The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness has released a new report it wants the Securities and Exchange Commission to consider as it embarks on the ambitious task of corporate disclosure reform.  As the Commission rethinks and refines its disclosure regime, the guiding principle should be materiality considered “through the eyes of a reasonable investor,” the report says.

Specific suggestions detailed in the report, include:

Disclosing in Form 10-K the “general development” of a business

 “Information regarding material acquisitions, dispositions, or bankruptcies should already be disclosed in a Form 8-K or other filing given its materiality to the company’s business, the report says. “Redundant disclosure in reports subsequent to the Form 8-K should not be required.”

Disclosing financial information for different geographic areas in which a company operates

A company would discuss those operations as part of Management’s Discussion and Analysis (MD&A) and U.S. generally accepted accounting principles (U.S. GAAP) require financial disclosures by operating segment. Therefore, the report says, any disclosures that are redundant with other obligations should not be separately required.

Describing principal plants, mines, and other materially important physical properties

 “The disclosure requirement—particularly for a company for which physical property is not material to its business—may lead to the disclosure of immaterial information to the extent a company ends up disclosing more than is mandated,” the Chamber says. “As businesses have moved away from factories and other brick-and-mortar locations, perhaps lengthy disclosures of physical properties for many companies are not a material consideration for investors.”

The discussion of material legal proceedings (Item 103 of Regulation S-K)

Although not identical, there is significant overlap between Item 103 and the financial statement disclosures required under loss contingency accounting standards, the report says. “The overlap—if not outright duplication in certain areas—between these two disclosure requirements has contributed to a proliferation of lengthy disclosures containing immaterial information that often clouds investors’ understanding of risk,” it adds.

The requirement to disclose which public market a company’s shares are traded on, the high and low share prices for the preceding two years, and the frequency and amount of dividends for a company’s stock during the preceding two years

“Given the technological capabilities now widely available, the requirement...  is obsolete and should no longer be included under Regulation S-K,” the report says. Similarly, the requirement to display a graph showing the company’s stock performance over a period of time is also not needed by most investors.

Disclosing changes in, and disagreements with, accountants

“This information is useful to investors, but there is no longer a need to mandate its disclosure in annual reports and proxy statements to the extent the same information has been disclosed in a Form 8-K filing,” the report says.

As a longer term project, the Chamber recommends a significant review of Compensation Discussion & Analysis (CD&A) and Management’s Discussion and Analysis (MD&A). “The complexity of the SEC’s rules and interpretations, coupled with the technical nature of the broader subject of executive compensation, means that in-depth expertise is required to understand what CD&A requires a company to disclose,” the report says. “Although CD&A was intended to illuminate a company’s executive compensation practices and philosophy, the discussion at most companies has instead resulted in a narrative that is dense and laden with technical jargon and immaterial information. CD&A can be impenetrable, even for sophisticated investors.”

As is the case for CD&A, “ MD&A is ripe for reexamination with the goal of streamlining the disclosure requirements, eliminating redundancy, and reinforcing the guiding principle of materiality,” it adds.