FAST Act Modernization and Simplification of Regulation S-K, 50988-51049 [2017-22374]
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Federal Register / Vol. 82, No. 211 / Thursday, November 2, 2017 / Proposed Rules
SECURITIES AND EXCHANGE
COMMISSION
17 CFR Parts 229, 230, 232, 239, 240,
249, 270, 274 and 275
[Release No. 33–10425; 34–81851; IA–4791;
IC–32858; File No. S7–08–17]
RIN 3235–AM02
FAST Act Modernization and
Simplification of Regulation S–K
Securities and Exchange
Commission.
ACTION: Proposed rule.
AGENCY:
We are proposing
amendments based on the
recommendations made in the staff’s
Report on Modernization and
Simplification of Regulation S–K, as
required by Section 72003 of the Fixing
America’s Surface Transportation Act.
The proposed amendments are intended
to modernize and simplify certain
disclosure requirements in Regulation
S–K, and related rules and forms, in a
manner that reduces the costs and
burdens on registrants while continuing
to provide all material information to
investors. The amendments are also
intended to improve the readability and
navigability of disclosure documents
and discourage repetition and
disclosure of immaterial information. To
provide for a consistent set of rules to
govern incorporation by reference and
hyperlinking, we are also proposing
parallel amendments to several rules
and forms applicable to investment
companies and investment advisers,
including proposed amendments that
would require certain investment
company filings to be submitted in
HyperText Markup Language (‘‘HTML’’)
format.
DATES: Comments should be received by
January 2, 2018.
ADDRESSES: Comments may be
submitted by any of the following
methods:
SUMMARY:
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Electronic Comments
• Use the Commission’s Internet
comment forms (http://www.sec.gov/
rules/proposed.shtml);
• Send an email to rule-comments@
sec.gov. Please include File Number S7–
08–17 on the subject line; or
• Use the Federal Rulemaking Portal
(http://www.regulations.gov). Follow the
instructions for submitting comments.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
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All submissions should refer to File
Number S7–08–17. This file number
should be included in the subject line
if email is used. To help us process and
review your comments more efficiently,
please use only one method. The
Commission will post all comments on
the Commission’s Web site (http://
www.sec.gov/rules/proposed.shtml).
Comments also are available for Web
site viewing and printing in the
Commission’s Public Reference Room,
100 F Street NE., Room 1580,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly.
Studies, memoranda, or other
substantive items may be added by the
Commission or staff to the comment file
during this rulemaking. A notification of
the inclusion in the comment file of any
such materials will be made available
on the Commission’s Web site. To
ensure direct electronic receipt of such
notifications, sign up through the ‘‘Stay
Connected’’ option at www.sec.gov to
receive notifications by email.
FOR FURTHER INFORMATION CONTACT:
Shehzad Niazi, Daniel Morris, or Angie
Kim, Office of Rulemaking, Division of
Corporation Finance, at (202) 551–3430;
Michael C. Pawluk or J. Matthew
DeLesDernier, Investment Company
Rulemaking Office, Division of
Investment Management, at (202) 551–
6792; U.S. Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549.
SUPPLEMENTARY INFORMATION: The
Commission is proposing to amend
Items 10, 102, 202, 303, 401, 405, 407,
501, 503, 512, 601, and 1100 of
Regulation S–K under the Securities Act
of 1933 (the ‘‘Securities Act’’) and the
Securities Exchange Act of 1934 (the
‘‘Exchange Act’’); Rules 405, 411, and
491 of Regulation C under the Securities
Act; Rules 11, 102, 105, 303, and 406 of
Regulation S–T under the Securities Act
and Exchange Act; Forms S–1, S–3, S–
6, S–11, N–14, S–4, F–1, F–3, F–4, F–
7, F–8, F–10, F–80, SF–1, and SF–3
under the Securities Act; Rules 12b–13,
12b–23, 14a–101 (Schedule 14A), and
16a–3 under the Exchange Act; Forms 3,
4, 5, 8–A, 10, 20–F, 40–F, 8–K, 10–Q,
10–K, and 10–D under the Exchange
Act; Rule 0–4 under the Investment
Company Act of 1940 (the ‘‘Investment
Company Act’’); Forms N–1A, N–2,
N–3, N–4, N–5, and N–6 under the
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Investment Company Act and Securities
Act; Form N–CSR under the Investment
Company Act and Exchange Act; and
Rule 0–6 under the Investment Advisers
Act of 1940 (‘‘Investment Advisers
Act’’). The Commission is also
proposing to add new Item 105 to
Regulation S–K and to remove Rule
12b–32 under the Exchange Act and
Rules 8b–23, 8b–24, and 8b–32 under
the Investment Company Act.
Table of Contents
I. Introduction
A. Background
B. Overview of the Proposed Amendments
II. Proposed Amendments
A. Description of Property (Item 102)
B. Management’s Discussion and Analysis
of Financial Condition and Results of
Operations (Item 303)
1. Year-to-Year Comparisons (Instruction 1
to Item 303(a))
2. Application to Foreign Private Issuers
C. Management, Security Holders and
Corporate Governance
1. Directors, Executive Officers, Promoters,
and Control Persons (Item 401)
2. Compliance With Section 16(a) of the
Exchange Act (Item 405)
3. Corporate Governance (Item 407)
D. Registration Statement and Prospectus
Provisions
1. Outside Front Cover Page of the
Prospectus (Item 501(b))
2. Risk Factors (Item 503(c))
3. Plan of Distribution (Item 508)
4. Undertakings (Item 512)
E. Exhibits
1. Description of Registrant’s Securities
(Item 601(b)(4))
2. Information Omitted From Exhibits
(Item 601)
3. Material Contracts (Item 601(b)(10)(i))
4. Subsidiaries of the Registrant and Entity
Identifiers (Item 601(b)(21)(i))
5. Application to Foreign Private Issuers
F. Incorporation by Reference
1. Item 10(d)
2. Securities Act Rule 411, Exchange Act
Rule 12b–23 and Rule 12b–32 and
Related Rules Under the Investment
Company Act and Investment Advisers
Act
3. Forms
G. Manner of Delivery
1. Tagging Cover Page Data
2. Exhibit Hyperlinks and HTML Format
for Investment Companies
H. General Request for Comment
III. Economic Analysis
A. Background
1. The Benefits of Information Disclosure
2. The Costs of Disclosure
B. Baseline
C. Economic Analysis of the Proposed
Amendments: General Assessment,
Including Impact on Efficiency,
Competition, and Capital Formation
D. Economic Analysis of the Specific
Amendments: Proposals That Clarify and
Update Existing Rules
1. Proposals That Clarify or Streamline a
Rule’s Requirements
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2. Proposals To Update Rules To Account
for Subsequent Developments
E. Economic Analysis of the Specific
Amendments: Proposals That Simplify
the Disclosure Process or Eliminate
Disclosures
1. Management’s Discussion and Analysis
of Financial Condition and Results of
Operations (Item 303)
2. Information Omitted From Exhibits
(Item 601): Item 601(a)(5), Item 601(a)(6),
and Item 601(b)(10)(iv)
F. Economic Analysis of the Specific
Amendments: Proposals That Require
More Disclosure or the Incorporation of
New Technology
1. Description of Registrant’s Securities
(Item 601(b)(4))
2. Subsidiaries of the Registrant and Entity
Identifiers (Item 601(b)(21))
3. Tagging Cover Page Data
4. Proposals for Additional Disclosure
With Minimal Additional Costs to
Registrants
G. Economic Analysis of HTML and
Hyperlinking Requirements of Forms
Under the Investment Company Act
IV. Paperwork Reduction Act
A. Background
B. Summary of the Proposed Amendments’
Impact on Collection of Information
1. Proposed Amendments Expected To
Decrease Burdens
2. Proposed Amendments Expected To
Increase Burdens
3. Proposed Amendments Not Expected to
Meaningfully Affect Burdens
C. Burden and Cost Estimates to the
Proposed Amendments
1. Form 10–K and Form 10–Q; Schedule
14A and Schedule 14C
2. Form S–1, Form S–3, Form S–4, Form
F–3, Form F–4, Form SF–1, Form SF–3,
Form 10, and Form 20–F
3. Form 8–A, Form 10–D, Form 40–F, Form
F–7, Form F–8, Form F–10, and Form
F–80
4. Form S–6, Form N–1A, Form N–2, Form
N–3, Form N–4, Form N–5, Form N–6,
Form N–14, and Form N–CSR
D. Request for Comment
V. Small Business Regulatory Enforcement
Fairness Act
VI. Initial Regulatory Flexibility Act Analysis
A. Reasons for, and Objectives of, the
Proposed Action
B. Legal Basis
C. Small Entities Subject to the Proposed
Rules
D. Reporting, Recordkeeping, and Other
Compliance Requirements
E. Duplicative, Overlapping, or Conflicting
Federal Rules
F. Significant Alternatives
G. Request for Comment
VII. Statutory Authority and Text of Proposed
Rule and Form Amendments
I. Introduction
A. Background
We are proposing amendments to
modernize and simplify certain
disclosure requirements in Regulation
S–K and related rules and forms to
implement Section 72003 of the Fixing
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America’s Surface Transportation Act
(the ‘‘FAST Act’’).1 As required by
Section 72003(c) of the FAST Act, the
staff published its Report on
Modernization and Simplification of
Regulation S–K (the ‘‘FAST Act
Report’’) on November 23, 2016.2
Consistent with Section 72003, the
FAST Act Report provided ‘‘specific
and detailed recommendations on
modernizing and simplifying the
requirements in Regulation S–K in a
manner that reduces the costs and
burdens on companies while still
providing all material information’’ and
‘‘[recommendations] on ways to
improve the readability and navigability
of disclosure and to discourage
repetition and the disclosure of
immaterial information.’’ 3 Also
consistent with Section 72003, the
FAST Act Report reflected consultations
with the Investor Advisory Committee
(‘‘IAC’’) and the Advisory Committee on
Small and Emerging Companies.
This release proposes amendments
based on the recommendations in the
FAST Act Report. The proposed
amendments largely implement these
recommendations, as required by
Section 72003(d) of the FAST Act.
However, in some cases, and as
discussed in more detail below, we have
chosen to alter or supplement the staff’s
previously recommended approach
based on our consideration of the issues
and the statutory mandate.4 This release
reflects perspectives developed during
the staff’s broader review of the
Commission’s disclosure regime. As
part of that effort, the staff requested
public input on how the disclosure
system could be improved,5 and the
Commission issued a concept release on
the business and financial disclosure
requirements in Regulation S-K (the
‘‘Concept Release’’).6
1 Public Law No. 114–94, Sec. 72003, 129 Stat.
1312 (2015).
2 Report on Modernization and Simplification of
Regulation S–K (Nov. 23, 2016), available at https://
www.sec.gov/reportspubs/sec-fast-act-report2016.pdf.
3 See FAST Act § 72003(c).
4 The FAST Act Report presented
recommendations for the Commission’s
consideration. The FAST Act Report also noted that
many of the recommendations in the report were
necessarily preliminary in nature and that ongoing
outreach and study would be necessary in
connection with any rulemaking to implement the
recommendations. See FAST Act Report, supra note
2, at n.15.
5 Comment letters related to this request are
available at https://www.sec.gov/spotlight/
disclosure-effectiveness.shtml. We refer to these
letters throughout as ‘‘Disclosure Effectiveness’’
letters.
6 See Business and Financial Disclosure Required
by Regulation S–K, Release No. 33–10064 (Apr. 13,
2016) [81 FR 23916 (Apr. 22, 2016)].
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In developing the proposed
amendments, we considered the
comment letters we received on the
Concept Release; 7 the prior staff study
of Regulation S–K (the ‘‘S–K Study’’)
mandated by the Jumpstart Our
Business Startups Act (the ‘‘JOBS
Act’’); 8 the Commission’s request for
comment on the requirements relating
to management, security holders, and
corporate governance matters in Subpart
400 of Regulation S-K (the ‘‘Regulation
S-K Subpart 400 Release’’); 9 and the
FAST Act Report.10 Throughout this
release, we discuss these comments as
further context for the proposed
amendments.11 The proposed
amendments also reflect the
Commission’s experience with
Regulation S-K arising from the Division
of Corporation Finance’s disclosure
review program.
In this release, we focus on
amendments to implement Section
72003(d) of the FAST Act. Accordingly,
we are not at this time proposing
amendments that extend substantially
7 Comment letters related to this request are
available at https://www.sec.gov/comments/s7-0616/s70616.htm.
8 Public Law No. 112–106, Sec. 108, 126 Stat. 306
(2012). See also Rule 12b–2 under the Exchange Act
[17 CFR 240.12b–2] and Rule 405 under the
Securities Act [17 CFR 230.405]. Section 108 of the
JOBS Act required the Commission to
comprehensively evaluate its disclosure
requirements to determine how they could be
updated to modernize and simplify the registration
process and reduce the costs and other burdens
associated with these requirements for emerging
growth companies (‘‘EGCs’’). The resulting
recommendations are in the staff’s Report on
Review of Disclosure Requirements in Regulation
S–K, available at https://www.sec.gov/news/
studies/2013/reg-sk-disclosure-requirementsreview.pdf.
In connection with the S–K Study, we received
public comments on regulatory initiatives to be
undertaken in response to the JOBS Act. See
Comments on SEC Regulatory Initiatives Under the
JOBS Act: Title I—Review of Regulation S–K,
available at http://www.sec.gov/comments/jobstitle-i/reviewreg-sk/reviewreg-sk.shtml.
9 Request for Comment on Subpart 400 of
Regulation S–K Disclosure Requirements Relating to
Management, Certain Security Holders and
Corporate Governance Matters, Release No. 33–
10198 (Aug. 25, 2016) [81 FR 59927 (Aug. 31,
2016)]. Comment letters related to this request are
available at https://www.sec.gov/comments/s7-1816/s71816.htm. We refer to these letters throughout
as ‘‘Subpart 400’’ letters.
10 Comment letters related to the FAST Act
Report are available at https://www.sec.gov/
comments/fast/fast.htm.
After the FAST Act Report was published, the
staff updated the IAC on the recommendations
included in the report at its December 8, 2016
meeting. See Minutes of the IAC Meeting on
December 8, 2016 available at https://www.sec.gov/
spotlight/investor-advisory-committee-2012/
iac120816-minutes.htm. The staff did not discuss
with the IAC or the ACSEC potential modifications
to those recommendations as reflected in this
release.
11 Unless otherwise indicated, comment letters
cited in this release are to the Concept Release.
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beyond the staff’s recommendations in
the FAST Act Report.12 We are
continuing to consider potential
additional changes to our disclosure
regime in connection with recent
proposing releases and requests for
comment.13 In addition, we are
proposing parallel amendments to
several rules and forms applicable to
investment companies and investment
advisers to provide for a consistent set
of rules governing incorporation by
reference and hyperlinking, including
proposed amendments that would
require certain investment company
filings to be submitted in HTML
format.14
B. Overview of the Proposed
Amendments
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We are proposing amendments to
several individual rules that would
update, streamline, or otherwise
improve our well-established and robust
disclosure framework. These include
proposed changes to:
• Description of Property (Item 102);
12 As discussed in relevant sections below, some
of the proposed amendments in this release would
apply to Form 20–F or Form 40–F. Form 20–F is
the combined registration statement and annual
report form for foreign private issuers under the
Exchange Act. It also sets forth disclosure
requirements for registration statements filed by
foreign private issuers under the Securities Act.
Form 40–F is the registration statement and annual
report used by eligible Canadian issuers under the
Multijurisdictional Disclosure System. While
Section 72003 of the FAST Act is focused on
Regulation S–K, we are proposing to make
corresponding changes to the disclosure
requirements applicable to foreign private issuers
where Forms 20–F and 40–F include provisions
that are substantially similar to those found in
Regulation S–K.
13 See Request for Comment on Possible Changes
to Industry Guide 3 (Statistical Disclosure by Bank
Holding Companies), Release No. 33–10321 (Mar. 1,
2017) [82 FR 12757 (Mar. 7, 2017)]; Concept
Release, supra note 6; Regulation S–K Subpart 400
Release, supra note 9; Disclosure Update and
Simplification, Release No. 33–10110 (Jul. 13, 2016)
[81 FR 51607 (Aug. 4, 2016)] (the ‘‘Disclosure
Update and Simplification Proposing Release’’);
Amendments to Smaller Reporting Company
Definition, Release No. 33–10107 (Jun. 27, 2016) [81
FR 43130 (Jul. 1, 2016)]; and Modernization of
Property Disclosures for Mining Registrants, Release
No. 33–10098 (Jun. 16, 2016) [81 FR 41651 (Jun. 27,
2016)] (the ‘‘Modernization for Mining Registrants
Proposing Release’’).
14 The Commission has adopted requirements for
exhibit hyperlinks and HTML format for operating
companies. See Exhibit Hyperlinks and HTML
Format, Release No. 33–10322 (Mar. 1, 2017) [82 FR
14130 (Mar. 17, 2017)] (‘‘Exhibit Hyperlinks
Adopting Release’’) (adopting amendments to
require registrants to hyperlink to each exhibit
listed in the exhibit index and, to enable the
inclusion of hyperlinks, requiring registrants to
submit all such filings in HTML format). Nonaccelerated filers and smaller reporting companies
(‘‘SRCs’’) may continue to file in American
Standard Code for Information Interchange
(‘‘ASCII’’) until September 1, 2018 and are therefore
not required to include exhibit hyperlinks until that
date.
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• Management’s Discussion and
Analysis (Item 303);
• Directors, Executive Officers,
Promoters, and Control Persons (Item
401);
• Compliance with Section 16(a) of
the Exchange Act 15 (Item 405);
• Outside Front Cover Page of the
Prospectus (Item 501(b)); 16
• Risk Factors (Item 503(c));
• Plan of Distribution (Item 508); 17
• Material Contracts (Item 601(b)(10));
and
• Various rules related to
incorporation by reference.
Other proposed amendments would
update some of our rules to account for
developments since their adoption or
last amendment. These include
proposed changes to Corporate
Governance (Item 407), Outside Front
Cover Page of the Prospectus (Item
501(b)(10)), and Undertakings (Item
512). Some of the proposed
amendments would simplify disclosure
or the disclosure process. These include
proposed changes to Management’s
Discussion and Analysis (Item 303(a))
that would allow for flexibility in
discussing historical periods and the
addition of new subparagraphs to
Exhibits (Item 601) to permit omission
of portions of exhibits that do not
contain material information.
Some of our proposed amendments
would require additional disclosure or
incorporation of new technology. These
include proposed changes to:
• Outside Front Cover Page of the
Prospectus (Item 501(b)(4));
• Description of Registrant’s
Securities (Item 601(b)(4));
• Subsidiaries of the Registrant (Item
601(b)(21)(i)); and
• Various regulations and forms to
require all of the information on the
cover pages of some Exchange Act forms
to be tagged in Inline XBRL format.
We discuss the proposed amendments
generally in the order that each Item
appears in Regulation S–K; however, we
have consolidated the discussion of the
rules and item requirements related to
incorporation by reference. We have
also consolidated our discussion of
rules requiring the incorporation of new
technology.
II. Proposed Amendments
A. Description of Property (Item 102)
Item 102 requires disclosure of the
location and general character of the
principal plants, mines, and other
15 15
U.S.C. 78a et seq.
proposed amendments to Item 501(b)(1),
(b)(3) and (b)(4).
17 Our proposals would amend Rule 405 and Rule
491.
16 See
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materially important physical properties
of the registrant and its subsidiaries.18
Instruction 1 to Item 102 states that
registrants must disclose such
information as reasonably will inform
investors as to the suitability, adequacy,
productive capacity, and extent of
utilization of the facilities by the
registrant.19 Instruction 2 provides that,
in determining whether properties are
material to an understanding of the
registrant’s business taken as a whole,
registrants should take into account
both quantitative and qualitative
factors.20
Currently, Item 102 specifies
disclosure of ‘‘principal’’ plants, mines,
and other ‘‘materially important’’
physical properties. The staff has
observed, however, that the item may
elicit disclosure that is not material.21
For example, some registrants—such as
those in the services or information
technology industry—may not have
material physical properties, and
accordingly, these registrants tend to
disclose information about their
corporate headquarters, office space,
and other facilities in response to this
item. To address this concern, in the
FAST Act Report, the staff
recommended that the Commission
consider revising Item 102 to require a
description of property only to the
extent that physical properties are
material to the registrant’s business.22
Similarly, several commenters stated
that Item 102 is not relevant to all
registrants or can result in immaterial
disclosure.23 Two of these commenters
18 Item
102 of Regulation S–K [17 CFR 229.102].
descriptions of the physical
characteristics of individual properties or legal
descriptions by metes and bounds are not required.
See Instruction 1 to Item 102 of Regulation S–K.
20 Disclosure specific to the mining, oil and gas,
and real estate industries is outside the scope of this
release. Instructions 3, 5, and 7 apply to the mining
industry. The Commission has separately proposed
revisions to the property disclosure requirements
for mining registrants. See Modernization for
Mining Registrants Proposing Release, supra note
13. Instructions 4, 6, and 8 apply to the oil and gas
industry. The Commission considered disclosure
specific to the oil and gas industry in 2008. See
Modernization of Oil and Gas Reporting, Release
No. 33–8995 (Dec. 31, 2008) [74 FR 2158 (Jan. 14,
2009)]. Instruction 9 applies to the real estate
industry.
21 See FAST Act Report, supra note 2, at
Recommendation B.1. See also Concept Release,
supra note 6, at Section IV.A.6.b and SEC Staff’s
Report of the Task Force on Disclosure
Simplification (Mar. 5, 1996) available at https://
www.sec.gov/news/studies/smpl.htm.
22 FAST Act Report, supra note 2, at
Recommendation B.1.
23 See, e.g., Letters from Ernst & Young (Sept. 11,
2012) [S–K Study letter] (‘‘Ernst & Young 1’’); U.S.
Chamber of Commerce (July 29, 2014) [Disclosure
Effectiveness letter] (‘‘Chamber 1’’); Society of
Corporate Secretaries and Governance Professionals
(Sept.10, 2014) [Disclosure Effectiveness letter]
(‘‘Society of Corporate Secretaries’’); Shearman &
19 Detailed
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noted that, if material to a registrant’s
business, Item 303, Management’s
Discussion and Analysis of Financial
Condition and Results of Operations
(‘‘MD&A’’),24 would require a
discussion of the importance of a
property or facility and, in these
instances, Item 102 may result in
duplicative disclosure.25
A number of commenters also
supported revising Item 102 to be more
principles-based or require disclosure
only when property is material.26 One of
these commenters asserted that the lack
of a materiality overlay in Instruction 2
to Item 102 results in immaterial
disclosure.27 Another commenter noted
different triggers for disclosure in Item
102, such as the item’s reference to
‘‘materially important’’ physical
properties and ‘‘major’’ encumbrance.28
This commenter suggested harmonizing
these and similarly varied formulations
to lessen ambiguity in their
application.29
A few commenters, however,
suggested retaining this item in its
current form,30 with one commenter
noting the importance of this disclosure
for mining companies.31 Additionally,
Sterling LLP (Nov. 26, 2014) [Disclosure
Effectiveness letter] (‘‘Shearman 1’’) (stating that
disclosure of physical properties does not, in most
cases, provide investors meaningful information,
particularly for registrants not engaged in
manufacturing); Allstate Insurance Company (July
1, 2016) (‘‘Allstate’’); Fenwick West LLP (Aug. 1,
2016) (‘‘Fenwick’’); U.S. Chamber of Commerce
(July 20, 2016) (‘‘Chamber 2’’); Corporate
Governance Coalition for Investor Value (July 20,
2016) (‘‘CGCIV’’); Securities Industry and Financial
Markets Association (July 21, 2016) (‘‘SIFMA’’);
Ernst & Young (July 21, 2016) (‘‘Ernst &Young 3’’);
and Davis Polk & Wardwell LLP (July 22, 2016)
(‘‘Davis Polk 1’’).
24 17 CFR 229.303.
25 See Letters from Chamber 1 and Society of
Corporate Secretaries.
26 See, e.g., Letters from Allstate; National
Association of Real Estate Investment Trusts (July
21, 2016); Fenwick; Davis Polk 1; FedEx
Corporation (July 21, 2016) (‘‘FedEx’’); Chamber 2;
and CGCIV (both the Chamber 2 and CGCIV letters
recommended eliminating this disclosure
requirement except to the extent property
disclosure is material or is necessary to make other
disclosures not misleading and stated that, if this
disclosure requirement is retained, it should not be
expanded and the Commission should clarify that
for registrants who do not have material physical
properties, disclosure about their corporate
headquarters, office space, and other facilities is
optional, not required).
27 See Letter from Fenwick.
28 See Letter from American Bar Association
(Mar. 6, 2015) [Disclosure Effectiveness letter]
(‘‘ABA’’).
29 Id.
30 See, e.g., Letters from US SIF: The Forum for
Sustainable and Responsible Investment (Sept., 18,
2014) [Disclosure Effectiveness letter] (‘‘US SIF 1’’);
US SIF: The Forum for Sustainable and Responsible
Investment (July 14, 2016) (‘‘US SIF 2’’); Elise J.
Bean (July 6, 2016) (‘‘E. Bean’’); and CFA Institute
(Oct. 6, 2016) (‘‘CFA Institute’’).
31 See Letter from US SIF 2.
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two commenters recommended
expanding the item to include
additional disclosure.32 One of these
commenters recommended disclosure of
risks resulting from the potential lack of
availability and rising cost of
properties.33 The other commenter
recommended property disclosure
specific to the manufacturing industry,
including manufacturing locations that
promote and retain jobs within the
United States. This commenter stated
that enhanced disclosures would inform
investors about the benefits of
manufacturing in the United States.34
Consistent with several commenters’
suggestions and the staff’s
recommendation in the FAST Act
report, we are proposing to revise Item
102 to emphasize materiality. While the
FAST Act Report recommended
amending Item 102 to require disclosure
only to the extent physical properties
are material to the registrant’s business,
our proposals would require this
disclosure to the extent material to the
registrant. Our proposal is intended to
encompass properties that are material
to the registrant, which would include
those properties that are material to the
registrant’s business.35 We are also
proposing to clarify that the 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.
As suggested by one commenter, we
are also proposing to harmonize the
various non-industry-specific triggers
for disclosure in Item 102.36 For
example, we are proposing to replace
the references to ‘‘major’’ encumbrances
and ‘‘materially important’’ physical
properties in Item 102 with references to
a materiality threshold. By using a
consistent materiality threshold, we
intend to facilitate application of the
proposed amendments. In light of the
particular significance of this disclosure
for registrants in the mining, real estate,
and oil and gas industries, we are not
proposing to modify any of the
instructions of Item 102 specific to those
industries in this release.37
32 See Letters from Stephen P. Percoco (July 24,
2016) (‘‘S. Percoco’’) and Sen. Feinstein, et al. (Feb.
27, 2017) (‘‘Sen. Feinstein, et al.’’).
33 See Letter from S. Percoco.
34 See Letter from Sen. Feinstein, et al.
35 We believe this approach is clearer and does
not inadvertently omit disclosures that would be
material to the registrant, but not its ongoing
business, for example properties that had value that
was material to the registrant but that were no
longer important to its operations.
36 See Letter from ABA.
37 For example, Instruction 3 of Item 102 refers to
‘‘major significance’’ and is specific to the mining
industry. The Modernization for Mining Registrants
Proposing Release proposes to eliminate this
instruction. See supra note 13.
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In the FAST Act Report, the staff also
recommended that the Commission
consider combining the description of
material physical properties with the
description of business in Item 101(c) of
Regulation S–K.38 A number of
commenters on the Concept Release also
recommended incorporating Item 102
into the broader description of business
disclosure requirements in Item 101.39
Several of these commenters
recommended revising Item 101 to
require broad disclosure of a registrant’s
resources or assets, whether physical or
otherwise, that are critical to a
registrant’s business.40 One of these
commenters stated that the specific
requirements of Item 102 are obsolete,
but that a description of physical
properties in Item 101 would remain
relevant to certain types of registrants.41
We have considered the
recommendations of the staff and
commenters but are not proposing to
combine Item 102 and Item 101. We
believe that any effort to combine these
items should follow a broader
evaluation of how the disclosure should
address material core assets, whether
physical or otherwise, including
material resources such as human
capital or intellectual property. Such a
broader inquiry was not included in the
FAST Act Report and is therefore
outside the scope of this release.
Request for Comment
1. Should we revise Item 102 to
clarify that a description of property is
required only to the extent that physical
properties are material to the registrant
and may be provided on a collective
basis, if appropriate, as proposed?
Under what circumstances is the
flexibility to provide property
disclosure on a collective basis useful
(e.g., information about the percentage
of material properties within and
outside the United States)?
2. Should we harmonize nonindustry-specific disclosure thresholds
by replacing them with a materiality
threshold as proposed?
3. The S–K Study recommended that,
for businesses that have material
properties, disclosure requirements
38 Item 101(c) of Regulation S–K [17 CFR
229.101(c)]. See FAST Act Report, supra note 2, at
Recommendation B.1.
39 See, e.g., Letters from Ernst & Young 3; SIFMA;
New York State Society of Certified Public
Accountants (July 19, 2016) (‘‘NYSSCPA’’); Davis
Polk 1; General Motors Company (Sept. 30, 2016)
(‘‘General Motors’’); and Financial Executives
International (Oct. 3, 2016) (‘‘Financial Executives
International’’).
40 See Letters from Ernst & Young 3; Davis Polk
1; General Motors; and Financial Executives
International.
41 See Letter from Davis Polk 1.
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could be refocused on material facts
about those properties that would
inform investors about the significance
of the property to the business,
including uncertainties in connection
with these properties.42 Should Item
102 require additional disclosure about
material properties, including
uncertainties such as information about
properties that are located near
designated areas where natural disasters
are more likely to occur? If so, what
should be required and why? Would
this elicit more meaningful disclosure or
would this duplicate disclosure in
MD&A?
B. Management’s Discussion and
Analysis of Financial Condition and
Results of Operations (Item 303) 43
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1. Year-to-Year Comparisons
(Instruction 1 to Item 303(a))
Item 303(a) requires registrants to
discuss their financial condition,
changes in financial condition, and
results of operations.44 Instruction 1 to
Item 303(a) states that the discussion
and analysis shall be of the financial
statements and other statistical data that
the registrant believes will enhance a
reader’s understanding of its financial
condition, changes in financial
condition, and results of operations.
This instruction also provides that,
generally, the discussion shall cover the
three-year period covered by the
financial statements and either use yearto-year comparisons or any other
formats that in the registrant’s judgment
would enhance a reader’s
understanding. The instruction states
that reference to the five-year selected
financial data may be necessary where
trend information is relevant.
In the FAST Act Report, the staff
recommended that we consider revising
42 See S–K Study at pp. 99–100 (recommending
that ‘‘[f]or businesses that do have properties that
are material, disclosure requirements could be
refocused on material facts about those properties
that would inform investors about the significance
of the property to the business and any trends or
uncertainties in connection with that property,
rather than requiring a list of locations, capacity
and ownership. Changes in the way that businesses
operate may also make other disclosures relevant
that are not expressly addressed under current
requirements. For example, requirements could be
more specific as to additional disclosure that would
be necessary where a business relies heavily on
intellectual property owned by a third party or
relies on service agreements with third parties to
perform necessary business functions.’’).
43 After consideration of the staff’s
recommendation C.2. in the FAST Act Report, we
are not, proposing to eliminate or revise the table
of contractual obligations. See FAST Act Report,
supra note 2, at n.15. See also letter from Jack
Ciesielski (Dec. 12, 2016) [FAST Act Letter]
(opposing the staff’s recommendation to delete or
revise the table of contractual obligations).
44 Item 303(a) of Regulation S–K [17 CFR
229.303(a)].
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Item 303(a) to clarify that a registrant
need only provide a period-to-period
comparison for the two most recent
fiscal years covered by the financial
statements and may hyperlink to the
prior year’s annual report for the earlier
of the year-to-year comparisons.45 Many
commenters on the Concept Release
recommended modifying Item 303 to
reduce duplicative disclosure, although
these commenters recommended simply
eliminating the earlier of the year-toyear comparisons.46 A number of these
commenters stated that this discussion
is readily available in a registrant’s prior
year annual report on EDGAR.47 Two of
these commenters stated that repetition
of the earlier of the year-to-year
comparisons could distract investors
from new, material information and
result in confusion.48 A few of these
commenters recommended requiring the
earlier of the year-to-year comparisons
only if there is a significant trend that
is discernible through a multiple yearto-year comparison 49 or if prior results
have been restated.50
Some of the commenters who
suggested eliminating the earlier of the
year-to-year comparisons recommended
allowing registrants to hyperlink to the
filing with the earlier of the year-to-year
comparisons.51 One commenter
opposed a requirement to hyperlink to
the prior filing, stating that EDGAR is
sufficiently user-friendly for investors to
45 See FAST Act Report, supra note 2, at
Recommendation C.1.
46 See, e.g., Letters from Ernst & Young 1 (stating
that the existing requirements in Item 303 should
be sufficient to result in a comprehensive
discussion of a three-year trend without a year-toyear comparison); Chamber 1; Society of Corporate
Secretaries (also stating that the existing
requirements in Item 303 are sufficient to elicit a
discussion of trends over the relevant three-year
period, if such a trend exists and is material); IBM
Corporation (Aug. 7, 2014) [Disclosure Effectiveness
letter]; Arthur J. Radin (May 29, 2015) [Disclosure
Effectiveness letter] (‘‘A. Radin 1’’); Arthur J. Radin
(July 5, 2016) (‘‘A. Radin 2’’); UnitedHealth Group
Inc. (July 21, 2016) (‘‘United Health’’); SIFMA; Ernst
& Young (Nov. 20, 2015) [Disclosure Effectiveness
letter] (‘‘Ernst &Young 2’’); Ernst & Young 3; PNC
Financial Services Group (July 21, 2016) (‘‘PNC’’);
Investment Program Association (July 21, 2016)
(‘‘Investment Program Association’’); Prologis Inc.
(July 21, 2016) (‘‘Prologis’’); Allstate; Davis Polk 1;
S. Percoco; Fenwick; NYSSCPA; Institute of
Management Accountants; Chamber 2; FedEx;
CGCIV; Northrop Grumman Corporation (Sept. 27,
2016); General Motors; and Financial Executives
International.
47 See, e.g., Letters from A. Radin 1 and A. Radin
2; Ernst &Young 3; PNC; Prologis; Allstate;
Fenwick; NYSSCPA; Chamber 2; FedEx; CGCIV;
Investment Program Association; General Motors;
and Financial Executives International.
48 See Letters from Chamber 1; Chamber 2; and
CGCIV.
49 See Letters from SIFMA and PNC.
50 See Letter from S. Percoco.
51 See, e.g., Letters from United Health;
Investment Program Association; Allstate; and
General Motors.
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readily obtain the relevant report.52
Another commenter, however, disagreed
with eliminating the requirement to
include the earlier of the year-to-year
comparisons stating that this would
require investors to look for the
information elsewhere.53
We are proposing to amend Item 303
to eliminate discussion of the earliest
year in some situations.54 Under the
amendments we propose today, when
financial statements included in a filing
cover three years, discussion about the
earliest year would not be required if (i)
that discussion is not material to an
understanding of the registrant’s
financial condition, changes in financial
condition, and results of operations, and
(ii) the registrant has filed its prior year
Form 10–K 55 on EDGAR containing
MD&A of the earliest of the three years
included in the financial statements of
the current filing. By allowing
registrants to eliminate MD&A
disclosure about the earliest year in
these situations, our proposals are
intended to discourage repetition of
disclosure that is no longer material,
which we believe would further our
mandate under the FAST Act to
modernize and simplify Regulation S–K
in a manner that reduces costs and
burdens on companies while still
providing all material information.
Our proposed amendments to Item
303(a) are consistent with our existing
interpretive guidance on MD&A. In the
2003 MD&A Interpretive Release, the
Commission stated that, in preparing
MD&A, companies should evaluate
issues presented in previous periods
and consider reducing or omitting
discussion of those that may no longer
be material or helpful, or revise
discussions where a revision would
make the continuing relevance of an
issue more apparent.56 The Commission
52 See
Letter from Fenwick.
Letters from CFA Institute (Nov. 12, 2014
[Disclosure Effectiveness letter] and Oct. 6, 2016).
54 Our proposed amendments to Item 303(a)(3)
would not affect SRCs, as SRCs may limit their
disclosure to the two-year period covered by their
financial statements. See Instruction 1 to Item
303(a) of Regulation S–K. See also Rule 12b–2
under the Exchange Act and Rule 405 under the
Securities Act.
Similarly, our proposed amendments would not
affect EGCs that provide two years of audited
financial statements. EGCs are only required to
provide two years of audited financial statements in
an initial public offering of common equity
securities and may limit their MD&A to only those
audited periods presented in the financial
statements. Public Law 112–106, Sec. 102(b)–(c),
126 Stat. 306 (2012). See also Instruction 1 to Item
303(a) of Regulation S–K.
55 17 CFR 249.310.
56 See Commission Guidance Regarding
Management’s Discussion and Analysis of Financial
Condition and Results of Operation, Release No.
53 See
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also encouraged companies and
management to take a ‘‘fresh look’’ at
MD&A with a view to enhancing its
quality.57 The Commission observed
that the effectiveness of MD&A
decreases with the accumulation of
unnecessary detail or duplicative or
uninformative disclosure that obscures
material information.58 In furtherance of
this prior interpretive guidance, our
proposals are intended to encourage
companies to re-evaluate disclosures in
their prior year MD&A and take a ‘‘fresh
look’’ to determine whether such
disclosure remains material.
To this end, we are not proposing the
staff’s recommendation in the FAST Act
Report to hyperlink to the prior year’s
annual report for the earlier of the yearto-year comparison. We believe that
encouraging companies to take a ‘‘fresh
look’’ at their prior year MD&A to
determine whether it remains material
and eliminating disclosure of the
earliest of the three years when
specified conditions are met, rather than
hyperlinking to disclosure that may no
longer be material, would more
effectively achieve our FAST Act
mandate to reduce the costs and
burdens on companies while continuing
to provide all material information.59
Our proposals would also eliminate
the reference to five-year selected
financial data in Instruction 1 to Item
303(a). Instruction 1 provides that,
where trend information is relevant,
reference to the five-year selected
financial data in Item 301 may be
necessary. Because disclosure
requirements for liquidity, capital
resources, and results of operations
already require trend disclosure,60 we
are proposing to simplify Instruction 1
by eliminating the reference to trend
information. This proposed amendment
is intended to eliminate duplication and
is not intended to discourage registrants
from providing trend disclosure in
MD&A.
We are also proposing to simplify
Instruction 1 to Item 303(a) to
emphasize that registrants may use any
presentation that, in the registrant’s
judgment, would enhance a reader’s
understanding. Instruction 1 currently
33–8350 (Dec. 19, 2003) [68 FR 75056 (Dec. 29,
2003)] (‘‘2003 MD&A Interpretive Release’’).
57 Id.
58 Id. See also Basic, Inc., v. Levinson, 485 U.S.
224 (1998) at 231 quoting TSC Industries, Inc. v.
Northway, Inc., 426 U.S. 438 (1976) at 448–449.
59 We also are mindful that a number of
registrants with segments or different lines of
business may present their MD&A by segment or
line of business. In these instances, numerous
hyperlinks in MD&A may fragment readability.
60 See Item 303(a)(1), 303(a)(2)(ii) and 303(a)(3)(ii)
of Regulation S–K [17 CFR 229.303(a)(1), (a)(2)(ii),
(a)(3)(ii)].
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specifies that the discussion cover the
three-year period covered by the
financial statements and use year-toyear comparisons or any other format
that, in the registrant’s judgment, would
enhance a reader’s understanding.
Although the staff has observed that
almost all registrants provide year-toyear comparisons,61 we believe that
registrants may, in some cases,
determine that a narrative discussion for
some or all of the years in the three-year
period is a more appropriate format. For
instance, in a situation where some
information about the earliest year in a
three-year period is needed because it
remains material to an understanding of
the registrant’s financial condition, a
registrant may decide that narrative
disclosure about the earliest year and a
year-to-year comparison for the two
most recent years in the three-year
period is appropriate. The proposed
amendments underscore our intent to
allow registrants to tailor the
presentation of their disclosure to reflect
their varying circumstances, provided
that registrants continue to disclose the
information required by Item 303.62
Request for Comment
4. Should we revise Item 303 as
proposed?
5. Should we expand the proposal,
with similar conditions, to other forms
such as Form S-1 63 or Form 8–K? 64
6. Instead of allowing registrants to
eliminate the earliest of the three years
of MD&A in some situations, should we
retain the earliest year requirement and
instead amend Item 303 to allow
registrants to hyperlink to the prior
year’s annual report for that disclosure
in lieu of repeating the disclosure in the
current year’s report?
7. Should we include additional
conditions on allowing registrants to
exclude the earliest of the three years or
provide guidance on when a discussion
of the earliest of the three years would
be material to an understanding of the
registrant’s financial condition, changes
in financial condition, and results of
operations? For example, should we not
allow registrants to exclude discussion
of the earliest year if there has been a
material change to either of the two
earlier years due to a restatement or a
retrospective adoption of a new
accounting principle?
8. Should we revise Instruction 1 to
Item 303(a) as proposed to eliminate the
reference to year-to-year comparisons?
61 See
Concept Release, supra note 6, at n.350 and
accompanying text.
62 See 2003 MD&A Interpretive Release, supra
note 53.
63 17 CFR 239.11.
64 17 CFR 249.308.
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Would eliminating that reference
encourage registrants to use a different
presentation? Alternatively, should we
retain the references to year-to-year
comparisons and revise the instruction
to identify specific alternatives to yearto-year comparisons? If so, what
alternatives should we include?
9. Should we eliminate the reference
to five-year selected financial data in
Instruction 1 to Item 303(a) as
proposed? Would there be a significant
impact on the total mix of information
available? Would eliminating this
reference discourage registrants from
providing trend disclosure in their
MD&A?
2. Application to Foreign Private Issuers
The disclosure requirements for Item
5 of Form 20–F 65 (Operating and
Financial Review and Prospects) are
substantively comparable to the MD&A
requirements under Item 303 of
Regulation S–K.66 To maintain a
consistent approach to MD&A for
domestic registrants and foreign private
issuers, we are proposing changes to
Form 20–F that conform to our
proposed amendments to Instruction 1
to Item 303(a). Accordingly, our
proposals would amend the instructions
to Item 5 of Form 20–F to provide that,
when financial statements included in a
filing cover three years, discussion
about the earliest year would not be
required if (i) that discussion is not
material to an understanding of the
registrant’s financial condition, changes
in financial condition, and results of
operations and (ii) the registrant has
filed its prior year Form 20–F on
EDGAR containing Item 5 disclosure of
the earliest of the three years included
in the financial statements of the current
filing. Similar to our proposals for Item
303, we are proposing to amend the
instructions to Item 5 of Form 20–F to
emphasize that registrants may use any
presentation that, in the registrant’s
judgment, would enhance a reader’s
understanding.
We are not proposing similar changes
to Form 40–F.67 Form 40–F generally
permits Canadian issuers to use
Canadian disclosure documents to
satisfy the Commission’s registration
and disclosure requirements. As a
result, the MD&A contained in Form
65 17
CFR 249.220f.
the Commission revised the wording of
Item 5 of Form 20–F in 1999, the adopting release
noted that the requirements correspond with Item
303 of Regulation S–K. See International Disclosure
Standards, Release No. 33–7745 (Sept. 28, 1999) [64
FR 53900 (Oct. 5, 1999)], at 53904.
67 17 CFR 249.240f.
66 When
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40–F is largely prepared in accordance
with Canadian disclosure standards.
Request for Comment
10. Should we make corresponding
changes to the instructions to Item 5 in
Form 20–F as proposed? Why or why
not? Are there any unique
considerations with respect to foreign
private issuers in this context?
11. Should we include additional
conditions on allowing registrants to
exclude the earliest of the three years or
provide guidance on when a discussion
of the earliest of the three years would
be material to an understanding of the
registrant’s financial condition, changes
in financial condition, and results of
operations when providing Item 5
disclosure on Form 20–F? For example,
should we not allow registrants to
exclude discussion of the earliest year if
there has been a material change to
either of the two earlier years due to a
restatement or a retrospective adoption
of a new accounting principle?
12. Should we make corresponding
changes to Form 40–F? Why or why
not?
13. Would the proposed amendments
conflict with home-country
requirements in some jurisdictions? If
so, please explain.
C. Management, Security Holders and
Corporate Governance
1. Directors, Executive Officers,
Promoters, and Control Persons (Item
401)
Item 401 68 requires disclosure of
identifying and background information
about a registrant’s directors, executive
officers, and significant employees.69
The information required by Item 401
must be included in several of the
Commission’s disclosure forms,
including Part III of an annual report on
Form 10–K. General Instruction G of
Form 10–K allows Part III disclosure to
be incorporated into the Form 10–K by
reference to the registrant’s definitive
proxy or information statement.70
68 17
CFR 229.401.
401 of Regulation S–K [17 CFR 229.401]
was adopted in 1982 as part of the Commission’s
integrated disclosure initiative, although similar
requirements can be traced back to Schedule A of
the Securities Act. See Adoption of Integrated
Disclosure System, Release No. 33–6383 (Mar. 3,
1982) [47 FR 11380 (Mar. 16, 1982)] (the ‘‘Integrated
Disclosure System Adopting Release’’). See also
Securities Act, Schedule A, Paragraph 4 [15 U.S.C.
77aa(4)].
70 General Instruction G.3 allows the information
required by Item 401, along with other items
required by Part III of Form 10–K, to be
incorporated by reference from the registrant’s
proxy statement if it is filed with the Commission
within 120 days after the end of the fiscal year
covered by the Form 10–K.
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As an alternative to incorporating all
of the Part III disclosure by reference to
a definitive proxy or information
statement, Instruction 3 to Item 401(b)
allows disclosure of information about
executive officers required under Item
401 to be included in Part I of Form 10–
K. If a registrant elects to follow this
instruction, it is not required to repeat
that information in its definitive proxy
or information statement.
This instruction was introduced in
1978, when the executive officer and
director disclosure requirements were
moved from separate parts of Form 10–
K into what was then Item 3 of
Regulation S–K.71 The instruction was
intended to allow registrants to continue
the practice of disclosing information
about their executives in Form 10–K
while incorporating disclosure about
directors and other matters by reference
to their definitive proxy or information
statement.72
As the staff observed in the FAST Act
Report, the instruction’s location may
cause confusion because it is included
under paragraph (b), despite the fact
that other paragraphs of Item 401 also
require disclosure about executive
officers.73 Although Instruction 3 refers
to ‘‘this Item’’ (rather than to paragraph
(b) narrowly), the staff issued
interpretive guidance stating that
disclosure of the business experience of
executive officers pursuant to Item
401(e) need not be duplicated in proxy
statements if it is already presented in
Part I of Form 10-K.74
To eliminate any confusion arising
from the current location of the
instruction, we are proposing to clarify
the instruction by moving it from Item
401(b) and making it a general
instruction to Item 401. The amended
instruction is intended to clarify its
application to any disclosure about
executive officers required by Item 401.
We are also proposing to revise the
required caption for the disclosure if it
is included in Part I of Form 10–K to
71 See
Uniform and Integrated Reporting
Requirements, Release No. 33–5949 (July 28, 1978)
[43 FR 34402 (Aug. 3, 1978)].
72 Id. At the time, Part I of Form 10–K required
disclosure regarding executive officers of the
registrant and Part II required disclosure about
directors. Registrants could exclude the Part II
information if it would be included in the
registrant’s proxy statement.
73 FAST Act Report, supra note 2, at
Recommendation D.1.
74 See Regulation S–K Compliance and Disclosure
Interpretation 116.02, available at https://
www.sec.gov/divisions/corpfin/guidance/regskinterp.htm (last updated July 26, 2016). General
Instruction G to Form 10–K also refers generally to
the ‘‘information regarding executive officers
required by Item 401’’ when discussing the
accommodation provided in Instruction 3 to Item
401(b).
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reflect a ‘‘plain English’’ approach. The
required caption would be ‘‘Information
about our Executive Officers’’ instead of
‘‘Executive officers of the registrant.’’
Request for Comment
14. Should we amend Instruction 3 to
Item 401(b) as proposed?
15. The proposed instruction would
apply to all of the disclosure about
executive officers required by Item 401.
Should we limit this instruction to only
certain paragraphs of Item 401, such as
paragraphs (b) and (e) but exclude
paragraph (f)? 75
16. Where a registrant relies on
General Instruction G to forward
incorporate by reference to its definitive
proxy or information statement, is there
other Part III disclosure about executive
officers that we should specify need not
be duplicated in the proxy or
information statement if it is already
presented in Part I of Form 10–K? For
example, should we specify that
disclosure about transactions with
executive officers pursuant to Item 404
does not need to be duplicated in the
proxy or information statement if it is
already disclosed in Part I of Form 10–
K?
17. Instead of clarifying how
Instruction 3 to Item 401(b) applies,
should we require disclosure about
executive officers to be included in a
registrant’s Form 10–K filing, so that it
is easier to locate? 76 Alternatively,
should we require all Item 401
disclosure to be included in a
registrant’s proxy or information
statement instead of its Form 10–K if the
registrant is required to file a proxy or
information statement? 77
2. Compliance With Section 16(a) of the
Exchange Act (Item 405)
Section 16(a) of the Exchange Act
requires officers, directors, and
specified types of security holders to
report their beneficial ownership of a
registrant’s equity securities using forms
75 Item 401(b) (Identification of executive
officers); Item 401(e) (Business experience) and
Item 401(f) (Involvement in certain legal
proceedings).
76 See Letter from Davis Polk (Oct. 31, 2016)
[Subpart 400 letter] (‘‘Davis Polk 2’’) (stating that
requiring disclosure about executive officers in
Form 10–K would make it easier to find and would
be more appropriate because shareholders ‘‘are not
generally asked to vote on matters related to a
registrant’s executive officers other than with
respect to executive compensation, and that
information is provided in the proxy statement’’).
77 See Letter from Ernst & Young LLP (Nov. 30,
2016) [Subpart 400 letter] (recommending that all
Item 401 disclosure be required in a registrant’s
proxy or information statement because splitting
that disclosure is ‘‘not conducive to investors
assessing the diversity and complementary mix of
experience of the board in conjunction with that of
executive officers’’).
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prescribed by the Commission.78 Item
405 79 requires registrants to disclose
each reporting person 80 who failed to
file on a timely basis Section 16 reports
during the most recent fiscal year or
prior fiscal years.81 The disclosure is
required under the caption ‘‘Section
16(a) Beneficial Ownership Reporting
Compliance.’’ Rule 16a–3(e) requires
reporting persons to furnish a duplicate
of those Section 16 reports to the
registrant.82 Item 405(a) states that
registrants shall provide the required
disclosure based solely on a review of
such furnished reports and any written
representation provided by such
persons that no Form 5 is required.83
In the FAST Act Report, the staff
recommended that we consider
eliminating the delivery requirement in
Rule 16a–3(e) and revising Item 405 to
permit registrants to rely only on (i) a
review of Section 16 reports submitted
on EDGAR and (ii) any written
representation that no Form 5 is
required, when determining whether
there are any Section 16 delinquencies
that must be disclosed pursuant to Item
405.84 Reporting persons have been
required to file their Section 16 reports
electronically on EDGAR since 2003.85
78 See
Form 3, Form 4, and Form 5.
CFR 229.405.
80 Item 405(a)(1) of Regulation S–K [17 CFR
229.405(a)(1)] defines a ‘‘reporting person’’ as ‘‘each
person who, at any time during the fiscal year, was
a director, officer, beneficial owner of more than ten
percent of any class of equity securities of the
registrant registered pursuant to Section 12 of the
Exchange Act, or any other person subject to
Section 16 of the Exchange Act with respect to the
registrant because of the requirements of Section 30
of the Investment Company Act.’’
81 Item 405 was initially proposed in 1988 in an
attempt to reduce the high delinquency rate for
Section 16 reports. See Ownership Reports and
Trading by Officers, Directors and Principal
Stockholders, Release No. 34–26333 (Dec. 2, 1988)
[53 FR 49997 (Dec. 13, 1988)] and Ownership
Reports and Trading by Officers, Directors and
Principal Security Holders, Release No. 34–27148
(Aug. 18, 1989) [54 FR 35667 (Aug. 29, 1989)] (reproposing Item 405 in response to comments on the
1988 proposing release).
82 See 17 CFR 240.16a–3(e).
83 See 17 CFR 229.405(a) and (b)(1).
84 FAST Act Report, supra note 2, at
Recommendation D.2.
85 See Mandated Electronic Filing and Web Site
Posting for Forms 3, 4 and 5, Release No. 33–8230
(May 7, 2003) [68 FR 25788 (May 13, 2003)] (the
‘‘Section 16 Mandatory Electronic Filing Release’’).
In addition, all registrants who maintain a corporate
website are required to post any Section 16 reports
relating to the equity securities of the registrant on
such website pursuant to Rule 16a–3(k) of the
Exchange Act [17 CFR 240.16a–3(k)], and many
registrants satisfy this requirement by providing
hyperlinks directly to the electronic filings once
they are made on EDGAR. The Commission has
noted that any concerns a registrant may have about
obtaining an electronic copy of the filing from a
Section 16 reporting person in order to satisfy the
web posting requirement ‘‘would not arise for
issuers that rely on a hyperlink (for example, to
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The Commission has stated that ‘‘[b]y
reviewing Section 16 reports posted on
EDGAR, an issuer is readily able to
evaluate their timeliness’’ 86 and
‘‘issuers also may consult EDGAR to
obtain notice of new filings.’’ 87
Consistent with the staff’s
recommendations, we are proposing to
amend Item 405 to focus on a review of
Section 16 reports available on EDGAR
rather than reports furnished to the
registrant. We are also proposing to
eliminate the requirement in Rule 16a–
3(e) that reporting persons furnish
Section 16 reports to the registrant. We
believe that a shift to reliance on
electronically filed Section 16 reports,
while retaining the written
representation in Item 405(b)(1), would
modernize and simplify compliance
with Item 405 while still providing all
material information.
