The SEC this week voted to propose amendments to eliminate redundant, overlapping, outdated, or superseded provisions, in light of subsequent changes to disclosure rules, accounting principles, and technology. The SEC is also soliciting comment on certain disclosure requirements that overlap with U.S. GAAP to determine whether to retain, modify, eliminate or refer them to the Financial Accounting Standards Board (FASB) for potential incorporation into U.S. GAAP.
The proposing release is part of the disclosure effectiveness review, which is a broad-based staff review of the requirements, and the presentation and delivery of disclosures that companies make to investors. The proposal is also part of the SEC’s work to implement the Fixing America’s Surface Transportation (FAST Act), which, among other things, requires the Commission to eliminate provisions of Regulation S-K that are duplicative, overlapping, outdated, or unnecessary.
The proposal would be primarily applicable to public companies (including foreign private issuers), but also would involve requirements applicable to other entities the Commission regulates, including Regulation A issuers, investment advisers, investment companies, broker-dealers, and nationally recognized statistical rating organizations.
Key highlights covered by the proposing release include:
Duplicative requirements, which require substantially the same disclosures as U.S. GAAP, International Financial Reporting Standards (IFRS), or other SEC disclosure requirements. The Commission said it will consider whether to propose to delete these requirements in light of the requirements elsewhere.
Overlapping requirements, which are related to, but not the same as U.S. GAAP, IFRS, or other SEC disclosure requirements. For these requirements, the Commission said it will consider whether to:
Delete Commission disclosure requirements that require disclosures that convey reasonably similar information to or are encompassed by the disclosures that result from compliance with the overlapping U.S. GAAP, IFRS, or Commission disclosure requirements, or require disclosure incremental to the overlapping U.S. GAAP, IFRS, or Commission disclosure requirements and may no longer be useful to investors;
Integrate Commission disclosure requirements that overlap with, but require information incremental to, other Commission disclosure requirements; or
Solicit comment on certain Commission disclosure requirements that overlap with, but require information incremental to, U.S. GAAP to determine whether to retain, modify, eliminate, or refer them to the Financial Accounting Standards Board (FASB) for potential incorporation into U.S. GAAP.
Outdated requirements, which have become obsolete as a result of the passage of time or changes in the regulatory, business, or technological environment. The Commission will consider whether to propose to amend these outdated requirements. The Commission will consider whether to propose to require additional disclosure of information to reduce any loss of information or increased burdens for investors.
Superseded requirements, which are inconsistent with recent legislation, more recently updated Commission disclosure requirements, or more recently updated U.S. GAAP. The Commission will consider whether to propose to amend these superseded disclosure requirements to reflect, as applicable, the more recently updated requirements.
The amendments, along with the input received on the Regulation S-K concept release, are designed to further inform the SEC’s actions to enhance disclosure.
“The proposed amendments address outdated and redundant disclosure requirements while continuing to require companies to provide investors with what they need to make informed decisions,” SEC Chair Mary Jo White said in a statement. “We are keenly interested in investors’ views on all aspects of the proposal and look forward to receiving their input as we continue to consider changes and enhancements to our disclosure requirements.”
The public comment period will remain open for 60 days following publication of the proposing release in the Federal Register.