On October 11, 2017, the SEC proposed a collection of amendments to its rules and forms intended to modernize and simplify some of the disclosure requirements applicable to US public companies.
The proposals would implement a statutory directive under the 2015 FAST Act. They span a number of topics, including MD&A, property, risk factors, confidential treatment requests and exhibits, and are generally modest changes, although some may prove quite helpful for companies in practice.
We discuss the more significant of the proposed amendments in the linked memorandum and summarize many of the proposal’s other, more ministerial amendments in a list at the end. Underlying the most significant of the proposed changes is a principles-based approach that allows companies to tailor disclosure to their own circumstances and, perhaps most importantly, defers to companies to make judgments about materiality. The SEC says it is continuing to consider further changes to the disclosure regime, so this proposal could signal a trend in US public company disclosure requirements to emphasize quality over quantity and principles-based rather than prescriptive rules, which would benefit companies and investors alike by cutting back on irrelevant and immaterial disclosure.
This alert memo was republished in Law360 and the Columbia Law School Blue Sky Blog.