In the FAST Act Report, the staff
recommended that the Commission
consider adding an instruction that
permits a registrant to rely on the
information in the Section 16 reports
submitted on EDGAR unless it knows,
or has reason to believe, that the
information is not complete or accurate
or that a report or an amendment should
have been filed but was not.88 While
there is a similar instruction in Item 403
of Regulation S–K with respect to the
contents of Section 13(d) and 13(g)
statements filed with the Commission,89
we have concerns that, if implemented,
this recommendation could lead to
uncertainty about when a registrant has
a reporting obligation because of the
difficulty ascertaining when a registrant
may have knowledge of delinquencies
or a reason to believe that delinquencies
have occurred. Therefore, at this time,
we are not proposing to expand
reporting under Item 405 in this
manner.
We are, however, proposing to change
the language of Item 405 to clarify that
registrants may rely on Section 16
reports filed on EDGAR but are not
required to limit their inquiry to those
filings. Item 405 currently states that the
registrant ‘‘shall’’ make its disclosure
‘‘based solely upon’’ the Section 16
reports that are furnished to it pursuant
to Rule 16a–3(e) and any written
representation from a reporting person
that no Form 5 is required. This
EDGAR) instead of, or in addition to, direct website
posting.’’ Id. at 25790.
86 See Ownership Reports and Trading by
Officers, Directors and Principal Security Holders,
Release 33–8600 (Aug. 3, 2005) [70 FR 46080 (Aug.
9, 2005)], at 46086.
87 Section 16 Mandatory Electronic Filing Release,
supra note 85, at 25790.
88 FAST Act Report, supra note 2, at n.55.
89 See Instruction 3 to Item 403 [17 CFR 229.403].
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language could be read to suggest that
registrants may not rely on information
outside of the Section 16 reports
furnished to the registrant pursuant to
Rule 16a–3(e). As proposed, Item 405(b)
would state that registrants ‘‘may’’ rely
only on the Section 16 reports and the
written representation. Therefore, if a
registrant was aware that information in
a Section 16 report submitted on
EDGAR was not complete or accurate, or
that a reporting person failed to file a
required report, it could provide
appropriate disclosure pursuant to Item
405. We are also soliciting comment on
the benefits and challenges of the
proposed approach and how it may
affect compliance with Section 16(a)
reporting obligations.
The staff’s final recommendation for
revising Item 405 was to eliminate the
use of the ‘‘Section 16(a) Beneficial
Ownership Reporting Compliance’’
heading when the registrant does not
have Section 16(a) delinquencies to
report.90 The staff has observed that
some registrants have included this
heading to disclose that they have
nothing to report pursuant to Item
405.91 To reduce unnecessary disclosure
and improve the ability to search a
registrant’s filings for disclosure of
Section 16(a) reporting delinquencies,
we are proposing to add an instruction
to Item 405 that encourages registrants
to exclude the heading if they have no
delinquencies to report. We are also
proposing to change the heading to
‘‘Delinquent Section 16(a) Reports’’ to
more precisely describe the required
disclosure and to further encourage
registrants to exclude the heading if
they do not have delinquencies to
report.
We are also proposing to eliminate the
checkbox on the cover page of Form 10–
K relating to Item 405 disclosures and
the related instruction in Item 10 of
Form 10–K.92 Currently, registrants are
required to check a box on the cover
page of Form 10–K to indicate that
disclosure pursuant to Item 405 is not
contained in the Form 10–K and will
not be contained, to the best of the
registrant’s knowledge, in any definitive
proxy or information statement that is
incorporated by reference.93 This
checkbox was included in Form 10–K to
90 See FAST Act Report, supra note 2, at
Recommendation D.3.
91 Rule 12b–13 [17 CFR 240.12b–13] states that,
unless expressly provided otherwise, if any item is
inapplicable or the answer thereto is negative, an
appropriate statement to that effect shall be made.
Item 405, however, only requires the use of this
heading when responsive disclosure is included.
See Item 405(a)(1).
92 17 CFR 229.10.
93 See 17 CFR 249.310.
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assist the Commission and security
holders in identifying registrants that
were disclosing delinquent filings by
insiders.94 The related instruction in
Item 10 of Form 10–K is also intended
to facilitate the Form’s processing and
review.95 We believe that the proposed
amendments would lessen the need for
this checkbox by reducing the
unnecessary use of the heading and
thereby facilitating document searches.
Moreover, the checkbox may have
limited use, because most registrants
defer their Item 405 disclosure to their
definitive proxy or information
statement pursuant to General
Instruction G of Form 10-K.96
Request for Comment
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18. Would allowing registrants to rely
on Section 16 reports filed on EDGAR
instead of reports furnished to them
reduce the burden of complying with
Item 405 while preserving their ability
to disclose delinquencies? What effect,
if any, would the proposed approach
have on compliance with the Section
16(a) reporting requirements? Should
we continue to require Section 16
reporting persons to furnish reports to
registrants, or should we require them to
provide notice to the registrant when
the reporting person files a report on
EDGAR?
19. Should we, instead of permitting,
require a registrant to disclose
delinquencies under Item 405 if it
knows, or has reason to believe, that
94 See Ownership Reports and Trading by
Officers, Directors and Principal Security Holders,
Release No. 34–28869 [56 FR 7242 (Feb. 21, 1991)]
(‘‘Ownership Reports and Trading Release’’), at
Section VI.B.
95 The Instruction to Item 10 specifies that
checking the box on the cover page to indicate that
Item 405 disclosure of delinquent Form 3, 4, or 5
filers is not contained is intended to facilitate Form
processing and review. The instruction also states
that failure to provide such indication will not
create liability for violation of the federal securities
laws and that the space should be checked only if
there is no disclosure in the Form of reporting
person delinquencies in response to Item 405 and
if the registrant, at the time of filing the Form 10–
K, has reviewed the information necessary to
ascertain, and has determined that, Item 405
disclosure is not expected to be contained in Part
III of the Form 10–K or incorporated by reference.
96 See Ownership Reports and Trading Release at
7260 (‘‘If at the time of filing the Form 10–K the
registrant does not yet know whether such
disclosure will be contained in the proxy or
information statement or the Form 10–K
amendment containing the Part III information, the
box should not be checked. If the box is not
checked, this will not be taken as a statement that
there will be Item 405 disclosure of delinquent
filers, but rather that the registrant may not have the
requisite knowledge at the time the Form 10–K is
filed.’’). The proposed approach would also have
the advantage of allowing for this disclosure to be
located with a simple text search whether it is
included in the registrant’s annual report or its
definitive proxy or information statement.
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there is a delinquency that is not
reflected on EDGAR? Why or why not?
20. Should we revise the ‘‘Section
16(a) Beneficial Ownership Reporting
Compliance’’ heading as proposed? Is
there an alternative heading that would
be more appropriate?
21. Should we continue to include a
checkbox on Form 10–K, or include a
checkbox on Schedule 14A 97 or
Schedule 14C, to indicate when the
disclosure required by Item 405 is
included in a filing? If so, what benefits
would it provide compared to our
proposed approach of encouraging
registrants to exclude the proposed
‘‘Delinquent Section 16(a) Reports’’
heading if they do not have
delinquencies to report?
3. Corporate Governance (Item 407)
Several disclosure requirements
related to corporate governance are
consolidated in Item 407.98 In the FAST
Act Report, the staff recommended
updating a reference to an outdated
auditing standard in Item 407(d)(3)(i)(B)
and revising Item 407(e)(5) to clarify
that EGCs are not required to provide a
compensation committee report.99 We
are proposing amendments to
implement both of these
recommendations.
a. Audit Committee Discussions With
Independent Auditor (Item
407(d)(3)(i)(B))
Under existing Item 407(d)(3)(i)(B),
when a registrant files a proxy or
information statement relating to an
annual or special meeting of security
holders at which directors are elected or
written consents are provided in lieu of
a meeting, a registrant’s audit committee
must state whether it has discussed with
the independent auditor the matters
required by AU section 380,
Communication with Audit Committees
(‘‘AU sec. 380’’).100 AU sec. 380 was
part of the interim standards previously
adopted by the Public Company
Accounting Oversight Board (‘‘PCAOB’’)
on April 16, 2003.101 As noted in the
Commission’s concept release on audit
committee disclosures (the ‘‘Audit
97 17
CFR 240.14a–101.
CFR 229.407. Item 407 was adopted in 2006
to consolidate various corporate governance
requirements under a single disclosure item. See
Executive Compensation and Related Person
Disclosure, Release No. 33–8732A (Aug. 29, 2006)
[71 FR 53158 (Sept. 8, 2006)].
99 See FAST Act Report, supra note 2, at
Recommendations D.4 and D.5.
100 See Instruction 3 to Item 407(d) of Regulation
S–K.
101 See PCAOB Release No. 2003–006 (Apr. 16,
2003). AU sec. 380 required an auditor to discuss
various matters related to the conduct of an audit
with those who have responsibility for oversight of
the financial reporting process.
98 17
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Committee Concept Release’’), the
reference to AU sec. 380 is outdated,
because it was superseded by PCAOB
Auditing Standard No. 16,
Communications with Audit
Committees (‘‘AS 16’’).102 Furthermore,
on March 31, 2015, the PCAOB formally
reorganized its auditing standards
resulting in the codification of AS 16 as
Auditing Standard No. 1301,
Communications with Audit
Committees (‘‘AS 1301’’).103
Commenters on the Audit Committee
Concept Release that addressed this
issue generally supported updating the
AU sec. 380 reference.104 Commenters
differed on how best to update this
reference, as AS 1301 is not the only
requirement addressing
communications between an auditor
and the audit committee. Specifically,
both the Commission and PCAOB have
other rules and standards that require
matters to be communicated to a
company’s audit committee.105
Accordingly, several commenters
suggested aligning the disclosure
requirements with the communication
requirements specific to the standards
and rules of the PCAOB,106 while others
suggested a more encompassing
requirement that would refer to all audit
committee communications with the
independent auditors required by not
only the PCAOB but also the
Commission.107
102 See Possible Revisions to Audit Committee
Disclosures, Release No. 33–9862 (July 1, 2015) [80
FR 38995 (July 8, 2015)], at 39003.
103 See PCAOB Release No. 2015–02 (Mar. 31,
2015). The PCAOB completed a reorganization of its
auditing standards into a topical structure and a
single, integrated numbering system (the
‘‘Reorganization’’). The Commission approved the
Reorganization on September 17, 2015. See Order
Granting Approval of Proposed Rules to Implement
the Reorganization of PCAOB Auditing Standards
and Related Changes to PCAOB Rules and
Attestation, Quality Control, and Ethics and
Independence Standards, Release No. 34–75935
(Sept. 17, 2015) [80 FR 57263 (Sept. 22, 2015)].
104 Comments on the Audit Committee Concept
Release are available at https://www.sec.gov/
comments/s7–13–15/s71315.shtml. We refer to
these letters throughout as ‘‘Audit Committee’’
letters.
105 See, e.g., Appendix B to AS 1301; Section
10A(k) of the Exchange Act [15 U.S.C. § 78j–1(k)];
Rule 2–07 of Regulation S–X [17 CFR 210.2–07];
and Rule 10A–3 [17 CFR 240.10A–3].
106 See, e.g., Letters from AngloGold Ashanti
Limited (Sept. 7, 2015) [Audit Committee letter];
Deloitte & Touche LLP (Sept. 2, 2015) [Audit
Committee letter]; National Association of State
Boards of Accountancy (Sept. 3, 2015) [Audit
Committee letter]; and James H. Edwards (Sept. 8,
2015) [Audit Committee letter].
107 See, e.g., Letters from AT&T Inc. (Sept. 8,
2015) [Audit Committee letter]; Federal Regulation
of Securities, Law and Accounting, and Corporate
Governance Committees of the American Bar
Association (Feb. 9, 2016) [Audit Committee letter];
and The Home Depot, Inc. (Sept. 17, 2015) [Audit
Committee letter]. One commenter on the
Regulation S–K Subpart 400 Release also
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After consideration of the comments
we have received and the
recommendation of the staff in the
FAST Act Report, we are proposing to
update the reference to AU sec. 380 by
referring more broadly to the applicable
requirements of the PCAOB and the
Commission. We believe such an
approach would accommodate future
changes to audit committee
communication requirements.
Request for Comment
22. Should we amend Item
407(d)(3)(i)(B) to refer to the ‘‘applicable
requirements of the PCAOB and the
Commission rules’’ as proposed? Is
there a better reference or additional
guidance that we should provide to
facilitate audit committee compliance
and investor understanding of this
requirement?
b. Compensation Committee Report
(Item 407(e)(5))
Item 407(e)(5) requires a registrant’s
compensation committee to state
whether it has reviewed and discussed
the Compensation Discussion and
Analysis (‘‘CD&A’’) required by Item
402(b).108 Based on this review and
discussion, Item 407(e)(5) requires that
the compensation committee state
whether it recommended to the board of
directors that the CD&A be included in
the registrant’s annual report, proxy
statement or information statement. As
recommended by the staff, we are
proposing to amend Item 407 to
explicitly exclude EGCs from the Item
407(e)(5) requirement, because they are
not subject to a requirement to include
a CD&A in their public disclosures.109
Specifically, we are proposing to add a
reference to EGCs in Item 407(g) instead
of amending Item 407(e)(5). Item 407(g)
currently excludes SRCs from Item
407(e)(5), among other provisions of
Item 407.
Request for Comment
23. Instead of amending Item 407(g) as
proposed, should we amend Item
407(e)(5)?
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D. Registration Statement and
Prospectus Provisions
1. Outside Front Cover Page of the
Prospectus (Item 501(b))
Item 501 110 includes disclosure
requirements related to the forepart of
the registration statement and the
outside front cover page of the
recommended updating Item 407(d) to refer to AS
16. See Letter from Davis Polk 2.
108 17 CFR 229.402(b).
109 See Item 402(l) of Regulation S–K.
110 17 CFR 229.501.
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prospectus. In the FAST Act Report, the
staff made several recommendations to
streamline the requirements and to
provide registrants with greater
flexibility in designing a cover page
tailored to their business and the
particular offering.111 The proposed
amendments discussed below would
implement these recommendations.
a. Name (Item 501(b)(1))
Item 501(b)(1) requires disclosure of a
registrant’s name, including an English
translation of the name of foreign
registrants. The instruction to Item
501(b)(1) states that if a registrant’s
name is the same as that of a ‘‘well
known’’ company, or if the name leads
to a misleading inference about the
registrant’s line of business, the
registrant must include information to
eliminate any possible confusion with
the other company. If disclosure is
insufficient to eliminate the confusion,
the registrant may be required to change
its name. An exception, however, is
available when the registrant is an
‘‘established company,’’ the character of
the registrant’s business has changed,
and the ‘‘investing public is generally
aware of the change and the character of
[the registrant’s] current business.’’
The policy reflected in Item 501(b)(1)
with regards to misleading company
names was first articulated in 1969 in
response to an increase in the number
of registrants using names that the staff
considered to be misleading.112
Although we continue to believe that a
registrant’s name could mislead
investors, the staff’s experience
administering this provision suggests
that these situations can typically be
addressed with clarifying disclosure.
The Commission and the staff may be
able to address situations in which the
registrant’s name is either confusingly
similar or misleading in connection
with any public interest finding
necessary to declare the filing
effective.113 Accordingly, we are
proposing to streamline the instruction
111 FAST Act Report, supra note 2, at
Recommendations E.1–5.
112 At the time, the Commission noted that
registrants were using words such as ‘‘nuclear,’’
‘‘missile,’’ ‘‘space,’’ ‘‘nucleonics,’’ and ‘‘electronics’’
in their names when they were not engaged in
activity normally associated with those words, or
were engaged to a limited extent. See Guide for
Preparation and Filing of Registration Statements;
Misleading Names of Registrants, Release No. 33–
4959 (Apr. 16, 1969) [34 FR 6575 (Apr. 17, 1969)].
This policy was contained in Guide 53 of the
Commission’s Guides for Preparation and Filing of
Registration Statements before being moved into
Item 501 in 1982. See Integrated Disclosure System
Adopting Release, supra note 69; Rescission of
Guides and Redesignation of Industry Guides,
Release No. 33–6384 (Mar. 3, 1982) [47 FR 11476
(Mar. 16, 1982)].
113 15 U.S.C. 77h.
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to Item 501(b)(1) by eliminating the
portion that discusses when a name
change may be required and the
exception to that requirement.
Request for Comment
24. Should we eliminate the language
about a registrant’s being required to
change its name in the instruction to
Item 501(b)(1) as proposed, or should
we retain the current version of the
instruction? Are there situations where
disclosure would not be sufficient to
eliminate misleading inferences about
the company or its line of business?
b. Offering Price of the Securities (Item
501(b)(3))
Item 501(b)(3) requires disclosure of
the price of the securities being offered,
the underwriter’s discounts and
commissions, and the net proceeds that
the registrant and any selling security
holders will receive.114 The disclosure
must be provided on an aggregate and
per share basis, but registrants may
present the required information in any
format that fits the design of the cover
page and is clear, easily read, and not
misleading.
Although in many cases the
disclosure required by Item 501(b)(3)
will be straightforward, Instruction 2
states that ‘‘[i]f it is impracticable to
state the price to the public, explain the
method by which the price is to be
determined.’’ 115 In the FAST Act
Report, the staff recommended
providing registrants with greater
flexibility in explaining the method by
which the price is to be determined
when it is impracticable to state the
price on the cover page.116
We are proposing to amend
Instruction 2 to explicitly allow
registrants to include a clear statement
that the offering price will be
determined by a particular method or
formula that is more fully explained in
the prospectus. Under the proposed
instruction, registrants would be
required to accompany that statement
with a cross-reference to the offering
price method or formula disclosure,
including a page number that is
114 17 CFR 229.501(b)(3). Item 501(b)(3) also
includes specific disclosure requirements for
offerings being made on a minimum/maximum
basis.
115 The instruction also provides that if the
securities are to be offered at the market price, or
if the offering price is to be determined by a formula
relating to the market price, indicate the market and
market price of the securities as of the latest
practicable date. We are not proposing any change
to this portion of the instruction.
116 See FAST Act Report, supra note 2, at
Recommendation E.2.
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highlighted by prominent type or in
another manner.117
Request for Comment
25. As proposed, Item 501(b)(3) would
allow registrants to choose to include a
cross-reference to the explanation of the
method in which the offering price will
be determined when it is impracticable
to state the price method or formula to
the public on the cover page. Should we
instead retain the requirement to
present the explanation on the
prospectus cover page? Why or why
not?
26. Should we amend Instruction 2 to
Item 501(b)(3) to require the crossreference to be accompanied by a
hyperlink? Item 501(b)(5) currently
requires on the prospectus cover page a
cross-reference to the risk factors
section. Should we similarly amend
Item 501(b)(5) to also require a
hyperlink?
c. Market for the Securities (Item
501(b)(4))
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Item 501(b)(4) requires a registrant to
name the national securities exchanges
that list the securities being offered and
to disclose the trading symbols for those
securities. A ‘‘national securities
exchange’’ is a securities exchange that
has registered with the Commission
under Section 6 of the Exchange Act.118
Under Item 501(b)(4), registrants are not
required to name markets that are not a
‘‘national securities exchange.’’
Consistent with the staff’s
recommendation in the FAST Act
Report,119 we believe that information
about markets that are not a ‘‘national
securities exchange’’ could be important
to investors and should be disclosed on
the prospectus cover page. Accordingly,
we are proposing to amend Item
501(b)(4) to require disclosure of the
principal United States market or
markets for the securities being offered
and the corresponding trading
symbols.120
117 This cross-reference would be similar to the
cross-reference that is required for risk factor
disclosure pursuant to Item 501(b)(5) of Regulation
S–K [17 CFR 229.501(b)(5)]. In the FAST Act
Report, the staff recommended the Commission
consider amending Instruction 2 to Item 501(b)(3)
to require the cross-reference to the offering price
method or formula to be accompanied by a
hyperlink. Because the cross-reference to risk
factors required under Item 501(b)(5) does not
currently require a hyperlink, we are not proposing
to require a hyperlink for the disclosure called for
by Item 501(b)(3).
118 See Section 6 of the Securities Exchange Act
of 1934 [15 U.S.C. 78f].
119 See FAST Act Report, supra note 2, at
Recommendation E.3.
120 Our proposed changes to Item 501(b)(4) align
with our proposals to amend Item 201(a) [17 CFR
229.201(a)] in the Disclosure Update and
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Also consistent with the staff’s
recommendation,121 we are limiting
disclosure of markets that are not
national securities exchanges to those
principal United States markets where
the registrant, through the engagement
of a registered broker-dealer, has
actively sought and achieved quotation.
We agree with the staff that a registrant
cannot always control whether its
securities are quoted on an over-thecounter market and should not be
burdened with making that
determination.
Request for Comment
27. Should we expand the disclosure
required by Item 501(b)(4) to include
markets other than national securities
exchanges as proposed? Would
expanding the disclosure requirement
make it difficult for registrants to
determine which United States markets
to disclose?
28. Should we limit the disclosure
requirement to those principal United
States markets where the registrant has
actively sought and achieved quotation
through the engagement of a registered
broker-dealer as proposed? Should there
be any other limitations on the markets
the registrant would be required to
disclose?
29. Should a domestic or foreign
registrant be required to identify
principal foreign markets where the
registrant, through the engagement of a
registered broker-dealer, has actively
sought and achieved quotation for the
class of security being offered?
30. If a registrant discloses another
trading market elsewhere in its
registration statement, should Item
501(b)(4) require disclosure of that
market on the cover page, even if it is
not a national securities exchange and
even if the registrant did not actively
seek quotation through the engagement
of a registered broker-dealer? For
example, Item 201(a) of Regulation
S–K 122 requires disclosure of the
principal United States market or
markets in which each class of the
registrant’s common equity is traded.
31. Should we provide additional
guidance on when a market other than
a national securities exchange must be
disclosed or when a registrant would be
considered to have actively sought
quotation through the engagement of a
registered broker-dealer?
Simplification Proposing Release. See Disclosure
Update and Simplification Proposing Release supra
note 13, at 51688.
121 See FAST Act Report, supra note 2, at
Recommendation E.3.
122 Item 201(a) of Regulation S–K.
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d. Prospectus ‘‘Subject to Completion’’
Legend (Item 501(b)(10))
Item 501(b)(10) requires a registrant
that is using a preliminary prospectus to
include a legend advising readers that
the information will be amended or
completed. The legend also must
include a statement that the prospectus
is not an offer to sell or a solicitation of
an offer to buy securities in any state
where the offer or sale is not permitted.
The latter statement was introduced in
1958 to harmonize the legend with what
was required by state securities
administrators at the time.123
The legend requirement has remained
mostly unchanged since 1958, even after
the National Securities Markets
Improvement Act (‘‘NSMIA’’) allowed
for preemption of state blue sky laws in
many offerings.124 Consistent with the
staff’s recommendations in the FAST
Act Report,125 we are proposing to
amend Item 501(b)(10) to permit
registrants to exclude from the
prospectus the portion of the legend
relating to state law for offerings that are
not prohibited by state blue sky law.
This change would allow for a more
tailored prospectus cover page in
recognition of the changes to securities
law brought by NSMIA.
Also consistent with the staff’s
recommendations,126 we are proposing
to streamline Item 501(b) by combining
paragraphs (b)(10) and (11) without
substantive change. Thus, our proposed
amendments to paragraph (b)(10) would
also require the ‘‘subject to completion’’
legend to be included if a registrant
relies on Rule 430A 127 to omit pricing
information and the prospectus is used
after the effectiveness of the registration
statement but before the public offering
price is determined. Correspondingly,
we are proposing to delete paragraph
(b)(11).
Request for Comment
32. Should we allow registrants the
discretion to exclude the portion of the
legend required by Item 501(b)(10) that
relates to state law prohibitions on
offers or sales when it would not apply,
as proposed?
2. Risk Factors (Item 503(c))
Item 503(c) requires disclosure of the
most significant factors that make the
123 See Amendment of Rules 134 and 433, Release
No. 33–3885 (Jan. 7, 1958) [23 FR 184 (Jan. 10,
1958)]. This requirement was originally in Rule 433,
a predecessor to the current requirement.
124 Public Law No. 104–290, 110 Stat. 3416
(1996).
125 See FAST Act Report, supra note 2, at
Recommendation E.4.
126 See id., at Recommendation E.5.
127 17 CFR 230.430A.
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offering speculative or risky.128 The
item specifies that the discussion
should be concise and organized
logically. Although the requirement is
principles-based, it includes the
following specific examples as factors
that may make an offering speculative or
risky:
• A registrant’s lack of an operating
history,
• a registrant’s lack of profitable
operations in recent periods,
• a registrant’s financial position,
• a registrant’s business or proposed
business, or
• the lack of a market for a registrant’s
common equity securities or securities
convertible into or exercisable for
common equity securities.129
The item directs registrants to explain
how each risk affects the issuer or the
securities being offered. Additionally,
the item discourages disclosure of risks
that could apply to any issuer or
offering.
Risk factor disclosure was initially
called for only in the offering context.130
Accordingly, when Item 503(c) was
adopted in 1982 as part of the integrated
disclosure system, it was included with
other offering-related disclosure
requirements in Subpart 500 of
Regulation S-K.131 In 2005, risk factor
disclosure requirements were extended
to periodic reports and registration
statements on Form 10.132
As recommended by the staff in the
FAST Act Report, we are proposing to
relocate Item 503(c) from Subpart 500 to
Subpart 100 to reflect the application of
risk factor disclosure requirements to
registration statements on Form 10 133
and periodic reports.134 Subpart 100
128 17
CFR 229.503(c).
factors were derived from previous stop
order proceedings under Section 8(d) of the
Securities Act where the Commission suspended
the effectiveness of previously filed registration
statements due, in part, to inadequate disclosure
about speculative aspects of the registrant’s
business. See Guides for Preparation and Filing of
Registration Statements, Release No. 33–4936 (Dec.
9, 1968) [33 FR 18617 (Dec. 17, 1968)] (citing In the
Matter of Doman Helicopters, Inc., 41 S.E.C. 431
(Mar. 27, 1963); In the Matter of Universal Camera
Corp., 19 S.E.C. 648 (June 28, 1945)).
130 See Guides for Preparation and Filing of
Registration Statements, Release No. 33–4666 (Feb.
7, 1964) [29 FR 2490 (Feb. 15, 1964)] and Guides
for Preparation and Filing of Registration
Statements, Release No. 33–4936 (Dec. 9, 1968) [33
FR 18617 (Dec. 17, 1968)].
131 See Integrated Disclosure System Adopting
Release, supra note 69.
132 See Securities Offering Reform, Release No.
33–8591 (July 19, 2005) [70 FR 44722 (Aug. 3,
2005)] (‘‘Securities Offering Reform Adopting
Release’’).
133 17 CFR 249.210.
134 See FAST Act Report, supra note 2, at
Recommendation E.6. Additionally, the proposed
amendments would use the term ‘‘registrant’’
instead of ‘‘issuer.’’ Use of and reference to
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covers a broad category of business
information and is not limited to
offering-related disclosure. Accordingly,
our proposed amendments would move
Item 503(c)’s requirement for risk factor
disclosure to new Item 105.135
Additionally, our proposed
amendments would eliminate the risk
factor examples that are currently
enumerated in Item 503(c). Although
not addressed in the FAST Act Report,
we solicited comment in the Concept
Release on whether we should retain or
eliminate the examples and whether we
should revise our requirements to
include additional or different
examples.
A number of commenters
recommended retaining and revising the
examples in Item 503(c).136 Several of
these commenters supported a revision
to specify examples of risk factors that
are generic and therefore should not be
disclosed.137 For example, one of these
commenters recommended that the
Commission prohibit disclosure of
generalized risks that affect all
registrants or all registrants in a
particular industry, the risk of stock
volatility, organizational structure risks,
and summaries of applicable
regulation.138 Two commenters
recommended revising the examples to
include risk factors applicable to wellestablished Exchange Act registrants,139
while another two supported expanding
the list of examples.140 One of the
commenters that recommended
expanding the list of examples pointed
‘‘registrant’’ instead of ‘‘issuer’’ is intended to better
reflect the application of risk factor disclosure
outside of the offering context. The term
‘‘registrant’’ is defined under both the Exchange Act
and Securities Act. See Rule 12b–2 [17 CFR
240.12b–2] and Rule 405 [17 CFR 230.405].
135 See proposed Item 105. Consistent with this
change, we are also proposing amendments to
several Commission forms that require risk factor
disclosure and reference Item 503(c). These
proposed amendments would revise references to
Item 503 to specify new Item 105. A number of
forms that require risk factor disclosure do not
reference Item 503(c). Our proposed amendments
do not include revisions to these forms. For
example, Forms 10–Q and 20–F require risk factor
disclosure but do not reference Item 503(c).
136 See, e.g., Letters from Center for Audit Quality
(July 21, 2016) (‘‘CAQ’’); California Public
Employees’ Retirement System (July 21, 2016)
(‘‘CalPERS’’); PricewaterhouseCoopers LLP (July 21,
2016) (‘‘PWC’’); Edison Electric Institute and
American Gas Association (July 21, 2016) (‘‘Edison
Electric and AGA’’); Investment Program
Association; Davis Polk 1; National Investor
Relations Institute (Aug. 4, 2016) (‘‘NIRI’’);
Shearman & Sterling (Aug. 31, 2016) (‘‘Shearman
2’’); NYSSCPA.
137 See, e.g., Letters from Edison Electric and
AGA; Investment Program Association; Davis Polk
1; NIRI; and Shearman 2.
138 See Letter from Investment Program
Association.
139 See Letters from CAQ and PWC.
140 See Letters from CalPERS and NYSSCPA.
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50999
to guidelines produced by the investor
community as a source of additional
examples.141
A few commenters recommended
eliminating the examples in Item
503(c).142 One of these commenters
supported eliminating the examples so
as to emphasize the principles-based
nature of the disclosure requirement
and to focus registrants on their own
risk identification process.143 Another
of these commenters expressed a view
that the examples were outdated and
only helpful when the requirement to
disclose risk factors was first
introduced.144
As part of our mandate under the
FAST Act to modernize and simplify
our disclosure requirements while still
providing all material information, we
are proposing to eliminate these
examples. These examples may not
apply to all registrants and may not
correspond to the material risks of any
particular registrant. In addition, the
inclusion of these examples could
suggest that a registrant must address
each one in its risk factor disclosures,
regardless of the significance to its
business. Finally, several commenters
suggested expanding the list of
examples or revising them to specify
examples of generic risks that should
not be disclosed. We are concerned that
inclusion of examples could anchor or
skew the registrant’s risk analysis in the
direction of the examples.145 We believe
that eliminating the examples would
encourage registrants to focus on their
own risk identification processes.
Request for Comment
33. Should we move the requirement
to provide risk factor disclosure in Item
503(c) to a new Item 105 as proposed?
Why or why not?
34. Should we relocate Item 503(c)’s
requirements to another subsection of
Regulation S–K? If so, which subsection
and why?
35. Should we eliminate the risk
factor examples as proposed, or do they
provide useful guidance to registrants?
Instead of eliminating the examples,
should we provide different or
141 See Letter from CalPERS (referring to several
sets of guidelines such as the Principles for
Responsible Investment and those issued by the
International Corporate Governance Network,
among others).
142 See Letters from Chris Barnard (June 23, 2016)
(‘‘Barnard’’); Fenwick; and SIFMA (stating that the
five examples are not ‘‘cutting edge’’ and ‘‘could be
eliminated,’’ but that most registrants recognize that
Item 503(c) is focused on principles-based
disclosure of the most significant factors that make
the offering speculative or risky).
143 See Letter from Barnard.
144 See Letter from Fenwick.
145 See infra note 349 and accompanying text.
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additional examples that would be more
helpful to registrants? If so, what
examples would be most helpful?
3. Plan of Distribution (Item 508)
Item 508 requires disclosure about the
plan of distribution for securities in an
offering, including information about
underwriters.146 Paragraph (a) requires
disclosure about the principal
underwriters and underwriters that have
a material relationship with the
registrant, while paragraph (h) requires
disclosure of the discounts and
commissions to be allowed or paid to
dealers. If a dealer is paid any
additional discounts or commissions for
acting as a ‘‘sub-underwriter,’’
paragraph (h) allows the registrant to
include a general statement to that effect
without giving the additional amounts
to be sold.
‘‘Sub-underwriter’’ is not a defined
term, and its application may be
unclear. ‘‘Principal underwriter,’’
however, is defined in Regulation C as
‘‘an underwriter in privity of contract
with the issuer of the securities as to
which he is an underwriter.’’ 147
Consistent with the staff’s
recommendation in the FAST Act
Report,148 and in light of the definition
of ‘‘principal underwriter’’ and the
disclosure required by Item 508(a), we
are proposing to amend Rule 405 149 to
define the term ‘‘sub-underwriter’’ 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.150
Request for Comment
36. Should we amend Rule 405 to
define ‘‘sub-underwriter’’ as proposed?
Should we define the term differently?
For example, is the concept of ‘‘privity
of contract’’ sufficiently clear?
4. Undertakings (Item 512)
Item 512 151 provides undertakings
that a registrant must include in Part II
of its registration statement, depending
146 17
CFR 229.508.
CFR 230.405.
148 See FAST Act Report, supra note 2, at
Recommendation E.7.
149 17 CFR 230.405.
150 The only other use of the term ‘‘subunderwriter’’ or ‘‘subunderwriter’’ in Regulation S–
K, the Securities Act rules, or the Exchange Act
rules is in Rule 491 [17 CFR 230.491]. We are
proposing to amend Rule 491 to reference ‘‘subunderwriter,’’ consistent with our proposed
amendments here. The proposed definition of subunderwriter would not change the meaning of that
term in Rule 491 and appears to be consistent with
its use in that context.
151 17 CFR 229.512.
on the type of offering. In the FAST Act
Report, the staff recommended that the
Commission consider eliminating
undertakings that are duplicative of
other rules or that have become
unnecessary due to developments since
their adoption. We are proposing the
following amendments to implement
the staff’s recommendations.
Item 512(c) sets forth undertakings
that a registrant must include if it
registers a warrant or rights offering to
existing security holders and the
securities not purchased by those
security holders will be reoffered to the
public.152 The undertaking requires a
registrant, after the expiration of the
subscription period, to supplement the
prospectus to disclose the results of the
subscription offer and the terms of any
subsequent reoffer to the public. If any
public reoffer is made on terms different
from the offer to existing security
holders, then the registrant must
undertake to file a post-effective
amendment to disclose the terms of that
offering. We are proposing to eliminate
this undertaking because it is no longer
necessary. A registrant conducting the
type of offering described in Item 512(c)
would already have been required to
register and disclose the offering to
existing security holders as well as the
reoffering to the public. Furthermore,
Item 512(a)(1) requires registrants to
undertake to file a post-effective
amendment to disclose fundamental
changes in the information set forth in
the registration statement and material
information with respect to the plan of
distribution or changes in the plan of
distribution.153 Thus, disclosure of
material changes in the terms of the
reoffering would also be required as part
of the Item 512(a)(1) undertaking, thus
obviating the need for the Item 512(c)
undertaking.
Consistent with the recommendations
made in the FAST Act Report, we are
also proposing to eliminate the Item
512(d), Item 512(e), and Item 512(f)
undertakings, because they are
obsolete.154 Item 512(d) requires a
registrant to include undertakings if the
securities it registers are to be offered at
competitive bidding.155 The
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152 17 CFR 229.512(c). The Item 512(c)
undertaking was included in the Securities Act
forms and guides, prior to the enactment of the
integrated disclosure system in 1982. See, e.g.,
Notice of Proposed Revision of Form S-4, Release
No. 33–3667 (July 31, 1956) [21 FR 6025 (Aug. 11,
1956)] and Notice of Proposed Form S–11 for
Registration of Securities of Certain Real Estate
Companies, Release No. 33–4347 (Apr. 10, 1961)
[26 FR 3280 (Apr. 18, 1961)].
153 17 CFR 229.512(a)(1).
154 See FAST Act Report, supra note 2, at
Recommendation E.9.
155 17 CFR 229.512(d).
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undertaking requires a registrant to use
its best efforts to distribute a Section
10(a) prospectus to prospective bidders,
underwriters, and dealers and to file a
post-effective amendment reflecting the
results of the bidding and any related
terms. This undertaking arises from
former Rule 50 under the Public Utility
Holding Company Act of 1935
(‘‘PUHCA’’), which formerly required
public utility company securities to be
sold through competitive bids.156 We
propose eliminating this undertaking
because the Commission rescinded Rule
50 in 1994,157 and because Congress
repealed PUHCA in 2005.158
Furthermore, this undertaking was put
into place prior to the adoption of Rule
430A, which permits the omission of
pricing and underwriter related terms
from the effective registration statement
if the issuer includes that information in
a prospectus or post-effective
amendment after the effective date.159
To the extent that competitive bidding
is still used, registrants may file
prospectuses that contain the pricing
and underwriter disclosure pursuant to
Rule 430A and those documents will be
subject to the liability imposed by that
rule.160
Item 512(e) provides that, if a
registrant’s prospectus directly
incorporates by reference the registrant’s
annual report to security holders
meeting the requirements of Rule 14a–
4 161 or Rule 14c–3,162 the registrant
must undertake to deliver the latest
156 See Notice of Proposal to Adopt Rule 415
Relating to Competitive Bidding Registration
Statements, to Amend Rules 424, 455, 471 and 472
and to Rescind Rule 460, Release No. 33–3491–Z
(Nov. 10, 1953) [18 FR 7300 (Nov. 18, 1953)];
Adoption of Rule 415 Relating to Competitive
Bidding Registration Statements, Amendment of
Rules 424, 427, 455, 471 and 472 and Rescission
of Rule 460, Release No. 33–3494 (Jan. 13, 1954) [19
FR 399 (Jan. 22, 1954)]; and Phase One
Recommendations of Task Force on Disclosure
Simplification, Release No. 33–7300 (May 31, 1996)
[61 FR 30397 (June 14, 1996)] (‘‘1996 Disclosure
Simplification Recommendations’’).
157 See 1996 Disclosure Simplification
Recommendations (citing Public Utility Holding
Company Act Rules, Release No. 35–26031 (Apr.
20, 1994) [59 FR 21922 (Apr. 28, 1994)]).
158 See Energy Policy Act of 2005, Public Law No.
109–58, 119 Stat. 594 (2005).
159 17 CFR 230.430A.
160 We understand that registration statements
filed in connection with securities to be offered
through competitive bidding are rarely used. See
Louis Loss, Joel Seligman, & Troy Paredes,
Securities Regulation (5th ed. 2016) (‘‘Loss et al.’’)
§ 2.A.4. Competitive Bidding. According to Loss et
al., competitive bidding is now used by
‘‘municipalities and public instrumentalities.’’ Rule
430A provides that information omitted in reliance
on that rule is deemed part of the registration
statement as of the time it was declared effective,
thus subjecting those disclosures to liability under
Section 11 of the Securities Act.
161 17 CFR 240.14a–4.
162 17 CFR 240.14c–3.
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annual report with the prospectus.163 If
interim information is required but is
not included in the prospectus, the
registrant must undertake to deliver the
latest quarterly report that is
incorporated by reference in the
prospectus. The purpose of this
undertaking is to ensure that the
registrant delivers incorporated annual
and quarterly reports with the
prospectus, as required by former Form
S-2.164 The disclosure and delivery
requirements of former Form S–2 were
intended to minimize duplicative
reporting while still requiring delivery
of incorporated information.165 The
Commission rescinded Form S–2 as part
of Securities Offering Reform, since its
underlying purpose was outdated
because of EDGAR, other technological
developments, and the rapid
dissemination of information in the
market.166 Similarly, we are now
proposing to eliminate the related
undertaking, since any material
information in a registrant’s annual or
quarterly reports to security holders
should be publicly available.
Finally, the undertaking in Item 512(f)
applies to registrants that prior to the
offering had no obligation to file reports
with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange
Act.167 If such a registrant conducts an
underwritten equity offering, it must
undertake to provide the securities
certificates required by the underwriter
at closing to permit prompt delivery to
each purchaser. The purpose of this
undertaking is to ensure that the
registrant delivers sufficient certificates
to the underwriter at closing to permit
aftermarket trading in new issues.168 We
163 17
CFR 229.512(e).
Proposed Comprehensive Revision to
System for Registration of Securities Offerings,
Release No. 33–6235 (Sept. 2, 1980) [45 FR 63693
(Sept. 25, 1980)].
165 See Securities Offering Reform Adopting
Release, supra note 132.
166 See id.
167 17 CFR 229.512(f).
168 See Hot Issues, Release No. 33–5274 (July 26,
1972) [37 FR 16005 (Aug. 9, 1972)] (‘‘Hot Issues
Release’’); Notice of Adoption of Amendments to
Registration Forms S–1 and S–2 under the
Securities Act of 1933 and to Forms 10, 10–K and
10–Q and Rules 13a–13 and 15d–13 under the
Securities Exchange Act of 1934, Release No. 33–
5395 (June 1, 1973) [38 FR 17202 (June 29, 1973)].
In 1972, the Commission conducted public hearings
on the matter of hot issues securities markets,
which revealed that ‘‘one of the imperfections
affecting aftermarket trading in new issues is the
occasional failure of issuers to furnish securities in
such denominations and registered in such manner
as to permit adequate and prompt delivery to each
purchaser. Accordingly, one of the proposals is that
non-reporting registrants formally undertake in
registration statements filed on Forms S–1 and S–
2 that they will deliver the certificates to the
underwriter at the closing for prompt delivery to
customers.’’ See Hot Issues Release, supra at 16007.
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are proposing to eliminate this
undertaking because the need to deliver
certificates to underwriters has
decreased dramatically since this
undertaking was adopted in the early
1970s. Today, equity securities trades in
the United States are typically cleared
and settled using the depository and
book-entry services of the Depository
Trust and Clearing Corporation’s
clearing agency subsidiaries.169
Request for Comment
37. Should we retain or modify any of
the undertakings that we have proposed
eliminating? If so, please explain why.
38. In what instances are physical
securities certificates still delivered
today? Should we retain the
undertaking for those situations?
39. Are there other undertakings that
we have not addressed in this release
that are duplicative, no longer necessary
or that should be eliminated for other
reasons?
40. Are there undertakings we should
consider requiring to modernize and
address developments for novel
securities offerings?
E. Exhibits
1. Description of Registrant’s Securities
(Item 601(b)(4))
Item 202 requires registrants to
provide a brief description of their
registered capital stock, debt securities,
warrants, rights, American Depositary
Receipts, and other securities.170
Registrants provide Item 202 disclosure
about registered securities in their
registration statements 171 but are not
required to provide this disclosure in
their Form 10–K or Form 10–Q.172
169 See Loss et al. § 7.E.2. Current Law (‘‘Virtually
all equities securities trades in the United States are
cleared and settled through the National Securities
Clearing Corporation (NSCC) and the Depository
Trust Company (DTC), clearing agency subsidiaries
of the Depository Trust and Clearing Corporation
(DTCC).’’); Depository Trust & Clearing Corporation,
FAQs: How Issuers Work With DTC available at
http://www.dtcc.com/matching-settlement-andasset-services/issuer-services/how-issuers-workwith-dtc (last visited Feb. 22, 2017) (‘‘DTC provides
(i) settlement services for virtually all equity,
corporate and municipal debt trades and Money
Market Instruments in the U.S.’’).
170 Items 202(a)–(d) and (f) [17 CFR 229.202(a)–
(d) and (f)]. Item 202(e), ‘‘Market information for
securities other than common equity,’’ is outside
the scope of this release; it requires that if securities
other than common stock are to be registered and
there is an established trading market for such
securities, registrants are required to provide market
information for such securities comparable to that
required by Item 201(a) of Regulation S–K.
171 Item 202 disclosure is often incorporated by
reference into a registration statement on Form 8–
A from a prior registration statement on Form S–
1. See Concept Release, supra note 6, at Section
IV.D.2. Registrants are not currently required to
include Item 202 disclosure as an exhibit to any
filings with the Commission.
172 17 CFR 249.308a.
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Consistent with the staff’s
recommendation in the FAST Act
Report,173 we are proposing to amend
Item 601(b)(4) 174 to require registrants
to provide the information required by
Item 202(a)–(d) and (f) as an exhibit to
Form 10–K, rather than limiting this
disclosure to registration statements.175
Proposed Item 601(b)(4)(vi) would
require Item 202 disclosure only for
securities that are registered under
Section 12 of the Exchange Act.176
Because Item 202(e) requires Item 201(a)
market information for securities other
than common equity where there is an
established trading market for those
securities, proposed Item 601(b)(4)(vi)
does not include Item 202(e). The
proposed requirement is intended to
increase investors’ ease of access to
information about the rights and
obligations of each class of securities
registered.
The proposed amendments would not
change existing disclosure obligations
under Form 8–K and Schedule 14A,
which currently require registrants to
disclose certain modifications to the
rights of their security holders and
amendments to their articles of
incorporation or bylaws.177 As
Registrants are required to file complete copies of
their articles and bylaws as exhibits to Form 10–K,
but they are not required to provide the
descriptions called for by Item 202. See Item
601(b)(3) [17 CFR 229.601(b)(3)]. Also, under
Accounting Standards Codification (‘‘ASC’’) Topic
505–10–50–3, registrants are required to summarize
the ‘‘pertinent rights and privileges of the various
securities outstanding’’ in the notes to their
financial statements. ASC Topic 470–10–50–5
requires the same information for debt securities.
While the date of sale is not required, registrants
usually include it in their discussions of the rights
and privileges of securities sold.
173 See FAST Act Report, supra note 2, at
Recommendation F.1.
174 17 CFR 229.601(b)(4).
175 To the extent that a registrant has previously
filed an exhibit containing Item 202 disclosure, it
could incorporate that exhibit by reference and
hyperlink to the previously-filed exhibit in future
Form 10–K filings, assuming that the information
contained therein remains unchanged. See Exhibit
Hyperlinks Adopting Release supra note 15.
176 The proposed amendment includes an
instruction requiring disclosure for those classes of
a registrant’s securities that have not been retired
by the end of the period covered by the report. We
are also proposing to amend Item 202 to specify that
Section 305(a)(2) of the Trust Indenture Act of 1939,
15 U.S.C. 77aa et seq., as amended, would not affect
a registrant’s disclosure obligations under proposed
Item 601(b)(4)(vi).
177 Item 3.03 of Form 8–K requires disclosure of
material modifications to rights of security holders
while Item 5.03 requires disclosure of amendments
to the articles of incorporation or bylaws for
amendments not disclosed in a proxy or
information statement. Item 5.03 of Form 8–K also
requires disclosure of changes in fiscal year other
than by means of a submission to a vote of security
holders through the solicitation of proxies (or
otherwise) or an amendment to the articles of
incorporation or bylaws [17 CFR 249.308].
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proposed, any modifications and
amendments during a fiscal year would
now also be reflected in the Item 202
disclosure provided in an exhibit to the
registrant’s next annual report.178 The
proposed amendments would be in
addition to the current requirement to
file a complete copy of the amended
articles of incorporation or bylaws
under Item 601(b)(3).179
We recognize that some commenters
opposed requiring Item 202 disclosure
in periodic reports, stating that this
information can easily be found in
registration statements,180 while other
commenters noted that the information
overlaps with disclosure required under
U.S. GAAP.181 Requiring Item 202
disclosure as an exhibit to annual
reports could improve the ability of
investors to gain access to information
about their rights as security holders.
The proposed Item 601(b)(4)(vi) would
allow investors to easily locate an
updated description of their rights as
security holders in the most recent
annual report rather than require
investors to search through prior filings
to find this disclosure. Where a
registrant has previously filed the Item
202 information as an exhibit, and so
long as there has not been any change
to the information called for by Item
202, the registrant may incorporate the
information by reference and provide a
hyperlink to the previously filed
exhibit. Therefore, we believe that any
additional compliance cost associated
Item 12 of Schedule 14A requires disclosure if
action is to be taken regarding the modification of
any class of securities of the registrant, or the
issuance or authorization for issuance of securities
of the registrant in exchange for outstanding
securities. Section (b) of Item 12 requires disclosure
of any material differences between the outstanding
securities and the modified or new securities in
respect of any of the matters concerning which
information would be required in the description of
the securities in Item 202 of Regulation S–K. Item
19 of Schedule 14A requires disclosure of
amendments to the registrant’s charter, bylaws, or
other documents.
178 Over the course of a given fiscal year, it is
possible that a registrant may make various nonmaterial changes to the rights and privileges of its
securities that do not require separate disclosure on
Form 8–K. However, if any changes are made,
whether material or non-material, the proposed
amendments would require a registrant to update
the description of securities in the exhibit filed with
its Form 10–K.
179 See Item 601(b)(3) of Regulation S–K [17 CFR
229.601(b)(3)]. The proposal would amend Item
601(b)(4) instead of Item 601(b)(3) because (b)(4) is
consistent with Item 202’s requirement to provide
a description of capital stock that is registered while
(b)(3) is specific to the articles of incorporation and
bylaws.
180 See, e.g., Letters from Fenwick; CGCIV;
Chamber 2; and FedEx. See also Davis Polk 1.
181 See Letters from CAQ and KPMG LLP (July 21,
2016) (‘‘KPMG’’). Both commenters referenced Item
202 in the context of broader recommendations to
the Commission to work with the FASB and the
PCAOB to eliminate redundancies.
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with the proposed amendment should
not be unduly burdensome.
Request for Comment
41. Should the proposed amendments
include a requirement to file Item 202
disclosure for each class of securities
registered under Section 12 of the
Exchange Act as an exhibit to the
annual report? Why or why not? Should
registrants also be required to include
descriptions of securities that are not
registered under Section 12 of the
Exchange Act? For example, should
issuers reporting only under Section
15(d) of the Exchange Act (e.g., assetbacked issuers) be required to file Item
202 disclosure as a Form 10–K exhibit?
42. Do the requirements for Item 202,
and our proposal to require that the Item
202 information be provided as an
exhibit to the annual report, provide
sufficient disclosure about debt
securities or other classes of stock with
different or preferential voting rights?
43. Would the new requirements
result in significantly higher compliance
costs? Would the new requirements
provide benefits to investors and
facilitate informed investment
decisions? Would the proposed
amendments require disclosure that is
adequately provided elsewhere in the
annual report or on EDGAR? 182
44. Would compliance with the
proposed amendment be problematic for
issuers with multiples classes of
registered securities (e.g., well-known
seasoned issuers or asset-backed
issuers)? If so, how should we revise the
proposed amendments to avoid
unnecessary burdens that may be
imposed on these issuers?
2. Information Omitted From Exhibits
(Item 601)
Item 601 of Regulation S–K generally
requires registrants to file complete
copies of exhibits.183 Securities Act
Rule 406 184 and Exchange Act Rule
24b–2 185 permit registrants to request
confidential treatment of information
included in an exhibit to a filing or any
other document required to be filed
under either the Securities Act or the
Exchange Act. Item 601(b)(2) states that
registrants shall not file schedules or
similar attachments to material plans of
acquisition, reorganization,
arrangement, liquidation, or succession
unless they contain information
material to an investment decision and
unless that information is not otherwise
182 See supra notes 172 and 181 and
accompanying text.
183 Item 601 of Regulation S–K [17 CFR 229.601].
184 17 CFR 230.406.
185 17 CFR 240.24b–2.
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disclosed in the agreement or the
disclosure document.186 The
Commission staff generally has not
objected where a registrant omits
personally identifiable information from
exhibits without submitting a
confidential treatment request.
To modernize and simplify the
disclosure requirements under Item 601,
we are proposing to add new paragraphs
(a)(5) and (a)(6) to expand the existing
accommodation in Item 601(b)(2) to
include all exhibits filed under Item 601
and permit the omission of personally
identifiable information. We also
propose to add paragraph (b)(10)(iv) to
Item 601 to reduce significantly the
need for registrants to submit
applications for confidential treatment
of information in material contract
exhibits required by that item.187 The
proposals to add paragraphs (a)(6) and
(b)(10)(iv) are broader than the staff’s
recommendations in the FAST Act
Report. As explained more fully below,
we believe that they are consistent with
our mandate under the FAST Act to
modernize and simplify our disclosure
requirements while still providing all
material information.188
a. Schedules and Attachments to
Exhibits
Proposed Item 601(a)(5) would permit
registrants to omit entire schedules and
similar attachments to exhibits unless
they contain material information and
unless that information is not otherwise
disclosed in the exhibit or the
disclosure document. This exception,
which is similar to the existing
accommodation in Item 601(b)(2) for
plans of acquisition, reorganization,
arrangement, liquidation, or succession,
would be expanded to all exhibits under
the proposed amendments. Similar to
the current provisions in Item 601(b)(2),
proposed Item 601(a)(5) would require
registrants to provide with each exhibit
a list briefly identifying the contents of
any omitted schedules and attachments.
186 17
CFR 229.601(b)(2).
domestic forms include their exhibits
requirements in the form and/or do not separately
reference Item 601 of Regulation S–K (e.g.,
Schedule 13E–3 and Schedule 13D). As such, we
are considering whether the rationale for the
proposed amendments to Item 601 of Regulation S–
K is also applicable to the exhibit requirements in
these forms. For example, Schedule 13E–3 and
Schedule 13D require registrants to file as exhibits
certain material agreements that may be deemed
analogous to the exhibits required under Item 601
of Regulation S–K. We are requesting further
comment to assist in our evaluation of this issue.
188 See FAST Act Report, supra note 2, at
Recommendation F.2 (recommending only that the
Commission permit registrants to omit attachments
and schedules filed with exhibits unless they
contain information that is material to an
investment decision that has not been otherwise
disclosed).
