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At a glance

The SEC adopted rules that reduce MD&A and other disclosure requirements, and made other changes designed to let investors more easily access and analyze information.

What happened?
On March 20, the SEC amended its rules to modernize and simplify certain reporting requirements for public companies, investment advisers and investment companies. The amendments are part of the SEC’s overall project to improve disclosure effectiveness and are intended to simplify compliance and ease accessibility without significantly altering the total mix of information provided to investors.
Some of the changes to simplify disclosure requirements include:
  • Providing registrants the ability to exclude discussion of the earliest of the three years in Management’s Discussion and Analysis (MD&A) if this year has been discussed in a previous filing; however, in some circumstances, information about the third year could be material and should be provided
  • Eliminating the requirement to compare financial statement line items to the previous year in the MD&A, thereby allowing each year to be discussed individually
  • Allowing registrants to omit certain confidential information from most exhibits without filing a confidential treatment request
  • Limiting the requirement to file completed material contracts that were entered within two years of the applicable registration statement or report to “newly reporting registrants,” as defined in the amendments
  • Clarifying that certain disclosures (e.g., the list of physical properties, attachments to material agreements) are only required if they present material information
Some of the amendments designed to make it easier for investors to access and analyze material information include:
  • Requiring companies to disclose on the national exchange or principal US market for their securities and the trading symbol and title of each class of securities on the cover page of filed forms
  • Requiring hyperlinks to documents incorporated by reference instead of including them as an exhibit
  • Tagging of all cover page data in inline XBRL
The new rules also prohibit the financial statements from incorporating by reference or cross-referencing information outside of the financial statements, unless specifically permitted or required by Commission rules, US GAAP or IFRS.
The amendments also make parallel changes to rules and other requirements for investment companies and advisers, including requiring investment companies to use HTML format when filing reports on Form N-CSR and registration statements.
Many of the changes apply equally to domestic registrants and foreign private issuers. A number of items are not applicable to Canadian companies filing on multijurisdictional disclosure system forms.
Why is this important?
Adoption of these amendments aligns with the SEC’s goal of reducing compliance costs. The amendments also clarify ambiguous disclosure requirements, remove redundancies, and further leverage the use of technology. Registrants should take note of these changes and plan to make appropriate updates to their filings in line with the new requirements.
What's next?
The amendments will be effective 30 days after they are published in the Federal Register, except for the following:
  • The ability to omit certain confidential information from most exhibits without filing a confidential treatment request will become effective immediately upon publication in the Federal Register.
  • The tagging of information on the cover page is subject to a three year phase-in, depending on the type of the filer.
  • All investment company registration statements and Form N-CSR filings made on or after April 1, 2020 must be made in HTML format and comply with these amendments.
To have a deeper discussion, contact:
Diane Howell
Partner

Brandon Browne
Senior Manager
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