Cozen O’Connor: SEC Adopts Amendments for FAST Act Modernization and Simplification of Regulation S-K [Alert]

SEC Adopts Amendments for FAST Act Modernization and Simplification of Regulation S-K

April 9, 2019

The Securities and Exchange Commission (SEC) recently adopted amendments to modernize and simplify Regulation S-K and its forms. These amendments were based on the SEC’s November 23, 2016, report to Congress and serve to streamline the disclosure process under the FAST Act.

For most registrants, the following changes are expected to have the greatest impact. The most significant changes relate to reportable years in MD&A, exhibit filings, and XBRL.

Regulation S-K Item, SEC Rule or Form Number

Change

I. MD&A

Regulation S-K Item 303 and Form 20-F

MD&A will only require two years of discussion. Registrants will now generally be able to exclude discussion of the earliest of three years of MD&A if the discussion has already been included in a prior filing.

II. Physical Property

Regulation S-K Item 102

Registrants will need to provide disclosure about a physical property only to the extent that it is material to the registrant.

III. Compliance with Section 16(a) of the Securities Exchange Act

Regulation S-K Item 405; Rule 16a-3(e)

The SEC changed the name of the section requiring disclosure of delinquent filings under Section 16 from “Section 16(a) Beneficial Ownership Reporting Compliance” to “Delinquent Section 16(a) Reports.” Such heading is required only to the extent there are any disclosures required. In addition, the SEC eliminated Rule 16a-3(e).

IV. Exhibits

Regulation S-K Items 601(b)(10) and 601(b)(2) and investment company registration forms

Registrants may now omit confidential information in material contracts and certain other exhibits without submitting a confidential treatment request to the SEC, so long as the information is (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed.

Regulation S-K Item 601(a)(5) and investment company forms

Registrants will not be required to file attachments to their material agreements if such attachments do not contain material information or were not otherwise disclosed in the exhibit of the disclosure document.

Regulation S-K Item 601(b)(10)

Only newly reporting registrants will be required to file material contracts that were entered into within two years of the applicable registration statement or report. Reporting companies would still be required to file material contracts not made in the ordinary course of business that must be performed in whole or in part at or after the filing of the registration statement or report. This will allow reporting companies to clean up their exhibit filings by removing completely executed material contracts.

V. Changes to SEC Forms

Forms 8-K, 10-Q, 10-K, 20-F, and 40-F

Registrants will be required to disclose on the form cover page the national exchange or principal U.S. market for their securities, the trading symbol, and title of each class of securities.

Securities Act Rule 411(b)(4); Exchange Act Rules 12b-23(a)(3) and 12b-32; Investment Company Act Rule 0-4; and Regulation S-T Rules 102 and 105

Registrants will no longer be required to file as an exhibit any document or part thereof that is incorporated by reference in a filing, but instead will be required to provide hyperlinks to documents incorporated by reference into a registration statement or form.

Forms 10-K, 10-Q, 8-K, 20-F and 40-F

Registrants will be required to tag all cover page data in Inline XBRL. The tagging of cover page data will be adopted in a three-year, phase-in process, whereby compliance must be complied with in accordance with the following:

Operating Companies

Compliance Date

  • Large accelerated filers that prepare their financial statements in accordance with U.S. GAAP
  • Reports for fiscal periods ending on or after June 15, 2019
  • Accelerated filers that prepare their financial statements in accordance with U.S. GAAP
  • Reports for fiscal periods ending on or after June 15, 2020
  • All other filers
  • Reports for fiscal periods ending on or after June 15, 2021

 

VI. Investment Company Forms

Regulation S-T Rules 102, 105, 201, 202, and 311; Form N-CSR; and investment company registration forms

Investment companies will be required to file reports on Form N-CSR and registration statements and amendments thereto in HTML format and provide hyperlinks to exhibits and other information incorporated by reference.

The changes adopted by the SEC will become effective on May 2, 2019, 30 days after publication in the Federal Register on April 2, 2019, except for the requirement to tag all cover page data in Inline XBRL, which will be phased in as noted above, and the amendments to the rules governing redactions of confidential information in material contracts, which will become effective upon publication.

The adopting release is available here and the SEC’s proposing release is available here.


Authors

Christopher J. Bellini

Member

cbellini@cozen.com

(612) 260-9029

Seth Popick

Associate

spopick@cozen.com

(412) 620-6527

Lindsey Stillwell

Associate

lstillwell@cozen.com

(215) 665-2138

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