187 Certain
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In addition, registrants would be
required to provide, on a supplemental
basis, a copy of any omitted schedules
or attachments to the Commission staff
upon request.189
The Commission requested comment
in the Concept Release on whether to
allow registrants to omit schedules and
attachments to all exhibits, provided
that the omitted schedules and
attachments do not include material
information that is not otherwise
included in the exhibit or the disclosure
document. Commenters uniformly
supported expanding the exception
under Item 601(b)(2).190 Some noted
that the current requirement to file
complete exhibits is unnecessarily
cumbersome and expensive where the
schedules do not contain material
information.191 Commenters also stated
that these burdens are exacerbated
where those schedules contain, as is
frequently the case, confidential
information that would require
registrants to file confidential treatment
requests.192 A few commenters that
supported allowing registrants to omit
schedules opposed requiring registrants
to provide a list of their omitted
schedules.193 Another commenter
supported a requirement to include a
list, but stated that requiring registrants
to provide a materiality analysis
189 See proposed Item 601(a)(5) of Regulation S–
K. Securities Act Rule 418 [17 CFR 230.418] states
that the Commission or its staff may, where it is
deemed appropriate, request supplemental
information concerning the registrant or a
registration statement, among other things.
Exchange Act Rule 12b–4 [17 CFR 240.12b–4]
similarly indicates that the Commission or its staff
may, where it is deemed appropriate, request
supplemental information concerning the registrant,
a registration statement, and a periodic or other
report filed under the Exchange Act. Unlike the
current version of Item 601(b)(2), registrants would
not be required to include with its list identifying
the contents of all omitted schedules an agreement
to furnish a supplemental copy of any omitted
schedule to the Commission upon request. Instead,
proposed Item 601(a)(5) would require registrants to
provide a copy of any omitted schedule to the
Commission staff upon request.
190 See, e.g., Letters from Committee on Securities
Law of the Business Law Section of the Maryland
State Bar Association (‘‘Maryland Bar Securities
Committee’’) (July 21, 2016); ABA; NYSSCPA;
FedEx; Fenwick; and Davis Polk 1. See also Letter
from CGCIV (supporting exemption from filing
immaterial attachments to material agreements for
smaller reporting companies).
191 See, e.g., Letters from Fenwick and Davis Polk
1.
192 See, e.g., Letters from Fenwick; Fenwick and
West LLP, Cooley LLP and Wilson Sonsini
Goodrich & Rosati, PC (June 19, 2012) [S–K Study
Letter] (‘‘Silicon Valley’’); and Mike Liles (Apr. 10,
2013) [S–K Study Letter] (endorsing the comments
expressed in the Silicon Valley Letter).
193 See Letter from Fenwick (stating that it does
not believe ‘‘the burden of completing such a list
of omitted schedules is offset by any meaningful
advantage to investors’’); see also letters from
NYSSCPA and FEI.
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supporting the decision to omit the
schedules was unnecessary.194 We
believe that a list of omitted schedules,
similar to current Item 601(b)(2), would
be informative for investors.
Request for Comment
45. Should the proposed amendments
permit registrants to omit entire
schedules and attachments to exhibits
unless the schedules or attachments
contain material information and unless
that information is not otherwise
disclosed in the exhibit or the
disclosure document? Similarly, should
we amend our investment company
rules or forms to permit investment
companies to omit entire schedules and
attachments?
46. Should Item 601(a)(5) require
registrants to provide a list of the
contents of the omitted schedules and
attachments as proposed? Would a list
of the titles of the schedules and
attachments be sufficient to identify the
contents of the omitted schedules and
attachments? Should we provide
guidance on the registrant’s description
of any omitted schedule or attachment?
47. As proposed, Item 601(a)(5) would
expand the existing Item 601(b)(2)
accommodation to all exhibits. Should
we require exhibits filed pursuant to
certain subsections of Item 601(b) to
include all schedules and attachments
even if they are not material? If so,
which exhibits and subsections?
b. Personally Identifiable Information
The Commission generally does not
publish or make available information
that ‘‘would constitute a clearly
unwarranted invasion of personal
privacy.’’ 195 This information includes
personally identifiable information
(‘‘PII’’). Exhibits filed pursuant to Item
601 may include PII such as bank
account numbers, social security
numbers, home addresses and similar
information. The staff generally does not
object where a registrant omits PII from
exhibits without submitting a
confidential treatment request.
In the Concept Release, the
Commission requested comment about
whether to continue or modify the
current accommodation on PII.
Numerous commenters recommended
codifying the current staff practice of
permitting registrants to omit PII from
194 See
Letter from Maryland Bar Securities
Committee.
195 17 CFR 200.80(b)(6) (exempting personnel and
medical files and similar files the disclosure of
which would constitute a clearly unwarranted
invasion of personal privacy).
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51003
exhibits without making a formal
confidential treatment request.196
Consistent with our mandate under
the FAST Act to modernize and
simplify our disclosure requirements
while still providing all material
information, Item 601(a)(6), as
proposed, would permit registrants to
omit PII without submitting a
confidential treatment request under
Rule 406 or Rule 24b–2. Allowing
registrants to omit PII without
submitting a confidential treatment
request is also intended to better
safeguard PII by limiting its
dissemination. Under the proposed
amendment, registrants also would not
be required to provide an analysis to
redact PII from exhibits.
Request for Comment
48. Should we codify the current staff
practice of permitting registrants to omit
PII without making a formal
confidential treatment request as
proposed? Similarly, should we amend
our investment company rules or forms
to similarly permit investment
companies to omit PII?
c. Redaction of Confidential Information
in Material Contract Exhibits
The proposed revisions to Item
601(b)(10) would permit registrants to
omit confidential information from
material contracts filed pursuant to that
item where such information is both (i)
not material and (ii) competitively
harmful if publicly disclosed, even
where the registrant has not submitted
a confidential treatment request to the
Commission. Instead, registrants would
be required to mark the exhibit index to
indicate that portions of the exhibit or
exhibits have been omitted and include
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. Registrants
would also be required to indicate with
brackets where the information has been
omitted from the filed version of the
exhibit.197
Although registrants would not be
required to file a confidential treatment
request in accordance with Rule 406 or
Rule 24b–2 in connection with the
redacted exhibit, the responsibility of a
registrant to determine whether all
material information has been disclosed
and whether they may redact the
196 See, e.g., Letters from NYSSCPA; Chamber 2;
FedEx; CGCIV; Maryland Bar Securities Committee;
General Motors; and Financial Executives
International.
197 These proposals are consistent with the
marking requirements for confidential treatment
requests under Rule 406 and Rule 24b–2.
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information under the proposed rules
would remain unchanged.198 The
Commission staff would continue its
selective review of registrant filings and
would selectively assess whether
redactions from exhibits appear to be
limited to information that is not
material and that would subject the
registrant to competitive harm if
publicly disclosed. As is currently the
case, the redacted information should
include no more text than necessary to
prevent competitive harm to the
registrant. Upon request, registrants
would be expected to promptly provide
supplemental materials to the staff
similar to those currently required in a
confidential treatment request,
including an unredacted paper copy of
the exhibit and an analysis of why the
redacted information is both (i) not
material and (ii) would cause
competitive harm if publicly
disclosed.199 The timing of any staff
review would not alleviate a registrant’s
obligation to disclose all material
information and its obligation to limit
redactions to those provisions and terms
that are both (i) not material and (ii)
would cause competitive harm if
publicly disclosed. Registrants could
request confidential treatment of this
supplemental information pursuant to
Rule 83 while it is in the staff’s
possession. If the registrant’s
supplemental materials do not support
its redactions, similar to the process the
staff currently follows for confidential
treatment requests under Rule 406 and
Rule 24b–2, the staff may request that
the registrant file an amendment that
includes some, or all, of the previously
redacted information.200
The Concept Release did not request
comment on the confidential treatment
process, other than its request for
comment about omitting schedules and
attachments to exhibits; however, two
commenters noted that the requirement
to file material agreements causes
registrants to expend significant
resources in preparing confidential
treatment requests.201 We believe that
simplifying and streamlining this
process would be consistent with the
198 See Rule 12b–20 [17 CFR 240.12b–20], Rule
408(a) [17 CFR 230.408(a)] and proposed Item
601(b)(10)(iv).
199 This analysis would be substantially the same
as is currently required in confidential treatment
requests submitted in reliance on Rule 80(b)(4) [17
CFR 200.80(b)(4)] pursuant to Rule 406 or Rule
24b–2.
200 Upon completion of the staff’s review, the
materials would be returned or destroyed if the
registrant complies with the procedures outlined in
Rule 418 or 12b–4.
201 See Letter from Fenwick and letter from Davis
Polk 1 (requesting that the Commission reconsider
the utility of the (b)(10) exhibit filing requirement).
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FAST Act mandate to revise Regulation
S–K in a manner that reduces the costs
and burdens on registrants while
providing investors all material
information. In addition, we believe the
proposal would result in limiting the
dissemination of sensitive information
because registrants would not be
required to provide an un-redacted copy
of each exhibit at the time of filing in
order to request confidential treatment.
Instead, this information would only be
required on request in connection with
a staff filing review.
Request for Comment
49. Should registrants be permitted to
omit confidential information from
exhibits filed pursuant to Item
601(b)(10) that is both (i) not material
and (ii) competitively harmful if
publicly disclosed without submitting a
confidential treatment request as
proposed? Similarly, should we amend
our investment company forms to
permit investment companies to omit
confidential information from exhibits?
50. Would the disclosure provided in
exhibits change under the proposed
amendments? Why or why not?
51. Under the proposed amendments,
if the registrant’s supplemental
materials do not support its redactions,
the staff may request that the registrant
file an amendment that includes some,
or all, of the previously redacted
information. In these situations, should
we require registrants to include an
explanatory note describing why the
amendment is being provided? Should
we also require that any amendment
highlight the previously redacted
information?
52. Should we allow registrants to
omit confidential information from
exhibits other than those filed pursuant
to Item 601(b)(10) that is both (i) not
material and (ii) competitively harmful
if publicly disclosed? For instance,
should registrants be allowed to omit
similar information from exhibits filed
pursuant to Item 601(b)(2)? Should they
be allowed to omit similar information
from exhibits filed pursuant to other
subsections of Item 601? If so, which
subsections and why?
53. Should we apply the proposed
amendments discussed in Section II.E.2.
(Information Omitted from Exhibits) to
forms that include their exhibits
requirements in the form or do not
separately reference Item 601 of
Regulation S–K (e.g., Schedule 13E–3
and Schedule 13–D)? If so, what forms
should be amended and to what extent?
If not, why? Are there special
considerations associated with change
of control transactions, going private
transactions, or beneficial ownership
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reporting that render the provision of
information in exhibits material to an
investment or voting decision? What are
the costs and benefits of applying the
proposed amendments to these forms?
How do they differ from the costs and
benefits of applying the proposed
amendments to Regulation S–K? 202
3. Material Contracts (Item 601(b)(10)(i))
Item 601(b)(10)(i) requires registrants
to file every material contract not made
in the ordinary course of business,
provided that one of two tests is met: (i)
The contract must be performed in
whole or in part at or after the filing of
the registration statement or report, or
(ii) the contract was entered into not
more than two years before that
filing.203
The first test captures contracts that
have not been fully performed prior to
the filing date. The second test—the
two-year look back—captures material
contracts that were fully performed
before the filing date.204 Currently, all
registrants subject to Item 601 must
consider both tests when deciding
whether a material, non-ordinary course
contract must be filed as an exhibit.
Consistent with the recommendations
in the FAST Act Report,205 we are
proposing amendments to Item
601(b)(10)(i) that would limit the twoyear look back test to newly reporting
registrants. Proposed Instruction 1 to
Item 601(b)(10)(i) defines a ‘‘newly
reporting registrant’’ 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
202 We are proposing to apply the proposed
amendments to Form 20–F to maintain a consistent
approach to the exhibit filing requirements for
domestic registrants and foreign private issuers. See
infra Section II.E.5 (Exhibits—Application to
Foreign Private Issuers).
203 Item 601(b)(10)(i) of Regulation S–K [17 CFR
229.601(b)(10)(i)].
204 The two-year look back is included in
Schedule A of the Securities Act [15 U.S.C.
77aa(24)] and serves as a ‘‘cutoff period’’ so
registrants would not have to file material contracts
that may have been fully performed many years
prior to registration. When Section 12(g) was added
to the Exchange Act in 1964, the Commission was
authorized to issue rules requiring such material
contracts to be filed with Exchange Act reports. See
Section 12(b)(1)(I) of the Exchange Act; H.R. Rep.
No. 88–1418, 83rd Cong., 2nd Sess., 1964. Prior to
the enactment of Section 12(g), the Exchange Act
reporting requirements were applicable only to
listed companies.
205 See FAST Act Report, supra note 2, at
Recommendation F.3.
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obligation.206 As an example, a
registrant that is filing its first
registration statement under the
Securities Act or the Exchange Act, or
filing its first Form 10–K since the
revival of its reporting obligation,207
would be required to file material
agreements under Item 601(b)(10)(i) for
the two-year look back period.208 The
definition of ‘‘newly reporting
registrant’’ under the proposed
instruction also would include any
registrant that (a) was a shell company,
other than a business combination
related shell company, as defined in
Rule 12b–2 under the Exchange Act,
immediately before completing a
transaction that has the effect of causing
it to cease being a shell company, and
(b) has not filed a registration statement
or Form 8–K, as required by Item 2.01
and Item 5.06 of that form, since the
completion of the transaction (or, in the
case of foreign private issuers, has not
filed a Form 20–F since the completion
of the transaction).209 Under the
proposed amendments, a registrant
meeting this definition would be
required to file material agreements for
the two-year look back period. The
proposed amendments would help
ensure that investors receive access to
agreements containing material
information, including agreements
entered into by newly reporting
registrants up to two years prior to the
commencement of their reporting
obligations. Registrants with established
reporting histories would not be
required to comply with the two-year
look back requirement because investors
would continue to have access to any
material agreements previously filed on
EDGAR.210 As such, the proposed
206 See proposed Instruction 1 to paragraph
(b)(10) of Item 601.
207 See Exchange Act Rules Compliance and
Disclosure Interpretation 153.02 (stating that a Form
10–K for the previous fiscal year is the first report
due after a reporting obligation is revived),
available at https://www.sec.gov/divisions/corpfin/
guidance/exchangeactrules-interps.htm (last
updated December 8, 2016).
208 In the case of a registrant with a suspended
reporting obligation that, less than two years later,
is revived, the proposed requirement to file material
agreements for the two-year look back period may
be satisfied by incorporating by reference and
hyperlinking to agreements previously filed on
EDGAR and filing any material agreements entered
into while the registrant was not reporting. See
Exhibit Hyperlinks Adopting Release, supra note
14, at 14135.
209 Under the proposed amendment, the
definition of ‘‘newly reporting registrant’’ would
not include reporting companies completing merger
transactions with business combination-related
shell companies.
210 Schedule A of the Securities Act requires that
registrants file ‘‘every material contract made, not
in the ordinary course of business, which contract
is to be executed in whole or in part at or after the
filing of the registration statement or which contract
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amendments would streamline
reporting obligations while maintaining
investor protections.
Request for Comment
54. Should we revise Item
601(b)(10)(i) to limit the two-year look
back test to newly reporting registrants
as proposed?
55. Should the two-year look back
requirement apply to a registrant
completing a reverse merger involving
any public shell company that is not a
business combination-related shell
company as proposed? Why or why not?
56. Should the proposed amendment
be broadened to require that a public
company acquiring or merging with a
non-public company must apply the
two-year look back test to agreements
entered into by the non-public company
prior to the transaction date?
57. Should registrants that have
revived reporting obligations be
required as proposed, to file material
contracts for the full two-year look back
period, regardless of how long their
prior reporting obligation was
suspended? Alternatively, if the
registrant’s reporting obligation was
suspended for less than two years prior
to revival, should the registrant only be
required to file agreements entered into
while the obligation was suspended?
4. Subsidiaries of the Registrant and
Entity Identifiers (Item 601(b)(21)(i))
Item 601(b)(21) requires a registrant to
list as an exhibit all of its subsidiaries,
the state, or other jurisdiction of
incorporation or organization of each,
and the names under which those
subsidiaries do business.211 The name
of particular subsidiaries may be
omitted if the unnamed subsidiaries,
considered in the aggregate as a single
subsidiary, would not constitute a
‘‘significant subsidiary’’ under Rule
1–02(w) of Regulation S–X.212
Consistent with the staff’s
recommendation in the FAST Act
Report,213 we are proposing
amendments to Item 601(b)(21)(i) that
would require registrants to include in
the exhibit the legal entity identifier
(‘‘LEI’’), if one has been obtained, of the
registrant and each subsidiary listed. An
has been made not more than two years before such
filing.’’ See Schedule A, paragraph 24 [15 U.S.C.
77aa(24)]. Due to the availability of filings on
EDGAR, as noted above, we believe the two-year
look back requirement does not provide additional
investor protection when applied to registrants with
a reporting history.
211 Item 601(b)(21)(i) of Regulation S–K [17 CFR
229.601(b)(21)(i)].
212 Item 601(b)(21)(ii) of Regulation S–K [17 CFR
229.601(b)(21)(ii)].
213 See FAST Act Report, supra note 2, at
Recommendation F.4.
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LEI is a 20-character, alpha-numeric
code that allows for unique
identification of entities engaged in
financial transactions. LEIs are intended
to improve market transparency by
providing clear identification of
participants.214 Fees are not imposed on
investors for use of, or access to, LEIs.
All of the associated reference data
needed to understand, process, and use
LEIs is widely and freely available.
These associated reference data also are
not subject to any usage restrictions.
There is a cost of obtaining an LEI for
registrants: A one-time fee of $75–$119
and $50–$99 in annual maintenance
fees.215
In the Concept Release, we solicited
comment on whether we should require
registrants to disclose their LEI and the
LEIs of their subsidiaries (if available) in
Exhibit 21 and how this information
would benefit investors. Many
commenters supported requiring
disclosure of LEIs,216 with most of them
214 See Arthur B. Kennickell, Bd. of Governors of
the Fed. Reserve Sys., Identity, Identification and
Identifiers: The Global Legal Entity Identifier
System (Nov. 8, 2016), available at https://
www.federalreserve.gov/econresdata/feds/2016/
files/2016103pap.pdf.
215 See Glob. Legal Entity Identifier Found.,
Frequently Asked Questions—Fees, Payment and
Taxes, available at https://lei.bloomberg.com/docs/
faq; and Glob. Mkt. Entity Identifier Util., GMEI
Utility Pricing, available at https://
www.gmeiutility.org/gmeiUtilityPricing.jsp. See
also, Letter from SIFMA.
216 See, e.g., Letters from Data Coalition (July 21,
2016) (‘‘Data Coalition’’) (recommending that the
Commission adopt the ‘‘if available’’ disclosure
standard as an interim step prior to requiring
registrants to obtain and disclose LEIs); Bloomberg
(recommending that filers should be required to
obtain an LEI); SIFMA (noting that regulators have
driven the expansion of the LEI system and
expressing support for recent regulations that
impose requirements upon certain investment
companies to obtain an LEI); and XBRL US
(recommending that the Commission require
registrants to obtain an LEI for every company in
their corporate structure; stating that use of LEIs
would improve the functionality of filings by
identifying participants in financial transactions
and bringing clarity to interrelationships between
entities). See also Letters from E. Bean; SEC Investor
Advisory Committee (June 15, 2016) (‘‘IAC 1’’)
(stating that LEIs could facilitate the work of the
Commission and other prudential regulators related
to systemic risk, firm interconnectivity, and
leverage at broker-dealers, asset managers, and
other market participants and benefit investors
trying to understand complex structures); Owner
Subcommittee of the SEC’s Investor Advisory
Committee (Nov. 22, 2016) (‘‘IAC 2’’); Main Street
Alliance (July 5, 2016); The Financial
Accountability and Corporate Transparency
Coalition (July 6, 2016); Citizens for Tax Justice;
GRI (July 21, 2016); American Sustainable Business
Council, Citizens for Tax Justice, FACT Coalition,
Fair Share, Global Financial Integrity and Main
Street Alliance (July 21, 2016); Americans for Tax
Fairness (July 21, 2016); AFL–CIO (July 21, 2016);
Oxfam America (July 21, 2016); S. Percoco;
Americans for Financial Reform (Aug. 10, 2016);
NYSCRF; Global Legal Identity Identifier
Foundation (July 21, 2016); and CFA Institute. See
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recommending that we require both the
registrant and its subsidiaries to obtain
and disclose LEIs.217 These commenters
generally stated that the use of LEIs
would improve investors’ ability to
understand registrants’ risk profiles. In
this regard, commenters observed that
LEIs would allow investors to link thirdparty data with structured data from the
Commission to produce more
meaningful analysis.218
The proposed amendment is intended
to modernize the disclosure
requirements under Regulation S–K by
requiring registrants to provide any LEIs
obtained for themselves or their listed
subsidiaries to investors. This proposal
would allow investors to use the LEI to
more quickly and precisely identify
registrants and their subsidiaries. Our
proposal is consistent with prior
regulatory efforts. For example, as part
of our recent investment company
reporting modernization efforts, we
adopted rules requiring certain
registrants and funds to obtain LEIs to
provide a consistent means of
identification.219 Due in part to these
and other similar global regulatory
efforts, the usage of LEIs has increased
over the last few years.220
also letter from TagniFi, LLC (Jan. 27, 2016)
[Disclosure Effectiveness letter] (‘‘TagniFi’’).
217 See id. Two commenters opposed an LEI
requirement, stating that ‘‘there is no global
standard for LEI.’’ See Letters from Financial
Executives International and General Motors.
218 See, e.g., Letters from SIFMA, Bloomberg, and
Data Coalition. See also Nationally Recognized
Statistical Rating Organizations, Release No. 34–
72936 (Aug. 27, 2014) [79 FR 55077 (Sept. 15,
2014)] (the ‘‘2014 NRSRO Amendments Release’’)
and Credit Risk Retention, Release No. 34–73407
(Oct. 22, 2014) [79 FR 77601 (Dec. 24, 2014)] (the
‘‘Credit Risk Retention Release’’).
219 See Investment Company Reporting
Modernization, Release No. 33–10231 (Nov. 18,
2016) [81 FR 81870]) (the ‘‘IM Modernization
Adopting Release’’). See also id. at n. 61 (discussing
additional contexts in which the Commission has
required LEIs, including Form PF—Reporting Form
for Investment Advisers to Private Funds and
Certain Commodity Pool Operators and Commodity
Trading Advisors, available at http://www.sec.gov/
rules/final/2011/ia-3308-formpf.pdf); Regulation
SBSR–Reporting and Dissemination of SecurityBased Swap Information, Release No. 34–74244
(Feb. 11, 2015) [80 FR 14564 (Mar. 19, 2015)]. See
also 2014 NRSRO Amendments Release, supra note
218; Credit Risk Retention Release, supra note 218.
220 See, e.g., Legal Entity Identifier Regulatory
Oversight Comm., The Global LEI System and
regulatory uses of the LEI (Nov. 5, 2015), available
at http://www.leiroc.org/publications/gls/lou_
20151105-1.pdf (progress report by the Legal
Identifier Regulatory Oversight Committee,
including an annex listing regulatory actions in the
United States, the EU countries, and eight other
countries which require, request, or allow the use
of LEIs). The global LEI system currently has over
580,000 registrations and is growing. See Global LEI
Foundation daily updated ‘‘concatenated file,’’
which includes all LEIs issued globally and related
LEI reference data, available at https://
www.gleif.org/en/lei-data/gleif-concatenated-file/
lei-download#or http://openleis.com. See also Glob.
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We recognize that many registrants
and their subsidiaries may not have
LEIs. Accordingly, our proposals would
require disclosure of LEIs only for those
registrants and subsidiaries that choose
to obtain this identifier. Below, we
solicit comment as to whether to require
registrants and their subsidiaries to
obtain LEIs.
Request for Comment
58. Should we require registrants to
include in Exhibit 21 the LEI (if one has
been obtained) of the registrant and each
subsidiary required to be listed in the
exhibit? Would requiring registrants to
disclose LEIs in Exhibit 21 as proposed,
provide investors with sufficient access
to that information? Is there another
location in registrant filings, other than
Exhibit 21, where LEI information
would be more accessible to investors?
For example, should a registrant be
required to disclose its LEI, if it has one,
on the cover page of each registration
statement, periodic filing, or current
report and provide the LEIs for its
significant subsidiaries in an exhibit?
59. If we require registrants to include
LEIs in Exhibit 21 as proposed, should
we also require them to provide that
information as machine-readable data?
If so, what structured data format would
be the most useful to investors? For
example, the Commission recently
adopted amendments requiring
investment companies to provide LEIs
in XML format.221 Should we require
registrants that have already obtained
LEIs to disclose their LEIs in XML
format? Or, for consistency with the
proposal to tag information on the cover
page of certain forms using Inline XBRL
format,222 should we require disclosure
of LEIs in Inline XBRL format? What
would be the additional cost to
registrants to provide LEIs in XML,
Inline XBRL, or another machinereadable format?
60. In light of the many comments
received on the costs and benefits of
LEIs,223 should our rules encourage or
require registrants and each subsidiary
thereof required to be listed in Exhibit
21 to obtain an LEI? If so, how should
Legal Entity Identifier Found., Regulatory Use of the
LEI (providing an overview of current and proposed
global regulatory activities involving LEI), available
at https://www.gleif.org/en/about-lei/regulatoryuse-of-the-lei; Global LEI Data Quality Reports
Archive, available at https://www.gleif.org/en/leidata/gleif-data-quality-management/about-thedata-quality-reports/archive# (showing total
number of LEIs issued, renewed, reactivated and
lapsed from January 2016 through April 2017).
221 See IM Modernization Adopting Release,
supra note 219.
222 See infra Section II.G.1 (Tagging Cover Page
Data).
223 See supra notes 216 to 218 and accompanying
text.
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we structure our rules to achieve this
purpose?
61. Some registrants have numerous
subsidiaries or affiliates operating
globally, while other registrants have
simple corporate structures. Should we
require certain types of registrants, such
as larger registrants or subsidiaries, to
obtain LEIs? For example, should we
limit the requirement to large
accelerated filers, well-known seasoned
issuers, or foreign private issuers?
5. Application to Foreign Private Issuers
The Commission previously adopted
amendments to conform the exhibit
requirements in Form 20–F to the
requirements in Item 601.224 To
maintain a consistent approach to the
exhibit requirements for domestic
registrants and foreign private issuers,
the proposed amendments would
require foreign private issuers to
provide information in exhibit filings
comparable to the information provided
by domestic registrants under Item
601(a)(5), Item 601(a)(6), Item
601(b)(4)(vi), Item 601(b)(10)(i), Item
601(b)(10)(iv), and Item 601(b)(21), as
proposed. In each case, we believe that
the justifications for the proposed
amendments to Item 601 are equally
applicable to Form 20–F.
We are not proposing similar changes
to Form 40–F. Form 40–F generally
permits Canadian issuers to use
Canadian disclosure documents to
satisfy the Commission’s registration
and disclosure requirements. As a
result, the exhibit requirements in Form
40–F are largely in accordance with
Canadian disclosure standards.
Request for Comment
62. Should we amend the exhibit
requirements of Form 20–F so that they
are consistent with the requirements
under Item 601 as proposed? Why or
why not? Are there any unique
considerations with respect to foreign
private issuers in this context?
63. Should we make corresponding
changes to the exhibit requirements in
Form 40–F? Why or why not?
64. Would the proposed amendments
conflict with home-country
requirements in some jurisdictions? If
so, please explain.
224 See International Disclosure Standards
Release, Release No. 33–7637 (Feb. 2, 1999) [64 FR
6261 (Feb. 9, 1999)] (expressing the Commission’s
intention ‘‘to conform the exhibit requirements for
Form 20–F with the exhibit requirements for
registration statements filed by U.S. issuers under
the Exchange Act’’ and stating that all of the Form
20–F exhibit requirements ‘‘are required for
domestic issuers filing a registration statement on
Form 10 or an annual report on Form 10–K’’).
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F. Incorporation by Reference
To reduce duplicative disclosure,
registrants have been permitted to
incorporate previously filed information
into their filings since the enactment of
the Securities Act and the Exchange
Act.225 Initially, incorporation by
reference was limited to exhibits, but
over time we have increasingly
permitted incorporation by reference in
other contexts. The rules and
instructions governing incorporation by
reference are now found in a variety of
regulations, including Regulation S–K,
Regulation C, Regulation 12B and many
of the Commission’s forms.
In the FAST Act Report, the staff
recommended that the Commission
consider consolidating, clarifying, and
updating Item 10(d) of Regulation S–K
and the other rules governing
incorporation by reference.226
Consistent with our mandate under the
FAST Act, our proposed amendments
would revise Item 10(d), Rule 411,227
Rule 12b–23,228 and a number of our
forms to simplify and modernize these
rules while still providing all material
information. Our proposed amendments
would also rescind Rule 12b–32.229 In
addition, to provide for a consistent set
of incorporation by reference rules for
investment companies and investment
advisers, we are proposing parallel
amendments to Rule 0–4 230 and a
number of forms under the Investment
Company Act,231 certain conforming
amendments to Rule 0–6 232 under the
Investment Advisers Act,233 and the
rescission of Rule 8b–23,234 Rule 8b–
24,235 and Rule 8b–32 236 under the
Investment Company Act (certain
provisions of which would be
consolidated into proposed new Rule
0–4). The proposed amendments would
streamline the requirements associated
with incorporation by reference and
facilitate investor access to incorporated
documents through the use of
hyperlinks. The proposed amendments
are also consistent with the
225 See Federal Trade Commission Release No.
33–47 (Sept. 22, 1933) (allowing for incorporation
by reference of exhibits filed with registration
statements); Release No. 34–51 (Nov. 27, 1934)
(allowing for incorporation by reference of exhibits
filed with the Commission under the Exchange Act
or filed with an exchange).
226 See FAST Act Report, supra note 2, at
Recommendations A.1 and A.2.
227 17 CFR 230.411.
228 17 CFR 240.12b–23.
229 17 CFR 240.12b–32.
230 17 CFR 270.0–4.
231 15 U.S.C. 80a–1 et seq.
232 17 CFR 275.0–6.
233 15 U.S.C. 80b–1 et seq.
234 17 CFR 270.8b–23.
235 17 CFR 270.8b–24.
236 17 CFR 270.8b–32.
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Commission’s longstanding acceptance
of incorporation by reference in the
interests of encouraging registrants to
eliminate duplicative disclosures.
Our proposed amendments respond to
some of the recommendations from
commenters on the Concept Release.
Commenters generally supported the
use of incorporation by reference.237 A
number of commenters recommended
expanding the ability to incorporate by
reference.238 Some commenters, while
supporting the use of incorporation by
reference, cautioned that it should not
excessively fragment disclosure or make
disclosure more difficult to access.239
1. Item 10(d)
Item 10 of Regulation S–K 240 contains
general requirements on the application
of Regulation S–K. Item 10(d) focuses on
incorporation by reference.241 Item
10(d) states that, where rules,
regulations, or instructions to the forms
permit incorporation by reference, a
document may be incorporated by
reference to the specific document and
to the prior filing or submission in
which that document was physically
filed or submitted. Item 10(d) generally
prevents registrants from incorporating
by reference a portion of a document
that itself also incorporates pertinent
information by reference.242 It also
prohibits incorporating documents by
reference if they have been on file with
the Commission for more than five years
and do not fall within one of the
exceptions provided in the rule.243
Consistent with the staff’s
recommendation in the FAST Act
Report, we are proposing to eliminate
the five-year limit in Item 10(d). This
requirement originated from the
Commission’s policy on retention of
hard copy records of filings, as set forth
237 See Letters from Wachtell, Lipton, Rosen &
Katz (May 16, 2016) (‘‘Wachtell’’); Ball Corporation
(July 19, 2016) (‘‘Ball’’); Chamber 2; FedEx; CGCIV;
International Integrated Reporting Council (July 20,
2016) (‘‘IIRC’’); California State Teachers’
Retirement System (July 21, 2016) (‘‘CalSTRS’’);
Edison Electric and AGA; American Federation of
State, County and Municipal Employees (July 21,
2016) (‘‘AFSCME’’); Fenwick; and NIRI.
238 See Letters from Wachtell; Chamber 2; FedEx;
CGCIV; IIRC; Edison Electric and AGA; Fenwick;
IAC 1; and NIRI.
239 See Letters from IIRC and CalSTRS. The IIRC
recommended emphasizing the use of incorporation
by reference for ‘‘supplementary’’ information so as
to focus the disclosure in a document on ‘‘core’’
information.
240 17 CFR 229.10.
241 17 CFR 229.10(d).
242 Indirect incorporation by reference is
permitted when the registrant is expressly required
to incorporate a document by reference and, in the
case of asset-backed issuers, under Item 1100(c) of
Regulation AB [17 CFR 229.1100(c)]. See Item 10(d).
243 See infra note 247 and accompanying text
(discussing the exceptions).
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51007
in the Commission’s Rules of
Practice.244 This requirement previously
imposed a 10-year limit but was
reduced to five years in 1977 to allow
for the Commission’s ‘‘orderly
destruction of unneeded filings.’’ 245 At
the time, the Commission noted that the
‘‘cost of storage outweighs the
usefulness to the Commission and to the
public of many if not most of these
records.’’ 246 Nevertheless, exceptions
were added for documents contained in
registration statements of reporting
registrants and for documents that a
registrant identifies by file number that
have not been disposed of pursuant to
the Commission’s Records Control
Schedule.247 Given these broad
exceptions and the current practice of
retaining documents electronically, the
five-year limit now serves little purpose
and may lead to confusion about which
documents may be incorporated by
reference.248
Without the provisions relating to the
five-year limit, little substance remains
in Item 10(d). Therefore, to simplify the
requirements, we are proposing to move
the remaining provision in Item 10(d)
prohibiting indirect incorporation by
reference into the other rules governing
incorporation by reference.249 In the
244 See Rules of Practice, Release No. 34–35833
(June 9, 1995) [60 FR 32738 (June 23, 1995)]
(moving the requirements from Rule 24 of the
Commission’s Rules of Practice to Item 10(d)). We
are also proposing to eliminate remaining
references to Rule 24 in Regulation S–K and other
rules and forms. See, e.g., Rule 411(d) and Form N–
2.
245 See 25 FR 6719 (July 15, 1960) (adopting Rule
24); Incorporation by Reference, Release No. 33–
5818 (Mar. 18, 1977) [42 FR 16922 (Mar. 30, 1977)]
(adopting an amendment to Rule 24 reducing the
10-year limit to five years).
246 Notice of (1) Proposed Amendments to Rule 24
of the Rules of Practice and All Other Commission
Rules Relating to Incorporation By Reference and
Basic Documents and (2) Proposed Revocation of
Securities Exchange Act Rule 12b–34, Release No.
33–5711 (May 21, 1976) [41 FR 105 (May 28, 1976)]
(proposing a three-year limit with certain ‘‘basic
documents’’ being retained for a longer period).
247 See Item 10(d)(1)–(2) and the Commission’s
Records Control Schedule [17 CFR 200.80f].
248 We believe that it is very unlikely that a
registrant would attempt to incorporate by reference
to a document that was filed with the Commission
but is no longer available because it was not
submitted on EDGAR and has been destroyed
pursuant to the Records Control Schedule. For
example, the Commission retains Securities Act and
Exchange Act registration statements, reports and
proxy materials that have not been filed on EDGAR
for 30 years. See Records Control Schedule [17 CFR
200.80f]. Under the proposed amendments, a
registrant would not be permitted to incorporate by
reference to a destroyed document because it would
render its disclosure incomplete, unclear, or
confusing. See, e.g., proposed Rule 411(e) and Rule
12b–23(e).
249 See the proposed amendments to Rule 411,
Rule 12b–23, Rule 0–4, and Rule 0–6. Paragraph (d)
of Item 10 also states that, when incorporation by
reference is permitted, a document may be
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FAST Act Report, the staff
recommended consolidating the
incorporation by reference rules in Item
10(d). After considering this
recommendation, we believe that
consolidating these procedural rules in
Regulation C and Regulation 12B (and,
for investment companies and
investment advisers, in Rule 0–4 under
the Investment Company Act and Rule
0–6 under the Investment Advisers Act,
respectively 250) would better align with
the Commission’s original intent of
focusing Regulation S–K on substantive
disclosure requirements.251
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Request for Comment
65. Should we consolidate the
requirements governing incorporation
by reference as proposed? Would the
proposed structure of the incorporation
by reference rules be simpler for
registrants, particularly smaller
registrants, to follow? Instead of
preserving the different rules for
incorporation by reference under
Regulation C and Regulation 12B,
should we combine Rule 411, Rule 12b–
23, and Rule 12b–32 in a single item of
Regulation S–K? Would that facilitate or
streamline compliance with the rules?
66. Should we eliminate Item 10(d)’s
five-year limit on incorporation by
incorporated by reference to the specific document
and to the prior filing or submission in which such
document was physically filed or submitted. We are
proposing to eliminate this provision because
similar provisions exist in Rule 411(d), Rule 12b–
23(b), Rule 0–4(c), and Rule 0–6(c).
250 As part of these amendments, we are
proposing amendments to various Investment
Company Act forms to eliminate references to Item
10(d), along with outdated references in our forms
and Rule 0–4 and Rule 0–6 to 17 CFR 228.10(f), a
former rule under Regulation S–B which was
rescinded in 2007. See Smaller Reporting Company
Regulatory Relief and Simplification, Release No.
33–8876 (Dec. 19, 2007) [73 FR 934 (Jan. 4, 2008)].
251 See FAST Act Report, supra note 2, at
Recommendation A.2 (‘‘These rules could be
consolidated in Item 10(d) for submissions that are
required to comply with Regulation S–K.’’). When
the Commission adopted the integrated disclosure
system, it indicated that it intended to bifurcate the
regulations into procedural requirements and
substantive disclosure requirements. See Proposed
Revision of Regulation C, Registration and
Regulation 12B, Registration and Reporting, Release
No. 33–6333 (Aug. 6, 1981) [46 FR 41971 (Aug. 18,
1981)] (‘‘In its development of an integrated
disclosure system, the Commission has sought to
consolidate requirements relating to substantive
disclosure and document content in Regulation S–
K. The proposals in this release reflect the
continuation of that process and also the effort to
simplify and consolidate procedural requirements
in Regulations C and 12B.’’); Integrated Disclosure
System Adopting Release, supra note 69 (‘‘The third
aspect of the integrated disclosure system consists
of Regulation C and Regulation 12B, which contain
the procedures to be used in preparing and filing
registration statements and reports under the
Securities Act and the Exchange Act,
respectively.’’). Nevertheless, the rules governing
incorporation by reference could be consolidated in
Regulation S–K. We are soliciting comment on
whether such an approach would be preferable.
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reference as proposed? Given the
exceptions that exist and the
Commission’s electronic filing
requirements, is the five-year limit
obsolete? Would eliminating the fiveyear limit make it difficult for investors
to locate information that a registrant
incorporates by reference?
67. For investment companies and
investment advisers, should we
consolidate the different rules for
incorporation by reference into Rule
0–4 and Rule 0–6, respectively as
proposed? Would this structure be
simpler for investment companies and
investment advisers to follow, or are
there special considerations regarding
investment companies and investment
advisers that make the current or
another structure more appropriate?
2. Securities Act Rule 411, Exchange
Act Rule 12b–23 and Rule 12b–32 and
Related Rules Under the Investment
Company Act and Investment Advisers
Act
Rule 12b–23 governs incorporation by
reference for registration statements
filed pursuant to Sections 12(b) and
12(g) of the Exchange Act and reports
filed pursuant to Sections 13 and 15(d)
of the Exchange Act.252 Rule 12b–23
broadly allows for incorporation by
reference in answer, or partial answer,
to any item of an Exchange Act
registration statement or report. Rule
12b–32 governs incorporation by
reference for exhibits filed with
registration statements and reports. Rule
411 governs incorporation by reference
for registration statements filed under
the Securities Act, including exhibits
thereto.253 Rule 411 restricts
incorporation by reference in a
prospectus unless otherwise provided in
the appropriate form but allows for
incorporation by reference similar to
Rule 12b–23 for the non-prospectus
portions of a registration statement.254
Under the Investment Company Act,
Rule 0–4 provides general incorporation
by reference rules for investment
company registration statements,
applications, and reports filed with the
Commission. Rule 8b–23 (additional
252 See Rule 12b–1 [17 CFR 240.12b–1] (setting
forth the scope of Regulation 12B).
253 See Rule 400 [17 CFR 230.400] (setting forth
the scope of Regulation C).
254 See Integrated Disclosure System Adopting
Release, supra note 69; Proposed Revision of
Regulation C, Registration and Regulation 12B,
Registration and Reporting, Release No. 33–6333
(Aug. 6, 1981) [46 FR 41971 (Aug. 18, 1981)]
(‘‘While it is generally proper to prevent
prospectuses from incorporating exhibits which are
not delivered, the Commission does not believe it
is necessary to impose such limits in connection
with Exchange Act reports which are not actually
delivered in registered public offerings of
securities.’’).
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incorporation by reference rules for
registration statements and reports),
Rule 8b–24 (rules regarding summaries
or outlines of documents), and Rule 8b–
32 (incorporation of exhibits by
reference) provide additional
incorporation by reference rules for
investment company registration
statements and reports. Under the
Investment Advisers Act, Rule 0–6
governs incorporation by reference for
investment adviser applications for
Commission orders under the
Investment Advisers Act other than
applications for registration as an
investment adviser.
a. Exhibit and Other Filing
Requirements
Rule 12b–23(a)(3) under the Exchange
Act requires that copies of any
information incorporated by reference
must be filed as an exhibit, with limited
exceptions.255 This provision was
introduced in 1971 so that then-existing
microfiche technology for the public
dissemination of reports and documents
filed with the Commission could
function properly.256 Rule 411(b)(4)
under the Securities Act has a more
limited exhibit filing provision for nonprospectus information that is
incorporated by reference into a
document that does not comply with the
five-year limit in Item 10(d). Rule 8b–23
under the Investment Company Act
generally requires investment company
registrants to file with a registration
statement or report a copy of any
registration statement, report, or
prospectus from which information is
incorporated by reference, except in
cases where the registration statement,
report, or prospectus was filed
electronically.257 We are proposing to
255 See Rule 12b–23(a)(3) [17 CFR 240.12b–
23(a)(3)](providing exceptions for a proxy or
information statement incorporated by reference in
response to Part III of Form 10–K, a form of
prospectus filed pursuant to Rule 424(b) [17 CFR
230.424(b)] incorporated by reference in response to
Item 1 of Form 8–A, and information filed on Form
8–K).
256 See Registration and Reporting and Form for
Annual Reports of Employee Stock Purchase Plans,
Release No. 34–9048 (Jan. 4, 1971) [36 FR 4483
(Mar. 6, 1971)] (‘‘In order that the microfiche system
for the public dissemination of reports and
documents filed with [the] Commission may work,
the amended rule requires that copies of
information or financial statements incorporated by
reference, or copies of the pertinent pages of any
document containing such information or
statement, be filed with the registration statement
or report in which it is so incorporated.’’).
257 See Rule 8b–23(a) [17 CFR 270.8b–23(a)]. In
addition, Rule 0–4 under the Investment Company
Act and Rule 0–6 under the Investment Advisers
Act permit the incorporation by reference as an
exhibit in any registration statement, application or
report (in the case of Rule 0–4) or in any application
(in the case of Rule 0–6) any document or part
thereof previously or concurrently filed with the
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eliminate these requirements, consistent
with commenters’ suggestions and the
staff’s recommendation in the FAST Act
Report to make the rules for
incorporation by reference more
consistent, and to apply consistent rules
for incorporation by reference under the
Investment Company Act and
Investment Advisers Act.258 We no
longer believe that these requirements
are necessary as most Exchange Act
filings are made publicly available on
EDGAR, and as we generally do not
have similar exhibit filing requirements
for Securities Act registration
statements.259
In connection with these proposed
amendments, we are also proposing to
eliminate the corresponding exhibit
requirement in Item 601(b)(99)(ii) of
Regulation S–K, which was adopted in
connection with Rule 12b–23(a) and
Rule 411(b)(4).260 In addition to Item
601(b)(99), other provisions in Item 601
require documents to be filed as exhibits
only when they are incorporated by
reference into a filing. For example,
Commission. Both rules also permit the
incorporation by reference of financial statements
(or parts thereof), although Rule 0–6 specifies that
the financial statements (or parts thereof) that are
incorporated are to be filed as exhibits. For
consistent rules under both Acts, we are proposing
amendments to Rule 0–4 to specify that financial
statements may be filed as exhibits to investment
company applications, as Rule 0–6 currently
specifies with respect to applications filed under
the Investment Advisers Act.
Furthermore, if the number of copies of any
document from which information is incorporated
by reference is less than the number of copies
required to be filed with a registration statement,
application, or report, Rule 0–4 and Rule 0–6
require an investment company or applicant,
respectively, to file as many additional copies of the
document incorporated by reference as may be
necessary to meet the requirements of the
registration statement, application, or report. See
Rule 0–4(a), Rule 0–6(a). We are proposing to
eliminate the requirement to file additional copies
from Rule 0–4 because most investment company
filings are available on EDGAR. Although
investment adviser applications are filed in paper
format, in the staff’s experience, those applications
rarely incorporate by reference information as
permitted by Rule 0–6. For our regulatory purposes,
we do not believe that the number of copies
specified in current Rule 0–6 is needed. Thus, for
the foregoing reasons and for consistency purposes,
we are similarly proposing to eliminate the
requirement to file additional copies from Rule 0–
6.
258 See Letters from ABA and Fenwick. See also
FAST Act Report, supra note 2, at Recommendation
A.2.
259 We note that investment advisers register and
submit some filings to the Commission
electronically through the Investment Adviser
Registration Depository (‘‘IARD’’).
260 See Integrated Disclosure System Adopting
Release, supra note 69 (adopting Item 601(b)(28)(ii),
which is now found in Item 601(b)(99)(ii)) and
Proposed Revision of Regulation S–K and Proposed
Rescission of Guides for the Preparation and Filing
of Registration Statements and Reports, Release No.
33–6332 (Aug. 6, 1981) [46 FR 41925 (Aug. 18,
1981)].
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Item 601(b)(13) requires a registrant to
file an annual report to security holders,
Form 10–Q or quarterly report to
security holders as an exhibit when the
registrant incorporates all or a portion of
such reports by reference. Although
annual reports to security holders are
readily available to investors and the
staff outside of EDGAR, we believe it is
appropriate to retain the exhibit
requirement in these circumstances
because some registrants satisfy their
disclosure requirements by
incorporating a significant amount of
disclosure from these reports. We are
not proposing to eliminate these other
exhibit filing requirements in Item 601.
Nonetheless, we are proposing to
eliminate the requirement in Item
601(b)(13) to file a Form 10-Q as an
exhibit when it is specifically
incorporated by reference into a
prospectus. This provision would no
longer be necessary because, under the
proposed rules, a registrant would be
required to include a hyperlink to any
information that is incorporated by
reference to a document available on
EDGAR.261
Request for Comment
68. Should we eliminate the
requirement in Rule 12b–23(a)(3) and
Rule 411(b)(4) that copies of information
incorporated by reference be filed as
exhibits to registration statements or
reports? Would eliminating these
requirements encourage incorporation
by reference as suggested by some
commenters? 262 Would eliminating the
requirement make it difficult for
investors to locate the incorporated
information on EDGAR?
69. Should we modify, as proposed,
the exhibit filing provisions in Rule
0–4, Rule 8b–23, and Rule 0–6 regarding
materials incorporated by reference? Are
there special considerations regarding
investment companies and applications
under the Investment Advisers Act that
merit maintaining or modifying the
current provisions we are proposing to
eliminate? Should we specify in Rule
0–4, as proposed, that financial
statements may be filed as exhibits to
investment company applications, as
Rule 0–6 currently specifies with
respect to applications filed under the
Investment Advisers Act? Given that
applications under the Investment
Advisers Act are filed with the
Commission in paper, should our final
rules continue to require the filing of
additional copies of materials
incorporated by reference?
261 See infra Section II.F.2.b. (Incorporation by
Reference—Hyperlinks).
262 See Letters from ABA and Fenwick.
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70. Some documents are required to
be filed as exhibits only when they are
incorporated by reference into a filing.
For example, Item 601(b)(13) requires an
annual report to security holders to be
filed as an exhibit to a Form 10–K when
all or part of the annual report is
incorporated by reference into the text
of Form 10–K. Should we amend Item
601(b)(13) or other provisions in Item
601 to eliminate these requirements (or
is the proposed elimination of Rule
12b–23(a)(3) sufficient to encourage
incorporation by reference)? Please
address the availability of the
information called for by Item 601 to
investors and the Commission in your
response.263
b. Hyperlinks
Consistent with the recommendation
of commenters and the staff, we are
proposing to facilitate greater investor
access to disclosure by amending Rule
411, Rule 12b–23, and Rule 0–4 to
require hyperlinks to information that is
incorporated by reference if that
information is available on EDGAR.264
The Commission recently adopted rules
requiring hyperlinks to most exhibits
filed pursuant to Item 601, Form F–
10 265 or Form 20–F.266 To
accommodate hyperlinks, those filings
must be made in HTML format.267 The
requirement to file documents in HTML
format would be expanded under the
proposed rules to include filings that are
subject to the proposed hyperlinking
requirements in Rule 411, Rule 12b–23,
and Rule 0–4.268 We believe that
263 For example, annual reports are required to be
delivered to security holders. See Rule 14a–3(b) and
Rule 14c–3(a) [17 CFR 240.14a–3(b) and 14c–3].
Such reports must also be provided to the
Commission. See Rule 14a–3(c) [17 CFR 240.14a–
3] and Rule 14c–3(b) (requiring hard copies of these
reports to be delivered to the Commission).
264 See Letters from Chamber; FedEx; Fenwick;
and CGCIV. See also FAST Act Report, supra note
2, at n.34. We are not proposing similar
amendments to Rule 0–6 because applications
under the Investment Advisers Act filed pursuant
to that rule are not required to be filed
electronically. In addition, applications filed
pursuant to Rule 0–6 may incorporate information
that may not be filed on EDGAR.
265 17 CFR 239.40.
266 See Exhibit Hyperlinks Adopting Release,
supra note 14, at 14130.
267 See id. at 14130. Larger registrants were
required to comply with the rules requiring exhibit
hyperlinks for filings submitted on or after
September 1, 2017. Id. The rules we adopted at that
time did not generally apply to investment
companies. However, as discussed below, we are
proposing to apply similar requirements to certain
filings by investment companies in this release. See
infra Section II.G.2.
268 See proposed Rule 105(e) of Regulation S–T.
We do not believe that the proposed amendments
would significantly increase the number of filings
that must be in HTML format. Filings that are not
subject to Rule 411 or Rule 12b–-23, such as proxy
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expanding the hyperlinking requirement
to other information that is incorporated
by reference would improve the
readability and navigability of
disclosure documents and discourage
repetition, consistent with our FAST
Act mandate.
The proposed requirements for
hyperlinking are similar to the
requirements for exhibit hyperlinking.
Specifically, under the proposed
amendments, registrants would not be
required to file an amendment to a
document solely to correct an inaccurate
hyperlink unless, that hyperlink was
included in a pre-effective registration
statement. An inaccurate hyperlink
alone would neither render the filing
materially deficient nor affect a
registrant’s eligibility to use Form S–
3 269 or Form F–3.270 Lastly, we are not
proposing to require refiling of
information that is incorporated by
reference from a document that was
previously filed with the Commission in
paper. Similar to our reasoning in the
Exhibit Hyperlinks Adopting Release,
we believe that requirement would have
limited utility given that electronic
filing has been required for over two
decades and paper filings are currently
made in very limited circumstances.271
Unlike the requirements for exhibit
hyperlinking, however, a registrant
would not be required to correct
inaccurate hyperlinks in an effective
registration statement by including a
corrected hyperlink in a subsequent
periodic report or a post-effective
amendment. We preliminarily believe
that it would result in more confusion
than clarity if we were to require
registrants to re-file disclosure to correct
a hyperlink or to include a section
solely devoted to corrected hyperlinks
in the body of a periodic report or posteffective amendment. This differs from
exhibit hyperlinks where the corrected
hyperlink would be unobtrusively
located in the exhibit index with other
exhibits. The requirement in proposed
Rule 411, Rule 12b–23, and Rule 0–4 to
describe the location of the information
incorporated by reference should
mitigate the impact of any inaccurate
hyperlinks.
Request for Comment
71. As proposed, in most cases a
registrant would be required to include
a hyperlink to information that it
incorporates by reference. Would the
statements on Schedule 14A, would not be affected
by this proposal.
269 17 CFR 239.13.
270 17 CFR 239.33.
271 See Exhibit Hyperlinks Adopting Release,
supra note 14, at 14131. See also FAST Act Report,
supra note 2, at n.31 and accompanying text.
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proposed hyperlinking requirements
significantly increase the compliance
burden on registrants? Should we
provide a delayed compliance date for
smaller reporting companies and ASCII
filers? 272 If so, what compliance date
would be appropriate? Should we
provide any exceptions to the proposed
hyperlinking requirement? For example,
should we exclude references to entire
forms that are readily accessible on
EDGAR, such as Form 10–K, or for
particular types of disclosure? If so,
which forms or types of disclosure
would be appropriate and why?
72. Should investment companies be
required to include a hyperlink to
information incorporated by reference
as proposed? Are there special
considerations regarding filings by
investment companies that merit
modifying the requirement in any way?
For example, should investment
company applications be required to
include a hyperlink to information that
is incorporated by reference?
73. When should registrants be
required to update inaccurate
hyperlinks? Should these updating
requirements differ from the
requirements to update inaccurate
exhibit hyperlinks as proposed? 273
Should we instead require registrants to
update hyperlinks in a post-effective
amendment or subsequent periodic
report?
