SEC proposes Regulation S-K amendments to implement FAST Act mandate



Publication October 19, 2017

On October 11, 2017 the SEC proposed amendments of Regulation S-K that are intended to:

  • Modernize and simplify certain disclosure requirements in Regulation S-K and related rules and forms; and
  • Implement Section 72003 of the Fixing America’s Surface Transportation Act (the “Fast Act1) and “largely implement” recommendations made by the SEC staff in a report to Congress on November 23, 2016 (the “FAST Act Report2) mandated by the FAST Act.

The SEC also proposed parallel amendments to several rules and forms applicable to investment companies and investment advisors to provide for consistent rules governing incorporation by reference and hyperlinking.

The SEC is soliciting public comments through mid-December.

Here is our FAST track through the 253-page proposing release, highlighting some changes that, if adopted in the form proposed, may be more impactful for reporting companies. 


Proposed amendments


Description of Property (Item 102)

Clarify that disclosure required under Item 102 should focus on physical properties that are material to the registrant and may be provided on a collective basis, if appropriate.

Largely consistent with FAST Act Report.

MD&A (Item 303)

  • Limit the period-to-period comparison to only the two most recent fiscal years presented in the financials, so long as the earlier period discussion (i) is no longer material to understanding the financials and (ii) has been included in the prior Form 10-K.
  • Amend instruction1 to (i) eliminate the reference to five-year selected financial information (where trend information is relevant) and (ii) clarify that information may be presented in a format (other than period-to-period comparisons) if the registrant thinks that would enhance a reader’s understanding.

Largely consistent with FAST Act Report.

The SEC is proposing similar changes for Item 5 of Form 20-F for foreign private issuers (other than Canadian issuers using Form 40-F).

Directors, Executive Officers, Promoters, and Control Persons (Item 401)

Clarify that any disclosure about executive officers required by Item 401 (not just 401(b)) does not need to be duplicated in proxy statements if it is already presented in Part I of Form 10-K.

Consistent with FAST Act Report.

Compliance with Section 16(a) of the Exchange Act (Item 405)

  • Permit registrants to rely on a review of Section 16 reports submitted on EDGAR (rather than copies required to be physically delivered) for purposes of disclosing any covered person who failed to timely file Section 16 reports.
  • Change the heading to “Delinquent Section 16(a) reports”.
  • Clarify that the heading does not need to be included if there is nothing to report.
  • Eliminate the checkbox on the Form 10-K cover page relating to Item 405 disclosures.

Largely consistent with FAST Act Report.

Rule 16a-3(e) would also be amended to eliminate the requirement that copies of Section 16 reports be furnished to the registrant.

Corporate Governance (Item 407)

  • Update a reference to outdated auditing standard (AU sec 380) to refer more broadly to all audit committee communications with independent auditors under applicable requirements of the PCAOB and the Commission, rather than any particular rule or standard.
  • Clarify that emerging growth companies  are not required to provide a compensation committee report.

Consistent with FAST Act Report.

Outside Front Cover Page of Prospectus (Item 501(b))

  • Eliminate a portion of an instruction relating to name changes that may be required if a registrant’s name is either confusingly similar or misleading.
  • Permit a cover page statement that the offering price will be determined by a particular method or formula that is more fully explained in the prospectus, if that statement is accompanied by a cross-reference to the offering price method or formula disclosure including a page number that is highlighted.
  • Require disclosure of the principal United States market or markets for the securities being offered (not just the national securities exchange where the securities will be listed) and all the corresponding trading symbols, but limiting the disclosure of markets that are not national securities exchanges to those principal United States markets where the registrant has actively sought and achieved quotation.
  • Permit registrants to exclude from any “subject to completion” legend the part that says “The Prospectus is not an offer to sell the securities, and it is not soliciting an offer to buy the securities, in any state where offers or sales are not permitted” for offerings that are not prohibited by state blue sky laws.

Consistent with FAST Act Report.

Risk Factors (Item 503(c))

Eliminate the five specific risk factor examples now listed in Item 503(c) and move the item to a new Item 105 generally covering risk factors.

New proposal, not addressed in FAST Act Report.

Plan of Distribution (Item 508)

Define “sub-underwriter” (which is not currently defined) as a “dealer that is participating as an underwriter in an offering by committing to purchase securities from a principal underwriter for the securities but is not itself in privity of contract with the issuer of the securities.”

