April 09, 2019

On March 20, 2019, the Securities and Exchange Commission (“SEC”) adopted amendments to simplify disclosure requirements under Regulation S-K for companies and investment advisors. These amendments are intended to improve the readability and navigability of SEC documents and to discourage disclosure of immaterial information. The final amendments include approximately 30 changes. The summary below highlights their key aspects.

EXHIBITS

• Omission and Redaction (Item 601(a)). A company may omit immaterial schedules or attachments in all exhibits filed under Item 601, as long as the information is not otherwise disclosed to the SEC. Instead, it needs to provide a list identifying the omitted schedules and attachments for each filed exhibit. The company may also redact any personally identifiable information from its Item 601 exhibits without submitting a confidential treatment request (“CTR”).
• Description of Securities (Item 601(b)(4)). A company must provide Item 202 disclosure as an exhibit to Form 10-K for each class of securities registered under the Exchange Act. If it has previously filed an exhibit containing the new required Item 202 disclosure to a Form 10-K, it could incorporate that exhibit by reference and hyperlink, as long as the information remains unchanged.
• Confidential Treatment (Item 601(b)(2) and (10)).Subject to the SEC’s request, a company may redact confidential information from material contracts without submitting a CTR to the SEC, if the redacted information is (a) immaterial and (b) would likely cause competitive harm to the company if publicly disclosed.
• Limitations on Material Contracts Required to Be Filed (Item 601(b)(10)). The two year lookback requirement, which mandates filing if a material contract was entered into no more than two years before the filing, is limited to newly reporting companies.
• Foreign Private Issuers. Foreign private issuers need to provide comparable information in exhibit filings for Form 20-F, but not Form 40-F.

INCORPORATION OF INFORMATION BY REFERENCE

• Elimination of Limitation on Incorporation (Item 10(d)). A company may incorporate documents that have been on file with the SEC for more than five years by reference.
• Hyperlinks. A company must provide hyperlinks to information that is incorporated by reference and describe its location, if that information is available on EDGAR. It will not need to correct any inaccurate hyperlink in an effective registration statement.
• Filing Copies of Incorporated Information (Rule 12b-23 and Rule 411). A company no longer needs to file as exhibits copies of any information incorporated by reference.
• Financial Statements. A company cannot incorporate outside information by reference in filed financial statements, unless permitted or required by the SEC’s rules, U.S. Generally Accepted Accounting Principles, or International Financial Reporting Standards.

DESCRIPTION OF PROPERTY (Item 102). A company only needs to disclose any material physical property. However, any Item 102 instruction specific to the mining, real estate, and oil and gas industries remains unmodified.

MD&A (Item 303(a)). Three major changes are adopted, including (a) the permitted omission of the discussion of the earliest of the three years if such discussion has been included in a prior filing on EDGAR, (b) the elimination of requirement to refer to the five year selected financial data as Item 303(a)(3)(ii) already requires disclosure of known trends and uncertainties, and (c) discretion to choose any presentation that would enhance a reader’s understanding.

MANAGEMENT, DELINQUENCY, AND CORPORATE GOVERNANCE

• Executive Officers (Item 401). A company needs not duplicate any disclosure about executive officers in its proxy statement if the information is already included in Part I of its Form 10-K.
• Delinquencies (Item 405). A company must change its disclosure heading to “Delinquent Section 16(a) Reports” and may exclude the heading if there are no delinquencies to report. The company no longer needs to check the delinquency report checkbox on the cover page of Form 10-K and may rely on Section 16 reports filed on EDGAR when assessing its disclosure obligation.

• Corporate Governance (Item 407). The compensation committee of an emerging growth company does not need to state whether it has reviewed a Compensation Discussion and Analysis (CD&A) nor whether it recommended to include the CD&A in the annual report or proxy statement to the board.
• Risk Factors (Item 503(c). A company is no longer provided with examples of possible risk factors, as the SEC intends to encourage companies to focus on their own risk-identification processes. Note that Item 503(c) is relocated to Item 105.

REGISTRATION STATEMENTS AND PROSPECTUS PROVISIONS

• Plan of Distribution (Item 508). A company must disclose its plan of distribution in an offering, including information about any underwriter and “sub-underwriter,” which is defined as a party participating in an offering by committing to purchase securities from a principal underwriter but is not itself in privity of contract with the issuer of the securities.
• Undertakings (Item 512). Undertakings including Item 512(c), (d), (e), and (f) are eliminated.

TRADING SYMBOLS AND XBRL. A company must disclose its trading symbol on the cover pages of Forms 10 K, 10-Q, 8-K, 20-F and 40-F (the “Forms”) and tag all information on the cover pages of the Forms in Inline XBRL according to various compliance dates, which vary depending on the status of each filer:

• Large accelerated filers: beginning in reports for fiscal periods ending on or after June 15, 2019;
• Accelerated filers: beginning in reports for fiscal periods ending on or after June 15, 2020;
• All other filers: beginning in reports for fiscal periods ending on or after June 15, 2021.

EFFECTIVE DATE OF THE AMENDMENTS. Except for provisions governing redaction of confidential information in material contracts, which became effective on April 2, 2019, the other amendments will become effective on May 2, 2019.