The Securities and Exchange Commission voted to adopt amendments to implement the mandate of Section 401(a) of the Sarbanes-Oxley Act of 2002. Section 401(a) added Section 13(j) to the Securities Exchange Act of 1934, which requires the Commission to adopt final rules by Jan. 26, 2003, to require each annual and quarterly financial report required to be filed with the Commission, to disclose “all material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the issuer with unconsolidated entities or other persons, that may have a material current or future effect on financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues or expenses.”
The amendments approved by the Commission will require a registrant to provide an explanation of its off-balance sheet arrangements in a separately captioned subsection of the “Management’s Discussion and Analysis” (MD&A) section in its disclosure documents. The amendments also will require registrants (other than small business issuers) to provide an overview of certain known contractual obligations in a tabular format.