74. Should we amend our forms to
clarify that information incorporated by
reference must include a hyperlink to
where that information may be found on
EDGAR? Would the requirements be
sufficiently clear if we include them
only in the rules as proposed?
c. Financial Statements
In addition to addressing
incorporation by reference, the FAST
Act Report recommended that we
consider revising our rules and forms to
allow for consistent cross-referencing to
disclosure found elsewhere in a
filing.274 To address the concern that
cross-referencing to non-financial
information from within the financial
statements may raise questions about
the scope of an audit or review, the staff
recommended that we consider
prohibiting the use of such crossreferencing. Several commenters on the
Concept Release also supported using
cross-references to reduce repetitive
disclosure while recommending that the
Commission clarify or delineate what
272 See Exhibit Hyperlinks Adopting Release, at
14130.
273 See Exhibit Hyperlinks Adopting Release,
supra note 14, at n.73.
274 See FAST Act Report, supra note 2, at
Recommendation A.2.
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information constitutes the set of
audited or reviewed financial
statements.275
In most cases, there is no prohibition
on cross-referencing to or incorporating
information from the financial
statements to satisfy the narrative
disclosure requirements of Regulation
S–K.276 In some cases cross-referencing
is specifically permitted.277 Therefore,
although we encourage registrants to
make use of the disclosure in their
financial statements to satisfy other
disclosure requirements,278 we are not
proposing clarifying amendments to our
rules or forms to address incorporation
by reference from the financial
statements at this time.
By contrast, where financial
statements cross-reference or
incorporate information from outside
the financial statements, it can raise
questions as to the scope of an auditor’s
responsibilities.279 To address this
concern, we are proposing amendments
to our rules and forms that would
prohibit that type of incorporation by
reference or cross-referencing.280 These
amendments would not prohibit crossreferences to other parts of a filing when
otherwise specifically permitted by our
rules.281 These amendments would also
not prohibit incorporating financial
information from other filings to satisfy
275 See Letters from Deloitte & Touche LLP (July
15, 2016); CAQ; Ernst & Young 3; PNC; Grant
Thornton LLP (July 21, 2016); KPMG; PWC; Crowe
Horwath LLP (July 21, 2016) (‘‘Crowe Horwath’’);
and CFA Institute.
276 Although Rule 411 restricts incorporation by
reference in a prospectus, it does not prohibit crossreferences within a prospectus. Also, Securities Act
forms, such as Forms S–1 and S–3, permit
incorporation by reference in the prospectus if
specified conditions are met.
277 See, e.g., Item 101(b) and Item 101(d)(2) of
Regulation S–K [17 CFR 229.101(b) and (d)(2)].
278 For example, disclosure about legal
proceedings, transactions with related persons and
matters relevant to MD&A might be disclosed in the
financial statements.
279 See supra note 275 and accompanying text.
280 See our proposed amendments to Rule 411,
Rule 12b–23, and Rule 0–4 and Securities Act
Forms S–1, S–3, S–11, and F–1. This approach
would also avoid the concern raised by one
commenter that registrants may lose their Securities
Act Section 27A [15 U.S.C. 77z–2] safe harbor by
cross-referencing to the body of a periodic report
within their financial statements. See Letter from
General Motors. Because Rule 0–6 governs
incorporation by reference only for applications
filed under the Investment Advisers Act, we are not
proposing to make similar amendments to that rule,
but request comment on whether the final rule
should include such provision.
281 For example, registrants would continue to be
permitted to include cross-references in the
financial statements to information outside of the
financial statements about segments when that
information conforms with generally accepted
accounting principles. See Item 101(b) of
Regulation S–K.
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financial reporting requirements when
otherwise permitted or required.282
We are also proposing an amendment
to Rule 0–4 that, except as provided in
the Commission’s rules, would restrict
the 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.283 We are proposing this
amendment to provide for consistency
with similar restrictions under both
current and proposed Rule 411 and Rule
12b-23 and request comment on
whether this amendment is appropriate.
Request for Comment
75. Should we amend our rules or
forms to clarify or expand when
financial statement disclosure may be
used to satisfy other disclosure
requirements? If so, are there particular
areas of disclosure that we should
address?
76. To clarify the scope of the
financial statements and an auditor’s
responsibilities, we have proposed
prohibiting registrants from
incorporating or cross-referencing
information outside of the financial
statements into their financial
statements unless otherwise specifically
permitted or required by the
Commission’s rules. Is the proposed
approach appropriate or would an
alternative approach better achieve this
goal? Should we provide other
exceptions to the proposed rule?
77. Are the proposed amendments
appropriate for investment companies?
Do investment companies raise special
considerations that our rules and forms
should address? Should we amend Rule
0–6 to provide for similar rules
regarding the incorporation by reference
of financial statements into applications
under the Investment Advisers Act?
Why or why not?
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d. Other Amendments
We are also proposing several nonsubstantive changes to Rule 411, Rule
12b–23 and Rule 0–4 to streamline,
clarify, and conform these rules. One of
these proposed changes relates to the
current provisions governing how
financial information from another
filing may be incorporated by
282 For example, registrants using Form S–3
would continue to be permitted to incorporate
financial statements filed with a Form 8–K that
reports the acquisition of a significant business.
Also, registrants using Form S–4 to report a merger
with another registrant would continue to be able
to incorporate the financial statements of the
registrant filed on Form 10–K and Form 10–Q.
283 See proposed Rule 0–4(b).
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reference.284 Rule 12b–23 states that
financial information incorporated by
reference must comply with the
requirements of the form or report into
which it is incorporated. Rule 411 and
Rule 0–4 contain similar language.285
These provisions could be read to imply
that the financial statements must
comply with the form on which they
were originally filed, rather than the
form into which they are being
incorporated. We are proposing to
eliminate these provisions because all
information, not just information
incorporated by reference or financial
information, must comply with the
requirements of the form in which it is
used unless otherwise permitted by rule
or statute.
The proposed amendments would
also eliminate several redundant
provisions in Rule 411 and Rule 12b–23.
Rule 411(b) provides that information
may be incorporated by reference in
answer, or partial answer, to any item
that calls for information not required to
be included in a prospectus ‘‘subject to
the following provisions.’’ Although
presented as conditions to using
incorporation by reference, the
provisions that follow mostly discuss
situations where incorporation by
reference is permitted by other parts of
these rules. For example, Rule 411(b)(1)
states that non-financial information
may be incorporated by reference to any
document in response to the nonprospectus disclosure requirements in
filings under the Securities Act. Rule
12b–23(a) contains a similar structure
for any item of a registration statement
or report. Further, Rule 411(b)(3) (for
non-prospectus disclosure
requirements) and Rule 12b–23(a)(2)
both state that incorporating
information by reference to other parts
of the same filing is generally permitted.
Incorporation by reference in all of these
contexts is permitted by the broader
provisions of Rule 411(b) and Rule 12b–
23(a). Accordingly, we are proposing to
eliminate paragraphs (b)(1) and (b)(3) of
Rule 411 and paragraph (a)(2) of Rule
12b-23, as these provisions are
unnecessary.
We are also proposing to move the
provisions relating to incorporating
exhibits by reference from Rule 12b–32
into Rule 12b–23. Previously,
Regulation C had a bifurcated structure,
similar to Rule 12b–32 and Rule 12b–23,
with both Rule 411 and Rule 447
governing the incorporation of exhibits
284 See Rule 411(b)(2) (discussing the
incorporation by reference of financial information
in the non-prospectus portion of a registration
statement) and Rule 12b–23(a)(1).
285 Similar language also exists in Rule 8b–23,
which we are proposing to rescind.
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51011
by reference for Securities Act filings.
Rule 447 was consolidated into Rule
411 in 1982.286 Although Rule 12b–32 is
currently found under the exhibits
subheading of Regulation 12B, we
believe that reducing the number of
separate rules governing incorporation
by reference would simplify
compliance. We are not proposing any
substantive changes to Rule 12b–32.287
For similar reasons, we are proposing
to move the provisions relating to
incorporating exhibits by reference from
Rule 8b–32 into Rule 0–4, with one
exception.288 Under Rule 8b–32(c), an
investment company may only
incorporate by reference into a
registration statement or report required
to be filed electronically an exhibit that
was filed in electronic format, unless
the exhibit was filed in paper under a
hardship exemption and any required
confirming copy has been submitted.289
Given that EDGAR is now the primary
method for the filing of investment
company registration statements,
applications, and reports with the
Commission and our rules require the
filing of electronic format copies of
paper format documents filed under a
hardship exemption,290 this provision is
obsolete, and therefore, we are
proposing to eliminate it.291
We are also proposing additional
modifications to Rule 0–4 and Rule 0–
6 to modernize and simplify these rules.
First, we are proposing to eliminate the
requirement that if a certificate of an
independent public accountant
previously or concurrently filed is
incorporated by reference by an
investment company (with respect to
the filing of a registration statement,
application, or report) or an investment
adviser (with respect to the filing of an
application) a written consent of the
accountant must be filed with the
filing.292 We note that Rule 439 under
286 See Integrated Disclosure System Adopting
Release, supra note 69.
287 The proposed amendments would conform the
language of Rule 12b–32 (as incorporated into Rule
12b–23) with similar language currently found in
Rule 411(c). References to 17 CFR 228.10(f), which
no longer exists, would be eliminated.
288 As with the proposed amendments to Rule
12b–23, we are proposing to conform the language
of paragraphs (a) and (b) of Rule 8b–32 (as
incorporated into Rule 0–4) with similar language
currently found in Rule 411(c). References to 17
CFR 228.10(f), which no longer exists, would
similarly be eliminated.
289 See Rule 8b–32(c).
290 See, e.g., Rule 201(b) of Regulation S–T [17
CFR 232.201(b)], Notes 2 and 3 to Rule 202 of
Regulation S–T [17 CFR 232.202].
291 See paragraph (a)(iv) of Rule 101 of Regulation
S–T [17 CFR 232.101] (specifying the investment
company filings required to be submitted
electronically).
292 See Rule 0–4(b), Rule 0–6(b).
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the Securities Act 293 provides a similar
requirement for these types of consents
for registration statements under the
Securities Act. We further note that our
investment company registration forms
do not require the filing of these
consents where a registration statement
or amendment is filed only under the
Investment Company Act.294 We are
unaware of circumstances under which
a consent would be required in
connection with an investment
company report or an application filed
by an investment company or
investment adviser. Therefore, we are
proposing to eliminate this requirement
from Rule 0–4 and Rule 0–6 but request
comment on whether the final rules
should retain it.
Second, we are proposing to eliminate
the restrictions currently contained in
Rule 0–4(d) and Rule 0–6(d) on
incorporating by reference exhibits or
financial statements made in certain
filings.295 Given that EDGAR is now the
primary method for the filing of
registration statements and reports with
the Commission, and that documents
filed on EDGAR remain available
regardless of whether a filing is
withdrawn, whether a registration
statement ceases to be effective, and
whether the other circumstances
outlined in Rule 0–4(d) and Rule 0–6(d)
apply to a particular filing, these
provisions are no longer necessary.296
For our regulatory purposes, we do not
believe that the restrictions are needed.
Thus, for the foregoing reasons and for
consistency purposes, we are proposing
to eliminate this provision from Rule 0–
4 and Rule 0–6 but request comment on
whether the final rules should retain it.
Finally, we are proposing to eliminate
the provisions currently contained in
Rule 0–4(e) and Rule 0–6(e). These
provisions provide that the Commission
may refuse to permit incorporation by
reference in any case in which, in the
Commission’s judgment, such
293 17
CFR 239.439.
e.g., General Instruction B.2(b) of Form
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294 See,
N–1A.
295 Specifically, the rules restrict the
incorporation by reference of exhibits or financial
statements which (1) have been withdrawn, (2)
were filed in connection with certain registration
statements that have ceased to be effective, (3) are
contained in filings subject to pending proceedings
under (i) Section 8(b) or 8(d) of the Securities Act,
(ii) Section 8(e) of the Investment Company Act,
(iii) in the case of applications under Rule 0–6,
Section 203(e)(1) of the Investment Advisers Act, or
(iv) orders under any of the foregoing, and (4) in
the case of investment companies, were documents
filed in paper and with respect to an electronic filer
under a temporary hardship exemption under Rule
201 of Regulation S–T and an electronic copy has
not been submitted.
296 As noted earlier, investment advisers register
and submit some filings to the Commission
electronically through IARD.
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incorporation would render a
registration statement or report of an
investment company or an application
filed by an investment adviser
incomplete, unclear, or confusing.
Instead, for consistency with proposed
Rule 411(e) and proposed Rule 12b–
23(e), we are proposing to amend Rule
0–4 and Rule 0–6 to contain a general
requirement that information must not
be incorporated by reference in any case
where such information would render
the disclosure incomplete, unclear, or
confusing.297
Request for Comment
78. We are proposing to eliminate
several redundant parts of the rules that
address incorporation by reference. Are
those provisions helpful to
understanding whether and when
incorporation by reference is permitted?
Should we include those provisions in
instructions to the rules or in other
guidance?
79. Are the proposed amendments
appropriate with respect to investment
companies, or do investment companies
raise special considerations that our
rules should address? For example,
should our rules maintain the current
restriction contained in Rule 8b–32(c)
regarding exhibits filed as part of
registration statements and reports
required to be filed electronically?
Should our rules retain the current
requirement that a consent be filed
where an independent public
accountant certificate is incorporated by
reference? Should our rules retain the
current prohibitions on incorporating by
reference information filed as part of
certain filings specified in Rule 0–4(d)
and Rule 0–6(d)? In these cases, should
our rules retain the current provisions of
our rules, or should they be modified in
any way? If so, how?
80. Are the proposed amendments to
Rule 0–4 and Rule 0–6 sufficient to help
ensure that information incorporated by
reference into a registration statement,
report, or application does not render
the disclosure in these documents
incomplete, unclear, or confusing? If so,
should we, as proposed to provide
regulatory consistency between
operating companies on the one hand
and investment companies and
investment advisers on the other,
eliminate the current provisions in Rule
0–4(e) and Rule 0–6(e) that the
Commission may refuse to permit
incorporation by reference in any case
297 See proposed Rule 0–4(e), proposed Rule 0–
6(b). A substantially similar provision exists in
current Rule 8b–23(c) (which we are proposing to
rescind) pertaining to information incorporated by
reference into an investment company registration
statement or report.
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in which in its judgment the
incorporation would render a
registration statement, report, or
application incomplete, unclear, or
confusing? Why or why not? If retained,
should the provisions be modified in
any way, and if so, how?
81. Are the proposed rules governing
incorporation by reference under the
Investment Company Act or Investment
Advisers Act sufficiently clear? Should
we modify them in any other respect?
For example, should our rules expressly
permit or prohibit information to be
incorporated into the body of an
application?
3. Forms
Incorporation by reference is also
addressed in our forms.298 Accordingly,
we are proposing revisions to several of
the Commission’s forms to implement
the proposed amendments discussed
above. In addition to conforming
changes, we are proposing amendments
to Form 10, Form 10–K and Form 20–
F to allow registrants to exclude item
numbers and captions or to create their
own captions tailored to their
disclosure.299 The proposed
amendments would not affect captions
that are expressly required by the forms
or Regulation S-K. For example, Form
10–K and Form 20–F require captions
for ‘‘audit fees,’’ ‘‘audit-related fees,’’
‘‘tax fees,’’ and ‘‘all other fees.’’
Regulation S–K requires a caption for
‘‘risk factors.’’ 300 These proposed
amendments are intended to reduce the
use of unnecessary cross-references
298 Although, as stated above, Rule 411, Rule 12b–
23 and Rule 12b–32 generally govern incorporation
by reference for filings subject to Regulation C or
Regulation 12B, provisions in the forms that cover
the same subject matter are controlling. See Rule
400 [17 CFR 230.400] (stating that the provisions in
a form, or an item of Regulation S–K referred to in
such form, will control when they cover the same
subject matter as a rule in Regulation C, unless
otherwise specifically provided in Regulation C)
and Rule 12b–1 (stating that provisions in a form
will control when they cover the same subject
matter as a rule in Regulation 12B).
299 Rule 12b–13 requires registrants to include the
numbers and captions of all items in these forms.
Although provisions in a form control when they
cover the same subject matter as a rule in
Regulation 12B, these forms do not contradict Rule
12b–13.
300 The proposed amendments are not intended to
change instances where the staff has interpreted a
requirement to allow for a caption to be excluded.
See, e.g., Regulation S–K Compliance and
Disclosure Interpretation 233.02 (discussing the
caption called for by Item 407(e)(4)). The proposed
amendments would also not eliminate General
Instruction G.4 of Form 10–K, which requires
captions when the registrant incorporates all of the
information in its Form 10–K by reference to its
annual report to security holders and its definitive
proxy or information statement. In connection with
this proposal, we are also proposing to amend Rule
12b–13 to make it clearer that the provisions of a
form control over the requirements of that rule.
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when information may be responsive to
more than one disclosure item in the
Exchange Act forms.301
While item numbers and captions are
generally not required in the prospectus
portion of most Securities Act filings,
they are required in many Exchange Act
forms.302 Although clear disclosure will
often call for appropriate headings or
captions, the proposed amendments
would provide registrants with more
flexibility in how they present their
disclosure. Increasing flexibility in this
manner may reduce repetitive
disclosure or unnecessary crossreferences when information may be
responsive to more than one item and
thereby enhance the overall readability
of required disclosures.
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Request for Comment
82. Should we amend Form 10, Form
10–K, and Form 20–F to eliminate the
requirements to include most item
numbers and captions as proposed?
Would the proposed amendments to
these forms lead to disclosure that is
less clear or less comparable across
registrants? Under the proposed
amendments, a few required captions
would remain, such as the caption for
‘‘risk factors’’ and the captions required
by General Instructions G.4 of Form 10–
K.303 Should we retain these
requirements, or should they also be
eliminated?
83. Would increasing flexibility in
how the disclosure in Form 10, Form
10–K, and Form 20–F is presented lead
to less repetitive disclosure? Should we
eliminate the requirements to include
item numbers and captions in other
forms, such as in Part II of Form 10–Q
or in Form 8–K?
84. In addition to or in lieu of
eliminating the requirements for most
item numbers and captions, should we
amend our rules to provide guidance on
the use of cross-references, as suggested
by one commenter? 304 If so, how should
the guidance discourage excessive crossreferencing while acknowledging that
some cross-references may be necessary
to provide clear disclosure? Should the
301 A commenter recommended amending our
rules to include a ‘‘policy’’ on avoidance of
duplication that would clarify that a registrant is
not required to repeat or include cross-references to
disclosure found elsewhere in a document when
responding to specific line item requirements;
however, we believe amending our forms in the
manner proposed would provide clearer guidance
for registrants. See Letter from ABA.
302 See Securities Act Rule 404 [17 CFR 230.404]
and Exchange Act Rule 12b–13 [17 CFR 240.12b–
13]. Rule 404 does not require the numbers or
captions of items to be included in a prospectus,
but does require them for the non-prospectus
portion of a registration statement. See Rule 404(d).
303 See supra note 300 and accompanying text.
304 See Letter from ABA.
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cross-referencing guidance differ based
on the nature of the document or the
disclosure? For example, should the
guidance treat a prospectus differently
from a Form 10–K filing, or treat
information in the financial statements
differently from narrative disclosure?
85. The proposed amendments would
not alter the general rule that a
prospectus may not incorporate
information by reference unless
permitted by the appropriate form. Our
forms, however, typically provide
registrants with significant latitude to
incorporate information by reference
when specified conditions are met.305
Should we change the information that
may be incorporated by reference into a
prospectus under any of our forms? If
so, which information, and why?
G. Manner of Delivery 306
1. Tagging Cover Page Data
Currently, operating company
registrants are required to file their
financial statements as an exhibit in a
machine-readable format using
eXtensible Business Reporting Language
(‘‘XBRL’’).307 This disclosure is required
as an exhibit to periodic reports and
Securities Act registration statements,
including reports on Form 8–K or Form
6–K that contain revised or updated
financial statements.
Registrants must also tag in XBRL a
specific group of data points that
appears on the cover page of the filing.
These specific data points, which are
tagged according to Regulation S–T and
the EDGAR Filer Manual, are known as
document and entity identifier elements
(‘‘DEIs’’) and include, among others,
form type, company name, filer size,
and public float.308 This information
305 For example, subject to certain conditions,
Form S–1 allows registrants to incorporate
information by reference in most of the items of Part
I—Information Required in Prospectus. See General
Instruction VII and Item 12 of Form S–1.
306 After consideration of the staff’s
recommendation G.2. in the FAST Act Report, we
are not, at this time, proposing to require the use
of external hyperlinks whenever our rules call for
the inclusion of an internet address. In the FAST
Act Report, the staff recommended requiring
external hyperlinks provided that the appropriate
technology is available to prevent these hyperlinks
from jeopardizing the security and integrity of the
EDGAR system. See FAST Act Report, supra note
2, at n.15.
307 For domestic disclosure forms, the XBRL datatagging requirements are imposed through Item
601(b)(101) of Regulation S–K and Rule 405(b) of
Regulation S–T. See Item 601(b)(101) of Regulation
S–K and Rule 405(b) of Regulation S–T [17 CFR
232.405(b)]. For foreign disclosure forms, analogous
XBRL tagging requirements are included in the
instructions to the relevant forms. See, e.g.,
paragraphs 100 and 101 of the Instructions to
Exhibits to Form 20–F.
308 See Rule 405 of Regulation S–T [17 CFR
232.405]; See also Interactive Data to Improve
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51013
corresponds to some, but not all, of the
information that registrants are required
to include on the filing cover page. For
example, the Form 10-K cover page
contains approximately 25 data points.
Less than half of those data points are
currently required to be tagged in XBRL.
The non-tagged data points include,
among others, the exchange on which
securities are registered and the state (or
jurisdiction) of incorporation.
In the FAST Act Report, the staff
recommended that the Commission
consider requiring operating company
registrants to tag in XBRL all the data
points on the cover pages of Form 10–
K, Form 10–Q, Form 8–K, Form 20–F,
and Form 40–F. The staff also
recommended that the Commission
consider revising the cover page of these
forms to include the trading symbol for
each class of securities registered under
the Exchange Act and require registrants
to format this additional data point in
XBRL.309
We are proposing amendments to
require all of the information on the
cover pages of Form 10–K, Form 10–Q,
Form 8–K, Form 20–F, and Form 40–F
to be tagged in Inline XBRL in
accordance with the EDGAR Filer
Manual. Under the proposed
amendments, the cover page data would
appear in HTML format with embedded
XBRL data. We recently proposed to
require the use of the Inline XBRL
format, where XBRL data is embedded
into an HTML document, instead of the
traditional XBRL format 310 for the
submission of operating company
financial statements.311 We intend for
Financial Reporting, Release No. 33–9002 (Jan. 30,
2009) [74 FR 15666] (discussing the requirement to
tag document and entity identifier elements, such
as form type, company name, and public float,
according to Regulation S–T and the EDGAR Filer
Manual).
309 See FAST Act Report, supra note 2, at
Recommendations G.1.
310 In the traditional XBRL format currently
required for financial statements, none of the
registrant’s XBRL data is embedded into an HTML
document. Instead, an exhibit containing all XBRL
data is filed with the relevant form. Inline XBRL
allows filers to embed XBRL data directly into an
HTML document, eliminating the need to tag a copy
of the information in a separate document.
311 See Inline XBRL Filing of Tagged Data,
Release No. 33–10323 (Mar. 1, 2017) [82 FR 14282
(Mar. 17, 2017)] (‘‘Inline XBRL Proposing Release’’).
As part of the proposal, we also proposed to require
the use of Inline XBRL format for the submission
of mutual fund risk/return summary information.
See also Order Granting Limited and Conditional
Exemption Under Section 36(a) of the Securities
Exchange Act of 1934 from Compliance with
Interactive Data File Exhibit Requirement in Forms
6–K, 8–K, 10–Q, 10–K, 20–F and 40–F to Facilitate
Inline Filing of Tagged Financial Data, Release No.
34–78041 (Jun. 13, 2016) [81 FR 39741 (June 17,
2016)] (exercising exemptive authority ‘‘to permit,
but not require, operating companies to use Inline
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Federal Register / Vol. 82, No. 211 / Thursday, November 2, 2017 / Proposed Rules
the cover pages of Form 10–K, Form 20–
F, and Form 40–F already require
disclosure of the title of each class of
securities registered pursuant to Section
12(b) of the Exchange Act and each
exchange on which they are registered,
our proposed amendments to these
forms would revise the cover page to
include a corresponding field for the
trading symbol. Unlike Form 10–K,
Form 20–F, and Form 40–F, however,
the cover pages of Form 10–Q and Form
8–K do not currently require disclosure
of the title of each class of securities and
each exchange on which they are
registered. Accordingly, to ensure that
registrants and their registered securities
are identified in a consistent manner
across forms, we are proposing to revise
the cover pages of Form 10–Q and Form
8–K to include this disclosure in
addition to the trading symbol.
Requiring the disclosure of trading
symbols on the cover pages of periodic
reports would facilitate investors’ efforts
to search news websites and stock
market databases for information about
registrants and distinguish among
similarly named companies. Further, we
believe that requiring the tagging of
trading symbols would allow investors
to sort and compare filings and
disclosures more easily and accurately.
the cover page data to be tagged in the
same format as this other information.
Therefore, if the Inline XBRL proposal
is not adopted, we are proposing, as an
alternative, to require operating
company filers to tag each cover page
data point in an XBRL exhibit to the
relevant filing.
To implement the cover page tagging
requirements, we propose to add new
Rule 406 to Regulation S–T, new Item
601(b)(104) to Regulation S–K, new
paragraph 104 to the ‘‘Instructions as to
Exhibits’’ of Form 20–F and new
paragraph B.17 to the ‘‘General
Instructions’’ of Form 40–F to require
registrants to file with each of the
specified forms a ‘‘Cover Page
Interactive Data File.’’ Under the
proposed amendments, registrants filing
Form 20–F and Form 40–F would be
required to tag cover page data only
when those forms are used as annual
reports. The proposed amendments
would not apply to Form 20–F and
Form 40–F when used as registration
statements. We are also proposing to
revise Rule 11 of Regulation S–T to add
the term ‘‘Cover Page Interactive Data
File.’’ The term would be defined as the
machine readable computer code that
presents the information required by
Rule 406 of Regulation S–T in Inline
XBRL format.
We believe that the proposal to
require mandatory tagging of all data
points on the cover pages of the
specified forms would allow investors
to automate their use of this
information. This would enhance their
ability to identify, count, sort, and
analyze registrants and disclosures to
the extent these data points otherwise
would be formatted solely in ASCII or
HTML. At the same time, we do not
expect the incremental compliance
burden associated with tagging the
additional cover page information to be
significant, given that registrants already
are required to tag some of this
information as well as information in
their financial statements. We therefore
believe that the enhanced comparability
and usability of these proposed
disclosures would justify the burden of
requiring registrants to tag the
additional data and would help to
modernize our disclosure system in a
manner consistent with the FAST Act
mandate.
We are also proposing amendments to
the cover pages of these forms to
include the trading symbol for each
class of registered securities.312 Because
Request for Comment
86. Should we require as proposed, all
of the information on the cover pages of
Form 10–K, Form 10–Q, Form 8–K,
Form 20–F, and Form 40–F to be tagged
in Inline XBRL? Should the proposed
cover page tagging requirement apply to
any other forms (e.g., Form 6–K)?
87. Should we amend the cover pages
of Form 10–K, Form 20–F, and Form
40–F to include the trading symbol for
each class of registered securities as
proposed? Should we also revise the
cover pages of Form 10–Q and Form 8–
K as proposed, to include the title,
trading symbol and exchange of each
class of registered securities?
88. Under the proposed amendments,
Form 10–K, Form 10–Q, Form 8–K,
Form 20–F, and Form 40–F would
require each registrant to identify on the
cover page of those forms the exchange
on which each class of securities is
registered. The proposed amendments
to Item 501(b)(4) would require each
registrant to identify on the cover page
of the prospectus its principal U.S.
market or markets for the securities
being offered. Should we reconcile these
differing cover page disclosures? If so,
how?
XBRL in their periodic and current reports under
the Exchange Act through March 2020’’).
312 In the Disclosure Update and Simplification
Proposing Release, we have proposed to amend
Item 201(a) to also require disclosure of the trading
symbol(s) for each class of a registrant’s common
equity. See Disclosure Update and Simplification
Proposing Release, supra note 13, at 51637.
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89. If we do not adopt Inline XBRL for
the submission of operating company
financial statements, should we instead
require the cover page data to be tagged
using traditional XBRL format?
90. Instead of requiring the cover page
data to be tagged using Inline XBRL or
traditional XBRL format, should we
require the cover page data to be
submitted using an XML format? Why
or why not?
91. Are there any changes we should
make to the proposed amendments to
better ensure accurate and consistent
tagging? If so, which changes should we
make and why?
92. Are there any disclosures
discussed in this release that we should
require to be provided in a structured
format? For example, should we require
the use of structured data within Item
303(a) to facilitate readability and
navigability of this disclosure for
investors? Are there specific elements of
Item 303(a) disclosure, such as the table
of contractual obligations, which should
be provided in a machine-readable
structured data format? Would it be
useful to investors to require registrants
to provide any of the property
disclosures under Item 102 in a
machine-readable format, such as
geospatial coordinates? To the extent
that we consider additional structured
data requirements in periodic reports,
what level and type of structured data
requirements would be appropriate? For
example, should we require registrants
to identify sections, subsections or
topics with ‘‘block text’’ labels, or
should we require registrants to
structure numeric elements and tables
individually? What would be the
challenges and costs of such an
approach? What would be the benefits?
2. Exhibit Hyperlinks and HTML Format
for Investment Companies
As discussed above, the Commission
recently adopted rules requiring
hyperlinks to most exhibits filed
pursuant to Item 601, Form F–10, and
Form 20–F, and, to accommodate
hyperlinks, those filings will be
required to be made in HTML.313 In this
release, we are proposing parallel
amendments to certain of our forms that
are used by investment companies and
amendments to Rule 102 314 of
Regulation S–T to apply similar
hyperlinking and HTML requirements
to those registrants to facilitate access to
these exhibits for investors and other
users of the information.
313 See Exhibit Hyperlinks Adopting Release,
supra note 14 at 14130.
314 17 CFR 232.102.
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Under the proposed amendments,
affected registrants would be required to
include a hyperlink to each exhibit
identified in a filing’s exhibit index,
unless the exhibit is filed in paper
pursuant to a temporary or continuing
hardship exemption under Rule 201 or
Rule 202 of Regulation S-T, or pursuant
to Rule 311 of Regulation S–T.315 This
requirement would apply to registration
statements on Form S–6, Form N–1A,
Form N–2, Form N–3, Form N–4, Form
N–5, Form N–6, and Form N–14 and to
reports on Form N–CSR.316 Consistent
with our rules for operating companies,
we are not proposing to require
registrants to refile electronically any
exhibits filed only in paper.317 Under
the proposed amendments, an electronic
filer would also be required to correct
an inaccurate or nonfunctioning link or
hyperlink to an exhibit.318
In connection with the proposed
exhibit hyperlinking requirements, we
are also proposing amendments to Rule
105 of Regulation S-T to require
investment company registrants to file
registration statements and reports that
include exhibits in HTML format.
Currently, investment company
registrants must submit electronic
filings to the Commission using the
EDGAR system in either ASCII format or
HTML format. Because the ASCII format
does not support hyperlink
functionality, the exhibit hyperlinking
315 As with the rules for operating companies, the
proposed rules for investment companies would
exclude any XBRL exhibits. See id. at 14133.
316 See proposed Instructions as to Exhibits of
Form S–6; proposed Instruction to Item 28 of Form
N–1A; proposed Instruction 4 to Item 25.2 of Form
N–2; proposed Instruction 3 to Item 29(b) of Form
N–3; proposed Instruction 3 to Item 24(b) of Form
N–4; proposed Instructions as to Exhibits of Form
N–5; proposed Item 26 of Form N–6; proposed
Instruction to Item 16 of Form N–14; proposed
Instruction to Item 12 of Form N–CSR. We are also
proposing to amend Forms N–3 and N–14 to clarify
that Rule 303 of Regulation S–T applies to
registration statements on Forms N–3 and N–14 that
are electronically filed. See proposed General
Instruction G to Form N–3; proposed Instruction to
Item 16 of Form N–14.
317 See Exhibit Hyperlinks Adopting Release,
supra note 14, at 14133.
318 17 CFR 232.105(d)(2). In the case of a
registration statement that is not yet effective, the
filer would be required to file an amendment to the
registration statement containing the inaccurate or
nonfunctioning link or hyperlink. In the case of a
report on Form N–CSR, the filer would be required
to correct the inaccurate or nonfunctioning link or
hyperlink in its next report on Form N–CSR. In the
case of a registration statement on Form S–6, Form
N–14, Form N–5, Form N–1A, Form N–2, Form N–
3, Form N–4, or Form N–6 that has become
effective, the filer would be required to correct an
inaccurate or nonfunctioning link or hyperlink in
the next post-effective amendment, if any, to the
registration statement. Alternatively, an electronic
filer may correct an inaccurate or nonfunctioning
link or hyperlink in a registration statement that has
become effective by filing a post-effective
amendment to the registration statement. Id.
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requirement would be feasible only if
registrants are required to file in HTML.
Under the proposed requirement,
registrants would be required to file
registration statements and reports on
Form S–6,319 Form N–1A,320 Form N–
2,321 Form N–3,322 Form N–4,323 Form
N–5,324 Form N–6,325 Form N–14, and
Form N–CSR 326 in HTML format. While
the affected registration statements and
reports would be required to be filed in
HTML pursuant to the proposed
amendments to Rule 105, registrants
would continue to be permitted to file
in ASCII any schedules or forms that are
not subject to the exhibit filing
requirements, such as proxy statements,
or other documents included with a
filing, such as an exhibit.
Request for Comment
93. Should we require investment
company registrants to include
hyperlinks in the exhibit index for
registration statements and reports as
proposed? Should we amend Rule 105
of Regulation S-T to require investment
company registrants to file registration
statements and reports that include
exhibits in HTML format as proposed?
94. Should we revise any additional
forms to require exhibit hyperlinks? For
example, should we revise a form to
require exhibit hyperlinks even though
all exhibits filed with this form will be
attached to it?
95. Should we require, as proposed,
that electronic filers correct an
inaccurate or nonfunctioning link or
hyperlink? If so, when should the
correction be required to be filed?
96. Should we require registrants to
refile electronically any exhibit
previously filed in paper so that they
can include a hyperlink in the exhibit
index?
97. What compliance date would be
appropriate for investment companies to
begin filing in HTML format? Should
the compliance date be the same for all
affected investment companies, or
should we distinguish between larger
and smaller investment companies, for
example, by providing an extended
compliance date for smaller entities? If
we provide an extended compliance
date for smaller entities, what additional
compliance period would be necessary
and how should we define those smaller
entities? For example, should we define
smaller investment companies for these
319 17
CFR 239.16.
CFR 239.15A and 17 CFR 274.11A.
321 17 CFR 239.14 and 17 CFR 274.11a–1.
322 17 CFR 239.17a and 17 CFR 274.11b.
323 17 CFR 239.17b and 17 CFR 274.11c.
324 17 CFR 239.24 and 17 CFR 274.5.
325 17 CFR 239.17c and 17 CFR 274.11d.
326 17 CFR 249.331 and 17 CFR 274.128.
320 17
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51015
purposes as investment companies that,
together with other investment
companies in the same group of related
investment companies have net assets of
less than $1 billion as of the end of the
most recent fiscal year of the investment
company?
H. General Request for Comment
We request and encourage any
interested person to submit comments
regarding the proposed amendments,
specific issues discussed in this release
and other matters that may have an
effect on the proposals. We note that
comments that are accompanied by
supporting data and analysis are of
particular assistance to us.
III. Economic Analysis
We are mindful of the costs and
benefits of our rules. Section 2(b) of the
Securities Act, Section 3(f) of the
Exchange Act, Section 2(c) of the
Investment Company Act, and Section
202(c) of the Investment Advisers Act
require us, when engaging in
rulemaking that requires us to consider
or determine whether an action is
necessary or appropriate in (or, with
respect to the Investment Company Act,
consistent with) the public interest, to
consider, in addition to the protection of
investors, whether the action will
promote efficiency, competition, and
capital formation.327 Additionally,
Exchange Act Section 23(a)(2) requires
us, when adopting rules under the
Exchange Act, to consider, among other
things, the impact that any new rule
would have on competition and not to
adopt any rule that would impose a
burden on competition that is not
necessary or appropriate in furtherance
of the Exchange Act.328
In this release, we are proposing
amendments to simplify and modernize
disclosure requirements in Regulation
S–K and related rules and forms as
required by Section 72003 of the FAST
Act.329 The proposed amendments are
based on the staff’s recommendations in
the FAST Act Report. The FAST Act
Report was tailored to the statutory
mandate of providing specific and
detailed recommendations on
modernizing and simplifying Regulation
S–K in a manner that reduces costs and
burdens on registrants while still
providing all material information. As
discussed above, the proposed
amendments reflect the input of public
commenters as well as the
Commission’s experience with
327 15 U.S.C. 77b(b), 15 U.S.C. 78c(f), 15 U.S.C.
80a–2(c), and 15 U.S.C. 80b–2(c).
328 15 U.S.C. 78w(a)(2).
329 Public Law 114–94, Sec. 72003, 129 Stat. 1312
(2015).
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Regulation S–K arising from the
Division of Corporation Finance’s
disclosure review program. To promote
consistency, we are also proposing
parallel amendments to certain rules
and forms applicable to investment
companies and investment advisers,
including proposed amendments that
would require certain investment
company filings to be submitted in
HTML format.
A. Background
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1. The Benefits of Information
Disclosure
The primary purpose of disclosure
under the federal securities laws is to
provide investors with the information
they need to make informed investment
and voting decisions. The separation of
ownership and management typically
prevents investors from directly
observing many managerial decisions
and requires them to rely on financial
and qualitative disclosures for
information. Absent regulation,
managers may lack incentives to
voluntarily disclose or standardize
relevant information. As a result, in the
absence of disclosure requirements, an
information asymmetry often exists
between managers and investors that
limits the ability of investors to
distinguish between well-run and
poorly-run companies and can lead to
under-supply and inefficient allocation
of capital.330 A disclosure regime that
facilitates the disclosure of material,
reliable information can reduce
informational asymmetries between
managers of companies and investors,
which can enhance capital formation
and the allocative efficiency of the
capital markets.
Materiality is a key principle of public
company reporting.331 Efforts to make
disclosures more effective typically
focus on evaluating whether existing or
proposed disclosures provide material
information to those using the
disclosures. Material disclosures can
reduce information asymmetries
330 See, Akerlof, George A., The Market for
‘‘Lemons’’: Quality Uncertainty and the Market
Mechanism, 84 Q. J. ECON. 488–500 (1970).
331 See Report of the Advisory Committee on
Corporate Disclosure to the Securities and Exchange
Commission, Cmte. Print 95–29, House Cmte. On
Interstate and Foreign Commerce, 95th Cong., 1st.
Sess. (Nov. 3, 1977), at 320. available at http://opcad-ils/InmagicGenie/DocumentFolder/
report%20of%20the%20advisory%20committee
%20on%20corporate%20disclosure%20to%20the
%20sec%2011011977.pdf.
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between managers of companies and
investors, decrease the cost of capital,
and lead to more efficient share prices
and heightened accountability of the
managers of companies.332
2. The Costs of Disclosure
Although disclosure requirements
benefit investors and financial markets,
there are potential drawbacks associated
with these requirements. For example,
disclosure can be costly for registrants
to produce and disclosure of sensitive
information can result in competitive
disadvantages.
Disclosure of information that is
unnecessary or that may not be material
also entails costs to investors, if it
affects their ability to discern material
information effectively. While material
disclosures provide important
information to investors about their
investments, sorting through
information that is unnecessary or not
material can obscure material
information that investors find useful.
Consistent with this view, research has
found that attention to one subject
generally leaves less attention available
for others.333
In the economic analysis that follows,
we first examine the current regulatory
and economic landscape that forms the
baseline for our analysis. We then
analyze the likely economic effects
arising from the proposed amendments
relative to that baseline. These
economic effects include the costs and
benefits and impact on efficiency,
competition, and capital formation.
B. Baseline
To assess the economic effect of the
proposed amendments, we are using as
332 See Bruggemann, Ulf and Kaul, Aditya and
¨
Leuz, Christian and Werner, Ingrid M., The Twilight
Zone: OTC Regulatory Regimes and Market Quality
(June 14, 2017). IGM Working Paper #95; Fisher
College of Business Working Paper No. 2013–03–09;
European Corporate Governance Institute (ECGI)—
Law Working Paper No. 224/2013; Charles A. Dice
Center Working Paper No. 2013–09. Available at
SSRN: https://ssrn.com/abstract=2290492 or http://
dx.doi.org/10.2139/ssrn.2290492.
See also C. Leuz and P. Wysocki, 2016, The
Economics of Disclosure and Financial Reporting
Regulation: Evidence and Suggestions for Future
Research, Journal of Accounting Research Vol. 54,
525–622 and M. Lang, K. Lins, and M. Maffett.
Transparency, Liquidity, and Valuation:
International Evidence on When Transparency
Matters Most, Journal of Accounting Research 50
(2012): 729–774.
333 See Pashler, H.E., The Psychology of Board:
Attention (Cambridge, MA: MIT Press 1998) and
Hirshleifer, David & Siew Hong Teoh, Limited
attention, information disclosure, and financial
reporting, 36 J. Acct. & Econ. 337–386 (2003).
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our baseline the current state of the
Commission’s filing and disclosure
regime. In characterizing the baseline, it
is useful to distinguish between
operating companies and investment
companies. Although both types of
registrants are subject to similar
registration and reporting requirements,
there are differences in the specific rules
and forms applicable to each. In
particular, on March 1, 2017, the
Commission adopted amendments
requiring registrants that file registration
statements and reports subject to the
exhibit requirements under Item 601 of
Regulation S–K, or that file Form F–10
or Form 20–F, (i.e., operating
companies) to submit these filings in
HTML format and to include a
hyperlink to each exhibit listed in the
exhibit index of these filings.334 In
contrast, there is currently no
comparable requirement for investment
companies; however, this proposal
includes amendments to a set of forms
under the Investment Company Act that
would apply HTML and hyperlinking
requirements to filers of those forms.
For operating companies, the baseline
includes the disclosure requirements in
Regulation S–K and related rules and
forms as well as Commission and staff
guidance on the application of those
requirements. Table 1 below suggests
that the proposed amendments to
Regulation S–K and related rules and
forms would apply to a substantial
number of operating companies. On
average, 7,800 different registrants per
year have filed periodic reports on Form
10–K and Form 10–Q in recent years. As
shown in the table below,
approximately 800 foreign private
issuers provided periodic information to
investors in the U.S. capital markets
using Form 20–F and Form 40–F. The
number of registrants filing definitive
proxy statements on Schedule 14A has
exceeded 5,000 each year.335
334 While compliance with these rules was
required by September 1, 2017, smaller reporting
companies, as well as registrants that are neither
accelerated filers nor large accelerated filers, are not
required to comply until September 1, 2018.
Although these registrants are not yet required to
comply with the exhibit hyperlinks and HTML
rules, we are treating these rules as part of the
baseline for all filers subject to Regulation S–K.
335 We note that, in addition to operating
companies, registered investment companies file
proxy statements as well.
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TABLE 1—NUMBER OF REGISTRANTS FILING VARIOUS DISCLOSURE FORMS FROM 2012–2016
Year
2012
2013
2014
2015
2016
10–K
.....................................................................................
.....................................................................................
.....................................................................................
.....................................................................................
.....................................................................................
As discussed above, investment
companies that file certain forms
required by the Investment Company
Act would also be affected by the
proposed amendments. Table 2 below
lists the number of filings filed by
investment companies in fiscal year
2016 using EDGAR submission types
potentially affected by the proposed
amendments, broken out by the number
of filings in HTML and ASCII format.
From January 1, 2016 to December 31,
2016, investment companies filed
64,522 filings using EDGAR submission
types potentially affected by the
proposed amendments. Of these filings,
the vast majority (58,429) were filed in
HTML, while fewer than ten percent
(6,093) were filed in ASCII format. As
shown in Table 2, most of the filers had
10–Q
8240
7898
7857
7767
7373
20–F
40–F
8381
8031
7872
7676
7147
712
690
669
687
675
DEF 14A
153
145
143
131
126
5371
5382
5259
5390
5126
substantially more HTML filings than
ASCII filings, while the Form S–6 filers
had more ASCII filings than HTML
filings in 2016.
The proposed amendments would
require registrants to include hyperlinks
in the case of exhibits included with the
forms and exhibits that are incorporated
by reference from a previously filed
TABLE 2—NUMBER OF POTENTIALLY document. To draw a baseline
AFFECTED FILINGS FROM JANUARY indicative of current disclosure
1, 2016 TO DECEMBER 2016 336
practices, we selected a random sample
of 400 filings (359 in HTML and 41 in
Number
Number
ASCII) submitted in 2016 that may be
of HTML
of ASCII
affected by the proposed amendments.
Filings
Filings
Table 3 below shows the average and
N–1A Filers .......
48,150
1,280 median number of exhibits listed in the
N–2 Filers .........
2,965
77 sampled filings by the type of exhibit
N–3 Filers .........
42
6
(i.e., filed with the form vs. incorporated
N–4 Filers .........
5,247
758
N–6 Filers .........
1,549
245 by reference).
S–6 Filers .........
476
3,727
Total ..............
58,429
6,093
TABLE 3—NUMBER OF EXHIBITS IN SAMPLED FILINGS 337
Number of exhibits listed in the
index
Average
Median
Number of exhibits
filed with the filing
Average
Number of exhibits
incorporated by reference
Median
Average
Number of
sampled filings
Median
N–1A .............................................................
N–2 ................................................................
N–3 ................................................................
N–4 ................................................................
N–6 ................................................................
N–14 ..............................................................
N–CSR ..........................................................
S–6 ................................................................
5.8
7.4
0
13.6
11.1
38.0
2.3
36
0
2
0
0
0
38.5
3
36
0.6
2.1
0
0.7
0.8
1.5
1.9
5.0
0
2
0
0
0
1
0
5.0
5.2
5.0
0
12.9
10.3
36.5
0.1
31.0
0
0
0
0
0
37.0
0
31.0
267
21
1
31
11
6
43
30
All Filings ................................................
6.7
N/A
0.9
N/A
5.8
N/A
400
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Table 3 shows a significant variation
in the number of exhibits listed in the
exhibit index across different types of
filings. Registration statements on Form
N–4, Form N–14, and Form S–6
typically contain a large number of
exhibits and had significantly more
exhibits incorporated by reference than
filings on other forms affected by the
proposed amendments. Of the 400
sampled filings, we found that none of
them included hyperlinked indexes.
As discussed above, disclosure
requirements involve trade-offs between
benefits to investors in terms of
reducing information asymmetries and
costs to registrants associated with
producing disclosure. While the
proposed amendments would apply to
all registrants subject to the regulation,
the trade-offs between the costs and
benefits of disclosure requirements
would vary across different types of
registrants. For example, smaller
companies typically have
proportionately higher disclosure costs
as well as proportionately higher
disclosure benefits.338 That is, the fixed
costs of disclosure requirements
typically constitute a higher percentage
of revenues for smaller companies than
336 The figures in this table are presented on the
basis of filer type, not on the basis of the form on
which the document was filed. Therefore, not all of
the filings presented in the table would be subject
to the proposed requirements.
337 In counting the number of exhibits, we did not
include the following exhibits: 101.INS XBRL
Instance Taxonomy; 101.SCH XBRL Taxonomy
Extension Schema Document; 101.CAL XBRL
Taxonomy Extension Calculation Linkbase
Document; 101.DEF XBRL Taxonomy Extension
Definition Linkbase Document; 101.LAB XBRL
Taxonomy Extension Labels Linkbase Document;
and 101.PRE XBRL Taxonomy Extension
Presentation Linkbase Document because XBRL
exhibits are not covered by the proposal.
Average represents the sum of the number of
exhibits divided by the number of sampled forms
for each form type. Median represents the middle
number of exhibits for each form type when the
numbers of exhibits are listed from the smallest to
the largest. For instance, for Form N–2, the number
of exhibits listed in the index ranged from 0 to 55,
with 2 as the middle number.
338 In its 2015 proposing release to amend the
definition of ‘‘smaller reporting company,’’ the
Commission observed that, based on a review of
filings, approximately 42% of registrants qualified
as smaller reporting companies. See Amendments
to Smaller Reporting Company Definition, Release
No. 33–10107 (Jun. 27, 2017) [81 FR 43130 (Jul. 1,
2016)], available at https://www.sec.gov/rules/
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for larger companies. However, the
benefits of disclosure may be greater for
smaller companies because information
asymmetries between investors and
managers of smaller companies are
typically higher than for larger, more
seasoned companies with a large
following.339 Compliance costs could be
also higher for foreign registrants to the
extent that the disclosure requirements
in the United States are different from
the disclosure requirements in their
home countries.
C. Economic Analysis of the Proposed
Amendments: General Assessment,
Including Impact on Efficiency,
Competition, and Capital Formation
In this subsection, we evaluate the
broad economic effects of the proposed
amendments, including a discussion of
their impact on efficiency, competition,
and capital formation. The proposals
amend a well-established and robust
disclosure regime that has existed for
many years. As a result, we expect the
aggregate impact of the proposed
amendments to be incremental to the
effects that have already been realized
from the existing disclosure regime.
As discussed above, disclosure
provides benefits to participants in
financial markets by reducing
information asymmetries that exist
between investors in a company and
managers tasked with operating the
company. Both registrants and investors
alike would generally benefit from the
proposed amendments, because they
would simplify the requirements and
resulting content of existing disclosures
while still providing all material
information. The proposed changes to
the requirements and resulting
improved presentation are expected to
increase the usefulness of the
disclosures for investors and generally
lower the regulatory burden (and
compliance costs) for registrants. In
addition, the improved information
environment associated with
modernized and simplified disclosures
is expected to incrementally enhance
capital formation and the allocative
efficiency of the capital markets through
more accurate share prices, better
accountability of managers and
increased capital market liquidity.
We expect some of the proposed
amendments to entail modest initial
implementation costs. However, we
339 See, e.g., R. Frankel and X. Li, Characteristics
of a firm’s information environment and the
information asymmetry between insiders and
outsiders, 37 J. Acct. Econ. 229, 229–259 (June
2004). See also, L. Cheng, S. Liao, and H. Zhang,
The Commitment Effect versus Information Effect of
Disclosure—Evidence from Smaller Reporting
Companies, 88 Acct. Rev. 1239, 1239–1263 (2013).
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believe that the initial costs would be in
manageable amounts. Furthermore,
those costs would be offset by future
savings as a result of simplified and
streamlined disclosure requirements,
after implementation. Some of the
proposed amendments, such as those
that impose new data tagging,
hyperlinking, or disclosure
requirements, would involve not only
implementation costs but would also
increase compliance costs for registrants
going forward, although as discussed
below, we do not expect these
additional costs to be significant.
While the purpose of the proposed
amendments is to simplify and
modernize public company disclosure
requirements without loss of material
information, we acknowledge that the
proposed amendments could result in a
loss of some information in specific
cases, as discussed below. This loss of
information could potentially increase
information asymmetry in those cases,
which may have negative implications
for investor protection, market
transparency, efficiency, and capital
formation. In turn, such loss of
information could raise the firm’s cost
of capital.340 However, we believe this
potential adverse effect would be
mitigated by the fact that registrants will
continue to be required to provide
further material information, if any, as
may be necessary to make the required
statements, in the light of the
circumstances under which they are
made, not misleading.341
D. Economic Analysis of the Specific
Amendments: Proposals That Clarify
and Update Existing Rules
1. Proposals That Clarify or Streamline
a Rule’s Requirements
a. Description of Property (Item 102)
Item 102 requires disclosure of the
location and general character of the
principal plants, mines, and other
materially important physical properties
of the registrant and its subsidiaries.
The staff has observed, however, that
the item may elicit disclosure that is not
material.342 The proposed amendments
to Item 102 would clarify that a
description of property is required only
to the extent physical properties are
material to the registrant and make other
340 See Easley, D., Hvidkjaer, S., & M. O’Hara, Is
information risk a determinant of asset returns? 57
J. Finance. 2185–2221 (2002).
341 See Rule 12b–20 [17 CFR 240.12b–20] and
Rule 408(a) [17 CFR 230.408(a)].
342 See FAST Act Report, supra note 2, at
Recommendation B.1. See also Concept Release,
supra note 6, at Section IV.A.6.b and SEC Staff’s
Report of the Task Force on Disclosure
Simplification (Mar. 5, 1996) available at https://
www.sec.gov/news/studies/smpl.htm.
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clarifying amendments.343 The
proposed amendments would not
modify the Item 102 requirements for
companies in the mining, real estate,
and oil and gas industries.
The main benefit of the proposed
amendments would be to reduce the
amount of duplicative disclosure that is
not material by emphasizing materiality
and harmonizing the rule’s thresholds
for disclosure. The proposed
amendments also could facilitate
compliance and avoid any confusion
associated with different disclosure
standards. The aggregate reduction in
regulatory burden due to the proposed
amendments to Item 102 may extend to
approximately 6,500 registrants.344
When Item 102 was originally
adopted, registrants were more likely to
maintain large physical properties and
other assets, such as mines and
manufacturing plants.345 However, the
nature of enterprise has changed
dramatically over the last thirty years.
Currently, many of the largest and most
profitable firms operate in the services
and technology industries that are often
not characterized by large physical
assets. Nevertheless, many modern
firms are highly geographically
dispersed. As a consequence,
information about the geographic
operations of these companies—
including information about the
location of physical properties—could
be highly relevant for investors by
providing information about important
firm customers and employees. We
expect that any risk of exclusion of
relevant information under the
proposed amendment would be
minimal, because Item 102 explicitly
solicits the disclosure of material
information. This risk is further
mitigated by the fact that registrants
may disclose relevant property
information elsewhere in their filings,
such as in response to Item 101
(Description of Business).
b. Management’s Discussion and
Analysis of Financial Condition and
Results of Operations (Item 303)
We are proposing a series of
amendments to Item 303. In this
subsection, we discuss all amendments
to Item 303 that are intended to clarify
the rule’s requirements, while in
343 See
Section II.A (Description of Property).
derive this number by taking the average
number of registrants filing annual reports as
reported in Table 1 and excluding all companies in
the mining, oil and natural gas, and real estate
industries.
