Just in time for the holidays! On December
20, 2013, the staff of the Securities and Exchange Commission (the
"SEC") released its Report on Review of Disclosure Requirements in
Regulation S-K, as mandated by Section 108 of the Jumpstart Our
Business Startups Act (the "JOBS
Act"). Section 108 required the SEC to
issue its report within 180 days of its enactment on April 5, 2012,
but all of the other rulemaking requirements imposed on the
SEC made that timetable difficult to meet.
The Report reviews the history of all the disclosure items set forth in Regulation S-K, but does not propose any specific groundbreaking changes. Instead, the Report identifies several areas for further study and information gathering, including (1) emphasizing a principles-based approach over "static requirements," (2) evaluating whether "scaled disclosure," i.e., less disclosure for smaller companies, would be appropriate (anyone remember Regulation S-B?), (3) considering the presentation of information through the EDGAR system and "other means" (although no other means are identified) and (4) considering ways to improve the presentation of information while discouraging the repetition of immaterial information (such as through the use of hyperlinks). The Report concludes that the staff favors a comprehensive approach to revise Regulation S-K to achieve the dual goals of streamlining disclosure requirements for companies and focusing on providing useful information to investors. The Report also acknowledges that several areas of disclosure need to be examined for their usefulness to investors, including risk factors, a description of the business, corporate governance and executive compensation disclosure (which is characterized as lengthy and highly technical), offering-related requirements and exhibits. Finally, the staff recommends reviewing and evaluating (i) the Industry Guides to determine whether they elicit useful information and conform to industry practice and trends, (ii) Regulation S-X and (iii) Regulation MA.
This article is for general information and does not include full legal analysis of the matters presented. It should not be construed or relied upon as legal advice or legal opinion on any specific facts or circumstances. The description of the results of any specific case or transaction contained herein does not mean or suggest that similar results can or could be obtained in any other matter. Each legal matter should be considered to be unique and subject to varying results. The invitation to contact the authors or attorneys in our firm is not a solicitation to provide professional services and should not be construed as a statement as to any availability to perform legal services in any jurisdiction in which such attorney is not permitted to practice.
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