On March 20th, the SEC adopted amendments to modernize and simplify disclosure requirements in Regulation S-K for public companies, investment advisers, and investment companies. Like previous amendments, these changes are consistent with the SEC’s mandate under the Fixing America’s Surface Transportation (FAST) Act and are based on recommendations in the staff’s FAST Act Report and a broader review of the SEC’s disclosure rules. These changes are expected to benefit investors through eliminating outdated and unnecessary disclosure while improving the readability and navigability of company disclosures. They should also reduce repetition and the disclosure of irrelevant and immaterial information. In addition, these amendments are expected to reduce costs and burdens on registrants.
Among other things, the amendments will simplify disclosure or the disclosure process by:
increasing flexibility in the discussion of historical periods in Management’s Discussion and Analysis
allowing companies to redact confidential information from some exhibits without filing a confidential treatment request
improving access to information through technology by requiring data tagging for particular items on the cover page of certain filings and by using hyperlinks for information that is incorporated for reference and available on EDGAR
updating rules to account for developments since their adoption or last amendment by eliminating certain requirements for undertakings in registration statements
revising rules or forms to update, streamline, or otherwise improve the SEC’s disclosure framework by eliminating risk factor examples listed in the disclosure requirement and revising the description of the property requirement to emphasize the materiality threshold
The amendments also include parallel amendments to several rules and forms applicable to investment companies and investment advisers, including amendments that require certain investment company filings to include a hyperlink to each exhibit listed in the exhibit index of the filings and be submitted in HTML format.
These changes go into effect thirty days after their publication in Federal Register, with the exception of the amendments relating to the redaction of confidential information in certain exhibits. These changes are immediately effective after publication in the Federal Register. The new requirements to tag data on the cover pages of certain filings will be implemented in a three-year phase-in that depends on the nature of the filer. Investment company registration statements and Form N-CSR filings made on or after April 1, 2020 must be made in HTML format and comply with the rule and form amendments concerning hyperlinks.
Sources:
SEC Adopts Rules to Implement FAST Act Mandate to Modernize and Simplify Disclosure (www.sec.gov)
FAST Act Modernization and Simplification of Regulation S-K (www.sec.gov)