345 Since 1935, we have required disclosure
similar to that required under Item 102. See Release
No. 33–276 (January 14, 1935) [not published in the
Federal Register].
344 We
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Subsection E.1 below, we discuss
proposals intended to amend the
content of MD&A. Instruction 1 to Item
303(a) provides that, generally, MD&A
shall cover the three-year period
covered by the financial statements and
either use year-to-year comparisons or
any other formats that in the registrant’s
judgment would enhance a reader’s
understanding. Additionally, the
instruction states that reference to the
five-year selected financial data may be
necessary where trend information is
relevant.
We are proposing to amend the
instructions to Item 303(a) to emphasize
that a registrant may use any
presentation that would enhance a
reader’s understanding. As discussed
above, our proposed amendments to
Item 303(a) are consistent with the
Commission’s existing interpretive
guidance on MD&A. We are also
proposing to eliminate mention of the
five-year selected financial data in the
instructions to Item 303(a) because
disclosure requirements for liquidity,
capital resources, and results of
operations already require trend
disclosure.
The proposed amendments emphasize
the flexibility available to registrants
with respect to the form of MD&A
presentation. The major benefit of
flexibility is that it allows registrants to
frame the information in a way that
emphasizes material information. One
potential cost associated with this
aspect of the rule is that, in framing the
discussion in a way that emphasizes
material information, registrants may
inadvertently de-emphasize information
that investors nevertheless find useful
or relevant. To the extent the proposed
amendment leads to more tailored
disclosure, it also could make disclosure
less comparable across registrants and
over time.
To maintain a consistent approach to
MD&A for domestic registrants and
foreign private issuers, we are proposing
changes to Form 20–F similar to the
proposed changes to Item 303(a).346 The
disclosure requirements for Item 5 of
Form 20–F are substantively comparable
to the MD&A requirements under Item
303 of Regulation S–K. The economic
effects of the proposed amendments to
Form 20–F are therefore similar to those
for the proposed amendments to Item
303(a) described above.
c. Risk Factors (Item 503(c))
Item 503(c) requires disclosure of the
most significant factors that make an
offering speculative or risky. We are
proposing to relocate Item 503(c) from
346 See
supra Section II.C.B.2.
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Subpart 500 to Subpart 100 of
Regulation S–K.347 We believe that
Subpart 100 is a more appropriate
location for the risk factor disclosure
requirements, because it covers a broad
category of business information and is
not limited to offering-related
disclosure. Additionally, our proposed
amendments would eliminate the risk
factor examples that are enumerated
currently in Item 503(c).348
We do not expect that relocating the
disclosure requirement within
Regulation S–K would pose any
additional costs to registrants or
investors because we are only proposing
to change the location of the
requirement. The content of the
requirement would not change.
With respect to the proposed
elimination of the examples in Item
503(c), we believe that this could
prompt registrants to more carefully
evaluate and classify their risk
exposures, which could ultimately
benefit investors through more specific
and relevant risk factor disclosures.
Although examples could be useful to
registrants in some cases, they could
also anchor or skew the registrant’s risk
analysis in the direction of the
examples. 349
An alternative to the proposed
amendments, as suggested by some
commenters, would be to expand or
update the list of examples or revise
them to specify generic risks that should
not be disclosed. While such an
approach might lead to incremental
improvements in existing disclosures, it
would not eliminate the anchoring
effect discussed above nor would it
serve to discourage generic or
‘‘boilerplate’’ disclosures as effectively
as the proposed amendments. It is also
possible that a list of generic risks could
inadvertently be viewed as exhaustive.
In addition, specifying a list of generic
risks that should not be disclosed may
create a rule that needs to be regularly
updated.
d. Plan of Distribution (Item 508)
Item 508 requires disclosure about the
plan of distribution for securities in an
offering, including information about
underwriters. We are proposing to
amend Rule 405 to define the term ‘‘subunderwriter’’ to clarify its application in
Item 508 of Regulation S–K.350 We
347 See
supra Section II.D.2.
id.
349 There is extensive evidence in psychology and
economics that individuals tend to rely too heavily
on the first piece of information offered (the
‘‘anchor’’) when making decisions. See e.g.,
Tversky, A. & Kahneman, D., Judgment under
Uncertainty: Heuristics and Biases. 185 Science.
1124–1131 (1974).
350 See supra Section II.D.3.
348 See
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51019
believe that defining the term ‘‘subunderwriter’’ would reduce compliance
costs by helping registrants to more
easily determine what disclosure is
required under Item 508. We also
believe that a defined term could help
investors better understand the role of
‘‘sub-underwriters’’ in the offering
process. We do not believe there would
be additional costs associated with the
proposed amendment, since it merely
clarifies an existing disclosure
requirement.
e. Material Contracts (Item 601(b)(10))
Item 601(b)(10)(i) currently requires
registrants to file every material contract
not made in the ordinary course of
business, provided that the contract
meets one of two tests: (i) The contract
must be performed in whole or in part
at or after the filing of the registration
statement or report, or (ii) the contract
was entered into not more than two
years before that filing.
The second test, the two-year look
back, captures material contracts that
were fully performed before the filing
date. We are proposing amendments to
Item 601(b)(10)(i) that would limit the
two-year look back test to newly
reporting registrants.351 Proposed
Instruction 1 to Item 601(b)(10)(i)
defines a ‘‘newly reporting registrant’’ 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.352 As
an example, a registrant that is filing its
first registration statement under the
Securities Act or the Exchange Act, or
filing its first Form 10–K since the
revival of its reporting obligation, would
be required to file material agreements
under Item 601(b)(10)(i) for the two-year
look back period. The definition of
‘‘newly reporting registrant’’ under the
proposed instruction also would
include any registrant that (a) was a
shell company, other than a business
combination related shell company, as
defined in Rule 12b–2 under the
Exchange Act, immediately before
completing a transaction that has the
effect of causing it to cease being a shell
company, and (b) has not filed a
registration statement or Form 8–K, as
required by Item 2.01 and Item 5.06 of
that form, since the completion of the
351 See
352 See
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transaction (or in the case of foreign
private issuers, has not filed a Form 20–
F since the completion of the
transaction).353 Under the proposed
amendments, a registrant meeting this
definition would be required to file
material agreements for the two-year
look back period.
We expect that the proposed
amendments would streamline
reporting obligations while maintaining
investor protections. Although the twoyear look back test captures material
contracts that were fully performed
before the filing date, this test does not
provide any new information to the
market for registrants with established
reporting histories. Excluding these
registrants from the two-year look back
requirement would marginally reduce
their compliance burdens, because they
would not need to re-file (or incorporate
by reference) agreements that were
previously filed and are no longer in
effect. At the same time, investors
would continue to have access to any
material agreements that a registrant
previously filed on EDGAR.
f. Proposals With a Minor Effect on
Disclosure
The following proposed amendments
are expected to have minor impacts on
the disclosure provided:
• Item 401—proposal would clarify
what disclosure about executive officers
does not need to be repeated in proxy
or information statements if it is already
included in Form 10–K.
• Item 405—proposal would simplify
the Section 16 reporting process by
allowing registrants to rely on a review
of Section 16 reports submitted on
EDGAR instead of gathering reports
furnished to the registrant.354
• Item 501(b)(1)—proposal would
eliminate the portion of the item that
discusses when a name change may be
required and the exception to that
requirement.
• Item 501(b)(3)—proposal would
allow registrants to move details of an
offering price method or formula from
the prospectus cover page to another
location in the prospectus; the proposal
also would require registrants to state
that the price will be more fully
explained in the prospectus and
accompany that statement with a crossreference to the more detailed offering
price disclosure.
• Item 501(b)(10)—proposal would
streamline the prospectus legend
requirements.
353 See
supra Section II.E.3
proposal would also eliminate the
requirement for reporting persons to furnish Section
16 reports to registrants, which could ease the
compliance burden on reporting persons.
354 The
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• Incorporation by Reference—
proposals would (i) provide clearer
guidance on cross-referencing; (ii)
consolidate the requirements for
incorporation by reference in Securities
Act Rule 411, Exchange Act Rule 12b–
23 and related rules under the
Investment Company Act and
Investment Advisers Act to eliminate
redundant or unnecessary requirements;
and (iii) allow registrants more
flexibility in excluding item numbers
and captions or creating their own
captions tailored to their disclosure in
Form 10, Form 10–K and Form 20–F.
Since the proposed amendments
listed above would alter existing
disclosure practices only to a minor
degree, their implementation would
have little economic effect. We believe
that the proposed amendments would
allow registrants to improve the
readability and navigability of
disclosure documents and reduce
repetition. The proposed amendments
also would reduce compliance costs for
registrants while preserving all material
information. We do not envision any
significant incremental costs associated
with the proposed amendments because
they do not significantly change the
required disclosures.
2. Proposals To Update Rules to
Account for Subsequent Developments
The following proposed amendments
would update existing rules to account
for subsequent developments and are
expected to have minor impacts on the
disclosure provided:
• Item 407(d)—proposal would
update the outdated reference to AU
sec. 380 in Item 407(d)(3)(i)(B).
• Item 407(e)—proposal would
update requirements for compensation
committee disclosure to exclude EGCs
because they are not required to include
a CD&A.
• Item 512—proposal would
eliminate certain undertakings that are
redundant and obsolete.
We believe that the proposed
amendments listed above would reduce
potential confusion in applying our
rules, result in more consistent
disclosure practices, and ease
compliance burdens for registrants, with
a minimal impact on the information
available to investors. We do not
envision any significant incremental
costs associated with the proposed
amendments, because the substance of
the rules would not change.
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E. Economic Analysis of the Specific
Amendments: Proposals That Simplify
the Disclosure Process or Eliminate
Disclosures
1. Management’s Discussion and
Analysis of Financial Condition and
Results of Operations (Item 303)
Under the proposed amendments to
Item 303 of Regulation S–K, when the
financial statements included in a filing
cover three years, discussion about the
earliest year would not be required if (i)
this discussion is not material to an
understanding of the registrant’s
financial condition, changes in financial
condition, and results of operations, and
(ii) the registrant has filed its prior year
Form 10–K on EDGAR containing
MD&A of the earliest of the three years
included in the financial statements of
the current filing.
We believe that the main economic
benefit of the proposed amendments
would be to simplify and modernize
MD&A as well as increase its readability
while still providing all material
information. This may facilitate a better
understanding of the firm’s financial
prospects. Because MD&A is typically
one of the most labor-intensive pieces of
disclosure to produce, eliminating the
requirement to discuss the earliest year
financial statements in some
circumstances could meaningfully
reduce compliance costs for registrants.
One potential cost of the proposed
amendments is that investors may
receive less comparative discussion
about earlier period financial results
within a filing. Although previously
disclosed information could provide
helpful context for the new information
being disclosed, this information would
have been incorporated into market
prices when it was originally presented.
There may be certain situations in
which this context may be particularly
useful in assessing a firm’s financial
condition—for example, in the case of
restatements of prior period financials.
Although we recognize these potential
costs, we believe their impact would be
mitigated by the fact that discussion of
earlier year financial results could be
excluded only under specified
conditions, including that the
discussion was not material to an
understanding of the registrant’s
financial condition, changes in financial
condition, and results of operations.
An alternative to the proposed
amendments would be to retain the
earliest year requirement but permit
registrants to hyperlink to the prior
year’s report in lieu of repeating this
disclosure. This alternative would likely
reduce search costs for investors and
allow efficient access to previously
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disclosed information about a firm’s
financial condition. However, we
believe that this alternative would not
reduce compliance costs to registrants
as effectively as the proposed
amendments. Furthermore, this
alternative may detract from investor
understanding of material information
about a firm’s financial condition to the
extent that it resulted in hyperlinking to
information that is no longer material to
such an understanding.
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
2. Information Omitted From Exhibits
(Item 601): Item 601(a)(5), Item
601(a)(6), and Item 601(b)(10)(iv)
Proposed Item 601(a)(5) would permit
registrants to omit schedules and
attachments to exhibits unless they
contain information material to an
investment or voting decision and that
information is not otherwise disclosed
in the exhibit or the disclosure
document.355 The proposed
amendments also would require
registrants to provide with each exhibit
a list briefly identifying the contents of
all omitted schedules and
attachments.356 In addition, registrants
would be required to provide, on a
supplemental basis, a copy of any of the
omitted schedules or attachments to the
Commission staff upon request.357
Allowing registrants to omit
schedules and attachments that are not
material to all exhibits would lower
their filing costs. As noted in Section
II.E.2.a above, some commenters have
noted that these burdens are
exacerbated if the schedules contain
commercially sensitive information that
would require registrants to file
confidential treatment requests. The
omission of schedules that are not
material would also help investors more
clearly focus on the material
disclosures.
Based on our review of confidential
treatment requests submitted under
Rule 406 and Rule 24b–2 granted in
fiscal year 2016, we estimate that over
90% of confidential treatment requests
are granted for material contracts based
on competitive harm to the registrant,
discussed below. For the subset of
confidential treatment requests that
were granted for reasons other than
competitive harm to the registrant, we
expect that many of those exhibits likely
contain schedules or attachments that
could be omitted under proposed Item
601(a)(5), although we are unable to
reliably estimate how many, because
355 See supra Section II.E.2.a (Exhibits—
Information Omitted from Exhibits, Schedules and
Attachments).
356 See id.
357 See id.
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this would depend, in part, on whether
the schedules contain material
information. Any reduction in burden
would be incremental to that
attributable to the proposed
amendments to Item 601(b)(10)(iv),
which would likely address over 90% of
confidential treatment requests.
Item 601(a)(6), as proposed to be
amended, would permit registrants to
omit PII without submitting a
confidential treatment request under
Rule 406 or Rule 24b–2.358 Under the
proposed amendment, registrants also
would not be required to provide an
analysis in order to redact PII from
exhibits. Since the proposed
amendment leaves the decision about
omission of PII entirely to the registrant,
it could result in more liberal
redactions. Thus, there is a tradeoff
between reduced compliance costs and
the potentially adverse effects of
reduced disclosure. However, our
analysis indicates that the Commission
granted very few confidential treatment
requests in reliance on the Freedom of
Information Act 359 (‘‘FOIA’’) exemption
concerning PII. As an illustration, in
fiscal year 2016 only nine confidential
treatment requests were granted
pursuant to this FOIA exemption.
Presumably, most registrants are
currently taking advantage of existing
staff guidance that PII may be omitted
without filing a confidential treatment
request. As a result, we do not expect
that codifying this accommodation
would significantly alter existing
disclosure practices.
We are also proposing to add
paragraph (b)(10)(iv) to Item 601 to
permit registrants to omit confidential
information in material contract exhibits
filed pursuant to that item that is both
(i) not material and (ii) competitively
harmful if publicly disclosed, without
submitting a confidential treatment
request.360 Instead, registrants would be
required to mark the exhibit index to
indicate that portions of the exhibit or
exhibits have been omitted and include
a prominent statement on the first page
of each redacted exhibit that certain
information is omitted from the filed
version of the exhibit.361 The registrant
would also be required to indicate with
brackets where the information is
omitted from the filed version of the
exhibit.362
Registrants could be asked by the
Commission staff to provide on a
supplemental basis an unredacted copy
358 See
supra Section II.E.2.b.
U.S.C. 552.
360 See supra Section II.E.2.c.
361 See id.
362 See id.
359 5
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51021
of the exhibit.363 The staff also could
request that the registrant provide an
analysis of why the redacted
information is both (i) not material and
(ii) competitively harmful.364
Registrants could request confidential
treatment of this supplemental
information pursuant to Rule 83 while
it is in the possession of the staff.
The proposed amendment would
significantly reduce the costs associated
with preparing confidential treatment
requests and expedite the filing process.
In this regard, one commenter on the
Concept Release reviewed seven
different confidential treatment requests
on which it assisted clients since 2012
and found that legal fees alone ranged
from approximately $35,000 to over
$200,000.365
Because more than 90% of the
confidential treatment requests granted
by the Commission in fiscal year 2016
were made in reliance on the FOIA
exemption concerning competitive
harm, the proposed amendments to Item
601(b)(10) to allow registrants to omit
competitively harmful information that
is not material without filing a
confidential treatment request could
correspondingly reduce the number and
cost of confidential treatment requests
pursuant to Rule 406 and Rule 24b–2 by
over 90%. However, this reduction in
cost would be partially offset by the
proposed amendment’s provision that
the staff may request an analysis similar
to the current competitive harm
analysis. Registrants would incur costs
to prepare and provide this analysis in
response to any request from the staff.
One potential cost of the proposed
amendments is that information may be
redacted that would not otherwise be
afforded confidential treatment by the
staff. However, based on previous
experience and a review of confidential
treatment requests, we believe that such
instances would be rare. Over the past
five fiscal years, very few confidential
treatment requests were denied by the
staff. Specifically, of the confidential
treatment requests filed over the last
five fiscal years, on average,
approximately 1.0% were withdrawn
because the staff determined that the
information likely was material to
investors.366 During this time, on
363 See
id.
id.
365 See Letter from Fenwick.
366 The following confidential treatment requests
were filed and withdrawn for likely materiality
during the last five fiscal years: 2016: 1,271 filed
and approximately 7 withdrawn; 2015: 1,369 filed
and approximately 14 withdrawn; 2014: 1,413 filed
and approximately 19 withdrawn; 2013: 1,290 filed
and approximately 16 withdrawn; and 2012: 1,466
filed and approximately 6 withdrawn.
364 See
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average, approximately 95% of
confidential treatment requests filed
were granted, and requests were rarely
denied.367 Also during the past five
fiscal years, on average, approximately
12% of confidential treatment requests
filed were revised prior to the request
being granted to limit the number of
terms redacted based on likely
materiality or over broad redactions.368
Under the proposed amendments, the
Commission staff would continue its
selective review of registrant filings and
would selectively assess whether
redactions from exhibits appear to be
limited to information that is not
material and that would subject the
registrant to competitive harm if
publicly disclosed.
F. Economic Analysis of the Specific
Amendments: Proposals That Require
More Disclosure or the Incorporation of
New Technology
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
1. Description of Registrant’s Securities
(Item 601(b)(4))
Item 202 requires registrants to
provide a brief description of their
registered capital stock, debt securities,
warrants, rights, American Depositary
Receipts, and other securities. We are
proposing to amend Item 601(b)(4) to
require registrants to provide Item 202
disclosure as an exhibit to Form 10–K
for each class of securities that is
registered under the Exchange Act,
rather than limiting this disclosure to
registration statements. The proposed
amendments would not change existing
disclosure obligations under Form 8–K
and Schedule 14A, which currently
require registrants to disclose certain
modifications to the rights of their
security holders and amendments to
their articles of incorporation or bylaws.
Any modifications and amendments
during a fiscal year to the information
called for by Item 202 would now also
be reflected in an exhibit to the
registrant’s next annual report.
Information about Exchange Act
registered securities allows investors to
assess the existing capital structure of
367 In fiscal years 2016 and 2015, no confidential
treatment requests were denied. In fiscal years
2014, 2013, and 2012, one, two and one CTR(s)
were denied, respectively. On average, during the
last five fiscal years, approximately 95% of
confidential treatment requests were granted in full
and approximately 5% were withdrawn. In addition
to withdrawals based on staff determinations that
the information was likely material, other reasons
confidential treatment requests are withdrawn
include that the offering is no longer going forward,
the information is already public, or the contract is
no longer material.
368 Confidential treatment requests revised based
on materiality and/or overbroad redactions in fiscal
years 2016, 2015, 2014, 2013, and 2012, were
approximately 119, 139, 183, 184, and 182,
respectively.
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registrants, which can help investors
understand better their exposure to risks
and their control rights. Requiring Item
202 disclosure as an exhibit to annual
reports would improve investors’ access
to information about their rights as
security holders, thereby facilitating
more informed investment and voting
decisions.
The proposed requirements would
impose some incremental compliance
costs for registrants to include the
proposed disclosure with their annual
reports. Table 1 above shows that on
average 7,800 registrants file Form 10–
K each year and therefore would be
subject to the new Item 601(b)(4) exhibit
filing requirement. However, because
registrants already prepare very similar
disclosure to satisfy existing disclosure
obligations under Form 8–K and
Schedule 14A and would be able to
incorporate by reference and hyperlink
to prior disclosure, so long as there has
not been any change to the information
called for by Item 202, we expect these
incremental costs to be minimal.
2. Subsidiaries of the Registrant and
Entity Identifiers (Item 601(b)(21))
Item 601(b)(21) requires a registrant to
list in an exhibit its subsidiaries, the
state or other jurisdiction of
incorporation or organization of each,
and the names under which those
subsidiaries do business. We are
proposing amendments to Item
601(b)(21)(i) that would require
registrants to include in the exhibit the
LEI, if one has been obtained, of the
registrant and each subsidiary listed.369
A key benefit of LEIs is that they
allow for unique identification of
entities engaged in commercial and
financial transactions. For various
reasons, firm and subsidiary names can
be spelled and recorded differently
across filings, corporate websites, and
standard databases. In addition,
subsidiaries can share the same (or very
similar) names. These issues can make
names poor identifiers of market
participants, which could be an obstacle
in some forms of investment analysis
involving computerized data access.
In contrast, LEIs provide clear and
unique identification of market
participants that facilitates the statistical
analysis and aggregation of firm
financial data. In this regard, some
commenters have observed that
improved identifiers would allow
investors to link third-party data with
structured data from Commission filings
to produce more meaningful analysis.370
As a consequence, a standard identifier
369 See
370 See
PO 00000
supra Section II.E.4.
id.
Frm 00036
Fmt 4701
Sfmt 4702
of firms and firm subsidiaries has the
potential to improve not only individual
investment decisions but also the
efficiency of the overall market.
Disclosure of LEIs would also
facilitate the ability of investors and the
Commission to link the information
disclosed in Commission filings with
data from other filings or sources as LEIs
become more widely used by regulators
and the financial industry. This could
aid in the performance of market
analysis studies, surveillance activities,
and systemic risk monitoring by the
Commission and other regulators.
The proposed amendments would
impose an incremental cost on
registrants to include LEIs in the Item
601(b)(21) exhibit. We do not expect
this incremental cost to be significant,
however, given that this information
should be readily available to
registrants. Our proposals would require
disclosure of LEIs only for those
registrants and subsidiaries that have
obtained this identifier, thereby not
imposing additional costs.371 As a
result, the benefits of LEI disclosure
outlined above may be limited to the
extent that not all reporting entities
obtain an identifier.
Moreover, standard identifiers, such
as LEIs, are most beneficial to registrants
and investors when a broad array of
firms in the market adopt them. For
example, a widely adopted identifier
would facilitate the electronic link and
cross-referencing of various
informational items over a large group
of registrants. Staff experience indicates
that LEI adoption rates are currently
low, which limits its benefits to
investors and other users of financial
information.372 If LEIs are not widely
used, firms may not have incentives to
obtain an LEI. Since coordination
among firms with regard to adoption is
difficult to accomplish, LEIs could
remain underutilized.
371 The use of and access to LEIs is free for
investors. All of the associated reference data
needed to understand, process and use LEIs is also
widely and freely available. However, the cost of
obtaining a LEI for registrants currently entails a
one-time fee of $75-$119, and $50-$99 per year in
annual maintenance fees.
372 For example, in the context of Form ADV,
which similarly requires an LEI to be reported only
if the entity already has one, the Commission has
noted that just 6.8% of registered investment
advisers report an LEI when filing the form. See
Form ADV and Investment Advisers Act Rules,
Release No. IA–4509 (Aug. 25, 2016) [81 FR 60417
(Sept. 1, 2016)], at 114.
However, see also the discussion in the text
around note 220, supra. Although overall adoption
rates appear low, the use of LEIs may be increasing
as a result of global regulatory efforts. See Glob.
Legal Entity Identifier Found., Regulatory Use of the
LEI, available at https://www.gleif.org/en/about-lei/
regulatory-use-of-the-lei (last visited July 13, 2017).
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3. Tagging Cover Page Data
We are proposing to require
registrants to tag all of the information
on the cover page of Form 10–K, Form
10–Q, Form 8–K, Form 20–F, and Form
40–F using Inline XBRL (or, if the
Commission’s recent proposal to require
Inline XBRL for the submission of
operating company financial statements
is not adopted, in an XBRL exhibit to
the relevant filing) in accordance with
the EDGAR Filer Manual. To implement
the cover page tagging requirements, we
propose to add new Rule 406 to
Regulation S–T, new Item 601(b)(104) to
Regulation S–K, new paragraph 104 to
the ‘‘Instructions as to Exhibits’’ of Form
20–F and new paragraph B.17 to the
‘‘General Instructions’’ of Form 40–F to
require registrants to file with each of
the specified forms a ‘‘Cover Page
Interactive Data File’’ containing cover
page data. We are also proposing to
revise Rule 11 of Regulation S–T to add
the term ‘‘Cover Page Interactive Data
File.’’ Our proposals also would amend
the cover pages of these forms to
include the trading symbol for each
class of the registrant’s registered
securities.373
Investment analysis increasingly
relies on quantitative statistical
methods. Machine-readable formats
greatly facilitate quantitative analysis
because they allow for the
corresponding items to be imported
directly into various platforms for data
analysis. Thus, tagging all the data
points on the cover pages of Form 10–
K, Form 10–Q, Form 8–K, Form 20–F,
and Form 40–F could decrease the costs
to investors for implementing
quantitative data analysis. We
acknowledge that the amendment
would impose additional costs on
registrants but expect the additional
burden to be minimal, given that
registrants already furnish a substantial
amount of information contained in
these forms in a structured format.
An alternative to the Inline XRBL or
traditional XBRL format is to specify an
XML format for the cover pages of Form
8–K, Form 10–K, Form 10–Q, Form 20–
373 Because the cover pages of Form 10–K, Form
20–F, and Form 40–F already require disclosure of
the title of each class of securities registered
pursuant to Section 12(b) of the Exchange Act and
each exchange on which they are registered, our
proposed amendments to these forms would revise
the cover page to include a corresponding field for
the trading symbol. Unlike these forms, however,
the cover pages of Form 10–Q and Form 8–K do not
currently require disclosure of the title of each class
of securities and each exchange on which they are
registered. Accordingly, to ensure that registrants
and their registered securities are identified in a
consistent manner across forms, we are proposing
to revise the cover pages of Form 10–Q and Form
8–K to include this disclosure in addition to the
trading symbol.
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F, and Form 40–F. An XML format
could have a variety of implementations
ranging from filers submitting the data
according to a designated technical
framework to inputting the cover page
information in a web-fillable format
within EDGAR. We are not proposing
this approach, because the Inline XBRL
and traditional XBRL format provide
more precise rules that facilitate
consistent input and data validation by
filers and enhance the analytical
capabilities of data users. Moreover, the
Inline XBRL and traditional XBRL
format have more robust data validation
capabilities, which could help to ensure
better data quality for investors. Inline
XBRL also would not suffer from
possible data quality discrepancies that
may occur from filers rekeying the
information from their cover page for
submission in XBRL or XML.
4. Proposals for Additional Disclosure
With Minimal Additional Costs to
Registrants
The following proposed amendments
are expected to impose only limited
compliance costs on registrants:
• Incorporation by Reference—
proposal would require hyperlinks
internal to EDGAR for documents
incorporated by reference.374
• Item 501(b)(4)—proposal would
require disclosure on the prospectus
cover page of any national securities
exchange where the securities being
offered are listed or, if not listed, the
principal United States market or
markets for the securities being offered
and the corresponding trading symbols,
if any. 375
Requiring registrants to include
hyperlinks to information that is
incorporated by reference could
improve the readability and navigability
of disclosure documents by allowing
users to be taken directly to the
incorporated information by clicking on
a link rather than having to locate the
information on EDGAR. Although
requiring the inclusion of hyperlinks for
incorporated information would impose
an additional compliance burden on
registrants, we do not expect this
burden to be significant given that
hyperlinks are relatively easy to
implement and involve minimal cost.
In the case of Item 501(b)(4),
expanding the existing requirements for
trading market disclosure to encompass
information about markets that are not
‘‘national securities exchanges’’ would
benefit investors by helping them to
better assess their trading costs. The
disclosure would impose some
374 See
375 See
PO 00000
supra Section II.F.2.
supra Section II.D.1.c.
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51023
additional disclosure costs on
registrants. However, we do not expect
these costs to be significant given that
registrants should have ready access to
this information. In this regard, we note
that the required disclosure would be
limited to the principal United States
market or markets where the registrant,
through the engagement of a registered
broker-dealer, has actively sought and
achieved quotation.
G. Economic Analysis of HTML and
Hyperlinking Requirements of Forms
Under the Investment Company Act
As discussed above, we are proposing
HTML and hyperlinks requirements for
filers of certain forms under the
Investment Company Act. Broadly
speaking, we believe the proposed
amendments would reduce search costs
for investors. In particular, we believe
that exhibit hyperlinks would help
investors and other users to access a
particular exhibit more efficiently as
they would not need to search within
the filing or through different filings
made over time to locate the exhibit.
Requiring exhibit hyperlinks may make
it easier for investors and other users to
find and access a particular exhibit that
was originally filed with a previous
filing.
To the extent that hyperlinks ease the
navigation process for investors and
other users, hyperlinks may also
facilitate a more thorough review of a
registrant’s registration statements,
applications, and reports and encourage
more effective monitoring over time.
The potential reduction of search costs
and the enhanced ability of investors to
review a registrant’s disclosure may
result in more informed investment and
voting decisions, potentially enhancing
allocative efficiency, and capital
formation by registrants.
We expect that hyperlinks would be
more beneficial in reducing search costs
in the case of exhibits incorporated by
reference than in the case of exhibits
filed with the filing, and in particular,
we expect these benefits to be most
pronounced in the case of incorporation
by reference from a filing that was not
recently filed because more recent
filings are displayed first on the EDGAR
search results page. Further, we expect
hyperlinks would have greater benefits
in the case of registrants that submit
more filings.
As a result of the proposed
amendments, we expect that both
HTML and ASCII registrants would
incur compliance costs to include
hyperlinks in their exhibit indexes. The
cost of inserting a hyperlink to an
exhibit incorporated by reference would
likely be greater than the cost of
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inserting a hyperlink to an exhibit filed
with the document. While the average
cost itself of inserting a hyperlink is
minimal, the total hyperlinking costs for
registrants would be a function of two
main factors: (1) How many registration
statements, applications and reports a
registrant files that require an exhibit
index; and (2) how many exhibits in the
exhibit index of these registration
statements, applications, and reports are
either filed with the filing or
incorporated by reference.
Filers reporting in ASCII would incur
costs to switch to HTML, in addition to
the costs of including hyperlinks in
their exhibit indexes. We expect that the
costs of switching to HTML would not
be significant because the cost of
software with built-in HTML and
hyperlink features is minimal. Overall,
given the modest costs involved, we do
not expect that the proposed
amendments would have significant
competitive effects for registrants.
Request for Comment
We request comment on all aspects of
our economic analysis, including the
potential costs and benefits of the
proposed amendments and whether the
rules, if adopted, would promote
efficiency, competition, and capital
formation or have an impact on investor
protection. Commenters are requested to
provide empirical data, estimation
methodologies, and other factual
support for their views, in particular, on
costs and benefits estimates.
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
IV. Paperwork Reduction Act
A. Background
Certain provisions of our rules and
forms that would be affected by the
proposed amendments contain
‘‘collection of information’’
requirements within the meaning of the
Paperwork Reduction Act of 1995
(‘‘PRA’’).376 The Commission is
submitting the proposal to the Office of
Management and Budget (‘‘OMB’’) for
review in accordance with the PRA.377
The hours and costs associated with
preparing and filing the forms and
reports constitute reporting and cost
burdens imposed by each collection of
information. An agency may not
conduct or sponsor, and a person is not
required to respond to, a collection of
information requirement unless it
displays a currently valid OMB control
number. Compliance with the
information collections is mandatory.
Responses to the information collections
are not kept confidential and there is no
mandatory retention period for the
376 44
377 44
U.S.C. 3501 et seq.
U.S.C. 3507(d) and 5 CFR 1320.11.
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information disclosed. The titles for the
collections of information are:
‘‘Regulation S–K’’ (OMB Control No.
3235–0071); 378
‘‘Regulation S–T’’ (OMB Control No.
3235–0424);
‘‘Regulation 12B’’ (OMB Control No.
3235–0062);
‘‘Regulation C’’ (OMB Control No.
3235–0074);
‘‘Family of rules under section 8(b) of
the Investment Company Act of 1940’’
(OMB Control No. 3235–0176);
‘‘Form S–1’’ (OMB Control No. 3235–
0065);
‘‘Form S–3’’ (OMB Control No. 3235–
0073);
‘‘Form S–4’’ (OMB Control No. 3235–
0324);
‘‘Form S–6’’ (OMB Control No. 3235–
0184);
‘‘Form S–11’’ (OMB Control No.
3235–0067);
‘‘Form N–14’’ (OMB Control No.
3235–0336);
‘‘Form F–1’’ (OMB Control No. 3235–
0258);
‘‘Form F–3’’ (OMB Control No. 3235–
0256);
‘‘Form F–4’’ (OMB Control No. 3235–
0325);
‘‘Form F–7’’ (OMB Control No. 3235–
0325);
‘‘Form F–8’’ (OMB Control No. 3235–
0378);
‘‘Form F–80’’ (OMB Control No.
3235–0404);
‘‘Form F–10’’ (OMB Control No.
3235–0380);
‘‘Form SF–1’’ (OMB Control No.
3235–0707);
‘‘Form SF–3’’ (OMB Control No.
3235–0690);
‘‘Form 10’’ (OMB Control No. 3235–
0064);
‘‘Form 20–F’’ (OMB Control No.
3235–0288);
‘‘Form 40–F’’ (OMB Control No.
3235–0381);
‘‘Form 10–K’’ (OMB Control No.
3235–0063);
‘‘Form 10–Q’’ (OMB Control No.
3235–0070);
‘‘Form 8–A’’ (OMB Control No. 3235–
0056);
‘‘Form 8–K’’ (OMB Control No. 3235–
0060);
‘‘Form 10–D’’ (OMB Control No.
3235–0604);
‘‘Schedule 14A’’ (OMB Control No.
3235–0059);
378 The paperwork burdens for Regulation S–K,
Regulation S–T, Regulation C and Regulation 12B
are imposed through the forms that are subject to
the requirements in these regulations and are
reflected in the analysis of those forms. To avoid
a PRA inventory reflecting duplicative burdens and
for administrative convenience, we assign a onehour burden to each of these regulations.
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‘‘Schedule 14C’’ (OMB Control No.
3235–0057); ‘‘Form N–1A’’ (OMB
Control No. 3235–0307); ‘‘Form N–2’’
(OMB Control No. 3235–0026); ‘‘Form
N–3’’ (OMB Control No. 3235–0316);
‘‘Form N–4’’ (OMB Control No. 3235–
0318); ‘‘Form N–5’’ (OMB Control. No.
3235–0169); ‘‘Form N–6’’ (OMB Control
No. 3235–0503); and ‘‘Form N–CSR’’
(OMB Control No. 3235–0570).
The forms, reports, and regulations
listed above were adopted under the
Securities Act, the Exchange Act or the
Investment Company Act. The
regulations, schedules, and forms set
forth the disclosure requirements for
registration statements, periodic and
current reports, distribution reports and
proxy, and information statements filed
by registrants to help investors make
informed investment and voting
decisions. Other forms and reports are
filed by entities regulated by the
Investment Company Act in connection
with the Commission’s oversight of
these entities.
We are proposing amendments, which
are described in more detail in Section
II above, based on the recommendations
made in the FAST Act Report, as
required by Section 72003 of the FAST
Act. The proposed amendments are
intended to modernize and simplify
certain disclosure requirements in
Regulation S–K and related rules and
forms in a manner that reduces the costs
and burdens on registrants while
continuing to provide all material
information to investors. The proposed
amendments are also intended to
improve the readability and navigability
of the Commission’s disclosure
documents and discourage repetition
and disclosure of immaterial
information. In addition, we are
proposing parallel amendments to
several rules and forms applicable to
investment companies and investment
advisers to provide for a consistent set
of incorporation by reference and
hyperlinking rules for these entities,
including proposed amendments that
would require certain investment
company filings to be submitted in
HTML format.
B. Summary of the Proposed
Amendments’ Impact on Collection of
Information
In this section, we summarize the
proposed amendments and their general
impact on the paperwork burden
associated with the forms listed in
Section IV.A. In Section IV.C. below, we
provide revised burden estimates for
each form.
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Federal Register / Vol. 82, No. 211 / Thursday, November 2, 2017 / Proposed Rules
1. Proposed Amendments Expected To
Decrease Burdens
a. Description of Property (Item 102)
The proposed amendments to Item
102 of Regulation S–K would clarify
that a description of property is only
required to the extent physical
properties are material to the registrant
and make other clarifying
amendments.379 The staff has observed
that the current disclosure standard may
lead registrants, in some instances, to
devote resources to providing disclosure
on properties that are not material.
Although the proposed amendments to
Item 102 are expected to help registrants
avoid unnecessary disclosure in some
instances, the amendments are
clarifying in nature and therefore we do
not believe they would significantly
affect the paperwork burden associated
with affected forms. Accordingly, we
estimate that the paperwork burden
would be reduced by 0.5 hours for each
form affected by the proposed
amendments. We expect that Form S–
1,380 Form S–4,381 Form 10, and Form
10–K would be affected by this
proposed amendment.
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
b. Management’s Discussion and
Analysis (Item 303)
The proposed amendments to Item
303 would allow registrants, in some
circumstances, to eliminate the earliest
year of the MD&A discussion.382 The
proposed amendments would also
eliminate the reference to five-year
selected financial data in Instruction 1
to Item 303(a) and clarify that registrants
may use their discretion in selecting the
best format for their MD&A
presentation.383 The combined effects of
these amendments would be to
eliminate the burden on registrants to
prepare and provide repetitive
disclosure that is not material. The
proposed amendments are of particular
significance, because MD&A is typically
one of the most labor-intensive sections
of any form in which it is required. We
anticipate that the proposed
amendments to simplify and clarify the
MD&A requirements would reduce the
paperwork burden associated with
related forms.
We estimate that the aggregate impact
of the proposed amendments would be
a four hour reduction in paperwork
burden each time Item 303 information
is required to be included in a form. We
estimate that the aggregate impact of the
379 See
supra Section II.A.
CFR 239.11.
381 17 CFR 239.25.
382 See supra Section II.B.
383 See supra id.
380 17
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proposed corresponding amendments to
Form 20–F would result in a four hour
reduction each time information under
Item 5 of that form is required. We
expect that Form S–1,384 Form S–4,385
Form S–11,386 Form F–1,387 Form F–
4,388 Form 10, Form 10–K, Form 10–Q,
and Form 20–F would be affected by
this proposed amendment.
c. Directors, Executive Officers,
Promoters and Control Persons (Item
401, Item 405 and Item 407)
The proposed amendments to Item
401, Item 405, and Item 407 of
Regulation S–K would simplify and
modernize executive officer, Section
16(a) compliance and corporate
governance disclosure requirements.
The proposed amendments to Item 401
would simplify the rules for
determining what disclosure about
executive officers may be included in
Form 10–K when other disclosure in
Part III of Form 10–K will be
incorporated by reference to the
registrant’s definitive proxy or
information statement.389 The proposed
amendments to Item 405 would allow
registrants to rely on a review of Section
16 reports submitted on EDGAR rather
than reports furnished to the registrant
when providing disclosure about
Section 16(a) compliance.390 Finally,
the proposed amendments to Item 407
clarify the applicable auditing standard
and the disclosure requirements for the
compensation committees of EGCs.391
The proposed amendments to Item
401, Item 405, and Item 407 would
clarify and streamline existing
disclosure requirements, and in that
respect are expected to marginally
reduce compliance costs for registrants.
We estimate that the proposed
amendments would reduce the
paperwork burden for each affected
form by 0.5 hours. We expect that Form
S–1, Form S–4, Form S–11, Form 8–K,
Form 10, Form 10–K, and Form 10–Q
would be affected by this proposed
amendment.
d. Exhibits (Item 601)
i. Information Omitted From Exhibits
(Item 601(a)(5), Item 601(a)(6), and Item
601(b)(10)(iv))
We are proposing several
amendments to Item 601 of Regulation
S–K. Many of these amendments affect
384 17
CFR 239.11.
CFR 239.25.
386 17 CFR 239.18.
387 17 CFR 239.31.
388 17 CFR 239.34.
389 See supra Section II.C.
390 See id.
391 See id.
385 17
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provisions related to the Commission’s
confidential treatment process.
Specifically, the proposed amendments
to Item 601(a)(5), Item 601(a)(6), and
Item 601(b)(10)(iv) would permit
registrants to omit, without submitting a
confidential treatment request,
schedules and attachments that are not
material, personally identifiable
information and confidential
information in material contract exhibits
that is both (i) not material and (ii)
competitively harmful if publicly
disclosed.
For purposes of the PRA, we consider
the time and cost to prepare and submit
a confidential treatment request to be
part of the paperwork burden associated
with preparing and filing the related
disclosure form. We estimate that
elimination of the need to prepare and
submit a confidential treatment request
to omit confidential information from
exhibits filed pursuant to Item
601(b)(10) that is both (i) not material
and (ii) competitively harmful if
publicly disclosed would reduce
internal burden hours by ten hours per
request for an estimated 20% of
registrants that prepare the confidential
treatment request without relying on
outside counsel, and reduce external
costs by $4,000 per request for an
estimated 80% of registrants that retain
outside counsel for this work.392
Proposed Item 601(a)(5) would permit
registrants to omit entire schedules and
attachments to exhibits unless the
schedules contain information material
to an investment or voting decision and
that information is not otherwise
disclosed in the exhibit or the
disclosure document. The threshold for
omission under proposed Item 601(a)(5)
is lower than for omission under the
proposed amendment to Item 601(b)(10)
because registrants would not be
required to show that the information
would cause competitive harm if
publicly disclosed.
Based on our review of confidential
treatment requests granted in fiscal year
2016, we estimate that over 90% of
these requests were granted for material
contracts based on competitive harm to
the registrant. For the remainder, we
expect that many of those exhibits likely
contain schedules that could be omitted
under proposed Item 601(a)(5).
However, we are unable to reliably
estimate how many of these requests
would be unnecessary under the
proposed amendments to Item 601(a)(5)
because this would depend, in part, on
whether the schedules contain material
392 The $4,000 cost estimate is calculated as
follows: 10 hours × $400 per hour of outside
counsel work = $4,000. See infra note 412.
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Federal Register / Vol. 82, No. 211 / Thursday, November 2, 2017 / Proposed Rules
information. Given that the proposed
amendments to Item 601(b)(10) would
likely address over 90% of the
confidential treatment requests
submitted to the Commission, and to
avoid overestimating the decrease in
paperwork burden arising from the
proposed amendments, we are not
making an additional adjustment to our
burden estimates in respect of the
amendment to Item 601(a)(5) but are
soliciting comment on ways to
reasonably estimate such an
adjustment.393
Based on these assumptions, we
expect the annual internal burden hours
and professional costs devoted to the
confidential treatment process to
decrease each time exhibit information
described in Item 601(a)(5), Item
601(a)(6), or Item 601(b)(10)(iv) is
omitted or redacted. In fiscal year 2016,
43% of confidential treatment requests
were filed for Form 10–Q, 18% for Form
10–K, 13% for Form 8–K, 8% for Form
S–1, 4% for Form 20–F, and 1% each
for Form 10 and Form F–1. We are
therefore ascribing changes in
paperwork burdens and costs to these
forms in these same proportions.
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ii. Material Contracts Exhibits (Item
601(b)(10)(i))
The proposed amendment to Item
601(b)(10)(i) would limit the two-year
look back filing requirement for material
contracts to newly reporting registrants.
Registrants that are not newly reporting
registrants would no longer be required
to comply with this filing requirement
and thus would incur reduced
compliance burdens. However, we
believe that the current burden
associated with the two-year look back
requirement is minimal. Therefore, the
proposed amendments are not expected
to result in a significant reduction of the
paperwork burden associated with the
affected forms. We estimate that the
paperwork burden would be reduced by
0.5 hours for each form affected by the
proposed amendment. We expect that
Form 10, Form 10–K, Form S–1, Form
S–4, Form F–1, Form F–3, Form F–4,
Form S–11, and Form SF–1 would be
affected by this proposed amendment.
393 For similar reasons, we are making no
additional adjustment to our burden estimates in
respect of the amendments to Item 601(a)(6). In
fiscal year 2016, only nine confidential treatment
requests were granted by the Commission for
documents containing PII. This suggests that most
registrants are currently taking advantage of existing
staff guidance that PII may be omitted without filing
a confidential treatment request.
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2. Proposed Amendments Expected To
Increase Burdens
a. Registration Statement and
Prospectus Provisions (Item 501(b))
We are proposing to amend Item
501(b) to require disclosure on the cover
page of the prospectus of any national
securities exchange where the securities
being offered are listed or, if not listed,
the principal United States market or
markets for the securities being offered
and the corresponding trading symbols,
if any.394 The proposed amendments
would incrementally increase the
compliance burden on registrants by
requiring them to provide disclosure
about trading markets other than
national exchanges. Because we are
proposing to limit the incremental
disclosure to those trading markets
where the registrants, through the
engagement of a registered brokerdealer, has actively sought and achieved
quotation, we believe this information
should be readily available to registrants
and impose only a minimal paperwork
burden.
Accordingly, we estimate that the
proposed amendment would slightly
increase the paperwork burden
associated with each affected form by
0.25 hours. We expect that Form S–1,
Form S–3, Form S–4, Form S–11, Form
F–1, Form F–3, Form F–4, Form SF–
1,395 and Form SF–3 396 would be
affected by this proposed amendment.
b. Exhibits (Item 601(b)(4)(vi) and
(b)(21))
Proposed new Item 601(b)(4)(vi)
would require registrants to file an Item
202 description of their Exchange Act
registered securities as an exhibit to
Form 10–K. The proposed amendments
to Item 601(b)(21) would require
disclosure of an LEI (if one has been
obtained) for each registrant and any
subsidiaries required to be disclosed in
the exhibit.
We expect that the new requirements
under Item 601(b)(4)(vi) would slightly
increase the paperwork burden on
registrants because registrants would be
required to provide a description of
registered securities annually. However,
registrants would be able to incorporate
by reference and hyperlink to prior
disclosure if the information called for
by Item 202 remains unchanged from
prior years, thus mitigating any increase
in the anticipated burden. Accordingly,
we estimate the proposed amendments
would increase the paperwork burden
394 See
supra Section II.D.
CFR 239.44.
396 17 CFR 239.45.
395 17
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associated with Form 10–K and Form
20–F by 0.5 hours.
We expect that the proposed
amendments to Item 601(b)(21) would
also increase the burden on registrants;
however, we expect this increase to be
slight because LEI information should
be readily available and would be only
required if an identifier has already
been obtained. Those registrants that
have not obtained LEIs would not incur
an additional burden. Accordingly, we
estimate that the proposed amendments
to Item 601(b)(21) would increase the
paperwork burden associated with each
affected form by 0.25 hours. We expect
that Form S–1, Form S–4, Form F–1,
Form 10, Form 10–K, Form S–11, Form
SF–1, and Form SF–3 would be affected
by the proposed amendment to Item
601(b)(21).
c. Manner of Delivery
Proposed new Rule 406, proposed
new Item 601(b)(104), proposed new
paragraph 104 to ‘‘Instructions as to
Exhibits’’ of Form 20–F and proposed
new Instruction 17 to ‘‘Information To
Be Filed on this Form’’ of Form 40–F
would require registrants to tag every
data point on the cover pages of Form
10–K, Form 10–Q, Form 8–K, Form 20–
F, and Form 40–F using Inline XBRL,
including certain new data points added
pursuant to the proposed
amendments.397 Although expanded
data tagging would result in an increase
in the burden associated with related
forms, we note that registrants are
already required to tag certain cover
page information as well as financial
statement information. For this reason,
we believe most registrants already will
have developed the internal resources or
engaged outside professionals to assist
them in complying with existing data
tagging requirements.398 In this respect,
we do not believe the cover page tagging
requirement would result in significant
additional burdens for registrants.
Accordingly, we estimate that the
requirement to tag additional cover page
items would impose an increased
paperwork burden of one hour for each
affected form. We expect that Form 10–
397 See
supra Section II.G.1.
discussed above, the Commission recently
proposed to require the use of the Inline XBRL
format instead of the traditional XBRL format for
the submission of operating company financial
statements, and we intend for the cover page data
to be tagged in the same format as this other
information. See id. In the Inline XBRL Proposing
Release, we provided estimates of the change in
paperwork burden associated with the transition to
Inline XBRL. See supra note 310. Because we
expect to require the Inline XBRL format for tagging
cover page data only if the Inline XBRL proposal
has been adopted, we are not including PRA burden
estimates related to the transition to Inline XBRL in
this release.
398 As
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Federal Register / Vol. 82, No. 211 / Thursday, November 2, 2017 / Proposed Rules
K, Form 10–Q, Form 8–K, Form 20–F,
and Form 40–F would be affected by the
proposed new rules and form
amendments.
As described in more detail above, we
are proposing amendments to certain of
our forms that are used by investment
companies and amendments to Rule 102
of Regulation S–T to apply hyperlinking
and HTML requirements to those
registrants to facilitate access to most
exhibits for investors and other users of
the information.399 We anticipate that
the proposed amendments will increase
the burdens and costs for registrants to
prepare and file registration statements
and reports on the affected forms.
Because the software tools to prepare
and file documents in HTML are widely
used and available at minimal cost, we
do not believe this requirement would
appreciably change the existing burden
estimates for the affected registration
statements or reports, which already
include the time and expense to prepare
and file in electronic format on EDGAR.
We believe the burdens associated with
hyperlinking exhibits would be small as
the registrant would already be
preparing the exhibits and exhibit index
for the related filing and would have
readily available all the information
necessary to create the hyperlinks. We
assume that the average burden hours of
requiring exhibit hyperlinks would vary
based on the number of exhibits that are
included with a filing, as discussed in
detail below.400
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3. Proposed Amendments Not Expected
to Meaningfully Affect Burdens
a. Registration Statement and
Prospectus Provisions (Item 501(b), Item
503(c), Item 508 and Item 512)
The proposed amendments to Item
501(b)(1), Item 501(b)(3), and Item
501(b)(10) would, respectively,
eliminate misleading company name
disclosure requirements, explicitly
allow registrants to include a clear
statement that the offering price will be
determined by a particular method or
formula (and require a cross reference to
the offering price method or formula
disclosure), and permit registrants to
exclude some portion of the legend
relating to state law in the prospectus
for an offering that is not prohibited by
state blue sky law.401 The proposed
amendments to Item 503(c) would
relocate the current risk factor
disclosure requirements to Subpart 100
and eliminate the risk factor examples
without substantively changing the
underlying disclosure requirements.402
The proposed amendment to Item 508
would define the term ‘‘subunderwriter’’ to clarify one aspect of the
required disclosure about the plan of
distribution for a registered securities
offering.403 The proposed amendments
to Item 512 would eliminate certain
undertakings that are redundant or
obsolete.404
We believe these proposed
amendments would not meaningfully
affect the paperwork burden associated
with the related forms because these
amendments modernize and clarify
certain requirements and do not
substantively change the required
disclosure. Therefore, we are not
making any adjustments to the
paperwork burden of affected forms due
to these proposed amendments.
b. Incorporation by Reference
We are proposing amendments to
simplify and modernize the rules and
forms governing incorporation by
reference. Under the proposed
amendments, certain existing
requirements for incorporation by
reference would be consolidated into
Rule 411, Rule 12b-23, Rule 0–4, and
Rule 0–6.405 The proposed amendments
would also eliminate several redundant
or outdated requirements. In addition,
the proposed amendments would
provide registrants with additional
flexibility in organizing the disclosure
in Form 10, Form 10–K, and Form 20–
F by permitting them to exclude item
numbers and captions or create their
own captions tailored to the disclosure
in these forms 406 These proposals are
expected to decrease reporting burdens
associated with incorporating
information by reference in Commission
filings, leading to an estimated 0.5 hour
reduction in paperwork burden per
affected form. However, this decrease
would be offset by an estimated 0.5 hour
increase in paperwork burden per
affected form due to the proposed
amendments requiring registrants to
include hyperlinks to information
incorporated by reference when that
information is available on EDGAR.407
Accordingly, we are not making any
adjustments to the paperwork burden of
affected forms due to these proposed
amendments.
402 See
399 See
supra Section II.G.2.
400 See infra Section IV.C.4.
401 The proposed amendments would also
streamline 501(b) by combining paragraphs (b)(10)
and (b)(11) without substantive change.
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supra Section II.D.2.
supra Section II.D.3.
404 See supra Section II.D.4.
405 See supra Section II.F.
406 See id.
407 See id.
403 See
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51027
C. Burden and Cost Estimates to the
Proposed Amendments
As discussed below, we expect that
the proposed amendments would, in the
aggregate, reduce the paperwork burden
on respondents. The change in burden,
however, would differ depending on the
form because not all of the proposed
amendments would apply to each form.
These estimates represent the average
burden for all registrants, both large and
small. In deriving our estimates, we
recognize that the burdens will likely
vary among individual registrants based
on a number of factors, including the
nature of their business.
The burden estimates were calculated
by multiplying the estimated number of
responses by the estimated average
amount of time it would take a
registrant to prepare and review
disclosure required under the proposed
amendments. The portion of the burden
carried by outside professionals is
reflected as a cost, while the portion of
the burden carried by the registrant
internally is reflected in hours.
