United States: SEC Updates And Streamlines Disclosure Requirements

In Short

The Situation: The U.S. Securities and Exchange Commission ("SEC") adopted amendments to Regulation S-K, Regulation S-X, and related rules and forms to update and streamline disclosure and ease unnecessary compliance burdens for issuers.

The Result: The amendments eliminate, integrate, or modify disclosure requirements related to segment financial information, information by geographic area, research and development activities, seasonality, stock price and dividend information, and other matters.

Looking Ahead: The amendments are modest, incremental changes but require issuers to consider the prominence and context of disclosure.

On August 17, 2018, the SEC adopted amendments to Regulation S-K, Regulation S-X, and certain related rules and forms which, among other things:

  • Eliminate certain redundant or duplicative disclosure requirements that provide substantially the same disclosures as U.S. Generally Accepted Accounting Principles ("U.S. GAAP"), International Financial Reporting Standards ("IFRS"), or other SEC requirements;
  • Eliminate and/or integrate certain overlapping disclosure requirements, which require reasonably similar disclosures as U.S. GAAP or other SEC requirements;
  • Amend certain outdated disclosure requirements, which are outdated due to the passage of time or changes in regulatory, business, or technological environments; and
  • Amend certain superseded disclosure requirements that have been superseded by newer accounting, auditing, and disclosure requirements.

The amendments, adopted two years after the SEC's initial proposal in July 2016, are a part of the SEC's ongoing efforts under its Fixing America's Surface Transportation, or "FAST," Act mandate and Disclosure Effectiveness Initiative to improve disclosure effectiveness and simplify compliance while continuing to provide all material information to investors. The amendments will be effective 30 days after publication in the Federal Register, which is projected to be late September 2018.


The following summary highlights some of the noteworthy amendments that will affect an issuer's typical SEC disclosures.

Description of Business (Item 101)

  • Segments and Geographic Information. The amendments eliminate the requirement to provide segment financial information, financial information by geographic area, risks associated with an issuer's foreign operations, and any segment's dependence on foreign operations in light of existing U.S. GAAP and other Regulation S-K disclosure requirements. Segment disclosures will continue to be available in the notes to the financial statements and, where applicable, the Management Discussions and Analysis ("MD&A"). The SEC has concluded that risks related to foreign operations and segment dependence on foreign operations are more appropriately disclosed under "Risk Factors" and, where applicable, the MD&A. The SEC explicitly added a specific reference to "geographic areas" to the MD&A requirement to disclose trends and uncertainties by segment.
  • R&D Activities. The amendments eliminate the requirement to disclose the amount spent on research and development ("R&D") activities for all years presented, since U.S. GAAP and IFRS require reasonably similar disclosure. However, companies should continue to provide the required trend information related to R&D activities, if material, and can still continue to provide voluntary disclosure of their R&D activities as part of their business description.

MD&A (Item 303)

The amendments retain the seasonality disclosure requirements in annual reports but eliminate the requirement in interim reports, since U.S. GAAP in combination with Item 303 of Regulation S-K requires reasonably similar information. As the Private Securities Litigation Reform Act of 1995 ("PSLRA") safe harbor is not available for information disclosed in the notes to the financial statements, it could be argued that investors may potentially receive less forward-looking information about seasonality due to this change. However, the SEC noted that, even with this amendment change, the MD&A requires disclosure of such information in interim reports to the extent that the effects of seasonality may become material.

Market for Registrant's Common Equity (Item 201(a))

The amendments eliminate the outdated requirement to disclose the high and low trading prices of an issuer's common equity for each full quarterly period within the two most recent fiscal years and interim periods, since investors can now easily access such information free of charge on numerous websites. The SEC replaced the outdated rule with required disclosure of the trading symbol(s) for each class of the issuer's common equity.

Dividends (Item 201(c)(1))

The amendments eliminate the requirement to state the frequency and amount of any cash dividends in an annual report, Form S-1 or other relevant filings, since Regulation S-X was amended to require similar disclosure. Additionally, the amendments consolidate disclosure requirements regarding restrictions that currently, or are likely to, materially limit the issuer's ability to pay dividends on its common equity into a single requirement in Regulation S-X to provide disclosure in the notes to the financial statements.

Ratio of Earnings to Fixed Charges (Item 503(d))

The amendments eliminate the requirement to disclose the historical and pro forma ratio of earnings to fixed charges (and ratio of combined fixed charges and preference dividends to earnings) in connection with the registration of debt securities and preference equity securities, as well as the related exhibit setting forth the computation of such ratio. The SEC noted that debt investors often negotiate covenants requiring issuers to provide more relevant financial information about their ability to meet financial obligations, and U.S. GAAP already requires the disclosure of many components commonly used to calculate the ratio (e.g., income, interest expense, lease expense).

Where You Can Find More Information (Item 101)

The amendments eliminate the outdated requirement to identify the SEC's Public Reference Room and disclose its physical location and phone number, while retaining the requirements to disclose the SEC's internet address and the issuer's internet address if it has one.

Exhibits (Item 601)

The amendments eliminate the following exhibit requirements (although the exhibit-numbering system has been preserved):

  • Earnings Per Share. The final amendments eliminate Item 601(b)(11), which requires a statement showing the calculation of per-share earnings (unless the computation can be determined from information already in the report) in annual filings, since the SEC found the requirement duplicative of information required under U.S. GAAP, Regulation S-X, and IFRS.
  • Ratio of Earnings to Fixed Charges. In connection with the elimination of the ratio of earnings to fixed charges noted above, the related Item 601(b)(12) computation of the ratio exhibit filing requirement has been eliminated.
  • Reports to Shareholders. Various reports to security holders, required to be filed as exhibits under Items 601(b)(19) and (22), are also eliminated in light of, in the former case, other exhibit provisions or, in the latter case, the requirement to disclose shareholder voting results in a Form 8- K.


The SEC refrained from adopting amendments to other overlapping provisions and instead referred such items to the Financial Accounting Standards Board ("FASB") for potential incorporation into U.S. GAAP. These include disclosure requirements relating to major customers, products, and services; foreign currency; equity compensation plans; debt obligations; related party transactions; and interim financial statements. The SEC has requested that FASB complete its determination process within 18 months after the amendments are published.

Three Key Takeaways

  1. Although the changes are mainly incremental and clean-up in nature: (i) the relocation of certain disclosure from outside to inside the financial statements will subject such disclosure to annual audit and/or internal review, internal control over financial reporting, and XBRL tagging requirements; (ii) the PSLRA safe harbor for forward-looking information will no longer be available for disclosures relocated from outside to inside the financial statements and will have the opposite effect on disclosures relocated to outside the financial statements; and (iii) the relocation of some disclosure items could impact the prominence of, and context around, that disclosure.
  2. Issuers should prepare for incorporation of these changes in upcoming periodic filings and registration statements and begin discussions with internal accounting and legal departments and their independent registered public accounting firm.
  3. Issuers should expect additional changes in the future as part of the SEC's ongoing efforts to modernize and simplify disclosure requirements.

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.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
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.


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.


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