On March 20, the U.S. Securities and Exchange Commission voted to adopt several amendments to modernize and simplify disclosure requirements that apply to periodic reports, proxy statements and certain other public filings. These amendments have streamlined certain disclosure requirements, while also eliminating outdated or duplicative disclosures for reporting companies under Regulation S-K. This article provides a brief overview of the SEC's recent amendments, a summary of those that are expected to be most relevant, and practical considerations and near-term compliance matters that reporting companies, or registrants, should consider as a result thereof.
The SEC's amendments, among other things, changed the content of management's discussion and analysis — or MD&A — filings and the process for redacting confidential information in certain exhibits to improve the readability and navigability of company disclosures and discourage repetition and disclosure of immaterial information. Other than the requirement to data tag the cover page of certain periodic reports, as described in further detail below, these amendments became effective as of May 2.
Congress mandated that the SEC review certain disclosure requirements for reporting companies, and to streamline those requirements through a provision in the Fixing America's Surface and Transportation Act of 2015, also known as the FAST Act. The adopted amendments continue the SEC's ongoing effort to simplify and update such disclosure requirements where possible. In connection with the adoption, SEC Chairman Jay Clayton stated that "[t]he amendments adopted today demonstrate our focus on modernizing our disclosure system to meet the expectations of today's investors while eliminating unnecessary costs and burdens."
Management's Discussion and Analysis
Registrants that provide financial statements covering three years in their filings are no longer required to include in MD&A a discussion of the earliest years if (1) such discussion was already included in any other of the registrant's prior filings that required compliance with Item 303 of Regulation S-K (e.g., Form 10-K, Form S-1, Form S-4 or Form 10), and (2) registrants identify the location in the prior filing where the omitted discussion can be found.
For example, if a registrant files its 2019 Form 10-K with financial statements for fiscal years 2017, 2018 and 2019, the registrant can omit from its MD&A the discussion comparing its operating results and financial condition for fiscal years 2017 to 2018, and instead, only compare its operating results and financial condition for fiscal years 2018 and 2019, and refer the reader to the MD&A in the 2018 Form 10-K where the 2017 to 2018 comparative discussion may be found.
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