1. Form 10–K and Form 10–Q; Schedule
14A and Schedule 14C
The proposed amendments are
estimated to significantly reduce the
paperwork burdens associated with
Form 10–K 408 and Form 10–Q as well
as Schedule 14A and Schedule 14C.409
For purposes of the PRA, we estimate
that 75% of the burden of preparation
for these Exchange Act reports is carried
by the registrant internally and that 25%
of the burden of preparation is carried
by outside professionals retained by the
company at an average cost of $400 per
hour.410
Table 4 below illustrates the total
annual compliance burden, in hours
and in costs, 411 of the affected
408 Schedules 14A and 14C require disclosure
under Subpart 400 of Regulation S–K. This
disclosure is often incorporated, in relevant part,
into Part III of a registrant’s Form 10–K. Therefore,
our burden estimates for Form 10–K contemplate
that Part III disclosure may be incorporated by
reference to Schedules 14A or 14C.
409 Schedule 14A requires that registrants, under
certain circumstances, provide disclosure under
Item 303. Our burden estimate for Schedule 14A
assumes that registrants would duplicate the
disclosure provided under this Item in the most
recent Form 10–K and/or Form 10–Q.
410 We recognize that the costs of retaining
outside professionals may vary depending on the
nature of the professional services, but for purposes
of this PRA analysis, we estimate that such costs
would be an average of $400 per hour. This estimate
is based on consultations with several registrants,
law firms and other persons who regularly assist
registrants in preparing and filing reports with the
Commission.
411 For convenience, the estimated hour and cost
burdens in the tables in this section have been
rounded to the nearest whole number.
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collections of information resulting from
the proposed amendments.412
TABLE 4—INCREMENTAL PAPERWORK BURDEN UNDER THE PROPOSED AMENDMENTS FOR EXCHANGE ACT FORMS
Proposed
number of
affected
responses
Current annual
responses
10–K .............................
10–Q ............................
8–K ...............................
8,137
22,907
118,387
Current
burden hours
8,137
22,907
118,387
2. Form S–1, Form S–3, Form S–4, Form
F–3, Form F–4, Form SF–1, Form SF–
3, Form 10, and Form 20–F
The proposed amendments are
estimated to significantly reduce the
paperwork burden associated with Form
S–1, Form S–3, Form S–4, Form F–3,
Form F–4, and Form 20–F. For
Change in
company
hours
Change in
burden hours
12,228,620
3,220,037
507,665
(32,703)
(73,181)
116,867
Change in
professional
hours
(23,325)
(63,884)
88,490
registration statements on Form 10,
Form S–1, Form S–3, Form S–4, Form
F–1, Form F–3, Form F–4, Form SF–1,
and Form SF–3, and Exchange Act
report Form 20–F, we estimate that 25%
of the burden of preparation is carried
by the company internally and that 75%
of the burden of preparation is carried
(9,378)
(9,297)
28,377
Change in
professional
costs
($3,715,600)
(3,718,800)
11,350,800
by outside professionals retained by the
company at an average cost of $400 per
hour.
Table 5 below illustrates the total
annual compliance burden, in hours
and in costs, of the affected collections
of information resulting from the
proposed amendments.413
TABLE 5—INCREMENTAL PAPERWORK BURDEN UNDER THE PROPOSED AMENDMENTS FOR REGISTRATION STATEMENTS
Proposed
number of
affected
responses
Current annual
reponses
S–1 ...............................
S–3 ...............................
S–4 ...............................
S–11 .............................
SF–3 .............................
F–1 ...............................
F–3 ...............................
F–4 ...............................
10 .................................
20–F .............................
40–F .............................
901
1,082
551
100
71
63
107
68
238
725
160
Current
burden hours
901
1,082
551
100
71
63
107
68
238
725
160
Change in
company
hours
Change in
burden hours
150,242
127,806
564,731
19,476
24,495
26,917
4,467
24,769
12,805
479,501
17,197
(5,514)
(301)
(2,803)
(450)
36
(431)
(10)
(281)
(1390)
(2454)
160
Change in
professional
hours
(1,325)
(78)
(700)
(112)
9
(98)
(1)
(70)
(342)
(588)
40
(4,189)
(223)
(2,103)
(338)
27
(333)
(9)
(211)
(1,048)
(1,866)
120
Change in
professional
costs
($1,675,600)
(89,200)
(841,200)
(135,200)
10,800
(133,200)
(3,600)
(84,400)
(419,200)
(746,400)
40,000
TABLE 6—CURRENT AND REVISED BURDENS UNDER THE PROPOSED AMENDMENTS FOR SECURITIES ACT
AND EXCHANGE ACT FORMS
Current burden
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
Burden hours
(A)
10–K .........................................................................................................
10–Q ........................................................................................................
8–K ...........................................................................................................
S–1 ...........................................................................................................
S–3 ...........................................................................................................
S–4 ...........................................................................................................
S–11 .........................................................................................................
SF–3 ........................................................................................................
F–1 ...........................................................................................................
F–3 ...........................................................................................................
F–4 ...........................................................................................................
10 .............................................................................................................
20–F .........................................................................................................
412 The burdens associated with the proposed
amendments to the forms listed in Table 4, other
than the confidential treatment request proposal,
have been estimated by assuming that 75% of the
burden is borne by the company and 25% is borne
by outside counsel at $400 per hour. The burdens
associated with submitting confidential treatment
requests in connection with the forms listed in
Table 4 have been estimated by assuming that the
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12,228,620
3,220,037
507,665
150,242
127,806
564,731
19,476
24,495
26,917
4,467
24,769
12,805
479,501
Cost
(B)
Frm 00042
Fmt 4701
Sfmt 4702
Burden hours
(C)
$1,631,470,000
429,368,808
67,688,700
180,290,100
153,367,008
677,677,104
23,371,200
29,394,000
32,300,100
5,360,700
29,722,800
15,366,042
575,400,600
average request requires approximately ten hours of
preparation and that 20% of the burden is borne by
the company and 80% of the burden is borne by
outside counsel at $400 per hour.
413 The burdens associated with the proposed
amendments to the forms listed in Table 5, other
than the confidential treatment request proposal,
have been estimated by assuming that 25% of the
burden is borne by the company and 75% is borne
PO 00000
Revised burden
12,205,295
3,156,153
596,155
148,917
127,728
564,031
19,364
24,504
26,819
4,465
24,699
12,463
478,913
Costs
(D)
$1,627,754,400
425,650,008
79,039,500
178,614,900
153,277,808
676,835,904
23,236,000
29,404,800
32,166,900
5,357,100
29,638,400
14,946,842
574,654,200
by outside counsel at $400 per hour. The burdens
associated with submitting confidential treatment
requests in connection with the forms listed in
Table 5 have been estimated by assuming that the
average request requires approximately ten hours of
preparation and that 20% of the burden is borne by
the company and 80% of the burden is borne by
outside counsel at $400 per hour.
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TABLE 6—CURRENT AND REVISED BURDENS UNDER THE PROPOSED AMENDMENTS FOR SECURITIES ACT—Continued
AND EXCHANGE ACT FORMS
Current burden
Burden hours
(A)
40–F .........................................................................................................
3. Form 8–A, Form 10–D, Form 40–F,
Form F–7, Form F–8, Form F–10, and
Form F–80
The proposed amendments to Form
8–A,414 Form 10–D, Form 40–F, Form
F–7,415 Form F–8,416 Form F–10, and
Form F–80 417 are not expected to
meaningfully reduce the associated
paperwork burden for these forms.
Accordingly, we have not included a
tabular presentation of the impact on
the total annual compliance burden of
these forms as a result of these proposed
amendments.
4. Form S–6, Form N–1A, Form N–2,
Form N–3, Form N–4, Form N–5, Form
N–6, Form N–14, and Form N–CSR
The proposed amendments to Form
S–6,418 Form N–1A,419 Form N–2,420
Form N–3,421 Form N–4,422 Form N–
5,423 Form N–6,424 Form N–14, and
Form N–CSR 425 are expected to
17,197
increase the burdens and costs for
registrants to prepare and file
registration statements and reports on
the affected forms, but we believe the
burdens associated with hyperlinking
exhibits would be small.426 We assume
that the average burden hours of
requiring exhibit hyperlinks would vary
based on the number of exhibits that are
included with a filing. For purposes of
the PRA, based on the average and
median number of exhibits shown in
Table 3 above and the staff’s experience,
we estimate that the average burden for
a registrant to hyperlink to exhibits
would be one hour per response for
each of the affected forms. As discussed
above, we are not making any
adjustments to the paperwork burden of
affected forms due to the proposed
amendments to simplify and modernize
the rules and forms governing
incorporation by reference.427
Revised burden
Cost
(B)
Burden hours
(C)
20,636,800
17,237
Costs
(D)
20,684,800
The table below shows the total
annual compliance burden, in hours
and in costs, of the collections of
information resulting from the proposed
amendments.428 The burden estimates
were calculated by multiplying the
estimated number of responses by the
estimated average amount of time it
would take an issuer to prepare and
review the exhibit hyperlinks. The
portion of the burden carried by outside
professionals is reflected as a cost, while
the portion of the burden carried by the
issuer internally is reflected in hours.
For purposes of the PRA, we estimate
that 25% of the burden of preparation
is carried by the registrant internally
and that 75% of the burden of
preparation is carried by outside
professionals retained by the company
at an average cost of $400 per hour.429
TABLE 6—INCREMENTAL PAPERWORK BURDEN UNDER THE PROPOSED AMENDMENTS TO FORMS FOR INVESTMENT
COMPANIES
Proposed number
of affected responses
Form
Form
Form
Form
Form
Form
Form
Form
Form
Incremental burden hours/form
Total incremental
burden hours
25% internal burden
75% outside professional
Professional costs
(A)
Forms
(B)
(C) = (A) × (B)
(D) = (C) × 0.25
(E) = (C) × 0.75
(F) = E × $400
S–6 .............
N–1A ...........
N–2 .............
N–3 .............
N–4 .............
N–5 .............
N–6 .............
N–14 ...........
N–CSR .......
2,498
6,002
166
20
1,653
1
472
192
6,898
1
1
1
1
1
1
1
1
1
2,498
6,002
166
20
1,653
1
472
192
6,898
625
1,501
42
5
413
0
118
48
1,725
1,874
4,502
125
15
1,240
1
354
144
5,174
$749,600
1,800,800
50,000
6,000
496,000
400
141,600
57,600
2,069,600
Total ..............
..............................
..............................
17,902
..............................
..............................
5,371,600
D. Request for Comment
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
Pursuant to 44 U.S.C. 3506(c)(2)(B),
we request comment in order to:
414 17
CFR 249.208a.
CFR 239.37.
416 17 CFR 239.38.
417 17 CFR 239.41.
418 17 CFR 239.16.
419 17 CFR 239.15A and 17 CFR 274.11A.
420 17 CFR 239.14 and 17 CFR 274.11a–1.
421 17 CFR 239.17a and 17 CFR 274.11b.
415 17
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• Evaluate whether the proposed
collections of information are necessary
for the proper performance of the
functions of the Commission, including
422 17
CFR 239.17b and 17 CFR 274.11c.
CFR 239.24 and 17 CFR 274.5.
424 17 CFR 239.17c and 17 CFR 274.11d.
425 17 CFR 249.331 and 17 CFR 274.128.
426 See supra Section IV.B.2.c.
427 See supra Section IV.B.3.b.
428 For convenience, the estimated hour and cost
burdens in the table have been rounded to the
nearest whole number.
423 17
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Frm 00043
Fmt 4701
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whether the information will have
practical utility;
• Evaluate the accuracy of our
assumptions and estimates of the
429 We recognize that the costs of retaining
outside professionals may vary depending on the
nature of the professional services, but for purposes
of this PRA analysis, we estimate that such costs
would be an average of $400 per hour. These
estimates are based on our estimates for the parallel
requirement for operating companies. Exhibit
Hyperlinks Adopting Release, supra note 14 at
14139.
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burden of the proposed collection of
information;
• Determine whether there are ways
to enhance the quality, utility, and
clarity of the information to be
collected;
• Evaluate whether there are ways to
minimize the burden of the collection of
information on those who respond,
including through the use of automated
collection techniques or other forms of
information technology; and
• Evaluate whether the proposed
amendments would have any effects on
any other collection of information not
previously identified in this section.
Any member of the public may direct
to us any comments concerning the
accuracy of these burden estimates and
any suggestions for reducing these
burdens. Persons submitting comments
on the collection of information
requirements should direct their
comments to the Office of Management
and Budget, Attention: Desk Officer for
the U.S. Securities and Exchange
Commission, Office of Information and
Regulatory Affairs, Washington, DC
20503, and send a copy to, Brent J.
Fields, Secretary, U.S. Securities and
Exchange Commission, 100 F Street NE.,
Washington, DC 20549, with reference
to File No. S7–08–17. Requests for
materials submitted to OMB by the
Commission with regard to the
collection of information should be in
writing, refer to File No. S7–08–17 and
be submitted to the U.S. Securities and
Exchange Commission, Office of FOIA
Services, 100 F Street NE., Washington
DC 20549. OMB is required to make a
decision concerning the collection of
information between 30 and 60 days
after publication of this proposed rule.
Consequently, a comment to OMB is
best assured of having its full effect if
the OMB receives it within 30 days of
publication.
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
V. Small Business Regulatory
Enforcement Fairness Act
For purposes of the Small Business
Regulatory Enforcement Fairness Act of
1996,430 a rule is ‘‘major’’ if it has
resulted, or is likely to result in:
• An annual effect on the U.S.
economy of $100 million or more;
• a major increase in costs or prices
for consumers or individual industries;
or
• significant adverse effects on
competition, investment, or innovation.
We request comment on whether our
proposal would be a ‘‘major rule’’ for
purposes of the Small Business
Regulatory Enforcement Fairness Act.
430 5
U.S.C. 801 et seq.
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We solicit comment and empirical data
on:
• The potential effect on the U.S.
economy on an annual basis;
• any potential increase in costs or
prices for consumers or individual
industries; and
• any potential effect on competition,
investment, or innovation.
VI. Initial Regulatory Flexibility Act
Analysis
This Initial Regulatory Flexibility Act
Analysis has been prepared in
accordance with the Regulatory
Flexibility Act.431 It relates to proposed
amendments to modernize and simplify
certain disclosure requirements in
Regulation S–K and related rules and
forms to implement Section 72003 of
the FAST Act and provide consistent
incorporation by reference and
hyperlinking requirements in the rules
and forms applicable to investment
companies and investment advisers.
A. Reasons for, and Objectives of, the
Proposed Action
The purpose of the proposed
amendments is to modernize and
simplify Commission disclosure
requirements in a manner that reduces
costs and burdens on companies while
still providing all material information.
Specifically, the proposed amendments
would modernize and simplify these
disclosure requirements by clarifying,
consolidating, relocating and
eliminating, or updating various
Commission rules that govern public
company disclosure. The proposed
amendments would also modernize the
rules by requiring cover page data to be
tagged in a machine-readable format,
requiring disclosure of LEIs and
requiring hyperlinks to be included in
some documents filed on EDGAR. The
proposed amendments would largely
implement the staff’s recommendations
in the FAST Act Report, as required by
Section 72003(d) of the FAST Act. In
addition, the proposed amendments
would apply parallel incorporation by
reference and hyperlinking
requirements in the rules and forms
used by investment companies and
investment advisers to provide a
consistent set of requirements for these
registrants.
B. Legal Basis
We are proposing the rule and form
amendments contained in this
document under the authority set forth
in Sections 7, 10, 19(a), and 28 of the
Securities Act of 1933, as amended,
Sections 3(b), 12, 13, 14, 15, 16, 23(a),
431 5
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PO 00000
U.S.C. 601 et seq.
Frm 00044
Fmt 4701
Sfmt 4702
and 36 of the Securities Exchange Act
of 1934, as amended, Sections 6(c), 8,
24(a), 30, and 38 of the Investment
Company Act of 1940, as amended and
Sections 204, 206A, 210, and 211 of the
Investment Advisers Act of 1940, as
amended.
C. Small Entities Subject to the
Proposed Rules
The proposed amendments would
affect some registrants that are small
entities. The Regulatory Flexibility Act
defines ‘‘small entity’’ to mean ‘‘small
business,’’ ‘‘small organization,’’ or
‘‘small governmental jurisdiction.’’ 432
For purposes of the Regulatory
Flexibility Act, under our rules, an
issuer, other than an investment
company or an investment adviser, is a
‘‘small business’’ or ‘‘small
organization’’ if it had total assets of $5
million or less on the last day of its most
recent fiscal year and is engaged or
proposing to engage in an offering of
securities that does not exceed $5
million.433 An investment company,
including a business development
company,434 is considered to be a
‘‘small business’’ if it, together with
other investment companies in the same
group of related investment companies,
has net assets of $50 million or less as
of the end of its most recent fiscal
year.435 An investment adviser generally
is a small entity if it: (1) Has assets
under management having a total value
of less than $25 million; (2) did not have
total assets of $5 million or more on the
last day of the most recent fiscal year;
and (3) does not control, is not
controlled by, and is not under common
control with another investment adviser
that has assets under management of
$25 million or more, or any person
(other than a natural person) that had
total assets of $5 million or more on the
last day of its most recent fiscal year.436
We estimate that there are 837 issuers
that file with the Commission, other
than investment companies and
investment advisers, that may be
considered small entities.437 In
addition, we estimate that, as of
432 5
U.S.C. 601(6).
Securities Act Rule 157 [17 CFR 230.157]
and Exchange Act Rule 0–10(a) [17 CFR 240.0–
10(a)].
434 Business development companies are a
category of closed-end investment company that are
not registered under the Investment Company Act
[15 U.S.C. 80a–2(a)(48) and 80a–53–64].
435 See Investment Company Act Rule 0–10(a) [17
CFR 270.0–10(a)].
436 See Investment Advisers Act Rule 0–7(a) [17
CFR 275.0–7(a)].
437 This estimate is based on a review of Form 10–
K and 20–F filings (from EDGAR XBRL) with fiscal
periods ending between January 31, 2015 and
January 31, 2016.
433 See
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December 2016, there are 130
investment companies that would be
subject to the proposed amendments
that may be considered small entities.
Finally, we estimate that, as of August
1, 2017, there are 557 investment
advisers that may be subject to the
proposed amendments that may be
considered small entities.438
D. Reporting, Recordkeeping, and Other
Compliance Requirements
As noted above, the purpose of the
proposed amendments is to modernize
and simplify the Commission’s
disclosure requirements and provide
consistent incorporation by reference
and hyperlinking rules for investment
companies and investment advisers. If
adopted, the majority of the proposed
amendments are expected to have an
incremental effect on existing reporting,
recordkeeping and other compliance
burdens for all issuers, including small
entities.439 Many of the proposed
amendments would simplify and
streamline existing disclosure
requirements in ways that are expected
to reduce compliance burdens. Some of
the proposed amendments, like those
that impose new data tagging,440
hyperlinking 441 or disclosure
requirements 442 would increase
compliance costs for registrants,
although we do not expect these
additional costs to be significant.
E. Duplicative, Overlapping, or
Conflicting Federal Rules
We believe that the proposed
amendments would not duplicate,
overlap, or conflict with other federal
rules.
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
F. Significant Alternatives
The Regulatory Flexibility Act directs
us to consider alternatives that would
438 This estimate is based on Commissionregistered investment adviser responses to Form
ADV, Item 5.F and Item 12.
439 We recognize that the fixed costs of disclosure
requirements typically constitute a higher
percentage of revenues for smaller companies than
for larger companies. However, the benefits of
disclosure may be greater for smaller companies
because information asymmetries between investors
and managers of smaller companies are typically
higher than for larger, more seasoned companies
with a large following. See, e.g., R. Frankel and X.
Li, Characteristics of a firm’s information
environment and the information asymmetry
between insiders and outsiders, 37 J. Acct. Econ.
229, 229–259 (June 2004). See also, L. Cheng, S.
Liao, and H. Zhang, The Commitment Effect versus
Information Effect of Disclosure—Evidence from
Smaller Reporting Companies, 88 Acct. Rev. 1239,
1239–1263 (2013).
440 See, e.g., supra Section 0 (Tagging Cover Page
Data).
441 See, e.g., supra Section 0 (Exhibit Hyperlinks
and HTML format for Investment Companies).
442 See e.g., supra Section II.D.1.c (Market for the
Securities (Item 501(b)(4)).
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accomplish our stated objectives, while
minimizing any significant adverse
impact on small entities. In connection
with the proposed amendments, we
considered the following alternatives:
• Establishing different compliance or
reporting requirements that take into
account the resources available to small
entities;
• Clarifying, consolidating, or
simplifying compliance and reporting
requirements under the rules for small
entities;
• Using performance rather than
design standards; and
• Exempting small entities from all or
part of the requirements.
We believe the proposed amendments
would clarify, consolidate and simplify
compliance and reporting requirements
for small entities and other registrants.
As discussed above, we believe the
majority of the proposed amendments
would simplify and streamline
disclosure requirements in ways that are
expected to reduce compliance
burdens.443 We do not believe that the
proposed amendments would impose
any significant new compliance
obligations. Accordingly, we generally
do not believe it is necessary to
establish different compliance and
reporting requirements or timetables or
to exempt small entities from all or part
of the proposed amendments. We note
in this regard that the Commission’s
existing disclosure requirements
provide for scaled disclosure
requirements and other
accommodations for small entities, and
the proposed amendments would not
alter these existing accommodations.
Finally, with respect to using
performance rather than design
standards, the proposed amendments
generally use design rather than
performance standards in order to
promote uniform filing requirements for
all registrants. In some instances, the
proposed amendments would
modernize and simplify existing design
standards. For example, the proposed
amendments to Item 303(a) would
emphasize the flexibility currently
available to registrants with respect to
the form of MD&A presentation.444 In
other instances, the proposed
amendments may result in additional
flexibility when preparing disclosures.
For example, proposed Item 601(a)(5)
would expand registrants’ ability to
omit schedules and attachments that are
not material to exhibits.445 As another
443 See
supra Sections (Economic Analysis) and
IV (Paperwork Reduction Act).
444 See supra Section (Year-to-Year Comparisons
(Instruction 1 to Item 303(a)).
445 See supra Section (Schedules and
Attachments to Exhibits).
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51031
example, the proposed amendments to
Item 102 would clarify that the
threshold for disclosure about
registrants’ physical properties is based
on materiality.446
G. Request for Comment
We encourage the submission of
comments with respect to any aspect of
this Initial Regulatory Flexibility
Analysis. In particular, we request
comments regarding:
• how the proposed rule and form
amendments can achieve their objective
while lowering the burden on small
entities;
• the number of small entity
companies that may be affected by the
proposed rule and form amendments;
• the existence or nature of the
potential effects of the proposed
amendments on small entity companies
discussed in the analysis; and
• how to quantify the effects of the
proposed amendments.
Commenters are asked to describe the
nature of any effect and provide
empirical data supporting the extent of
that effect. Comments will be
considered in the preparation of the
Final Regulatory Flexibility Analysis, if
the proposed rules are adopted, and will
be placed in the same public file as
comments on the proposed rules
themselves.
VII. Statutory Authority and Text of
Proposed Rule and Form Amendments
We are proposing the rule and form
amendments contained in this
document under the authority set forth
in Sections 7, 10, 19(a), and 28 of the
Securities Act of 1933, as amended,
Sections 3(b), 12, 13, 14, 15, 16, 23(a),
and 36 of the Securities Exchange Act
of 1934, as amended, Sections 6(c), 8,
24(a), 30, and 38 of the Investment
Company Act of 1940, as amended, and
Sections 204, 206A, 210, and 211 of the
Investment Advisers Act of 1940, as
amended.
List of Subjects in 17 CFR Parts 229,
230, 232, 239, 240, 249, 270, 274, and
275
Administrative practice and
procedure, Reporting and recordkeeping
requirements, Securities.
In accordance with the foregoing, we
are proposing to amend Title 17,
Chapter II of the Code of Federal
Regulations as follows:
446 See
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supra Section (Description of Property).
02NOP2
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asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
PART 229—STANDARD
INSTRUCTIONS FOR FILING FORMS
UNDER SECURITIES ACT OF 1933,
SECURITIES EXCHANGE ACT OF 1934
AND ENERGY POLICY AND
CONSERVATION ACT OF 1975—
REGULATION S–K
§ 229.105
(Item 105) Risk factors.
Where appropriate, provide under the
caption ‘‘Risk Factors’’ a discussion of
the most significant factors that make an
investment in the registrant or offering
speculative or risky. This discussion
must be concise and organized logically.
Do not present risks that could apply
■ 1. The authority citation for part 229
generically to any registrant or any
continues to read as follows:
offering. Explain how the risk affects the
registrant or the securities being offered.
Authority: 15 U.S.C. 77e, 77f, 77g, 77h,
77j, 77k, 77s, 77z–2, 77z–3, 77aa(25),
Set forth each risk factor under a
77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii,
subcaption that adequately describes the
77jjj, 77nnn, 77sss, 78c, 78i, 78j, 78j–3, 78l,
risk. If the risk factor discussion is
78m, 78n, 78n–1, 78o, 78u–5, 78w, 78ll, 78
included in a registration statement, it
mm, 80a–8, 80a–9, 80a–20, 80a–29, 80a–30,
must immediately follow the summary
80a–31(c), 80a–37, 80a–38(a), 80a–39, 80b–11
section. If you do not include a
and 7201 et seq.; 18 U.S.C. 1350; sec. 953(b),
summary section, the risk factor section
Pub. L. 111–203, 124 Stat. 1904 (2010); and
must immediately follow the cover page
sec. 102(c), Pub. L. 112–106, 126 Stat. 310
(2012).
of the prospectus or the pricing
information section that immediately
§ 229.10 [Amended].
follows the cover page. Pricing
■ 2. Remove and reserve paragraph (d)
information means price and priceof § 229.10.
related information that you may omit
■ 3. Amend § 229.102 by revising the
from the prospectus in an effective
introductory text, Instruction 1 and
registration statement based on Rule
Instruction 2 to read as follows:
430A (§ 230.430A(a) of this chapter).
The registrant must furnish this
§ 229.102 (Item 102) Description of
information in plain English. See
property.
§ 230.421(d) of Regulation C of this
To the extent material, disclose the
chapter.
location and general character of the
■ 5. Amend § 229.202 by revising
registrant’s principal physical
Instruction 3 under ‘‘Instructions to
properties. In addition, identify the
Item 202’’ to read as follows:
segment(s), as reported in the financial
statements, that use the properties
§ 229.202 (Item 202) Description of
described. If any such property is not
registrant’s securities.
held in fee or is held subject to an
*
*
*
*
*
encumbrance that is material to the
3. Section 305(a)(2) of the Trust
registrant, so state and describe briefly
Indenture Act of 1939, U.S.C. 77aaa et
how held.
seq., as amended (‘‘Trust Indenture
Instructions to Item 102: 1. What is
Act’’), shall not be deemed to require
required is information that will
the inclusion in a registration statement,
reasonably inform investors as to the
prospectus, or annual report on Form
suitability, adequacy, productive
10–K of any information not required by
capacity, and extent of utilization of the this Item or Item 601(b)(4)(vi) of this
principal physical properties of the
chapter.
registrant and its subsidiaries, to the
*
*
*
*
*
extent the described properties are
■ 6. Amend § 229.303 by revising
material. A registrant should engage in
Instruction 1 under ‘‘Instructions to
a comprehensive consideration of the
paragraph 303(a)’’ to read as follows:
materiality of its properties. If
appropriate, descriptions may be
§ 229.303 (Item 303) Management’s
provided on a collective basis; detailed
discussion and analysis of financial
condition and results of operations.
descriptions of the physical
characteristics of individual properties
*
*
*
*
*
or legal descriptions by metes and
Instructions to paragraph 303(a): 1.
bounds are not required and shall not be The registrant’s discussion and analysis
given.
shall be of the financial statements and
2. Disclosures with respect to this
other statistical data that the registrant
item need only be provided to the extent believes will enhance a reader’s
the properties are material to the
understanding of its financial condition,
registrant. In determining materiality
changes in financial condition and
under this Item, the registrant should
results of operations. Generally, the
take into account both quantitative and
discussion shall cover the periods
qualitative factors. See Instruction 1 to
covered by the financial statements
Item 101 of Regulation S–K (§ 229.101).
included in the filing and the registrant
may use any presentation that in the
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*
*
registrant’s judgment enhances a
■ 4. Add § 229.105 to read as follows:
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reader’s understanding. A smaller
reporting company’s discussion shall
cover the two-year period required in
Article 8 of Regulation S–X and may use
any presentation that in the registrant’s
judgment enhances a reader’s
understanding. For registrants providing
financial statements covering three
years in a filing, discussion about the
earliest year would not be required if (i)
that discussion is not material to an
understanding of the registrant’s
financial condition, changes in financial
condition and results of operations and
(ii) the registrant has filed its prior year
Form 10–K on EDGAR containing
management’s discussion and analysis
of the earliest of the three years
included in the financial statements of
the current filing. An emerging growth
company, as defined in Rule 405 of the
Securities Act (§ 230.405 of this chapter)
or Rule 12b–2 of the Exchange Act
(§ 240.12b–2 of this chapter), may
provide the discussion required in
paragraph (a) of this Item for its two
most recent fiscal years if, pursuant to
Section 7(a) of the Securities Act of
1933 (15 U.S.C 77g(a)), it provides
audited financial statements for two
years in a Securities Act registration
statement for the initial public offering
of the emerging growth company’s
common equity securities.
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*
*
*
■ 7. Amend § 229.401 by removing
Instruction 3 to paragraph (b) of Item
401and adding an Instruction to Item
401 to read as follows:
§ 229.401 (Item 401) Directors, executive
officers, promoters and control persons.
*
*
*
*
*
Instruction to Item 401. The
information regarding executive officers
called for by this Item need not be
furnished in proxy or information
statements prepared in accordance with
Schedule 14A or Schedule 14C under
the Exchange Act (§ 240.14a–101 and
§ 240.14c–101 of this chapter) if you are
relying on General Instruction G of
Form 10–K under the Exchange Act
(§ 249.310 of this chapter), such
information is furnished in a separate
section captioned ‘‘Information about
our Executive Officers,’’ and is included
in Part I of your annual report on Form
10–K.
■ 8. Revise § 229.405 to read as follows:
§ 229.405 (Item 405) Compliance with
Section 16(a) of the Exchange Act.
(a) Reporting obligation. Every
registrant having a class of equity
securities registered pursuant to Section
12 of the Exchange Act (15 U.S.C. 78l)
and every closed-end investment
company registered under the
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Investment Company Act of 1940 (15
U.S.C. 80a–1 et seq.) must:
(1) Under the caption ‘‘Delinquent
Section 16(a) Reports,’’ identify each
person who, at any time during the
fiscal year, was a director, officer,
beneficial owner of more than ten
percent of any class of equity securities
of the registrant registered pursuant to
Section 12 of the Exchange Act, or any
other person subject to Section 16 of the
Exchange Act with respect to the
registrant because of the requirements of
Section 30 of the Investment Company
Act (‘‘reporting person’’) that failed to
file on a timely basis reports required by
Section 16(a) of the Exchange Act
during the most recent fiscal year or
prior fiscal years.
(2) For each such person, set forth the
number of late reports, the number of
transactions that were not reported on a
timely basis, and any known failure to
file a required form. A known failure to
file would include, but not be limited
to, a failure to file a Form 3, which is
required of all reporting persons, and a
failure to file a Form 5 in the absence
of the written representation referred to
in paragraph (b)(3) of this section,
unless the registrant otherwise knows
that no Form 5 is required.
Instruction 1 to paragraph (a) of Item
405. If no disclosure is required,
registrants are encouraged to exclude
the caption ‘‘Delinquent Section 16(a)
Reports.’’
Instruction 2 to paragraph (a) of Item
405. The registrant is only required to
disclose a failure to file timely once. For
example, if in the most recently
concluded fiscal year a reporting person
filed a Form 4 disclosing a transaction
that took place in the prior fiscal year,
and should have been reported in that
year, the registrant should disclose that
late filing and transaction pursuant to
this Item 405 with respect to the most
recently concluded fiscal year, but not
in material filed with respect to
subsequent years.
(b) Scope of the Inquiry. In
determining whether disclosure is
required pursuant to paragraph (a), the
registrant may rely only on the
following:
(1) A review of Forms 3 and 4 (17 CFR
249.103 and 249.104) and amendments
thereto filed electronically with the
Commission during the registrant’s most
recent fiscal year;
(2) A review of Forms 5 (17 CFR
249.105) and amendments thereto filed
electronically with the Commission
with respect to the registrant’s most
recent fiscal year; and
(3) Any written representation from
the reporting person that no Form 5 is
required. The registrant must maintain
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the representation in its records for two
years, making a copy available to the
Commission or its staff upon request.
■ 9. Amend § 229.407 by revising
paragraphs (d)(3)(i)(B) and (g) to read as
follows:
§ 229.407 (Item 407) Corporate
governance.
*
*
*
*
*
(d) * * *
(3)(i) * * *
(B) The audit committee has
discussed with the independent
auditors the matters required to be
discussed by the applicable
requirements of the Public Company
Accounting Oversight Board (‘‘PCAOB’’)
and the Commission;
*
*
*
*
*
(g) Smaller reporting companies and
emerging growth companies. (1) A
registrant that qualifies as a ‘‘smaller
reporting company,’’ as defined by
§ 229.10(f)(1), is not required to provide:
(A) The disclosure required in
paragraph (d)(5) of this Item in its first
annual report filed pursuant to Section
13(a) or 15(d) of the Exchange Act (15
U.S.C. 78m(a) or 78o(d)) following the
effective date of its first registration
statement filed under the Securities Act
(15 U.S.C. 77a et seq.) or Exchange Act
(15 U.S.C. 78a et seq.); and
(B) The disclosure required by
paragraphs (e)(4) and (e)(5) of this Item.
(2) A registrant that qualifies as an
‘‘emerging growth company,’’ as defined
in Rule 405 of the Securities Act
(§ 230.405 of this chapter) or Rule 12b–
2 of the Exchange Act (§ 240.12b–2 of
this chapter) , is not required to provide
the disclosure required by paragraph
(e)(5) of this Item.
*
*
*
*
*
■ 10. Amend § 229.501 by:
■ a. Revising the instruction under
‘‘Instruction to paragraph 501(b)(1)’’,
Instruction 2 under ‘‘Instructions to
paragraph 501(b)(3)’’, paragraph (b)(4)
and paragraph (b)(10); and
■ b. Removing paragraph (b)(11) to read
as follows:
§ 229.501 (Item 501) Forepart of
Registration Statement and Outside Front
Cover Page of Prospectus.
*
*
*
*
*
(b) * * *
(1) * * *
Instruction to paragraph 501(b)(1): If
your name is the same as that of a
company that is well known, include
information to eliminate any possible
confusion with the other company. If
your name indicates a line of business
in which you are not engaged or in
which you are engaged only to a limited
extent, include information to eliminate
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any misleading inference as to your
business.
*
*
*
*
*
Instructions to paragraph 501(b)(3):
* * *
2. If it is impracticable to state the
price to the public, explain the method
by which the price is to be determined.
Instead of explaining the method on the
outside front cover page of the
prospectus, you may state that the
offering price will be determined by a
particular method or formula that is
described in the prospectus and include
a cross-reference to the location of such
disclosure in the prospectus, including
the page number. Highlight the crossreference by prominent type or in
another manner. If the securities are to
be offered at the market price, or if the
offering price is to be determined by a
formula related to the market price,
indicate the market and market price of
the securities as of the latest practicable
date.
*
*
*
*
*
(4) Market for the securities. The
national securities exchange(s) where
the securities being offered are listed. If
the securities being offered are not listed
on a national securities exchange, the
principal United States market(s) where
the registrant, through the engagement
of a registered broker-dealer, has
actively sought and achieved quotation.
In each case, also disclose the
corresponding trading symbol(s) for the
securities on such market(s).
*
*
*
*
*
(10) Prospectus ‘‘Subject to
Completion’’ legend.
(i) If you use the prospectus before the
effective date of the registration
statement or if you use Rule 430A
[§ 230.430A of this chapter] to omit
pricing information and the prospectus
is used before you determine the public
offering price, include a prominent
statement that:
(A) The information in the prospectus
will be amended or completed;
(B) A registration statement relating to
these securities has been filed with the
Securities and Exchange Commission;
(C) The securities may not be sold
until the registration statement becomes
effective; and
(D) 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.
(ii) The legend called for by paragraph
(b)(10)(i) of this Item may be in the
following or other clear, plain language:
The information in this prospectus is
not complete and may be changed. We
may not sell these securities until the
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Federal Register / Vol. 82, No. 211 / Thursday, November 2, 2017 / Proposed Rules
registration statement filed with the
Securities and Exchange Commission is
effective. This prospectus is not an offer
to sell these securities and it is not
soliciting an offer to buy these securities
in any state where the offer or sale is not
permitted.
(iii) Registrants may exclude the
statement in paragraph (b)(i)(D) of this
Item if the offering is not prohibited by
state law.
*
*
*
*
*
§ 229.503
[Amended].
11. Amend § 229.503 by removing
‘‘risk factors’’ from the section heading
and removing and reserving paragraph
(c).
■
§ 229.512
[Amended].
12. Remove and reserve paragraphs
(c), (d), (e), and (f) of § 229.512.
■ 13. Amend § 229.601 by:
■ a. Revising paragraph (a)(1);
■ b. Adding paragraphs (a)(5) and (a)(6);
■ c. Revising entry (b)(4) from the
exhibit table in paragraph (a) to add a
subsection (vi) titled ‘‘Description of
registrant’s securities’’ and to add an
‘‘X’’ under column 10–K;
■ d. Revising entry (21) from the exhibit
table in paragraph (a) to read
‘‘Subsidiaries of the registrant and entity
identifiers ’’;
■ e. Revising entry (104) from the
exhibit table in paragraph (a) to read
‘‘Cover Page Interactive Data File’’ and
adding an ‘‘X’’ under columns 8–K, 10–
Q and 10–K;
■ f. Adding paragraph (b)(4)(vi) and the
instructions to paragraph (b)(4)(vi) and
paragraph (b)(10)(iv);
■ g. Revising paragraphs (b)(2), (b)(10),
(b)(13), (b)(21)(i), and (b)(99); and
■ h. Adding paragraph (b)(104) to read
as follows:
■
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
§ 229.601
(Item 601) Exhibits.
(a) Exhibits and index required. (1)
Subject to Rule 411(c) (§ 230.411(c) of
this chapter) under the Securities Act
and Rule 12b–23(c) (§ 240.12b–23(c) of
this chapter) under the Exchange Act
regarding incorporation of exhibits by
reference, the exhibits required in the
exhibit table must be filed as indicated,
as part of the registration statement or
report.
*
*
*
*
*
(5) Schedules (or similar attachments)
to the exhibits required by this Item are
not required to be filed unless such
schedules contain information material
to an investment or voting decision and
that information is not otherwise
disclosed in the exhibit or the
disclosure document. Each exhibit filed
must contain a list briefly identifying
the contents of all omitted schedules. In
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addition, the registrant must provide a
copy of any omitted schedule to the
Commission staff upon request.
(6) The registrant may redact
information from exhibits required to be
filed by this Item if disclosure of such
information would constitute a clearly
unwarranted invasion of personal
privacy (e.g., disclosure of bank account
numbers, social security numbers, home
addresses and similar information).
*
*
*
*
*
(b) * * *
(2) Plan of acquisition, reorganization,
arrangement, liquidation, or succession.
Any material plan of acquisition,
disposition, reorganization,
readjustment, succession, liquidation, or
arrangement and any amendments
thereto described in the statement or
report.
*
*
*
*
*
(4) * * *
(vi) For each class of securities that is
registered under Section 12 of the
Exchange Act, provide the information
required by Item 202(a)-(d) and (f) of
Regulation S–K (§ 229.202 of this
chapter), Description of registrant’s
securities.
*
*
*
*
*
Instruction 1 to paragraph (b)(4)(vi). A
registrant is only required to provide the
information called for by Item
601(b)(4)(vi) if it is filing an annual
report under Exchange Act Section 13(a)
or 15(d).
Instruction 2 to paragraph (b)(4)(vi).
For purposes of Item 601(b)(4)(vi), all
references in Item 202 to securities to be
or being registered, offered, or sold will
mean securities that are registered as of
the end of the period covered by the
report with which the exhibit is filed. In
addition, for purposes of this Item, the
disclosure will be required for classes of
securities that have not been retired by
the end of the period covered by the
report.
Instruction 3 to paragraph (b)(4)(vi).
The registrant may incorporate by
reference to a prior annual report under
Exchange Act Section 13(a) or 15(d)
containing the disclosure required by
Item 601(b)(4)(vi) of Regulation S–K, as
applicable, so long as there has not been
any change to the information called for
by Item 202, (Description of the
registrant’s securities) since the filing
date of the linked filing. Such hyperlink
will be deemed to satisfy the
requirements of Item 601(b)(4)(vi) for
the current filing.
*
*
*
*
*
(10) Material contracts. (i) Every
contract not made in the ordinary
course of business that is material to the
registrant and is to be performed in
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whole or in part at or after the filing of
the registration statement or report. In
addition, for newly reporting registrants,
every contract not made in the ordinary
course of business that is material to the
registrant and that was entered into not
more than two years before the date on
which such registrant:
(A) First files a registration statement
or report; or
(B) completes a transaction that had
the effect of causing it to cease being a
public shell company.
The only contracts that need to be filed
are those to which the registrant or a
subsidiary of the registrant is a party or
has succeeded to a party by assumption
or assignment or in which the registrant
or such subsidiary has a beneficial
interest.
*
*
*
*
*
(iv) The registrant may redact
provisions or terms of exhibits required
to be filed by paragraph (b)(10) of this
Item if those provisions or terms are
both (i) not material and (ii)
competitively harmful to the registrant
if publicly disclosed. If it does so, the
registrant should mark the exhibit index
to indicate that portions of the exhibit
or exhibits have been omitted and
include a prominent statement on the
first page of the redacted exhibit that
certain identified information has been
excluded from the exhibit because it is
both (i) not material and (ii)
competitively harmful to the registrant
if publicly disclosed. The registrant also
must indicate by brackets where the
information is omitted from the filed
version of the exhibit.
If requested by the Commission staff,
the registrant must promptly provide an
unredacted paper copy of the exhibit on
a supplemental basis. The Commission
staff also may request the registrant to
provide its materiality and competitive
harm analyses on a supplemental basis.
Upon evaluation of the registrant’s
supplemental materials, the
Commission staff may request the
registrant to amend its filing to include
in the exhibit any previously redacted
information that is not adequately
supported by the registrant’s materiality
and competitive harm analyses.
The registrant may request
confidential treatment of the
supplemental material submitted under
paragraph (iv) of this Item pursuant to
Rule 83 (§ 200.83 of this chapter) while
it is in the possession of the
Commission staff. After completing its
review of the supplemental information,
the Commission staff will return or
destroy it at the request of the registrant,
if the registrant complies with the
procedures outlined in Rules 418 or
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12b–4 (§ 230.418 or 240.12b–4 of this
chapter).
Instruction 1 to paragraph (b)(10) of
Item 601: For purposes of paragraph
(b)(10)(i) of this Item, a ‘‘newly
reporting registrant’’ is (i) 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),
(ii) any registrant that has not filed an
annual report since the revival of a
previously suspended reporting
obligation, and (iii) any registrant that
(a) was a shell company, other than a
business combination related shell
company, as defined in Rule 12b–2
under the Exchange Act (17 CFR
240.12b–2), immediately before
completing a transaction that has the
effect of causing it to cease being a shell
company and (b) has not filed a
registration statement or Form 8–K as
required by Items 2.01 and 5.06 of that
form, since the completion of such
transaction. For example, newly
reporting registrants would include (i) a
registrant that is filing its first
registration statement under the
Securities Act or the Exchange Act, and
(ii) a registrant that was a public shell
company, other than a business
combination related shell company, and
completes a reverse merger transaction
causing it to cease being a shell
company.
Instruction 2 to paragraph (b)(10):
With the exception of management
contracts, in order to comply with
paragraph (iii) above, registrants need
only file copies of the various
compensatory plans and need not file
each individual director’s or executive
officer’s personal agreement under the
plans unless there are particular
provisions in such personal agreements
whose disclosure in an exhibit is
necessary to an investor’s understanding
of that individual’s compensation under
the plan.
Instruction 3 to paragraph (b)(10): If
a material contract is executed or
becomes effective during the reporting
period reflected by a Form 10–Q or
Form 10–K, it must be filed as an
exhibit to the Form 10–Q or Form 10–
K filed for the corresponding period.
See paragraph (a)(4) of this Item. With
respect to quarterly reports on Form 10–
Q, only those contracts executed or
becoming effective during the most
recent period reflected in the report
must be filed.
*
*
*
*
*
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(13) Annual or quarterly report to
security holders. (i) The registrant’s
annual report to security holders for its
last fiscal year or its quarterly report to
security holders, if all or a portion
thereof is incorporated by reference in
the filing. Such report, except for those
portions thereof that are expressly
incorporated by reference in the filing,
is to be furnished for the information of
the Commission and is not to be deemed
‘‘filed’’ as part of the filing. If the
financial statements in the report have
been incorporated by reference in the
filing, the accountant’s certificate must
be manually signed in one copy. See
Rule 439 (§ 230.439 of this chapter).
(ii) Electronic filings. If all, or any
portion, of the annual or quarterly
report to security holders is
incorporated by reference into any
electronic filing, all, or such portion of
the annual or quarterly report to
security holders so incorporated, must
be filed in electronic format as an
exhibit to the filing.
*
*
*
*
*
(21) Subsidiaries of the registrant and
entity identifiers. (i) List the following
information for the registrant and each
of its subsidiaries: The name, the legal
entity identifier (if a legal entity
identifier has been obtained), the state
or other jurisdiction of incorporation or
organization, and the names under
which the entity does business. This list
may be incorporated by reference from
another filed document which includes
a complete and accurate list. ‘‘Legal
entity identifier’’ means, with respect to
any registrant or its subsidiaries, the
legal entity identifier as assigned by a
utility endorsed or otherwise governed
by the Global LEI Regulatory Oversight
Committee or accredited by the Global
LEI Foundation.
*
*
*
*
*
(99) Additional exhibits. (i) Any
additional exhibits that the registrant
may wish to file must be so marked as
to indicate clearly the subject matters to
which they refer.
(ii) If pursuant to Section 11(a) of the
Securities Act (15 U.S.C. 77k(a)) an
issuer makes generally available to its
security holders an earnings statement
covering a period of at least 12 months
beginning after the effective date of the
registration statement, and if such
earnings statement is made available by
‘‘other methods’’ than those specified in
paragraphs (a) or (b) of § 230.158 of this
chapter, it must be filed as an exhibit to
the Form 10–Q or the Form 10–K, as
appropriate, covering the period in
which the earnings statement was
released.
*
*
*
*
*
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(104) Cover Page Interactive Data File.
A Cover Page Interactive Data File (as
defined in § 232.11 of this chapter) as
required by Rule 406 of Regulation S–
T (17 CFR 232.406), and in the manner
provided by the EDGAR Filer Manual.
*
*
*
*
*
■ 14. Amend § 229.1100 by:
■ a. Revising Instruction 1 to paragraph
(c)(1) of Item 1100; and
■ b. Redesignating instructions 2
through 5 to paragraph (c)(1) as
‘‘Instruction 2 to paragraph (c)(1) of Item
1100.’’, ‘‘Instruction 3 to paragraph
(c)(1) of Item 1100’’, ‘‘Instruction 4 to
paragraph (c)(1) of Item 1100.’’, and
‘‘Instruction 5 to paragraph (c)(1) of Item
1100’’ to read as follows:
§ 229.1100
(Item 1100) General.
*
*
*
*
*
Instruction 1 to paragraph (c)(1) of
Item 1100. In addition to the conditions
in paragraph (c)(1) of this section, any
information incorporated by reference
must comply with all applicable
Commission rules pertaining to
incorporation by reference, such as Rule
303 of Regulation S–T (§ 232.303 of this
chapter), Rule 411 of Regulation C
(§ 230.411 of this chapter), and Rule
12b–23 of Regulation 12B (§ 240.12b–23
of this chapter), except that for purposes
of paragraph (c)(1), an asset-backed
issuer may incorporate by reference to a
second document that incorporates
pertinent information by reference to a
third document.
*
*
*
*
*
PART 230—GENERAL RULES AND
REGULATIONS, SECURITIES ACT OF
1933
15. The authority citation for part 230
continues to read in part as follows:
■
Authority: 15 U.S.C. 77b, 77b note, 77c,
77d, 77f, 77g, 77h, 77j, 77r, 77s, 77z–3, 77sss,
78c, 78d, 78j, 78l, 78m, 78n, 78o,78o–7 note,
78t, 78w, 78ll(d), 78mm, 80a–8, 80a–24, 80a–
28, 80a–29, 80a–30, and 80a–37, and Pub. L.
112–106, sec. 201(a), sec. 401, 126 Stat. 313
(2012), unless otherwise noted.
*
*
*
*
*
16. Amend § 230.405 by adding in
alphabetical order the definition of Subunderwriter to read as follows:
■
§ 230.405
Definition of terms.
*
*
*
*
*
Sub-underwriter. The term subunderwriter means 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.
*
*
*
*
*
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17. Revise § 230.411 to read as
follows:
■
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
§ 230.411
Incorporation by reference.
(a) Prospectus. Except as provided by
this section, Item 1100(c) of Regulation
AB (§ 229.1100(c) of this chapter) for
registered offerings of asset-backed
securities, or unless otherwise provided
in the appropriate form, information
must not be incorporated by reference
into the prospectus. Where a summary
or outline of the provisions of any
document is required in the prospectus,
the summary or outline may incorporate
by reference particular items, sections or
paragraphs of any exhibit and may be
qualified in its entirety by such
reference. In any financial statements,
incorporating by reference, or crossreferencing to, information outside of
the financial statements is not permitted
unless otherwise specifically permitted
or required by the Commission’s rules.
(b) Information not required in a
prospectus. Information may be
incorporated by reference in answer, or
partial answer, to any item of a
registration statement that calls for
information not required to be included
in a prospectus. Except as provided in
the Commission’s rules, financial
information required to be given in
comparative form for two or more fiscal
years or periods must not be
incorporated by reference unless the
information incorporated by reference
includes the entire period for which the
comparative data is given. In any
financial statements, incorporating by
reference, or cross-referencing to,
information outside of the financial
statements is not permitted unless
otherwise specifically permitted or
required by the Commission’s rules.
(c) Exhibits. Any document or part
thereof filed with the Commission
pursuant to any Act administered by the
Commission may be incorporated by
reference as an exhibit to any
registration statement filed with the
Commission by the same or any other
person. If any modification has occurred
in the text of any document
incorporated by reference since the
filing thereof, the registrant must file
with the reference a statement
containing the text of such modification
and the date thereof.
(d) Hyperlinks. Include an active
hyperlink to information incorporated
into a registration statement or
prospectus by reference if such
information is publicly available on the
Commission’s Electronic Data
Gathering, Analysis and Retrieval
System (‘‘EDGAR’’) at the time the
registration statement or prospectus is
filed. For hyperlinking to exhibits,
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please refer to Item 601 of Regulation S–
K (§ 229.601 of this chapter) or the
appropriate form.
(e) General. Include an express
statement clearly describing the specific
location of the information you are
incorporating by reference. The
statement must identify the document
where the information was originally
filed or submitted and the location of
the information within that document.
The statement must be made at the
particular place where the information
is required, if applicable. Information
must not be incorporated by reference in
any case where such incorporation
would render the disclosure incomplete,
unclear, or confusing. For example,
unless expressly permitted or required,
disclosure must not be incorporated by
reference from a second document if
that second document incorporates
information pertinent to such disclosure
by reference to a third document.
■ 18. Revise § 230.491 to read as
follows:
§ 230.491 Information to be furnished
under paragraph (6) of Schedule B.
Any foreign government filing a
registration statement pursuant to
Schedule B of the act need state, in
furnishing the information required by
paragraph (6), the names and addresses
only of principal underwriters, namely,
underwriters in privity of contract with
the registrant, provided they are
designated as principal underwriters
and a brief statement is made as to the
discounts and commissions to be
received by sub-underwriters or dealers.
PART 232—REGULATION S–T—
GENERAL RULES AND REGULATIONS
FOR ELECTRONIC FILINGS
19. The authority citation for part 232
continues to read in part as follows:
■
Authority: 15 U.S.C. 77c, 77f, 77g, 77h,
77j, 77s(a), 77z–3, 77sss(a), 78c(b), 78l, 78m,
78n, 78o(d), 78w(a), 78ll, 80a–6(c), 80a–8,
80a–29, 80a–30, 80a–37, and 7201 et seq.;
and 18 U.S.C. 1350, unless otherwise noted.
*
*
*
*
*
20. In § 232.11 in alphabetical order
add the definition of Cover Page
Interactive Data File in to read as
follows:
■
§ 232.11
232.
Definitions of terms used in Part
*
*
*
*
*
Cover Page Interactive Data File. The
term Cover Page Interactive Data File
means the machine-readable computer
code that presents in Inline XBRL
electronic format the cover page
information for specified forms as
required by Rule 406 (§ 232.406 of this
chapter).
PO 00000
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Note to definition of Cover Page
Interactive Data File: When a filing is
submitted using Inline XBRL, if permitted or
required and as provided by the EDGAR Filer
Manual, a portion of the Cover Page
Interactive Data File must be embedded into
a form with the remainder submitted as an
exhibit to the form.
*
*
*
*
*
21. Revise the second sentence of
paragraph (a) and the third sentence of
paragraph (d) of § 232.102 to read as
follows:
■
§ 232.102
Exhibits.
(a) * * * Previously filed exhibits,
whether in paper or electronic format,
may be incorporated by reference into
an electronic filing to the extent
permitted by Rule 411 under the
Securities Act (§ 230.411 of this
chapter), Rule 12b–23 under the
Exchange Act (§ 240.12b–23 of this
chapter), Rule 0–4 under the Investment
Company Act (§ 270.0–4 of this chapter)
or Rule 303 of Regulation S–T
(§ 232.303). * * *
*
*
*
*
*
(d) * * * For electronic filings on
Form S–6 (§ 239.16 of this chapter),
Form N–14 (§ 239.23 of this chapter),
Form F–10 (§ 239.40 of this chapter),
Form 20–F (§ 249.220f of this chapter),
Form N–5 (§ 274.5 of this chapter), Form
N–1A (§ 274.11A of this chapter), Form
N–2 (§ 274.11a–1 of this chapter), Form
N–3 (§ 274.11b of this chapter), Form N–
4 (§ 274.11c of this chapter), Form N–6
(§ 274.11d of this chapter), Form N–CSR
(§ 274.128 of this chapter), or filings
subject to Item 601 of Regulation S–K
(§ 229.601 of this chapter), each exhibit
identified in the exhibit index (other
than an exhibit filed in eXtensible
Business Reporting Language or an
exhibit that is filed with Form ABS–EE
(§ 249.1401 of this chapter)) must
include an active link to an exhibit that
is filed with the document or, if the
exhibit is incorporated by reference, an
active hyperlink to the exhibit
separately filed on EDGAR. * * *
*
*
*
*
*
■ 22. Amend § 232.105 by revising
paragraph (d) and adding paragraph (e)
as follows:
§ 232.105
Use of HTML and hyperlinks.
*
*
*
*
*
(d) Electronic filers submitting Form
S–6 (§ 239.16 of this chapter), Form N–
14 (§ 239.23 of this chapter), Form F–10
(§ 239.40 of this chapter), Form 20–F
(§ 249.220f of this chapter), Form N–5
(§ 274.5 of this chapter), Form N–1A
(§ 274.11A of this chapter), Form N–2
(§ 274.11a–1 of this chapter), Form N–3
(§ 274.11b of this chapter), Form N–4
(§ 274.11c of this chapter), Form N–6
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(§ 274.11d of this chapter), Form N–CSR
(§ 274.128 of this chapter), or a
registration statement or report subject
to Item 601 of Regulation S–K (§ 229.601
of this chapter), must submit such
registration statement or report in
HTML and each exhibit identified in the
exhibit index (other than an exhibit
filed in eXtensible Business Reporting
Language or an exhibit filed with Form
ABS–EE (§ 249.1401 of this chapter))
must include an active link to an exhibit
that is filed with the registration
statement or report or, if the exhibit is
incorporated by reference, an active
hyperlink to the exhibit separately filed
on EDGAR, unless such exhibit is filed
in paper pursuant to a temporary or
continuing hardship exemption under
Rules 201 or 202 of Regulation S–T
(§ 232.201 or § 232.202) or pursuant to
Rule 311 of Regulation S–T (§ 232.311).
Instructions to paragraph (d): (1) No
hyperlink is required for any exhibit
incorporated by reference that has not
been filed with the Commission in
electronic format.
(2) An electronic filer must correct an
inaccurate or nonfunctioning link or
hyperlink to an exhibit, in the case of
a registration statement that is not yet
effective, by filing an amendment to the
registration statement containing the
inaccurate or nonfunctioning link or
hyperlink; or, in the case of a
registration statement that has become
effective or an Exchange Act report, an
electronic filer must correct the
inaccurate or nonfunctioning link or
hyperlink in the next Exchange Act
periodic report that requires, or
includes, an exhibit pursuant to Item
601 of Regulation S–K (§ 229.601 of this
chapter), Form N–CSR (§ 274.128 of this
chapter), or, in the case of a foreign
private issuer (as defined in § 229.405 of
this chapter), Form 20–F (§ 249.220f of
this chapter) or Form F–10 (§ 239.40 of
this chapter). In the case of a registration
statement on Form S–6 (§ 239.16 of this
chapter), Form N–14 (§ 239.23 of this
chapter), Form N–5 (§ 274.5 of this
chapter), Form N–1A (§ 274.11A of this
chapter), Form N–2 (§ 274.11a–1 of this
chapter), Form N–3 (§ 274.11b of this
chapter), Form N–4 (§ 274.11c of this
chapter), or Form N–6 (§ 274.11d of this
chapter) that has become effective, an
electronic filer must correct an
inaccurate or nonfunctioning link or
hyperlink in the next post-effective
amendment, if any, to the registration
statement. Alternatively, an electronic
filer may correct an inaccurate or
nonfunctioning link or hyperlink in a
registration statement that has become
effective by filing a post-effective
amendment to the registration
statement.
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(e) Except for exhibits, which are
covered by paragraph (d) of this section,
electronic filers that are incorporating
information by reference pursuant to
Rule 411 under the Securities Act
(§ 230.411 of this chapter), Rule 12b–23
under the Exchange Act (§ 240.12b–23
of this chapter), or Rule 0–4 under the
Investment Company Act (§ 270.0–4 of
this chapter) must submit such
registration statement or report in
HTML and must include an active
hyperlink to such incorporated
information when required by those
rules. A hyperlink is not required if the
incorporated information is filed in
paper pursuant to a temporary or
continuing hardship exemption under
Rules 201 or 202 of Regulation S–T
(§ 232.201 or § 232.202) or pursuant to
Rule 311 of Regulation S–T (§ 232.311).
Instruction 1 to paragraph (e) of Rule
105. No hyperlink is required for any
information incorporated by reference
that has not been filed with the
Commission in electronic format.
Instruction 2 to paragraph (e) of Rule
105. In the case of a registration
statement that is not yet effective, an
electronic filer must correct an
inaccurate or nonfunctioning hyperlink
by filing an amendment to such
registration statement.
*
*
*
*
*
■ 23. Revise the first sentence of
paragraph (b) of § 232.303 to read as
follows:
§ 232.303
Incorporation by reference.
*
*
*
*
*
(b) If a filer incorporates by reference
into an electronic filing any portion of
an annual or quarterly report to security
holders, it must also file the portion of
the annual or quarterly report to
security holders in electronic format as
an exhibit to the filing, as required by
Regulation S–K Item 601(b)(13)
(§ 229.601(b)(13) of this chapter). * * *
■ 24. Add § 232.406 to read as follows:
*
*
*
*
*
§ 232.406
Cover Page XBRL Data Tagging.
Electronic filers submitting Forms
10–K (§ 249.310 of this chapter), 10–Q
(§ 249.308a of this chapter), 8–K
(§ 249.308 of this chapter), 20–F
(§ 249.220f of this chapter) and 40–F
(§ 249.240f of this chapter) must tag in
Inline XBRL electronic format, in the
manner provided by the EDGAR Filer
Manual, all of the information provided
by the electronic filer on the cover page
of these forms.
*
*
*
*
*
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51037
PART 239—FORMS PRESCRIBED
UNDER THE SECURITIES ACT OF 1933
25. The authority citation for part 239
continues to read in part as follows:
■
Authority: 15 U.S.C. 77c, 77f, 77g, 77h,
77j, 77s, 77z–2, 77z–3, 77sss, 78c, 78l, 78m,
78n, 78o(d),78o–7 note, 78u–5, 78w(a), 78ll,
78mm, 80a–2(a), 80a–3, 80a–8, 80a–9, 80a–
10, 80a–13, 80a–24, 80a–26, 80a–29, 80a–30,
and 80a–37; and sec. 107, Pub. L. 112–106,
126 Stat. 312, unless otherwise noted.
*
*
*
*
*
26. Amend Form S–1 (referenced in
§ 239.11) by revising the last sentence of
Instruction V. under ‘‘General
Instructions’’, the first paragraph of
Instruction VII. under ‘‘General
Instructions’’ and Item 3 to read as
follows:
■
Note: The text of Form S–1 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM S–1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
*
*
*
*
*
GENERAL INSTRUCTIONS
*
*
*
*
*
V. Registration of Additional Securities
* * * See Rule 439(b) under the
Securities Act (17 CFR 230.439(b)).
*
*
*
*
*
VII. Eligibility To Use Incorporation by
Reference
If a registrant meets the following
requirements in paragraphs A–F
immediately prior to the time of filing
a registration statement on this Form, it
may elect to provide information
required by Items 3 through 11 of this
Form in accordance with Item 11A and
Item 12 of this Form. Notwithstanding
the foregoing, in the financial
statements, incorporating by reference
or cross-referencing to information
outside of the financial statements is not
permitted unless otherwise specifically
permitted or required by the
Commission’s rules. * * *
*
*
*
*
*
Item 3. Summary Information, Risk
Factors and Ratio of Earnings to Fixed
Charges.
Furnish the information required by
Items 105 and 503 of Regulation S–K
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(§ 229.105 and § 229.503 of this
chapter).
*
*
*
*
*
■ 27. Amend Form S–3 (referenced in
§ 239.13) by revising the last sentence of
Instruction IV.A. under ‘‘General
Instructions’’, Item 3, and paragraph (d)
of Item 12 to read as follows:
Note: The text of Form S–3 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM S–3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
*
*
*
*
*
GENERAL INSTRUCTIONS
*
*
*
*
*
IV. Registration of Additional
Securities and Additional Classes of
Securities
Note: The text of Form S–6 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
Form S–6
*
*
*
*
*
INSTRUCTIONS AS TO EXHIBITS
*
*
*
*
*
Each exhibit identified in the exhibit
index must include an active link to an
exhibit that is filed with the registration
statement or, if the exhibit is
incorporated by reference an active
hyperlink to the exhibit separately filed
on EDGAR. If the registration statement
is amended, each amendment must
include active hyperlinks to the exhibits
required with the amendment.
*
*
*
*
*
■ 29. Amend Form S–11 (referenced in
§ 239.18) by revising the last sentence of
Instruction G. under ‘‘General
Instructions’’, the first paragraph of
instruction H. under ‘‘General
Instructions’’ and Item 3(a) to read as
follows:
the foregoing, in the financial
statements, incorporating by reference
or cross-referencing to information
outside of the financial statement is not
permitted unless otherwise specifically
permitted or required by the
Commission’s rules. * * *
*
*
*
*
*
Item 3. Summary Information, Risk
Factors and Ratio of Earnings to Fixed
Charges.
(a) Furnish the information required
by Items 105 and 503 of Regulation S–
K (§ 229.105 and § 229.503 of this
chapter).
*
*
*
*
*
■ 30. Amend Form N–14 (referenced in
§ 239.23) by:
■ a. Revising the third paragraph of
General Instruction G; and
■ b. Revising the Instruction to Item 16
to add a paragraph to read as follows:
Note: The text of Form N–14 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
Note: The text of Form S–11 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
UNITED STATES
*
SECURITIES AND EXCHANGE
COMMISSION
A. Registration of Additional
Securities Pursuant to Rule 462(b).
* * * See Rule 439(b) under the
Securities Act [17 CFR 230.439(b)].
*
*
*
*
*
Form N–14
*
*
*
*
*
GENERAL INSTRUCTIONS
*
*
*
*
Item 3. Summary Information, Risk
Factors and Ratio of Earnings to Fixed
Charges.
Washington, DC 20549
G. Incorporation by Reference and
Delivery of Prospectuses or Reports
Filed with the Commission
FORM S–11
*
Furnish the information required by
Items 105 and 503 of Regulation S–K
(§ 229.105 and § 229.503 of this
chapter).
*
*
*
*
*
FOR REGISTRATION UNDER THE
SECURITIES ACT OF 1933 OF
SECURITIES OF CERTAIN REAL
ESTATE COMPANIES
Item 12. Incorporation of Certain
Information by Reference.
*
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
*
*
*
*
*
(d) Any information required in the
prospectus in response to Item 3
through Item 11 of this Form may be
included in the prospectus through
documents filed pursuant to Section
13(a), 14, or 15(d) of the Exchange Act
that are incorporated or deemed
incorporated by reference into the
prospectus that is part of the registration
statement. Notwithstanding the
foregoing, in the financial statements,
incorporating by reference or crossreferencing to information outside of the
financial statements is not permitted
unless otherwise specifically permitted
or required by the Commission’s rules.
*
*
*
*
*
■ 28. Amend Form S–6 (referenced in
§ 239.16) by revising ‘‘Instructions as to
Exhibits’’ to add a paragraph to read as
follows:
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GENERAL INSTRUCTIONS
*
*
*
*
G. Registration of Additional Securities
* * * Any opinion or consent
required in the Rule 462(b) registration
statement may be incorporated by
reference from the earlier registration
statement with respect to the offering, if:
(i) Such opinion or consent expressly
provides for such incorporation; and (ii)
such opinion relates to the securities
registered pursuant to Rule 462(b). See
Rule 439(b) under the Securities Act [17
CFR 230.439(b)].
H. Eligibility to Use Incorporation by
Reference
If a registrant meets the following
requirements in paragraphs 1–6
immediately prior to the time of filing
a registration statement on this Form, it
may elect to provide information
required by Items 3 through 28 of this
Form in accordance with Item 28A and
Item 29 of this Form. Notwithstanding
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*
*
*
*
All incorporation by reference must
comply with the requirements of this
Form and the following rules on
incorporation by reference: rule 411
under the Securities Act [17 CFR
230.411] (general rules on incorporation
by reference in a prospectus) and rule
303 of Regulation S–T [17 CFR 232.303]
(specific requirements for electronically
filed documents).
*
*
*
*
*
Item 16. Exhibits
*
*
*
*
*
Instruction:
*
*
*
*
*
Each exhibit identified in the exhibit
index must include an active link to an
exhibit that is filed with the registration
statement or, if the exhibit is
incorporated by reference an active
hyperlink to the exhibit separately filed
on EDGAR. If the registration statement
is amended, each amendment must
include active hyperlinks to the exhibits
required with the amendment.
*
*
*
*
*
■ 31. Amend Form S–4 (referenced in
§ 239.25) by revising the last sentence of
Instruction K. under ‘‘General
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Instructions’’ and the first sentence of
Item 3 to read as follows:
V. Registration of Additional Securities
Note: The text of Form S–4 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM S–4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
*
*
*
*
*
GENERAL INSTRUCTIONS
*
*
*
*
*
K. Registration of Additional Securities.
* * * Any opinion or consent
required in the Rule 462(b) registration
statement may be incorporated by
reference from the earlier registration
statement with respect to the offering, if:
(i) such opinion or consent expressly
provides for such incorporation; and (ii)
such opinion relates to the securities
registered pursuant to Rule 462(b). See
Rule 439(b) under the Securities Act [17
CFR 230.439(b)].
*
*
*
*
*
Item 3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information.
* * * See Rule 439(b) under the
Securities Act [17 CFR 230.439(b)].
VI. Eligibility to Use Incorporation by
Reference
If a registrant meets the following
requirements immediately prior to the
time of filing a registration statement on
this Form, it may elect to provide
information required by Item 3 and Item
4 of this Form in accordance with Item
4A and Item 5 of this Form.
Notwithstanding the foregoing, in the
financial statements, incorporating by
reference or cross-referencing to
information outside of the financial
statements is not permitted unless
otherwise specifically permitted or
required by the Commission’s rules.
*
*
*
*
*
Item 3. Summary Information, Risk
Factors and Ratio of Earnings to Fixed
Charges.
Furnish the information required by
Items 105 and 503 of Regulation S–K
(§ 229.105 and § 229.503 of this
chapter).
*
*
*
*
*
■ 33. Amend Form F–3 (referenced in
§ 239.33) by revising the last sentence of
Instruction IV.A. under ‘‘General
Instructions’’ and Item 3 to read as
follows:
Provide in the forepart of the
prospectus a summary containing the
information required by Items 105 and
503 of Regulation S–K (§ 229.105 and
§ 229.503 of this chapter) and the
following:
*
*
*
*
*
■ 32. Amend Form F–1 (referenced in
§ 239.31) by revising the last sentence of
Instruction V. under ‘‘General
Instructions’’, the first paragraph of
instruction VI. under ‘‘General
Instructions’’ and Item 3 to read as
follows:
Note: The text of Form F–3 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
Note: The text of Form F–1 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM F–1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
*
*
*
*
*
GENERAL INSTRUCTIONS
*
*
*
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*
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
Jkt 244001
(§ 229.105 and § 229.503 of this
chapter).
*
*
*
*
*
■ 34. Amend Form F–4 (referenced in
239.34) by revising the last sentence of
Instruction H. under ‘‘General
Instructions’’ and Item 3 to read as
follows:
Note: The text of Form F–4 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM F–4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
*
*
*
*
*
H. * * * See Rule 439(b) under the
Securities Act [17 CFR 230.439(b)].
*
*
*
*
*
Item 3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information.
Provide in the forepart of the
prospectus a summary containing the
information required by Items 105 and
503 of Regulation S–K (§ 229.105 and
§ 229.503 of this chapter) and the
following:
*
*
*
*
*
■ 35. Revise Item 3 of Form F–7
(referenced in § 239.37) to read as
follows:
Note: The text of Form F–7 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
FORM F–3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Washington, DC 20549
*
GENERAL INSTRUCTIONS
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
*
*
*
*
*
*
*
*
*
*
IV. Registration of Additional Securities
and Additional Classes of Securities
A. Registration of Additional
Securities Pursuant to Rule 462(b).
* * * See Rule 439(b) under the
Securities Act [17 CFR 230.439(b)].
*
*
*
*
*
Item 3. Summary Information, Risk
Factors and Ratio of Earnings to Fixed
Charges.
Furnish the information required by
Items 105 and 503 of Regulation S–K
*
20:05 Nov 01, 2017
UNITED STATES
51039
PO 00000
Frm 00053
Fmt 4701
Sfmt 4702
FORM F–7
*
*
*
*
PART I—INFORMATION REQUIRED
TO BE SENT TO SHAREHOLDERS
*
*
*
*
*
Item 3. Incorporation of Certain
Information by Reference
Information called for by this Form,
including exhibits, may be incorporated
by reference at the Registrant’s option
from documents that the Registrant has
filed previously with the Commission
pursuant to Section 13(a) or 15(d) of the
Exchange Act or submitted to the
Commission pursuant to Rule 12g3–2(b)
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Federal Register / Vol. 82, No. 211 / Thursday, November 2, 2017 / Proposed Rules
under the Exchange Act. For
information that you are incorporating
by reference, identify the document
where the information was originally
filed or submitted and the specific
location of the information within that
document. The statement must be made
at the particular place where the
information is required, if applicable.
Unless expressly permitted or required,
disclosure must not be incorporated by
reference from a second document if
that second document incorporates
information pertinent to such disclosure
by reference to a third document. If any
information is incorporated by reference
into the prospectus, the prospectus must
provide the name, address and
telephone number of an officer of the
Registrant from whom copies of such
information may be obtained upon
request without charge.
*
*
*
*
*
■ 36. Revise Item 3 of Form F–8
(referenced in § 239.38) to read as
follows:
Note: The text of Form F–8 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
SECURITIES AND EXCHANGE
COMMISSION
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
*
*
PART I—INFORMATION REQUIRED
TO BE DELIVERED TO OFFEREES OR
PURCHASERS
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
*
*
*
*
*
Item 3. Incorporation of Certain
Information by Reference
Information called for by this Form,
including exhibits, may be incorporated
by reference at the Registrant’s option
from documents that the Registrant has
filed previously with the Commission
pursuant to Section 13(a) or 15(d) of the
Exchange Act or submitted to the
Commission pursuant to Rule 12g3–2(b)
under the Exchange Act. For
information that you are incorporating
by reference, identify the document
where the information was originally
filed or submitted and the specific
location of the information within that
document. The statement must be made
at the particular place where the
information is required, if applicable.
Unless expressly permitted or required,
disclosure must not be incorporated by
reference from a second document if
that second document incorporates
VerDate Sep<11>2014
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REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
UNITED STATES
Jkt 244001
38. Revise Item 3 of Form F–80
(referenced in § 239.41) to read as
follows:
Note: The text of Form F–80 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM F–80
*
*
*
*
*
SECURITIES AND EXCHANGE
COMMISSION
PART I—INFORMATION REQUIRED
TO BE DELIVERED TO OFFEREES OR
PURCHASERS
Washington, DC 20549
*
FORM F–10
Item 3 Incorporation of Certain
Information by Reference
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
*
*
*
*
*
*
*
*
*
Item 4. Incorporation of Certain
Information by Reference
FORM F–8
*
Note: The text of Form F–10 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
*
Washington, DC 20549
*
■
PART I—INFORMATION REQUIRED
TO BE DELIVERED TO OFFEREES OR
PURCHASERS
UNITED STATES
*
information pertinent to such disclosure
by reference to a third document. If any
information is incorporated by reference
into the prospectus, the prospectus must
provide the name, address, and
telephone number of an officer of the
Registrant from whom copies of such
information may be obtained upon
request without charge.
*
*
*
*
*
■ 37. Revise Item 4 of Form F–10
(referenced in § 239.40) to read as
follows:
Information called for by this Form,
including exhibits, may be incorporated
by reference at the Registrant’s option
from documents that the Registrant has
filed previously with the Commission
pursuant to Section 13(a) or 15(d) of the
Exchange Act or submitted to the
Commission pursuant to Rule 12g3–2(b)
under the Exchange Act. For
information that you are incorporating
by reference, identify the document
where the information was originally
filed or submitted and the specific
location of the information within that
document. The statement must be made
at the particular place where the
information is required, if applicable.
Unless expressly permitted or required,
disclosure must not be incorporated by
reference from a second document if
that second document incorporates
information pertinent to such disclosure
by reference to a third document. If any
information is incorporated by reference
into the prospectus, the prospectus must
provide the name, address, and
telephone number of an officer of the
Registrant from whom copies of such
information may be obtained upon
request without charge.
*
*
*
*
*
PO 00000
Frm 00054
Fmt 4701
Sfmt 4702
*
*
*
*
Information called for by this Form,
including exhibits, may be incorporated
by reference at the Registrant’s option
from documents that the Registrant has
filed previously with the Commission
pursuant to Section 13(a) or 15(d) of the
Exchange Act or submitted to the
Commission pursuant to Rule 12g3–2(b)
under the Exchange Act. For
information that you are incorporating
by reference, identify the document
where the information was originally
filed or submitted and the specific
location of the information within that
document. The statement must be made
at the particular place where the
information is required, if applicable.
Unless expressly permitted or required,
disclosure must not be incorporated by
reference from a second document if
that second document incorporates
information pertinent to such disclosure
by reference to a third document. If any
information is incorporated by reference
into the prospectus, the prospectus must
provide the name, address, and
telephone number of an officer of the
Registrant from whom copies of such
information may be obtained upon
request without charge.
*
*
*
*
*
■ 39. Amend Form SF–1 (referenced in
§ 239.44) by revising the last sentence of
Instruction III. under ‘‘General
Instructions’’ and the last sentence of
Item 2 to read as follows:
Note: The text of Form SF–1 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
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UNITED STATES
PART 240—GENERAL RULES AND
REGULATIONS, SECURITIES
EXCHANGE ACT OF 1934
SECURITIES AND EXCHANGE
COMMISSION
41. The authority citation for part 240
continues to read in part as follows:
■
Washington, DC 20549
FORM SF–1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
*
*
*
*
*
GENERAL INSTRUCTIONS
*
*
*
*
*
III. Registration of Additional
Securities
* * * See Rule 439(b) under the
Securities Act [17 CFR 230.439(b)].
*
*
*
*
*
*
Furnish the information required by
Items 105 and 503 of Regulation S–K (17
CFR 229.105 and 17 CFR 229.503) and
Item 1103 of Regulation AB (17 CFR
229.1103).
*
*
*
*
*
■ 40. Amend Form SF–3 (referenced in
§ 239.45) by revising the last sentence of
Instruction III. under ‘‘General
Instructions’’ and the last sentence of
Item 2 to read as follows:
Note: The text of Form SF–3 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM SF–3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
*
*
*
*
GENERAL INSTRUCTIONS
*
*
*
*
*
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
III. Registration of Additional
Securities Pursuant to Rule 462(b).
* * * See Rule 439(b) under the
Securities Act [17 CFR 230.439(b)].
*
*
*
*
*
Item 2. Inside Front and Outside Back
Cover Pages of Prospectus.
Furnish the information required by
Items 105 and 503 of Regulation S–K (17
CFR 229.105 and 17 CFR 229.503) and
Item 1103 of Regulation AB (17 CFR
229.1103).
*
*
*
*
*
VerDate Sep<11>2014
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Jkt 244001
*
*
*
*
42. Revise § 240.12b–13 to read as
follows:
■
Item 2. Inside Front and Outside Back
Cover Pages of Prospectus.
*
Authority: 15 U.S.C. 77c, 77d, 77g, 77j,
77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn,
77sss, 77ttt, 78c, 78c–3, 78c–5, 78d, 78e, 78f,
78g, 78i, 78j, 78j–1, 78k, 78k–1, 78l, 78m,
78n, 78n–1, 78o, 78o-4, 78o–10, 78p, 78q,
78q–1, 78s, 78u–5, 78w, 78x, 78ll, 78mm,
80a–20, 80a–23, 80a–29, 80a–37, 80b–3, 80b–
4, 80b–11, and 7201 et seq., and 8302; 7
U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18
U.S.C. 1350; Pub. L. 111–203, 939A, 124 Stat.
1376 (2010); and Pub. L. 112–106, sec. 503
and 602, 126 Stat. 326 (2012), unless
otherwise noted.
§ 240.12b–13
report.
Preparation of statement or
Except as provided by the appropriate
form, the statement or report must
contain the numbers and captions of all
items of such form. The text of the items
may be omitted if the answers thereto
are so prepared as to indicate to the
reader the coverage of the items without
the necessity of referring to the text of
the items or instructions thereto. Where
any item requires information to be
given in tabular form, it must be given
in substantially the tabular form
specified in the item. All instructions,
whether appearing under the items of
the form or elsewhere therein, must be
omitted. Unless expressly provided
otherwise, if any item is inapplicable or
the answer thereto is in the negative, an
appropriate statement to that effect must
be made.
■ 43. Revise § 240.12b–23 to read as
follows:
§ 240.12b–23
Incorporation by reference.
(a) Registration statement or report.
Except as provided by this section or in
the appropriate form, information may
be incorporated by reference in answer,
or partial answer, to any item of a
registration statement or report.
(b) Financial information. Except as
provided in the Commission’s rules,
financial information required to be
given in comparative form for two or
more fiscal years or periods must not be
incorporated by reference unless the
information incorporated by reference
includes the entire period for which the
comparative data is given. In the
financial statements, incorporating by
reference, or cross-referencing to,
information outside of the financial
statements is not permitted unless
otherwise specifically permitted or
required by the Commission’s rules.
PO 00000
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51041
(c) Exhibits. Any document or part
thereof filed with the Commission
pursuant to any Act administered by the
Commission may be incorporated by
reference as an exhibit to any statement
or report filed with the Commission by
the same or any other person. Any
document or part thereof filed with an
exchange pursuant to the Act may be
incorporated by reference as an exhibit
to any statement or report filed with the
exchange by the same or any other
person. If any modification has occurred
in the text of any document
incorporated by reference since the
filing thereof, the registrant must file
with the reference a statement
containing the text of any such
modification and the date thereof.
(d) Hyperlinks. You must include an
active hyperlink to information
incorporated into a registration
statement or report by reference if such
information is publicly available on the
Commission’s Electronic Data
Gathering, Analysis and Retrieval
System (‘‘EDGAR’’) at the time the
registration statement or form is filed.
For hyperlinking to exhibits, please
refer to Item 601 of Regulation S–K
(§ 229.601 of this chapter) or the
appropriate form.
(e) General. Include an express
statement clearly describing the specific
location of the information you are
incorporating by reference. The
statement must identify the document
where the information was originally
filed or submitted and the location of
the information within that document.
The statement must be made at the
particular place where the information
is required, if applicable. Information
must not be incorporated by reference in
any case where such incorporation
would render the disclosure incomplete,
unclear, or confusing. For example,
unless expressly permitted or required,
disclosure must not be incorporated by
reference from a second document if
that second document incorporates
information pertinent to such disclosure
by reference to a third document.
§ 240.12b–32
[Removed and reserved].
44. Remove and reserve § 240.12b–32.
■ 45. Revise the first sentence of Note
D.1 of § 240.14a–101 to read as follows:
■
§ 240.14a–101 Schedule 14A. Information
required in proxy statement.
*
*
*
*
*
D. * * *
1. Disclosure must not be
incorporated by reference from a second
document if that second document
incorporates information pertinent to
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such disclosure by reference to a third
document. * * *
*
*
*
*
*
■ 46. Remove and reserve paragraph (e)
of § 240.16a–3.
PART 249—FORMS, SECURITIES
EXCHANGE ACT OF 1934
47. The authority citation for part 249
continues to read in part as follows:
■
Authority: 15 U.S.C. 78a et seq. and 7201
et seq.; 12 U.S.C. 5461 et seq.; 18 U.S.C. 1350;
Sec. 953(b), Pub. L. 111–203, 124 Stat. 1904;
Sec. 102(a)(3), Pub. L. 112–106, 126 Stat. 309
(2012); Sec. 107, Pub. L. 112–106, 126 Stat.
313 (2012), and Sec. 72001, Pub. L. 114–94,
129 Stat. 1312 (2015), unless otherwise
noted.
*
*
*
*
*
48. Remove and reserve paragraph (c)
of General Instruction 3 to Form 3
(referenced in § 249.103).
■ 49. Remove and reserve paragraph (c)
of General Instruction 2 to Form 4
(referenced in § 249.104).
■ 50. Remove and reserve paragraph (c)
of General Instruction 2 to Form 5
(referenced in § 249.105).
■ 51. Amend Form 8–A (referenced in
§ 249.208a) by revising the Instructions
as to Exhibits to read as follows:
■
Note: The text of Form 8–A does not, and
this amendment will not, appear in the Code
of Federal Regulations.
FORM 8–A
FOR REGISTRATION OF CERTAIN
CLASSES OF SECURITIES PURSUANT
TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
*
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM 10
GENERAL FORM FOR
REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT
OF 1934
*
Washington, DC 20549
*
UNITED STATES
*
INSTRUCTIONS FOR EXHIBITS
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
*
*
*
*
*
*
*
*
C. How to Prepare Registration
Statements and Reports on This Form.
(a) Do not use this Form as a blank
form to be filled in; use it only as a
guide in the preparation of the
VerDate Sep<11>2014
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Jkt 244001
*
*
*
*
*
*
*
*
*
Trading
symbol(s)
GENERAL INSTRUCTIONS
*
*
Item 1A. Risk Factors.
Set forth, under the caption ‘‘Risk
Factors,’’ where appropriate, the risk
factors described in Item 105 of
Regulation S–K (§ 229.105 of this
chapter) applicable to the registrant.
* * *
*
*
*
*
*
Title of each class
*
*
GENERAL INSTRUCTIONS
If the securities to be registered on
this form are to be registered on an
*
*
INFORMATION REQUIRED IN
REGISTRATION STATEMENT
SECURITIES AND EXCHANGE
COMMISSION
*
Note: The text of Form 10 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
*
UNITED STATES
*
exchange on which other securities of
the registrant are registered, or are to be
registered pursuant to Section 12(g) of
the Act, copies of all constituent
instruments defining the rights of the
holders of each class of such securities,
including any contracts or other
documents which limit or qualify the
rights of such holders, must be filed as
exhibits with each copy of the
registration statement filed with the
Commission or with an exchange,
subject to Rule 12b–23(c) regarding
incorporation of exhibits by reference.
■ 52. Amend Form 10 (referenced in
249.210) by revising the first sentence in
Item 1A and Instruction C(a) under
‘‘General Instructions’’ to read as
follows:
Frm 00056
Fmt 4701
(a) This form is not to be used as a
blank form to be filled in, but only as
a guide in the preparation of the
registration statement on paper meeting
the requirements of Rule 12b–12 [17
CFR 240.12b–12]. The numbers or
captions of items are not required unless
expressly required by this form or the
referenced disclosure requirements. The
text of the items may be omitted.
Otherwise, the answers to the items
must be prepared in the manner
specified in Rule 12b–13 [17 CFR
240.12b–13].
*
*
*
*
*
■ 53. Amend Form 20–F (referenced in
§ 249.220f) by:
■ a. Adding a field to the cover page to
include trading symbol(s);
■ b. Revising Instruction C(a) under
‘‘General Instructions’’;
■ c. Adding Instruction 6 under
‘‘Instructions to Item 5’’;
■ d. Revising Instruction 1(b) under
‘‘Instructions to Item 10’’;
■ e. Revising Instructions 1 and 2 under
‘‘Instructions to Item 12’’;
■ f. Revising the introductory text,
Instruction 4(a) and Instruction 8 and
adding Instructions 2(d) and 104 under
‘‘Instructions As To Exhibits’’ to read as
follows:
Note: The text of Form 20–F does not, and
this amendment will not, appear in the Code
of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM 20–F
*
*
*
*
*
Securities registered or to be
registered pursuant to Section 12(b) of
the Act.
Name of each exchange on which registered
registration statement or annual report.
General Instruction E states which items
must be responded to in a registration
statement and which items must be
responded to in an annual report. The
number or captions of items are not
required unless expressly required by
this form. You may also omit the text
following each caption in this Form,
which describes what must be disclosed
PO 00000
C. Preparation of Registration
Statement.
Sfmt 4702
under each item. Omit the text of all
instructions in this Form. If an item is
inapplicable or the answer to the item
is in the negative, respond to the item
by making a statement to that effect.
*
*
*
*
*
Item 5. Operating and Financial Review
and Prospects
*
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*
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*
*
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Instructions to Item 5:
*
*
*
*
6. Generally, the discussion shall
cover the periods covered by the
financial statements and the registrant
may use any format that in the
registrant’s judgment enhances a
reader’s understanding.
For registrants providing financial
statements covering three years in a
filing, disclosure about the earliest year
would not be required if (i) that
disclosure is not material to an
understanding of the registrant’s
financial condition, changes in financial
condition and results of operations and
(ii) the registrant has filed its prior year
Form 20–F on EDGAR containing an
Operating and Financial Review and
Prospects discussion of the earliest of
the three years included in the financial
statements of the current filing.
*
*
*
*
*
*
Item 10. Additional Information
*
*
*
*
*
Instructions to Item 10:
*
*
*
*
*
1* * *
(b) If the information called for by
Item 10.B has been reported previously
in a registration statement on Form 20-F
or a registration statement filed under
the Securities Act and has not changed,
you may incorporate that information by
a specific reference in the annual report
to the previous registration statement or,
to the extent that this information has
been provided in the exhibit required by
instruction 2(d) of the Instructions as to
Exhibits, you may refer to the exhibit for
this information.
*
*
*
*
*
Item 12. Description of Securities Other
than Equity Securities
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
*
*
*
*
*
Instructions to Item 12:
*
*
*
*
*
1. If you are using the form as an
annual report, provide the information
required by Item 12.D.3 and Item 12.D.4
under this Item of your annual report
and provide the remainder of the
information required by this Item in an
exhibit to such report pursuant to
paragraph 2(d) of Instructions as to
Exhibits.
2. You do not need to include any
information in a registration statement,
prospectus, or annual report on Form
20–F in response to Item 305(a)(2) of the
Trust Indenture Act of 1939, 15 U.S.C.
77aaa et seq., as amended, if the
information is not otherwise required by
this Item or Instruction 2(d) under
Instructions as to Exhibits of this Form.
VerDate Sep<11>2014
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Jkt 244001
INSTRUCTIONS AS TO EXHIBITS
File the exhibits listed below as part
of an Exchange Act registration
statement or report. Exchange Act Rule
12b–23(c) explains the circumstances in
which you may incorporate exhibits by
reference. Exchange Act Rule 24b–2
explains the procedure to be followed in
requesting confidential treatment of
information required to be filed.
Previously filed exhibits may be
incorporated by reference. If any
previously filed exhibits have been
amended or modified, file copies of the
amendment or modification or copies of
the entire exhibit as amended or
modified.
If the Form 20–F registration
statement or annual report requires the
inclusion, as an exhibit or attachment,
of a document that is in a foreign
language, you must provide instead
either an English translation or an
English summary of the foreign
language document in accordance with
Exchange Act Rule 12b–12(d) (17 CFR
240.12b–12(d)) for both electronic and
paper filings. You may submit a copy of
the unabridged foreign language
document along with the English
translation or summary as permitted by
Regulation S–T Rule 306(b) (17 CFR
232.306(b)) for electronic filings or by
Exchange Act Rule 12b–12(d)(4) (17
CFR 240.12b–12(d) (4)) for paper filings.
Include an exhibit index in each
registration statement or report you file,
immediately preceding the exhibits you
are filing. The exhibit index must list
each exhibit according to the number
assigned to it below. If an exhibit is
incorporated by reference, note that fact
in the exhibit index. For paper filings,
the pages of the manually signed
original registration statement should be
numbered in sequence, and the exhibit
index should give the page number in
the sequential numbering system where
each exhibit can be found.
Schedules (or similar attachments) to
the exhibits required by this Form 20–
F are not required to be filed unless
such schedules contain information
material to an investment or voting
decision and that information is not
otherwise disclosed in the exhibit or the
disclosure document. Each exhibit filed
must contain a list briefly identifying
the contents of all omitted schedules. In
addition, the registrant must provide a
copy of any omitted schedule to the
Commission staff upon request.
The registrant may redact information
from exhibits required to be filed by this
Form 20–F if disclosure of that that
information would constitute a clearly
unwarranted invasion of personal
privacy (e.g., disclosure of bank account
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51043
numbers, social security numbers, home
addresses and similar information). The
registrant is not required to undertake or
provide to the Commission upon
request a materiality or competitive
harm analysis of this redacted
information.
*
*
*
*
*
2* * *
(d) If a registrant is filing an annual
report under Exchange Act Section 13(a)
or 15(d), the registrant must provide as
an exhibit a description of the rights of
each class of securities that is registered
under Section 12 of the Exchange Act as
of the end of the period covered by the
report with which the exhibit is filed.
The description must include
information for the securities
comparable to that required by Item
9.A.3, A.5, A.6, and A.7, Item 10.B.3,
B.4, B.6, B.7, B.8, B.9, and B.10, and
Item 12.A, 12.B, 12.C, and 12.D.1 and
12.D.2 of Form 20–F (collectively, the
‘‘Description of Securities’’). However,
for purposes of this paragraph 2(d), all
references in those Items to securities to
be or being registered, offered or sold
will mean securities that are registered
as of the end of the period covered by
the report with which the exhibit is
filed. In addition, for purposes of this
Item, the disclosure will be required for
classes of securities that have not been
retired by the end of the period covered
by the report. A registrant may
incorporate by reference and provide an
active hyperlink to a prior periodic
filing containing the disclosure required
by this paragraph 2(d) so long as there
has not been any change to the
information called for by the
Description of Securities since the filing
date of the linked filing. Such hyperlink
will be deemed to satisfy the
requirements of this paragraph 2(d) for
the current filing.
*
*
*
*
*
4.(a) Every contract not made in the
ordinary course of business that is
material to the registrant and is to be
performed in whole or in part at or after
the filing of the registration statement or
report. In addition, for newly reporting
registrants, every contract not made in
the ordinary course of business that is
material to the registrant and that was
entered into not more than two years
before the date on which such
registrant:
(i) first files a registration statement or
report; or
(ii) completes a transaction that had
the effect of causing it to cease being a
public shell company.
The only contracts that must be filed
are those to which the registrant or a
subsidiary of the registrant is a party or
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has succeeded to a party by assumption
or assignment or in which the registrant
or such subsidiary has a beneficial
interest.
The registrant may redact provisions
or terms of exhibits required to be filed
by this Form 20–F if those provisions or
terms are both (i) not material and (ii)
competitively harmful to the registrant
if publicly disclosed. If it does so, the
registrant should mark the exhibit or
exhibits to indicate that portions of the
exhibit or exhibits have been omitted
and include a prominent statement on
the first page of the redacted exhibit that
certain identified information has been
excluded from the exhibit because it is
both (i) not material and (ii)
competitively harmful to the registrant
if publicly disclosed. The registrant also
must indicate by brackets where the
information is omitted from the filed
version of the exhibit.
If requested by the Commission staff,
the registrant must provide an
unredacted paper copy of the exhibit on
a supplemental basis. The Commission
staff also may request the registrant to
provide its materiality and competitive
harm analyses on a supplemental basis.
Upon evaluation of the registrant’s
supplemental materials, the
Commission staff may request the
registrant to amend its filing to include
in the exhibit any previously redacted
information that is not adequately
supported by the registrant’s materiality
and competitive harm analyses.
The registrant may request
confidential treatment of the
supplemental material submitted to the
Commission or the staff pursuant to
Rule 83 (17 CFR 200.83) while it is in
the possession of the Commission staff.
After reviewing the supplemental
information, the Commission staff will
return or destroy it at the request of the
registrant, if the registrant complies
with the procedures outlined in Rules
418 or 12b–4 (17 CFR 230.418 or 17 CFR
240.12b–4).
Note: A ‘‘newly reporting registrant’’ is (i)
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), (ii) any registrant that
has not filed an annual report since the
revival of a previously suspended reporting
obligation, and (iii) any registrant that (a) was
a shell company, other than a business
combination related shell company, as
defined in Rule 12b–2 under the Exchange
Act (17 CFR 240.12b–2), immediately before
completing a transaction that has the effect
of causing it to cease being a shell company
and (b) has not filed a Form 20–F since the
completion of such transaction. For example,
newly reporting registrants would include (i)
a registrant that is filing its first registration
statement under the Securities Act or the
Exchange Act, and (ii) a registrant that was
a public shell company, other than a business
combination related shell company, and
completes a reverse merger transaction
causing it to cease being a shell company.
*
*
*
*
*
8. List the following information for the
registrant and each of its subsidiaries:
the name, the legal entity identifier (if
any), the state or other jurisdiction of
incorporation or organization, and the
names under which the entity does
business. This list may be incorporated
by reference from another filed
document which includes a complete
and accurate list. ‘‘Legal entity
identifier’’ means, with respect to any
registrant or its subsidiaries, the legal
entity identifier as assigned by a utility
endorsed by the Global LEI Regulatory
Oversight Committee or accredited by
Trading
symbol(s)
Title of each class
*
*
*
*
*
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
*
*
*
*
*
(17) Cover Page Interactive Data File. If
the Form 40–F is being used as an
annual report, a Cover Page Interactive
Data File (as defined in 17 CFR 232.11)
as required by Rule 406 of Regulation S–
T [17 CFR 232.406], in the manner
provided by the EDGAR Filer Manual
and listed as exhibit 104.
*
*
*
*
*
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55. Amend Form 8–K (referenced in
§ 249.308) by adding a field to the cover
page for securities registered pursuant to
Section 12(b) of the Exchange Act, the
title of each class of such securities,
trading symbol(s) and name of each
exchange on which registered:
Note: The text of Form 8–K does not, and
this amendment will not, appear in the Code
of Federal Regulations.
PO 00000
Frm 00058
Fmt 4701
102 and 103 [Reserved]
104. Cover Page Interactive Data File. If
the Form 20–F is being used as an
annual report, a Cover Page Interactive
Data File (as defined in 17 CFR 232.11)
as required by Rule 406 of Regulation S–
T [17 CFR 232.406], and in the manner
provided by the EDGAR Filer Manual.
■ 54. Amend Form 40–F (referenced in
§ 249.240f) by:
■ a. Adding a field to the cover page to
include trading symbol(s); and
■ b. Adding paragraph B.17 under
‘‘General Instructions’’ to read as
follows:
Note: The text of Form 40–F does not, and
this amendment will not, appear in the Code
of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM 40–F
*
*
*
*
*
Securities registered or to be
registered pursuant to Section 12(b) of
the Act.
Name of each exchange on which registered
■
B. Information To Be Filed on this Form
the Global LEI Foundation. You may
omit the names of subsidiaries that, in
the aggregate, would not be a
‘‘significant subsidiary’’ as defined in
rule 1–02(w) of Regulation S–X as of the
end of the year covered by the report.
You may omit the names of multiple
wholly owned subsidiaries carrying on
the same line of business, such as chain
stores or service stations, if you give the
name of the immediate parent company,
the line of business and the number of
omitted subsidiaries broken down by
U.S. and foreign operations.
*
*
*
*
*
Sfmt 4702
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM 8–K
*
*
*
*
*
Securities registered pursuant to
Section 12(b) of the Act:
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Trading
symbol(s)
Title of each class
*
*
*
*
*
■ 56. Amend Form 10–Q (referenced in
§ 249.308a) by adding a field to the
cover page for securities registered
pursuant to Section 12(b) of the
Exchange Act, the title of each class of
such securities, trading symbol(s) and
name of each exchange on which
registered:
*
*
*
*
57. Amend Form 10–K (referenced in
§ 249.310) by:
■ a. Revising Instruction (C)(1) and the
last sentence of Instruction (G)(3) under
‘‘General Instructions’’, the first
sentence in Item 1A, and paragraph (a)
under ‘‘Supplemental Information to be
Furnished With Reports Filed Pursuant
to Section 15(d) of the Act by
Registrants Which Have Not Registered
Securities Pursuant to Section 12 of the
Act’’;
■ b. Removing the second sentence of
Instruction (G)(4) under ‘‘General
Instructions’’, the checkbox that relates
to disclosure under Item 405, and the
instruction to Item 10; and
■ c. Adding a field to the cover page to
include trading symbol(s) to read as
follows:
Note: The text of Form 10–K does not, and
this amendment will not, appear in the Code
of Federal Regulations.
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
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Jkt 244001
SECURITIES AND EXCHANGE
COMMISSION
FORM 10–Q
*
*
*
*
*
Securities registered pursuant to
Section 12(b) of the Act:
Name of each exchange on which registered
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM 10–K
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
GENERAL INSTRUCTIONS
*
*
*
*
*
C. Preparation of Report.
(1) This form is not to be used as a
blank form to be filled in, but only as
a guide in the preparation of the report
on paper meeting the requirements of
Rule 12b–12. Except as provided in this
instruction and General Instruction G,
the answers to the items must be
prepared in the manner specified in
Rule 12b–13. The numbers or captions
Trading
symbol(s)
Title of each class
*
*
*
*
Item 1A. Risk Factors. Set forth,
under the caption ‘‘Risk Factors,’’ where
appropriate, the risk factors described in
Item 105 of Regulation S–K (§ 229.105 of
this chapter) applicable to the registrant.
* * *
*
*
*
*
*
UNITED STATES
Washington, DC 20549
Trading
symbol(s)
■
*
Name of each exchange on which registered
Note: The text of Form 10–Q does not, and
this amendment will not, appear in the Code
of Federal Regulations.
Title of each class
*
51045
(a) Except to the extent that the
materials enumerated in (1) and/or (2)
below are specifically incorporated into
this Form by reference, every registrant
which files an annual report on this
Form pursuant to Section 15(d) of the
Act must furnish to the Commission for
its information, at the time of filing its
Frm 00059
Fmt 4701
G. Information to be Incorporated by
Reference.
*
*
*
*
*
(3) * * * See the Instruction to Item
401 of Regulation S–K (§ 229.401 of this
chapter).
*
*
*
*
*
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM 10–K
Securities registered pursuant to
Section 12(b) of the Act:
Name of each exchange on which registered
Supplemental Information to be
Furnished With Reports Filed Pursuant
to Section 15(d) of the Act by
Registrants Which Have Not Registered
Securities Pursuant to Section 12 of the
Act
PO 00000
of items are not required unless
expressly required by this form or the
referenced disclosure requirements.
*
*
*
*
*
Sfmt 4702
report on this Form, four copies of the
following: * * *
*
*
*
*
*
■ 58. Amend Form 10–D (referenced in
§ 249.312 of this chapter) by:
■ a. Removing and reserving General
Instruction D(2)(a); and
■ b. Revising General Instruction D(2)(d)
to read as follows:
Note: The text of Form 10–D does not, and
this amendment will not, appear in the Code
of Federal Regulations.
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UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM 10–D
ASSET–BACKED ISSUER
DISTRIBUTION REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
GENERAL INSTRUCTIONS
*
*
*
*
*
(d) Exchange Act Rules 12b–23 (17 CFR
240.12b–23) (additional rules on
incorporation by reference for reports
filed pursuant to Sections 13 and 15(d)
of the Act).
*
*
*
*
*
PART 270—RULES AND
REGULATIONS, INVESTMENT
COMPANY ACT OF 1934
59. The authority citation for part 270
continues to read in part as follows:
■
Authority: 15 U.S.C. 80a–1 et seq., 80a–
34(d), 80a–37, 80a–39, and Pub. L. 111–203,
sec. 939A, 124 Stat. 1376 (2010), unless
otherwise noted.
*
*
*
*
*
■ 60. Revise § 270.0–4 to read as
follows:
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
§ 270.0–4
Incorporation by reference.
(a) Registration statements and
reports. Except as provided by this
section or in the appropriate form,
information may be incorporated by
reference in answer, or partial answer,
to any item of a registration statement or
report. Where an item requires a
summary or outline of the provisions of
any document, the summary or outline
may incorporate by reference particular
items, sections, or paragraphs of any
exhibit and may be qualified in its
entirety by such reference.
(b) Financial information. Except as
provided in the Commission’s rules,
financial information required to be
given in comparative form for two or
more fiscal years or periods must not be
incorporated by reference unless the
information incorporated by reference
includes the entire period for which the
comparative data is given. In the
financial statements, incorporating by
reference, or cross-referencing to,
information provided pursuant to the
non-financial information disclosure
requirements is not permitted unless
otherwise specifically permitted or
required by the Commission’s rules.
(c) Exhibits. Any document or part
thereof, including any financial
statement or part thereof, filed with the
Commission pursuant to any Act
administered by the Commission may
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20:05 Nov 01, 2017
Jkt 244001
be incorporated by reference as an
exhibit to any registration statement,
application, or report filed with the
Commission by the same or any other
person. If any modification has occurred
in the text of any document
incorporated by reference since the
filing thereof, the registrant must file
with the reference a statement
containing the text of any such
modification and the date thereof.
(d) Hyperlinks. Include an active
hyperlink to information incorporated
into a registration statement,
application, or report by reference if
such information is publicly available
on the Commission’s Electronic Data
Gathering, Analysis and Retrieval
System (‘‘EDGAR’’) at the time the
registration statement, application, or
report is filed. For hyperlinking to
exhibits, please refer to the appropriate
form.
(e) General. Include an express
statement clearly describing the specific
location of the information you are
incorporating by reference. The
statement must identify the document
where the information was originally
filed or submitted and the location of
the information within that document.
The statement must be made at the
particular place where the information
is required, if applicable. Information
must not be incorporated by reference in
any case where such incorporation
would render the disclosure incomplete,
unclear, or confusing. For example,
unless expressly permitted or required,
disclosure must not be incorporated by
reference from a second document if
that second document incorporates
information pertinent to such disclosure
by reference to a third document.
§ 270.8b–23
■
§ 270.8b–24
■
[Removed and reserved].
61. Remove and reserve § 270.8b–23.
[Removed and reserved].
62. Remove and reserve § 270.8b–24.
§ 270.8b–32
[Removed and reserved].
63. Remove and reserve § 270.8b–32.
*
*
*
*
*
■
PART 274—FORMS PRESCRIBED
UNDER THE INVESTMENT COMPANY
ACT OF 1934
64. The authority citation for part 274
continues to read in part as follows:
■
Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s,
78c(b), 78l, 78m, 78n, 78(o)(d), 80a–8, 80a–
26, 80a–29, and Pub. L. 111–203, sec. 939A,
124 Stat. 1376 (2010), unless otherwise
noted.
*
*
*
*
*
65. Amend Form N–5 (referenced in
§ 274.5 of this chapter) by revising
■
PO 00000
Frm 00060
Fmt 4701
Sfmt 4702
‘‘Instructions as to Exhibits’’ to add a
paragraph to read as follows:
Note: The text of Form N–5 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
Form N–5
*
*
*
*
*
INSTRUCTIONS AS TO EXHIBITS
*
*
*
*
*
Each exhibit identified in the exhibit
index must include an active link to an
exhibit that is filed with the registration
statement or, if the exhibit is
incorporated by reference an active
hyperlink to the exhibit separately filed
on EDGAR. If the registration statement
is amended, each amendment must
include active hyperlinks to the exhibits
required with the amendment.
*
*
*
*
*
■ 66. Amend Form N–1A (referenced in
§ 274.11A of this chapter) by:
■ a. Revising General Instruction D.2;
and
■ b. Revising the Instruction to Item 28
to read as follows:
Note: The text of Form N–1A does not, and
this amendment will not, appear in the Code
of Federal Regulations.
Form N–1A
*
*
*
*
*
GENERAL INSTRUCTIONS
*
*
*
*
*
D. Incorporation by Reference
*
*
*
*
*
2. General Requirements
All incorporation by reference must
comply with the requirements of this
Form and the following rules on
incorporation by reference: rule 411
under the Securities Act [17 CFR
230.411] (general rules on incorporation
by reference in a prospectus); rule 303
of Regulation S–T [17 CFR 232.303]
(specific requirements for electronically
filed documents); and rule 0–4 [17 CFR
270.0–4] (additional rules on
incorporation by reference for Funds).
*
*
*
*
*
Item 28. Exhibits
*
*
*
*
*
Instruction
Each exhibit identified in the exhibit
index (other than an exhibit filed in
eXtensible Business Reporting
Language) must include an active link to
an exhibit that is filed with the
registration statement or, if the exhibit
is incorporated by reference an active
hyperlink to the exhibit separately filed
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on EDGAR. If the registration statement
is amended, each amendment must
include active hyperlinks to the exhibits
required with the amendment.
A Fund that is a Feeder Fund also
must file a copy of all codes of ethics
applicable to the Master Fund.
*
*
*
*
*
■ 67. Amend Form N–2 (referenced in
§ 274.11a–1 of this chapter) by:
■ a. Revising General Instruction F; and
■ b. Revising the Instructions to Item
25.2 to add Instruction 4 to read as
follows:
Note: The text of Form N–2 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
Form N–2
*
*
*
*
*
GENERAL INSTRUCTIONS
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
*
*
*
*
*
F. Incorporation by Reference
Incorporation by reference permits a
Registrant to include documents and
exhibits filed previously with the
Commission as part of the registration
statement by making reference to where,
and under what designation, these
documents can be found in previous
filings. A Registrant may incorporate all
or part of the Statement of Additional
Information (the ‘‘SAI’’) into the
prospectus delivered to investors
without physically delivering the SAI
with the prospectus, so long as the SAI
is available to investors upon request at
no charge and any information or
documents incorporated by reference
into the SAI are provided along with the
SAI, except to the extent provided by
paragraph F.3 below.
