In the waning days of the current Congress, a bill intended to help public companies streamline their disclosures to the Securities and Exchange Commission was unanimously approved by the House of Representatives this week.
The Disclosure Modernization and Simplification Act, sponsored by Rep. Scott Garrett (R-N.J.) would direct the SEC to allow issuers to submit a summary page on annual 10-K filings, provided that each item on that page cross-references (including the use of hyperlinks) that material contained elsewhere in the report. The SEC is urged to “emphasize a company by company approach that allows relevant and material information to be disseminated to investors without boilerplate language or static requirements while preserving completeness and comparability of information across registrants.”
The bill, which passed in the House on Wednesday, also calls upon the commission to revise Regulation S-K “to reduce the burden on smaller issuers, including emerging growth companies, accelerated filers, and smaller reporting companies.”
Echoing an ongoing effort by the Commission to review its disclosure regime, the bill also calls for a plan to eliminate “duplicative, overlapping, outdated, or unnecessary provisions.” The SEC would be required to study ways to: modernize and simplify the requirements in regulation S-K; improve the readability and navigability of disclosure documents; and discourage the disclosure of immaterial information.
The SEC would have 180 days following the bill’s passage to issue these regulations. Within 360 days following enactment, the Commission would need to issue a report to the Congress containing its disclosure reform recommendations, a requirement that would put a deadline on the current review required by the JOBS Act. "I believe we need to stop studying and start taking action," Garrett said in a statement.
The bill now moves to the Senate, which would have to pass it before lawmakers start their holiday recess at the end of next week. If that does not happen, the House would have to pass the bill again in the next Congress that begins in January.