed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
25 Sep 2018, Conference, California, United States

We're excited to introduce Women's IP Strategy, a 2-day conference that tackles both the IP, legal as well as broader career development obstacles, risks and rewards for women lawyers working in male-dominant industries.

2 Oct 2018, Webinar, California, United States

This CLE webinar will offer suggestions to litigators to help them comply with the new GDPR during e-discovery.

10 Oct 2018, Webinar, California, United States

For the past years, 3D printing has significantly revolutionized the business industry as it provides innovations and improvement to pre-existing processes.

Similar Articles
Relevancy Powered by MondaqAI
Sheppard Mullin Richter & Hampton
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Sheppard Mullin Richter & Hampton
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions