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Human capital disclosures
Perhaps the most notable amendment to Regulation S-K 101 relates to the expansion of human capital disclosures. The amended rules require a registrant to provide a description of its human capital resources (including the number of employees), if material to an understanding of the registrant’s business taken as a whole. And if material to a particular segment, that segment should be identified.
Registrants are also required to disclose, if material, any human capital measures or objectives that the registrant focuses on in managing its business, such as those related to the development, attraction, and retention of employees. A registrant should tailor its disclosures to its business and workforce.
In response to these amendments, SEC Chair Jay Clayton stated that he “expect[s] to see meaningful qualitative and quantitative disclosure, including, as appropriate, disclosure of metrics that companies actually use in managing their affairs.” He further noted that they should be constant from period to period, and if not, registrants should disclose any changes to the metrics used or how the metrics are calculated.
General development disclosure
The amendments to Regulation S-K 101(a) replace the previous requirement for information about the general development of the business over the last five years (three years for small reporting companies) with a requirement to disclose only information that is material to an understanding of the general development of the business. Additionally, registrants are permitted, in filings made after a registrant’s initial registration statement, to provide only an update to the general development of the business rather than a full discussion as long as they incorporate by reference and hyperlink to the full description in a prior report or registration statement. A registrant should focus its disclosures on material developments since its most recent full discussion of the general development of the business.
Principles-based approach
When describing the registrant’s current and intended business, the amendments to Regulation S-K 101(c) replace the current prescriptive list of 12 items required to be addressed with a more principles-based approach. Under the amended rules, when describing each segment of its business, a registrant is required to provide information material to an understanding of the entire business. The amendments list examples of items to consider; including some which were previously among the prescribed disclosures:
  • Revenue-generating activities, products, and/or services, and any dependence on such activities, key products, services, product families, or customers
  • The status of development efforts for new or enhanced products, trends in market demand, and competitive conditions
  • Resources material to the business
  • A description of any material portion of the business that may be subject to renegotiation or termination by the government
  • The extent to which the business is seasonal

Compliance with government regulations
The amendments require disclosures regarding the material effects that compliance with all government regulations, not just environmental laws, may have upon the capital expenditures, earnings, and competitive position of the registrant, including the estimated capital expenditures for costs expected to be incurred related to environmental control facilities.

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