by Cydney Posner
At an open meeting this morning, the SEC voted to adopt new rule and form amendments requiring that the exhibit index in registration statements and reports contain hyperlinks to the exhibits listed and that these filings all be made in HTML format. (The SEC also voted to propose the use of Inline XBRL for financial statement information. See this PubCo post.) Not terribly controversial, which probably explains how any action was taken at all, given that there are now only two commissioners and they have diametrically opposed views on just about everything. (This post reflects notes from the open meeting, prior to issuance of the related press release and adopting release. For more detailed information, see this subsequent PubCo post.)
The exhibit hyperlink rules were adopted substantially as proposed at the end of August last year, with just one significant change, according to Corp Fin staff speaking at the meeting. (See this PubCo post.) Acting SEC Chair Michael Piwowar commented that the new rules are designed to “harness technology” to improve disclosure. The use of hyperlinks is expected to eliminate the cumbersome process of searching through years of filings to find exhibits, facilitating the review process.
More specifically, the amendments will require registrants that file registration statements and periodic and current reports that are subject to the Reg S-K Item 601 exhibit requirements (or that file on Forms F-10 or 20-F) to include a hyperlink to each exhibit listed in the exhibit index of these filings, whether or not the exhibit is incorporated by reference. The only exceptions would be for the following:
- exhibits filed on paper under temporary or continuing hardship exemptions under Rules 201 or 202 of Reg S-T or under Rule 311 of Reg S-T;
- XBRL exhibits that are filed with the affected forms (because the XBRL exhibits are in unconverted code and not incorporated by reference into other filings);
- exhibits filed with Form ABS-EE; and
- exhibits incorporated by reference that were filed on paper prior to the time that electronic filing on EDGAR became mandatory and have not been refiled in electronic format.
The amendments would apply to Forms S-1, S-3, S-4, S-8, S-11, F-1, F-3, F-4, F-10, SF-1 and SF-3 under the Securities Act; and Forms 10, 10-K, 10-Q, 8-K, 10-D and 20-F under the Exchange Act. For periodic or current reports, the active hyperlink to each exhibit must be included when the report is filed. In a change from the proposal, the final rules require the active hyperlink to each exhibit in registration statements to be included in the initial filing and in each amendment (including pre-effective amendments), as opposed to only in the version that becomes effective as originally proposed. The rationale for the change was that inclusion of hyperlinks at the early stages of registration would enhance review by potential investors when they are most engaged in the review process.
In addition, because the ASCII format supports cross-references but not functional hyperlinks, to enable the inclusion of hyperlinks, the amendments will require registrants to submit these form and report filings in HTML format. The SEC noted that only 2% of registrants made filings on these forms were in ASCII format.
To allow sufficient time for the transition, the effective date will be delayed for most issuers until September 1, 2017 and, for smaller reporting companies and non-accelerated filers that use the ASCII format, until September 1, 2018. (There is also a special exception for Form 10-D filings, as a result of the need for programming changes.)