Consistent with FAST Act Report.

Undertakings (Item 512)

Eliminate four of the undertakings currently required in Part II of a registration statement that are duplicative of other rules or have become unnecessary; that is, 512(c), (d), (e) and (f).

Consistent with FAST Act Report.

Exhibits (Item 601)

  • Require registrants to provide the information required by Item 202(a)-(d) and (f)--a description of their registered capital stock, debt securities, warrants, rights, American Depositary Receipts and other securities--as an exhibit to Form 10-K, rather than limiting this disclosure to registration statements.
  • Permit registrants to omit entire schedules and similar attachments to exhibits unless (i) they contain material information and (ii) that information is not otherwise disclosed in the exhibit or disclosure document--in effect, extending the accommodation currently provided in Item 601(b)(2) (for exhibits to plans of acquisition, reorganization, arrangement, liquidation or succession) to all exhibits--so long as the registrant:
    • provides with each exhibit a list briefly identifying the contents of any omitted schedules or attachments (similar to current 601(b)(2) provision); and
    • provides a copy of any omitted schedules or attachments, on a supplemental basis, upon request by the SEC staff.
  • Permit registrants to omit personally identifiable information (e.g., bank account numbers, social security numbers, home addresses and similar information) without submitting a confidential treatment request, in line with current SEC staff practice.
  • Permit registrants to omit or redact confidential information from material contracts filed as exhibits so long as the omitted or redacted information is both (i) not material and (ii) competitively harmful if publicly disclosed, without having to submit an un-redacted copy and a prior formal request for confidential treatment as is currently required, so long as:
    • the exhibit index is marked to indicate that portions of the exhibit(s) have been omitted or redacted;
    • there is a prominent statement on the first page of each redacted exhibit that information in the marked sections of the exhibit has been omitted from the filed version of the exhibit; and
    • brackets are used to indicate where information has been omitted form the filed version of the exhibit.

Consistent with FAST Act Report.

Material Contracts (Item 601(b)(10)

Limit the so-called “two-year look back” test for material contracts so that it only applies to a newly reporting registrant, which would be defined as “any registrant filing a registration statement that, at the time of such filing, is not subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act, whether or not such registrant has ever previously been subject to the reporting requirements of Section 13(a) or 15(d), and any registrant that has not filed an annual report since the revival of a previously suspended reporting obligation.

Consistent with FAST Act Report.

Subsidiaries of Registrant and Entity Identifiers (Item 601(b)(21))

Require registrants to include the GLEIF legal entity identifier (a 20-character, alpha numeric code that allows for unique identification of entities engaged in financial transactions), if one has been obtained, of the registrant and each subsidiary listed in this exhibit.

Consistent with FAST Act Report.

Various Incorporation by reference rules

Modify a number of rules (not just S-K or Exchange Act rules and regulations, but also rules under the Investment Company Act and Investment Advisers Act) relating to incorporation by reference to clarify, streamline, make consistent and remove unneeded or obsolete provisions. This includes:

  • Exhibit and other Filing Requirements: Eliminating requirements in various rules that copies of any information incorporated by reference must be filed as an exhibit (subject to certain exceptions).
  • Hyperlinks. Requiring hyperlinks to information that is incorporated by reference if that information is available on EDGAR, generally similar to the current requirements for exhibit hyperlinking.
  • Financial Statement Information. Prohibiting incorporation by reference or cross-referencing in the financial statements information from outside the financial statements, and restricting incorporation of financial information required to be given in comparative form for two or more fiscal years or periods unless the information incorporated by reference includes the entire period for which the comparative data is given.
  • Other Non-Substantive Amendments. Amending various other provisions, in non-substantive respects, to “streamline, clarify or conform” rules and related forms.

Consistent with FAST Act Report.

Tagging Cover Page Date

Require that all of the information on the cover pages of Forms 10-K, 10-Q, 8-K, 20-F and 40-F to be tagged in Inline XBRL in accordance with the EDGAR Filer Manual.

Consistent with FAST Act Report.

1 FAST Act Modernization and Simplification of Regulation S-K (Oct. 11, 2017) (the “Proposing Release”).

2 Modernization and Simplification of Regulation S-K (Nov. 23, 2016) (the “Fast Act Report”).

Business and Financial Disclosure Required by Regulation S-K, Release No. 33-10064 (Apr. 13, 2016) (the “SEC Concept Release”).

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