Tag: Regulation S-K

SEC votes to modernize Reg S-K requirements for business, legal proceedings and risk factor disclosures

At an open meeting this morning, the SEC voted (three to two) to adopt amendments, substantially as proposed, to modernize the Reg S-K disclosure requirements related to the descriptions of business, legal proceedings and risk factors. As Chair Jay Clayton observed in his Statement, these Reg S-K disclosure items “essentially have not changed in over 30 years,” but much has changed in our economy since that time, making these updates well warranted. The changes are a component of the SEC’s Disclosure Effectiveness Initiative and reflect public comments on the SEC’s 2016 Concept Release (see this PubCo post) and the 2019 proposal (see this PubCo post)—although the extent to which those comments were taken into account was subject to some debate, as discussed below—as well as learning from the staff’s disclosure review process. As described in the press release, the amendments mainly adopt a “principles-based, registrant-specific approach to disclosure” that is intended to elicit information “on a basis consistent with the lens that management and the board of directors use to manage and assess the registrant’s performance.”  The amendments are also intended to discourage repetition, reduce disclosure of information that is not material and simplify compliance.  While there are changes throughout, the most significant change is the enhancement of the disclosure requirement for human capital, a topic that has been front-burnered by the impact of COVID-19 on the workforce.  The amendments will become effective 30 days after publication in the Federal Register.