In general, a Registrant may
incorporate by reference, in response to
any item of Form N–2 not required to
be included in the prospectus, any
information contained elsewhere in the
registration statement or in other
statements, applications, or reports filed
with the Commission.
A Registrant may incorporate by
reference into the prospectus or the SAI
in response to Item 4.1 or 24 of this form
the information contained in Form N–
CSR [17 CFR 249.331 and 274.128] or
any report to shareholders meeting the
requirements of Section 30(e) of the
1940 Act [15 U.S.C. 80a–29(e)] and Rule
30e–1 [17 CFR 270.30e–1] thereunder
(and a Registrant that has elected to be
regulated as a business development
company may so incorporate into Items
4.2, 8.6.c, or 24 of this form the
information contained in its annual
report under the Securities Exchange
Act of 1934 [15 U.S.C. 78a et seq.] (the
‘‘Exchange Act’’)), provided:
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20:05 Nov 01, 2017
Jkt 244001
1. The material incorporated by
reference is prepared in accordance
with, and covers the periods specified
by, this form.
2. The Registrant states in the
prospectus or the SAI, at the place
where the information required by Items
4.1, 4.2, 8.6.c, or 24 of this form would
normally appear, that the information is
incorporated by reference from a report
to shareholders or a report on Form N–
CSR. (The Registrant also may describe
briefly, in either the prospectus, the
SAI, or Part C of the registration
statement (in response to Item 25.1)
those portions of the report to
shareholders or report on Form N–CSR
that are not incorporated by reference
and are not a part of the registration
statement.)
3. The material incorporated by
reference is provided with the
prospectus and/or the SAI to each
person to whom the prospectus and/or
the SAI is sent or given, unless the
person holds securities of the Registrant
and otherwise has received a copy of the
material. (The Registrant must state in
the prospectus and/or the SAI that it
will furnish, without charge, a copy of
such material on request and provide
the name, address, and telephone
number of the person to contact.)
All incorporation by reference must
comply with the requirements of this
Form and the following rules on
incorporation by reference: rule 411
under the Securities Act [17 CFR
230.411] (general rules on incorporation
by reference in a prospectus); rule 303
of Regulation S–T [17 CFR 232.303]
(specific requirements for electronically
filed documents); and rule 0–4 [17 CFR
270.0–4] (additional rules on
incorporation by reference for
investment companies).
*
*
*
*
*
Item 25. Financial Statements and
Exhibits
*
*
*
*
*
*
*
2. Exhibits:
*
*
*
Instructions
*
*
*
*
*
4. Each exhibit identified in the
exhibit index must include an active
link to an exhibit that is filed with the
registration statement or, if the exhibit
is incorporated by reference an active
hyperlink to the exhibit separately filed
on EDGAR. If the registration statement
is amended, each amendment must
include active hyperlinks to the exhibits
required with the amendment.
*
*
*
*
*
PO 00000
Frm 00061
Fmt 4701
Sfmt 4702
51047
68. Amend Form N–3 (referenced in
§ 274.11b of this chapter) by:
■ a. Revising General Instruction G; and
■ b. Revising the Instructions to Item
29(b) to add Instruction 3 to read as
follows:
■
Note: The text of Form N–3 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
Form N–3
*
*
*
*
*
GENERAL INSTRUCTIONS
*
*
*
*
*
G. Incorporation by Reference
A Registrant may, at its discretion,
incorporate all or part of the Statement
of Additional Information into the
prospectus, without physically
delivering the Statement of Additional
Information to investors with the
prospectus. But the Statement of
Additional Information must be
available to the investor upon request at
no charge and any information or
documents incorporated by reference
into the Statement of Additional
Information must be provided along
with the Statement of Additional
Information.
In general, a Registrant may
incorporate by reference, in the answer
to any item of Form N–3 not required
to be in the prospectus, any information
elsewhere in the registration statement
or in other statements, applications, or
reports led with the Commission.
Subject to these rules, a Registrant
may incorporate by reference into the
prospectus or the Statement of
Additional Information in response to
Items 4(a) or 28 of Form N–3 the
information in Form N–CSR [17 CFR
249.331 and 274.128] or any report to
contract owners meeting the
requirements of Section 30(e) of the
1940 Act [15 U.S.C. 80a–29(e)] and Rule
30e–1 [17 CFR 270.30e–1] provided:
1. The material incorporated by
reference is prepared in accordance
with, and covers the periods specified
by, this Form.
2. The Registrant states in the
prospectus or the Statement of
Additional Information, at the place
where the information would normally
appear, that the information is
incorporated by reference from a report
to security holders or a report on Form
N–CSR. The Registrant may also
describe, in either the prospectus, the
Statement of Additional Information, or
Part C of the Registration Statement (in
response to Item 29(a)), any parts of the
report to security holders or the report
on Form N–CSR that are not
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incorporated by reference and are not a
part of the Registration Statement.
3. The material incorporated by
reference is provided with the
prospectus or the Statement of
Additional Information to each person
to whom the prospectus or the
Statement of Additional Information is
given, unless the person holds securities
of the Registrant and otherwise has
received a copy of the material.
However, Registrant must state in the
prospectus or the Statement of
Additional Information that it will
furnish, without charge, another copy of
such report on request and the name,
address, and telephone number of the
person to contact.
All incorporation by reference must
comply with the requirements of this
Form and the following rules on
incorporation by reference: rule 411
under the Securities Act [17 CFR
230.411] (general rules on incorporation
by reference in a prospectus); rule 303
of Regulation S–T [17 CFR 232.303]
(specific requirements for electronically
filed documents); and rule 0–4 [17 CFR
270.0–4] (additional rules on
incorporation by reference for
investment companies).
*
*
*
*
*
Item 29. Financial Statements and
Exhibits
*
*
*
*
*
*
*
Form N–6
A Registrant may, at its discretion,
incorporate all or part of the Statement
of Additional Information into the
prospectus, without physically
delivering the Statement of Additional
Information to investors with the
prospectus. But the Statement of
Additional Information must be
available to the investor upon request at
no charge and any information or
documents incorporated by reference
into the Statement of Additional
Information must be provided along
with the Statement of Additional
Information.
All incorporation by reference must
comply with the requirements of this
Form and the following rules on
incorporation by reference: rule 411
under the Securities Act [17 CFR
230.411] (general rules on incorporation
by reference in a prospectus); rule 303
of Regulation S–T [17 CFR 232.303]
(specific requirements for electronically
filed documents); and rule 0–4 [17 CFR
270.0–4] (additional rules on
incorporation by reference for
investment companies).
In general, a Registrant may
incorporate by reference, in the answer
to any item of Form N–4 not required
to be in the prospectus, any information
elsewhere in the registration statement
or in other statements, applications, or
reports led with the Commission.
*
*
*
*
*
*
*
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
*
*
*
*
*
3. Each exhibit identified in the
exhibit index must include an active
link to an exhibit that is filed with the
registration statement or, if the exhibit
is incorporated by reference, an active
hyperlink to the exhibit separately filed
on EDGAR. If the registration statement
is amended, each amendment must
include active hyperlinks to the exhibits
required with the amendment.
*
*
*
*
*
■ 69. Amend Form N–4 (referenced in
§ 274.11c of this chapter) by:
■ a. Revising General Instruction G; and
■ b. Revising the Instructions to Item
24(b) to add Instruction 3 to read as
follows:
Note: The text of Form N–4 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
Form N–4
*
*
GENERAL INSTRUCTIONS
*
*
*
VerDate Sep<11>2014
*
*
20:05 Nov 01, 2017
*
GENERAL INSTRUCTIONS
*
*
*
*
*
B. Filing and Use of Form N–6
*
*
*
*
*
4. What rules apply to the filing of a
registration statement on Form N–6?
*
*
*
*
*
D. Incorporation by Reference
*
*
*
*
*
2. General Requirements:
All incorporation by reference must
comply with the requirements of this
Form and the following rules on
incorporation by reference: rule 411
under the Securities Act [17 CFR
230.411] (general rules on incorporation
by reference in a prospectus); rule 303
of Regulation S–T [17 CFR 232.303]
(specific requirements for electronically
filed documents); and rule 0–4, [17 CFR
270.0–4] (additional rules on
incorporation by reference for
investment companies).
*
*
*
*
*
Item 26. Exhibits
Note: The text of Form N–CSR does not,
and this amendment will not, appear in the
Code of Federal Regulations.
*
*
*
*
*
*
*
3. Each exhibit identified in the
exhibit index must include an active
link to an exhibit that is filed with the
registration statement or, if the exhibit
is incorporated by reference an active
hyperlink to the exhibit separately filed
on EDGAR. If the registration statement
is amended, each amendment must
include active hyperlinks to the exhibits
required with the amendment.
*
*
*
*
*
■ 70. Amend Form N–6 (referenced in
§ 274.11d of this chapter) by:
■ a. Revising General Instruction D.2;
and
■ b. Revising Item 26 to read as follows:
Item 24. Financial Statements and
Exhibits
*
*
Subject to General Instruction D
regarding incorporation by reference
and rule 483 under the Securities Act
[17 CFR 230.483], file the exhibits listed
below as part of the registration
statement. Letter or number the exhibits
in the sequence indicated and file
copies rather than originals, unless
otherwise required by rule 483. Reflect
any exhibit incorporated by reference in
the list below and identify the
previously filed document containing
the incorporated material. Each exhibit
identified in the exhibit index must
include an active link to an exhibit that
is filed with the registration statement
or, if the exhibit is incorporated by
reference an active hyperlink to the
exhibit separately filed on EDGAR. If
the registration statement is amended,
each amendment must include active
hyperlinks to the exhibits required with
the amendment.
(a) * * *
*
*
*
*
*
■ 71. Amend Form N–CSR (referenced
in § 274.128 of this chapter) by:
■ a. Revising General Instruction D; and
■ b. Revising the Instruction to Item 12
to read as follows:
Instructions
*
*
Note: The text of Form N–6 does not, and
this amendment will not, appear in the Code
of Federal Regulations.
*
(b) Exhibits:
*
G. Incorporation by Reference
Jkt 244001
*
*
*
*
*
*
(b) Exhibits:
*
*
*
Instructions:
*
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Federal Register / Vol. 82, No. 211 / Thursday, November 2, 2017 / Proposed Rules
Item 12. Exhibits.
Form N–CSR
*
*
*
*
*
*
*
*
*
*
GENERAL INSTRUCTIONS
Instruction to Item 12.
*
Letter or number the exhibits in the
sequence that they appear in this item.
Each exhibit identified in the exhibit
index must include an active link to an
exhibit that is filed with the report or,
if the exhibit is incorporated by
reference an active hyperlink to the
exhibit separately filed on EDGAR. If
the report is amended, each amendment
must include active hyperlinks to the
exhibits required with the amendment.
*
*
*
*
*
*
*
*
*
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
D. Incorporation by Reference
A registrant may incorporate by
reference information required by Items
4, 5, and 12(a)(1). No other Items of the
Form shall be answered by
incorporating any information by
reference. The information required by
Items 4 and 5 may be incorporated by
reference from the registrant’s definitive
proxy statement (filed or required to be
filed pursuant to Regulation 14A (17
CFR 240.14a–1 et seq.)) or definitive
information statement (filed or to be
filed pursuant to Regulation 14C (17
CFR 240.14c–1 et seq.)) involving the
election of directors, if such definitive
proxy statement or information
statement is filed with the Commission
not later than 120 days after the end of
the fiscal year covered by an annual
report on this Form. All incorporation
by reference must comply with the
requirements of this Form and the
following rules on incorporation by
reference: Rule 303 of Regulation S–T
(17 CFR 232.303) (specific requirements
for electronically filed documents); Rule
12b–23 under the Exchange Act (17 CFR
240.12b–23) (additional rules on
incorporation by reference for reports
filed pursuant to Sections 13 and 15(d)
of the Exchange Act); and Rule 0–4 (17
CFR 270.0–4) (additional rules on
incorporation by reference for
investment companies).
*
*
*
*
*
VerDate Sep<11>2014
20:05 Nov 01, 2017
Jkt 244001
PART 275—RULES AND
REGULATIONS, INVESTMENT
ADVISERS ACT OF 1940
72. The authority citation for Part 275
continues to read, in part, as follows:
■
Authority: 15 U.S.C. 80b–2(a)(11)(G), 80b–
2(a)(11)(H), 80b–2(a)(17), 80b–3, 80b–4, 80b–
4a, 80b–6(4), 80b–6a, and 80b–11, unless
otherwise noted.
*
*
*
*
*
73. Revise § 275.0–6 to read as
follows:
§ 275.0–6 Incorporation by reference in
applications.
(a) Exhibits. Any document or part
thereof, including any financial
statement or part thereof, filed with the
Commission pursuant to any Act
administered by the Commission may
be incorporated by reference as an
exhibit to any application filed with the
Commission by the same or any other
person. If any modification has occurred
PO 00000
Frm 00063
Fmt 4701
Sfmt 9990
51049
in the text of any document
incorporated by reference since the
filing thereof, the registrant must file
with the reference a statement
containing the text of any such
modification and the date thereof.
(b) General. Include an express
statement clearly describing the specific
location of the information you are
incorporating by reference. The
statement must identify the document
where the information was originally
filed or submitted and the location of
the information within that document.
The statement must be made at the
particular place where the information
is required, if applicable. Information
must not be incorporated by reference in
any case where such incorporation
would render the disclosure incomplete,
unclear, or confusing. For example,
unless expressly permitted or required,
disclosure must not be incorporated by
reference from a second document if
that second document incorporates
information pertinent to such disclosure
by reference to a third document.
(c) Definition of Application. For
purposes of this rule, an ‘‘application’’
means any application for an order of
the Commission under the Act other
than an application for registration as an
investment adviser.
By the Commission.
Dated: October 11, 2017.
Brent J. Fields,
Secretary.
[FR Doc. 2017–22374 Filed 11–1–17; 8:45 am]
BILLING CODE 8011–01–P
E:\FR\FM\02NOP2.SGM
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Agencies
[Federal Register Volume 82, Number 211 (Thursday, November 2, 2017)]
[Proposed Rules]
[Pages 50988-51049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-22374]
[[Page 50987]]
Vol. 82
Thursday,
No. 211
November 2, 2017
Part II
Securities and Exchange Commission
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17 CFR Parts 229, 230, 232, et al.
FAST Act Modernization and Simplification of Regulation S-K; Proposed
Rule
Federal Register / Vol. 82 , No. 211 / Thursday, November 2, 2017 /
Proposed Rules
[[Page 50988]]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 229, 230, 232, 239, 240, 249, 270, 274 and 275
[Release No. 33-10425; 34-81851; IA-4791; IC-32858; File No. S7-08-17]
RIN 3235-AM02
FAST Act Modernization and Simplification of Regulation S-K
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule.
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SUMMARY: We are proposing amendments based on the recommendations made
in the staff's Report on Modernization and Simplification of Regulation
S-K, as required by Section 72003 of the Fixing America's Surface
Transportation Act. The proposed amendments are intended to modernize
and simplify certain disclosure requirements in Regulation S-K, and
related rules and forms, in a manner that reduces the costs and burdens
on registrants while continuing to provide all material information to
investors. The amendments are also intended to improve the readability
and navigability of disclosure documents and discourage repetition and
disclosure of immaterial information. To provide for a consistent set
of rules to govern incorporation by reference and hyperlinking, we are
also proposing parallel amendments to several rules and forms
applicable to investment companies and investment advisers, including
proposed amendments that would require certain investment company
filings to be submitted in HyperText Markup Language (``HTML'') format.
DATES: Comments should be received by January 2, 2018.
ADDRESSES: Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment forms (http://www.sec.gov/rules/proposed.shtml);
Send an email to rule-comments@sec.gov. Please include
File Number S7-08-17 on the subject line; or
Use the Federal Rulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number S7-08-17. This file number
should be included in the subject line if email is used. To help us
process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's Web
site (http://www.sec.gov/rules/proposed.shtml). Comments also are
available for Web site viewing and printing in the Commission's Public
Reference Room, 100 F Street NE., Room 1580, Washington, DC 20549, on
official business days between the hours of 10:00 a.m. and 3:00 p.m.
All comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly.
Studies, memoranda, or other substantive items may be added by the
Commission or staff to the comment file during this rulemaking. A
notification of the inclusion in the comment file of any such materials
will be made available on the Commission's Web site. To ensure direct
electronic receipt of such notifications, sign up through the ``Stay
Connected'' option at www.sec.gov to receive notifications by email.
FOR FURTHER INFORMATION CONTACT: Shehzad Niazi, Daniel Morris, or Angie
Kim, Office of Rulemaking, Division of Corporation Finance, at (202)
551-3430; Michael C. Pawluk or J. Matthew DeLesDernier, Investment
Company Rulemaking Office, Division of Investment Management, at (202)
551-6792; U.S. Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549.
SUPPLEMENTARY INFORMATION: The Commission is proposing to amend Items
10, 102, 202, 303, 401, 405, 407, 501, 503, 512, 601, and 1100 of
Regulation S-K under the Securities Act of 1933 (the ``Securities
Act'') and the Securities Exchange Act of 1934 (the ``Exchange Act'');
Rules 405, 411, and 491 of Regulation C under the Securities Act; Rules
11, 102, 105, 303, and 406 of Regulation S-T under the Securities Act
and Exchange Act; Forms S-1, S-3, S-6, S-11, N-14, S-4, F-1, F-3, F-4,
F-7, F-8, F-10, F-80, SF-1, and SF-3 under the Securities Act; Rules
12b-13, 12b-23, 14a-101 (Schedule 14A), and 16a-3 under the Exchange
Act; Forms 3, 4, 5, 8-A, 10, 20-F, 40-F, 8-K, 10-Q, 10-K, and 10-D
under the Exchange Act; Rule 0-4 under the Investment Company Act of
1940 (the ``Investment Company Act''); Forms N-1A, N-2, N-3, N-4, N-5,
and N-6 under the Investment Company Act and Securities Act; Form N-CSR
under the Investment Company Act and Exchange Act; and Rule 0-6 under
the Investment Advisers Act of 1940 (``Investment Advisers Act''). The
Commission is also proposing to add new Item 105 to Regulation S-K and
to remove Rule 12b-32 under the Exchange Act and Rules 8b-23, 8b-24,
and 8b-32 under the Investment Company Act.
Table of Contents
I. Introduction
A. Background
B. Overview of the Proposed Amendments
II. Proposed Amendments
A. Description of Property (Item 102)
B. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Item 303)
1. Year-to-Year Comparisons (Instruction 1 to Item 303(a))
2. Application to Foreign Private Issuers
C. Management, Security Holders and Corporate Governance
1. Directors, Executive Officers, Promoters, and Control Persons
(Item 401)
2. Compliance With Section 16(a) of the Exchange Act (Item 405)
3. Corporate Governance (Item 407)
D. Registration Statement and Prospectus Provisions
1. Outside Front Cover Page of the Prospectus (Item 501(b))
2. Risk Factors (Item 503(c))
3. Plan of Distribution (Item 508)
4. Undertakings (Item 512)
E. Exhibits
1. Description of Registrant's Securities (Item 601(b)(4))
2. Information Omitted From Exhibits (Item 601)
3. Material Contracts (Item 601(b)(10)(i))
4. Subsidiaries of the Registrant and Entity Identifiers (Item
601(b)(21)(i))
5. Application to Foreign Private Issuers
F. Incorporation by Reference
1. Item 10(d)
2. Securities Act Rule 411, Exchange Act Rule 12b-23 and Rule
12b-32 and Related Rules Under the Investment Company Act and
Investment Advisers Act
3. Forms
G. Manner of Delivery
1. Tagging Cover Page Data
2. Exhibit Hyperlinks and HTML Format for Investment Companies
H. General Request for Comment
III. Economic Analysis
A. Background
1. The Benefits of Information Disclosure
2. The Costs of Disclosure
B. Baseline
C. Economic Analysis of the Proposed Amendments: General
Assessment, Including Impact on Efficiency, Competition, and Capital
Formation
D. Economic Analysis of the Specific Amendments: Proposals That
Clarify and Update Existing Rules
1. Proposals That Clarify or Streamline a Rule's Requirements
[[Page 50989]]
2. Proposals To Update Rules To Account for Subsequent
Developments
E. Economic Analysis of the Specific Amendments: Proposals That
Simplify the Disclosure Process or Eliminate Disclosures
1. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Item 303)
2. Information Omitted From Exhibits (Item 601): Item 601(a)(5),
Item 601(a)(6), and Item 601(b)(10)(iv)
F. Economic Analysis of the Specific Amendments: Proposals That
Require More Disclosure or the Incorporation of New Technology
1. Description of Registrant's Securities (Item 601(b)(4))
2. Subsidiaries of the Registrant and Entity Identifiers (Item
601(b)(21))
3. Tagging Cover Page Data
4. Proposals for Additional Disclosure With Minimal Additional
Costs to Registrants
G. Economic Analysis of HTML and Hyperlinking Requirements of
Forms Under the Investment Company Act
IV. Paperwork Reduction Act
A. Background
B. Summary of the Proposed Amendments' Impact on Collection of
Information
1. Proposed Amendments Expected To Decrease Burdens
2. Proposed Amendments Expected To Increase Burdens
3. Proposed Amendments Not Expected to Meaningfully Affect
Burdens
C. Burden and Cost Estimates to the Proposed Amendments
1. Form 10-K and Form 10-Q; Schedule 14A and Schedule 14C
2. Form S-1, Form S-3, Form S-4, Form F-3, Form F-4, Form SF-1,
Form SF-3, Form 10, and Form 20-F
3. Form 8-A, Form 10-D, Form 40-F, Form F-7, Form F-8, Form F-
10, and Form F-80
4. Form S-6, Form N-1A, Form N-2, Form N-3, Form N-4, Form N-5,
Form N-6, Form N-14, and Form N-CSR
D. Request for Comment
V. Small Business Regulatory Enforcement Fairness Act
VI. Initial Regulatory Flexibility Act Analysis
A. Reasons for, and Objectives of, the Proposed Action
B. Legal Basis
C. Small Entities Subject to the Proposed Rules
D. Reporting, Recordkeeping, and Other Compliance Requirements
E. Duplicative, Overlapping, or Conflicting Federal Rules
F. Significant Alternatives
G. Request for Comment
VII. Statutory Authority and Text of Proposed Rule and Form
Amendments
I. Introduction
A. Background
We are proposing amendments to modernize and simplify certain
disclosure requirements in Regulation S-K and related rules and forms
to implement Section 72003 of the Fixing America's Surface
Transportation Act (the ``FAST Act'').\1\ As required by Section
72003(c) of the FAST Act, the staff published its Report on
Modernization and Simplification of Regulation S-K (the ``FAST Act
Report'') on November 23, 2016.\2\ Consistent with Section 72003, the
FAST Act Report provided ``specific and detailed recommendations on
modernizing and simplifying the requirements in Regulation S-K in a
manner that reduces the costs and burdens on companies while still
providing all material information'' and ``[recommendations] on ways to
improve the readability and navigability of disclosure and to
discourage repetition and the disclosure of immaterial information.''
\3\ Also consistent with Section 72003, the FAST Act Report reflected
consultations with the Investor Advisory Committee (``IAC'') and the
Advisory Committee on Small and Emerging Companies.
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\1\ Public Law No. 114-94, Sec. 72003, 129 Stat. 1312 (2015).
\2\ Report on Modernization and Simplification of Regulation S-K
(Nov. 23, 2016), available at https://www.sec.gov/reportspubs/sec-fast-act-report-2016.pdf.
\3\ See FAST Act Sec. 72003(c).
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This release proposes amendments based on the recommendations in
the FAST Act Report. The proposed amendments largely implement these
recommendations, as required by Section 72003(d) of the FAST Act.
However, in some cases, and as discussed in more detail below, we have
chosen to alter or supplement the staff's previously recommended
approach based on our consideration of the issues and the statutory
mandate.\4\ This release reflects perspectives developed during the
staff's broader review of the Commission's disclosure regime. As part
of that effort, the staff requested public input on how the disclosure
system could be improved,\5\ and the Commission issued a concept
release on the business and financial disclosure requirements in
Regulation S[dash]K (the ``Concept Release'').\6\
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\4\ The FAST Act Report presented recommendations for the
Commission's consideration. The FAST Act Report also noted that many
of the recommendations in the report were necessarily preliminary in
nature and that ongoing outreach and study would be necessary in
connection with any rulemaking to implement the recommendations. See
FAST Act Report, supra note 2, at n.15.
\5\ Comment letters related to this request are available at
https://www.sec.gov/spotlight/disclosure-effectiveness.shtml. We
refer to these letters throughout as ``Disclosure Effectiveness''
letters.
\6\ See Business and Financial Disclosure Required by Regulation
S-K, Release No. 33-10064 (Apr. 13, 2016) [81 FR 23916 (Apr. 22,
2016)].
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In developing the proposed amendments, we considered the comment
letters we received on the Concept Release; \7\ the prior staff study
of Regulation S-K (the ``S-K Study'') mandated by the Jumpstart Our
Business Startups Act (the ``JOBS Act''); \8\ the Commission's request
for comment on the requirements relating to management, security
holders, and corporate governance matters in Subpart 400 of Regulation
S[dash]K (the ``Regulation S[dash]K Subpart 400 Release''); \9\ and the
FAST Act Report.\10\ Throughout this release, we discuss these comments
as further context for the proposed amendments.\11\ The proposed
amendments also reflect the Commission's experience with Regulation
S[dash]K arising from the Division of Corporation Finance's disclosure
review program.
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\7\ Comment letters related to this request are available at
https://www.sec.gov/comments/s7-06-16/s70616.htm.
\8\ Public Law No. 112-106, Sec. 108, 126 Stat. 306 (2012). See
also Rule 12b-2 under the Exchange Act [17 CFR 240.12b-2] and Rule
405 under the Securities Act [17 CFR 230.405]. Section 108 of the
JOBS Act required the Commission to comprehensively evaluate its
disclosure requirements to determine how they could be updated to
modernize and simplify the registration process and reduce the costs
and other burdens associated with these requirements for emerging
growth companies (``EGCs''). The resulting recommendations are in
the staff's Report on Review of Disclosure Requirements in
Regulation S-K, available at https://www.sec.gov/news/studies/2013/reg-sk-disclosure-requirements-review.pdf.
In connection with the S-K Study, we received public comments on
regulatory initiatives to be undertaken in response to the JOBS Act.
See Comments on SEC Regulatory Initiatives Under the JOBS Act: Title
I--Review of Regulation S-K, available at http://www.sec.gov/comments/jobs-title-i/reviewreg-sk/reviewreg-sk.shtml.
\9\ Request for Comment on Subpart 400 of Regulation S-K
Disclosure Requirements Relating to Management, Certain Security
Holders and Corporate Governance Matters, Release No. 33-10198 (Aug.
25, 2016) [81 FR 59927 (Aug. 31, 2016)]. Comment letters related to
this request are available at https://www.sec.gov/comments/s7-18-16/s71816.htm. We refer to these letters throughout as ``Subpart 400''
letters.
\10\ Comment letters related to the FAST Act Report are
available at https://www.sec.gov/comments/fast/fast.htm.
After the FAST Act Report was published, the staff updated the
IAC on the recommendations included in the report at its December 8,
2016 meeting. See Minutes of the IAC Meeting on December 8, 2016
available at https://www.sec.gov/spotlight/investor-advisory-committee-2012/iac120816-minutes.htm. The staff did not discuss with
the IAC or the ACSEC potential modifications to those
recommendations as reflected in this release.
\11\ Unless otherwise indicated, comment letters cited in this
release are to the Concept Release.
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In this release, we focus on amendments to implement Section
72003(d) of the FAST Act. Accordingly, we are not at this time
proposing amendments that extend substantially
[[Page 50990]]
beyond the staff's recommendations in the FAST Act Report.\12\ We are
continuing to consider potential additional changes to our disclosure
regime in connection with recent proposing releases and requests for
comment.\13\ In addition, we are proposing parallel amendments to
several rules and forms applicable to investment companies and
investment advisers to provide for a consistent set of rules governing
incorporation by reference and hyperlinking, including proposed
amendments that would require certain investment company filings to be
submitted in HTML format.\14\
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\12\ As discussed in relevant sections below, some of the
proposed amendments in this release would apply to Form 20-F or Form
40-F. Form 20-F is the combined registration statement and annual
report form for foreign private issuers under the Exchange Act. It
also sets forth disclosure requirements for registration statements
filed by foreign private issuers under the Securities Act. Form 40-F
is the registration statement and annual report used by eligible
Canadian issuers under the Multijurisdictional Disclosure System.
While Section 72003 of the FAST Act is focused on Regulation S-K, we
are proposing to make corresponding changes to the disclosure
requirements applicable to foreign private issuers where Forms 20-F
and 40-F include provisions that are substantially similar to those
found in Regulation S-K.
\13\ See Request for Comment on Possible Changes to Industry
Guide 3 (Statistical Disclosure by Bank Holding Companies), Release
No. 33-10321 (Mar. 1, 2017) [82 FR 12757 (Mar. 7, 2017)]; Concept
Release, supra note 6; Regulation S-K Subpart 400 Release, supra
note 9; Disclosure Update and Simplification, Release No. 33-10110
(Jul. 13, 2016) [81 FR 51607 (Aug. 4, 2016)] (the ``Disclosure
Update and Simplification Proposing Release''); Amendments to
Smaller Reporting Company Definition, Release No. 33-10107 (Jun. 27,
2016) [81 FR 43130 (Jul. 1, 2016)]; and Modernization of Property
Disclosures for Mining Registrants, Release No. 33-10098 (Jun. 16,
2016) [81 FR 41651 (Jun. 27, 2016)] (the ``Modernization for Mining
Registrants Proposing Release'').
\14\ The Commission has adopted requirements for exhibit
hyperlinks and HTML format for operating companies. See Exhibit
Hyperlinks and HTML Format, Release No. 33-10322 (Mar. 1, 2017) [82
FR 14130 (Mar. 17, 2017)] (``Exhibit Hyperlinks Adopting Release'')
(adopting amendments to require registrants to hyperlink to each
exhibit listed in the exhibit index and, to enable the inclusion of
hyperlinks, requiring registrants to submit all such filings in HTML
format). Non-accelerated filers and smaller reporting companies
(``SRCs'') may continue to file in American Standard Code for
Information Interchange (``ASCII'') until September 1, 2018 and are
therefore not required to include exhibit hyperlinks until that
date.
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B. Overview of the Proposed Amendments
We are proposing amendments to several individual rules that would
update, streamline, or otherwise improve our well-established and
robust disclosure framework. These include proposed changes to:
Description of Property (Item 102);
Management's Discussion and Analysis (Item 303);
Directors, Executive Officers, Promoters, and Control
Persons (Item 401);
Compliance with Section 16(a) of the Exchange Act \15\
(Item 405);
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\15\ 15 U.S.C. 78a et seq.
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Outside Front Cover Page of the Prospectus (Item 501(b));
\16\
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\16\ See proposed amendments to Item 501(b)(1), (b)(3) and
(b)(4).
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Risk Factors (Item 503(c));
Plan of Distribution (Item 508); \17\
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\17\ Our proposals would amend Rule 405 and Rule 491.
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Material Contracts (Item 601(b)(10)); and
Various rules related to incorporation by reference.
Other proposed amendments would update some of our rules to account
for developments since their adoption or last amendment. These include
proposed changes to Corporate Governance (Item 407), Outside Front
Cover Page of the Prospectus (Item 501(b)(10)), and Undertakings (Item
512). Some of the proposed amendments would simplify disclosure or the
disclosure process. These include proposed changes to Management's
Discussion and Analysis (Item 303(a)) that would allow for flexibility
in discussing historical periods and the addition of new subparagraphs
to Exhibits (Item 601) to permit omission of portions of exhibits that
do not contain material information.
Some of our proposed amendments would require additional disclosure
or incorporation of new technology. These include proposed changes to:
Outside Front Cover Page of the Prospectus (Item
501(b)(4));
Description of Registrant's Securities (Item 601(b)(4));
Subsidiaries of the Registrant (Item 601(b)(21)(i)); and
Various regulations and forms to require all of the
information on the cover pages of some Exchange Act forms to be tagged
in Inline XBRL format.
We discuss the proposed amendments generally in the order that each
Item appears in Regulation S-K; however, we have consolidated the
discussion of the rules and item requirements related to incorporation
by reference. We have also consolidated our discussion of rules
requiring the incorporation of new technology.
II. Proposed Amendments
A. Description of Property (Item 102)
Item 102 requires disclosure of the location and general character
of the principal plants, mines, and other materially important physical
properties of the registrant and its subsidiaries.\18\ Instruction 1 to
Item 102 states that registrants must disclose such information as
reasonably will inform investors as to the suitability, adequacy,
productive capacity, and extent of utilization of the facilities by the
registrant.\19\ Instruction 2 provides that, in determining whether
properties are material to an understanding of the registrant's
business taken as a whole, registrants should take into account both
quantitative and qualitative factors.\20\
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\18\ Item 102 of Regulation S-K [17 CFR 229.102].
\19\ Detailed descriptions of the physical characteristics of
individual properties or legal descriptions by metes and bounds are
not required. See Instruction 1 to Item 102 of Regulation S-K.
\20\ Disclosure specific to the mining, oil and gas, and real
estate industries is outside the scope of this release. Instructions
3, 5, and 7 apply to the mining industry. The Commission has
separately proposed revisions to the property disclosure
requirements for mining registrants. See Modernization for Mining
Registrants Proposing Release, supra note 13. Instructions 4, 6, and
8 apply to the oil and gas industry. The Commission considered
disclosure specific to the oil and gas industry in 2008. See
Modernization of Oil and Gas Reporting, Release No. 33-8995 (Dec.
31, 2008) [74 FR 2158 (Jan. 14, 2009)]. Instruction 9 applies to the
real estate industry.
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Currently, Item 102 specifies disclosure of ``principal'' plants,
mines, and other ``materially important'' physical properties. The
staff has observed, however, that the item may elicit disclosure that
is not material.\21\ For example, some registrants--such as those in
the services or information technology industry--may not have material
physical properties, and accordingly, these registrants tend to
disclose information about their corporate headquarters, office space,
and other facilities in response to this item. To address this concern,
in the FAST Act Report, the staff recommended that the Commission
consider revising Item 102 to require a description of property only to
the extent that physical properties are material to the registrant's
business.\22\
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\21\ See FAST Act Report, supra note 2, at Recommendation B.1.
See also Concept Release, supra note 6, at Section IV.A.6.b and SEC
Staff's Report of the Task Force on Disclosure Simplification (Mar.
5, 1996) available at https://www.sec.gov/news/studies/smpl.htm.
\22\ FAST Act Report, supra note 2, at Recommendation B.1.
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Similarly, several commenters stated that Item 102 is not relevant
to all registrants or can result in immaterial disclosure.\23\ Two of
these commenters
[[Page 50991]]
noted that, if material to a registrant's business, Item 303,
Management's Discussion and Analysis of Financial Condition and Results
of Operations (``MD&A''),\24\ would require a discussion of the
importance of a property or facility and, in these instances, Item 102
may result in duplicative disclosure.\25\
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\23\ See, e.g., Letters from Ernst & Young (Sept. 11, 2012) [S-K
Study letter] (``Ernst & Young 1''); U.S. Chamber of Commerce (July
29, 2014) [Disclosure Effectiveness letter] (``Chamber 1''); Society
of Corporate Secretaries and Governance Professionals (Sept.10,
2014) [Disclosure Effectiveness letter] (``Society of Corporate
Secretaries''); Shearman & Sterling LLP (Nov. 26, 2014) [Disclosure
Effectiveness letter] (``Shearman 1'') (stating that disclosure of
physical properties does not, in most cases, provide investors
meaningful information, particularly for registrants not engaged in
manufacturing); Allstate Insurance Company (July 1, 2016)
(``Allstate''); Fenwick West LLP (Aug. 1, 2016) (``Fenwick''); U.S.
Chamber of Commerce (July 20, 2016) (``Chamber 2''); Corporate
Governance Coalition for Investor Value (July 20, 2016) (``CGCIV'');
Securities Industry and Financial Markets Association (July 21,
2016) (``SIFMA''); Ernst & Young (July 21, 2016) (``Ernst &Young
3''); and Davis Polk & Wardwell LLP (July 22, 2016) (``Davis Polk
1'').
\24\ 17 CFR 229.303.
\25\ See Letters from Chamber 1 and Society of Corporate
Secretaries.
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A number of commenters also supported revising Item 102 to be more
principles-based or require disclosure only when property is
material.\26\ One of these commenters asserted that the lack of a
materiality overlay in Instruction 2 to Item 102 results in immaterial
disclosure.\27\ Another commenter noted different triggers for
disclosure in Item 102, such as the item's reference to ``materially
important'' physical properties and ``major'' encumbrance.\28\ This
commenter suggested harmonizing these and similarly varied formulations
to lessen ambiguity in their application.\29\
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\26\ See, e.g., Letters from Allstate; National Association of
Real Estate Investment Trusts (July 21, 2016); Fenwick; Davis Polk
1; FedEx Corporation (July 21, 2016) (``FedEx''); Chamber 2; and
CGCIV (both the Chamber 2 and CGCIV letters recommended eliminating
this disclosure requirement except to the extent property disclosure
is material or is necessary to make other disclosures not misleading
and stated that, if this disclosure requirement is retained, it
should not be expanded and the Commission should clarify that for
registrants who do not have material physical properties, disclosure
about their corporate headquarters, office space, and other
facilities is optional, not required).
\27\ See Letter from Fenwick.
\28\ See Letter from American Bar Association (Mar. 6, 2015)
[Disclosure Effectiveness letter] (``ABA'').
\29\ Id.
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A few commenters, however, suggested retaining this item in its
current form,\30\ with one commenter noting the importance of this
disclosure for mining companies.\31\ Additionally, two commenters
recommended expanding the item to include additional disclosure.\32\
One of these commenters recommended disclosure of risks resulting from
the potential lack of availability and rising cost of properties.\33\
The other commenter recommended property disclosure specific to the
manufacturing industry, including manufacturing locations that promote
and retain jobs within the United States. This commenter stated that
enhanced disclosures would inform investors about the benefits of
manufacturing in the United States.\34\
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\30\ See, e.g., Letters from US SIF: The Forum for Sustainable
and Responsible Investment (Sept., 18, 2014) [Disclosure
Effectiveness letter] (``US SIF 1''); US SIF: The Forum for
Sustainable and Responsible Investment (July 14, 2016) (``US SIF
2''); Elise J. Bean (July 6, 2016) (``E. Bean''); and CFA Institute
(Oct. 6, 2016) (``CFA Institute'').
\31\ See Letter from US SIF 2.
\32\ See Letters from Stephen P. Percoco (July 24, 2016) (``S.
Percoco'') and Sen. Feinstein, et al. (Feb. 27, 2017) (``Sen.
Feinstein, et al.'').
\33\ See Letter from S. Percoco.
\34\ See Letter from Sen. Feinstein, et al.
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Consistent with several commenters' suggestions and the staff's
recommendation in the FAST Act report, we are proposing to revise Item
102 to emphasize materiality. While the FAST Act Report recommended
amending Item 102 to require disclosure only to the extent physical
properties are material to the registrant's business, our proposals
would require this disclosure to the extent material to the registrant.
Our proposal is intended to encompass properties that are material to
the registrant, which would include those properties that are material
to the registrant's business.\35\ We are also proposing to clarify that
the 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.
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\35\ We believe this approach is clearer and does not
inadvertently omit disclosures that would be material to the
registrant, but not its ongoing business, for example properties
that had value that was material to the registrant but that were no
longer important to its operations.
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As suggested by one commenter, we are also proposing to harmonize
the various non-industry-specific triggers for disclosure in Item
102.\36\ For example, we are proposing to replace the references to
``major'' encumbrances and ``materially important'' physical properties
in Item 102 with references to a materiality threshold. By using a
consistent materiality threshold, we intend to facilitate application
of the proposed amendments. In light of the particular significance of
this disclosure for registrants in the mining, real estate, and oil and
gas industries, we are not proposing to modify any of the instructions
of Item 102 specific to those industries in this release.\37\
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\36\ See Letter from ABA.
\37\ For example, Instruction 3 of Item 102 refers to ``major
significance'' and is specific to the mining industry. The
Modernization for Mining Registrants Proposing Release proposes to
eliminate this instruction. See supra note 13.
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In the FAST Act Report, the staff also recommended that the
Commission consider combining the description of material physical
properties with the description of business in Item 101(c) of
Regulation S-K.\38\ A number of commenters on the Concept Release also
recommended incorporating Item 102 into the broader description of
business disclosure requirements in Item 101.\39\ Several of these
commenters recommended revising Item 101 to require broad disclosure of
a registrant's resources or assets, whether physical or otherwise, that
are critical to a registrant's business.\40\ One of these commenters
stated that the specific requirements of Item 102 are obsolete, but
that a description of physical properties in Item 101 would remain
relevant to certain types of registrants.\41\
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\38\ Item 101(c) of Regulation S-K [17 CFR 229.101(c)]. See FAST
Act Report, supra note 2, at Recommendation B.1.
\39\ See, e.g., Letters from Ernst & Young 3; SIFMA; New York
State Society of Certified Public Accountants (July 19, 2016)
(``NYSSCPA''); Davis Polk 1; General Motors Company (Sept. 30, 2016)
(``General Motors''); and Financial Executives International (Oct.
3, 2016) (``Financial Executives International'').
\40\ See Letters from Ernst & Young 3; Davis Polk 1; General
Motors; and Financial Executives International.
\41\ See Letter from Davis Polk 1.
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We have considered the recommendations of the staff and commenters
but are not proposing to combine Item 102 and Item 101. We believe that
any effort to combine these items should follow a broader evaluation of
how the disclosure should address material core assets, whether
physical or otherwise, including material resources such as human
capital or intellectual property. Such a broader inquiry was not
included in the FAST Act Report and is therefore outside the scope of
this release.
Request for Comment
1. Should we revise Item 102 to clarify that a description of
property is required only to the extent that physical properties are
material to the registrant and may be provided on a collective basis,
if appropriate, as proposed? Under what circumstances is the
flexibility to provide property disclosure on a collective basis useful
(e.g., information about the percentage of material properties within
and outside the United States)?
2. Should we harmonize non-industry-specific disclosure thresholds
by replacing them with a materiality threshold as proposed?
3. The S-K Study recommended that, for businesses that have
material properties, disclosure requirements
[[Page 50992]]
could be refocused on material facts about those properties that would
inform investors about the significance of the property to the
business, including uncertainties in connection with these
properties.\42\ Should Item 102 require additional disclosure about
material properties, including uncertainties such as information about
properties that are located near designated areas where natural
disasters are more likely to occur? If so, what should be required and
why? Would this elicit more meaningful disclosure or would this
duplicate disclosure in MD&A?
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\42\ See S-K Study at pp. 99-100 (recommending that ``[f]or
businesses that do have properties that are material, disclosure
requirements could be refocused on material facts about those
properties that would inform investors about the significance of the
property to the business and any trends or uncertainties in
connection with that property, rather than requiring a list of
locations, capacity and ownership. Changes in the way that
businesses operate may also make other disclosures relevant that are
not expressly addressed under current requirements. For example,
requirements could be more specific as to additional disclosure that
would be necessary where a business relies heavily on intellectual
property owned by a third party or relies on service agreements with
third parties to perform necessary business functions.'').
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B. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Item 303) 43
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\43\ After consideration of the staff's recommendation C.2. in
the FAST Act Report, we are not, proposing to eliminate or revise
the table of contractual obligations. See FAST Act Report, supra
note 2, at n.15. See also letter from Jack Ciesielski (Dec. 12,
2016) [FAST Act Letter] (opposing the staff's recommendation to
delete or revise the table of contractual obligations).
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1. Year-to-Year Comparisons (Instruction 1 to Item 303(a))
Item 303(a) requires registrants to discuss their financial
condition, changes in financial condition, and results of
operations.\44\ Instruction 1 to Item 303(a) states that the discussion
and analysis shall be of the financial statements and other statistical
data that the registrant believes will enhance a reader's understanding
of its financial condition, changes in financial condition, and results
of operations. This instruction also provides that, generally, the
discussion shall cover the three-year period covered by the financial
statements and either use year-to-year comparisons or any other formats
that in the registrant's judgment would enhance a reader's
understanding. The instruction states that reference to the five-year
selected financial data may be necessary where trend information is
relevant.
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\44\ Item 303(a) of Regulation S-K [17 CFR 229.303(a)].
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In the FAST Act Report, the staff recommended that we consider
revising Item 303(a) to clarify that a registrant need only provide a
period-to-period comparison for the two most recent fiscal years
covered by the financial statements and may hyperlink to the prior
year's annual report for the earlier of the year-to-year
comparisons.\45\ Many commenters on the Concept Release recommended
modifying Item 303 to reduce duplicative disclosure, although these
commenters recommended simply eliminating the earlier of the year-to-
year comparisons.\46\ A number of these commenters stated that this
discussion is readily available in a registrant's prior year annual
report on EDGAR.\47\ Two of these commenters stated that repetition of
the earlier of the year-to-year comparisons could distract investors
from new, material information and result in confusion.\48\ A few of
these commenters recommended requiring the earlier of the year-to-year
comparisons only if there is a significant trend that is discernible
through a multiple year-to-year comparison \49\ or if prior results
have been restated.\50\
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\45\ See FAST Act Report, supra note 2, at Recommendation C.1.
\46\ See, e.g., Letters from Ernst & Young 1 (stating that the
existing requirements in Item 303 should be sufficient to result in
a comprehensive discussion of a three-year trend without a year-to-
year comparison); Chamber 1; Society of Corporate Secretaries (also
stating that the existing requirements in Item 303 are sufficient to
elicit a discussion of trends over the relevant three-year period,
if such a trend exists and is material); IBM Corporation (Aug. 7,
2014) [Disclosure Effectiveness letter]; Arthur J. Radin (May 29,
2015) [Disclosure Effectiveness letter] (``A. Radin 1''); Arthur J.
Radin (July 5, 2016) (``A. Radin 2''); UnitedHealth Group Inc. (July
21, 2016) (``United Health''); SIFMA; Ernst & Young (Nov. 20, 2015)
[Disclosure Effectiveness letter] (``Ernst &Young 2''); Ernst &
Young 3; PNC Financial Services Group (July 21, 2016) (``PNC'');
Investment Program Association (July 21, 2016) (``Investment Program
Association''); Prologis Inc. (July 21, 2016) (``Prologis'');
Allstate; Davis Polk 1; S. Percoco; Fenwick; NYSSCPA; Institute of
Management Accountants; Chamber 2; FedEx; CGCIV; Northrop Grumman
Corporation (Sept. 27, 2016); General Motors; and Financial
Executives International.
\47\ See, e.g., Letters from A. Radin 1 and A. Radin 2; Ernst
&Young 3; PNC; Prologis; Allstate; Fenwick; NYSSCPA; Chamber 2;
FedEx; CGCIV; Investment Program Association; General Motors; and
Financial Executives International.
\48\ See Letters from Chamber 1; Chamber 2; and CGCIV.
\49\ See Letters from SIFMA and PNC.
\50\ See Letter from S. Percoco.
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Some of the commenters who suggested eliminating the earlier of the
year-to-year comparisons recommended allowing registrants to hyperlink
to the filing with the earlier of the year-to-year comparisons.\51\ One
commenter opposed a requirement to hyperlink to the prior filing,
stating that EDGAR is sufficiently user-friendly for investors to
readily obtain the relevant report.\52\ Another commenter, however,
disagreed with eliminating the requirement to include the earlier of
the year-to-year comparisons stating that this would require investors
to look for the information elsewhere.\53\
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\51\ See, e.g., Letters from United Health; Investment Program
Association; Allstate; and General Motors.
\52\ See Letter from Fenwick.
\53\ See Letters from CFA Institute (Nov. 12, 2014 [Disclosure
Effectiveness letter] and Oct. 6, 2016).
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We are proposing to amend Item 303 to eliminate discussion of the
earliest year in some situations.\54\ Under the amendments we propose
today, when financial statements included in a filing cover three
years, discussion about the earliest year would not be required if (i)
that discussion is not material to an understanding of the registrant's
financial condition, changes in financial condition, and results of
operations, and (ii) the registrant has filed its prior year Form 10-K
\55\ on EDGAR containing MD&A of the earliest of the three years
included in the financial statements of the current filing. By allowing
registrants to eliminate MD&A disclosure about the earliest year in
these situations, our proposals are intended to discourage repetition
of disclosure that is no longer material, which we believe would
further our mandate under the FAST Act to modernize and simplify
Regulation S-K in a manner that reduces costs and burdens on companies
while still providing all material information.
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\54\ Our proposed amendments to Item 303(a)(3) would not affect
SRCs, as SRCs may limit their disclosure to the two-year period
covered by their financial statements. See Instruction 1 to Item
303(a) of Regulation S-K. See also Rule 12b-2 under the Exchange Act
and Rule 405 under the Securities Act.
Similarly, our proposed amendments would not affect EGCs that
provide two years of audited financial statements. EGCs are only
required to provide two years of audited financial statements in an
initial public offering of common equity securities and may limit
their MD&A to only those audited periods presented in the financial
statements. Public Law 112-106, Sec. 102(b)-(c), 126 Stat. 306
(2012). See also Instruction 1 to Item 303(a) of Regulation S-K.
\55\ 17 CFR 249.310.
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Our proposed amendments to Item 303(a) are consistent with our
existing interpretive guidance on MD&A. In the 2003 MD&A Interpretive
Release, the Commission stated that, in preparing MD&A, companies
should evaluate issues presented in previous periods and consider
reducing or omitting discussion of those that may no longer be material
or helpful, or revise discussions where a revision would make the
continuing relevance of an issue more apparent.\56\ The Commission
[[Page 50993]]
also encouraged companies and management to take a ``fresh look'' at
MD&A with a view to enhancing its quality.\57\ The Commission observed
that the effectiveness of MD&A decreases with the accumulation of
unnecessary detail or duplicative or uninformative disclosure that
obscures material information.\58\ In furtherance of this prior
interpretive guidance, our proposals are intended to encourage
companies to re-evaluate disclosures in their prior year MD&A and take
a ``fresh look'' to determine whether such disclosure remains material.
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\56\ See Commission Guidance Regarding Management's Discussion
and Analysis of Financial Condition and Results of Operation,
Release No. 33-8350 (Dec. 19, 2003) [68 FR 75056 (Dec. 29, 2003)]
(``2003 MD&A Interpretive Release'').
\57\ Id.
\58\ Id. See also Basic, Inc., v. Levinson, 485 U.S. 224 (1998)
at 231 quoting TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438
(1976) at 448-449.
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To this end, we are not proposing the staff's recommendation in the
FAST Act Report to hyperlink to the prior year's annual report for the
earlier of the year-to-year comparison. We believe that encouraging
companies to take a ``fresh look'' at their prior year MD&A to
determine whether it remains material and eliminating disclosure of the
earliest of the three years when specified conditions are met, rather
than hyperlinking to disclosure that may no longer be material, would
more effectively achieve our FAST Act mandate to reduce the costs and
burdens on companies while continuing to provide all material
information.\59\
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\59\ We also are mindful that a number of registrants with
segments or different lines of business may present their MD&A by
segment or line of business. In these instances, numerous hyperlinks
in MD&A may fragment readability.
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Our proposals would also eliminate the reference to five-year
selected financial data in Instruction 1 to Item 303(a). Instruction 1
provides that, where trend information is relevant, reference to the
five-year selected financial data in Item 301 may be necessary. Because
disclosure requirements for liquidity, capital resources, and results
of operations already require trend disclosure,\60\ we are proposing to
simplify Instruction 1 by eliminating the reference to trend
information. This proposed amendment is intended to eliminate
duplication and is not intended to discourage registrants from
providing trend disclosure in MD&A.
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\60\ See Item 303(a)(1), 303(a)(2)(ii) and 303(a)(3)(ii) of
Regulation S-K [17 CFR 229.303(a)(1), (a)(2)(ii), (a)(3)(ii)].
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We are also proposing to simplify Instruction 1 to Item 303(a) to
emphasize that registrants may use any presentation that, in the
registrant's judgment, would enhance a reader's understanding.
Instruction 1 currently specifies that the discussion cover the three-
year period covered by the financial statements and use year-to-year
comparisons or any other format that, in the registrant's judgment,
would enhance a reader's understanding. Although the staff has observed
that almost all registrants provide year-to-year comparisons,\61\ we
believe that registrants may, in some cases, determine that a narrative
discussion for some or all of the years in the three-year period is a
more appropriate format. For instance, in a situation where some
information about the earliest year in a three-year period is needed
because it remains material to an understanding of the registrant's
financial condition, a registrant may decide that narrative disclosure
about the earliest year and a year-to-year comparison for the two most
recent years in the three-year period is appropriate. The proposed
amendments underscore our intent to allow registrants to tailor the
presentation of their disclosure to reflect their varying
circumstances, provided that registrants continue to disclose the
information required by Item 303.\62\
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\61\ See Concept Release, supra note 6, at n.350 and
accompanying text.
\62\ See 2003 MD&A Interpretive Release, supra note 53.
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Request for Comment
4. Should we revise Item 303 as proposed?
5. Should we expand the proposal, with similar conditions, to other
forms such as Form S[dash]1 \63\ or Form 8-K? \64\
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\63\ 17 CFR 239.11.
\64\ 17 CFR 249.308.
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6. Instead of allowing registrants to eliminate the earliest of the
three years of MD&A in some situations, should we retain the earliest
year requirement and instead amend Item 303 to allow registrants to
hyperlink to the prior year's annual report for that disclosure in lieu
of repeating the disclosure in the current year's report?
7. Should we include additional conditions on allowing registrants
to exclude the earliest of the three years or provide guidance on when
a discussion of the earliest of the three years would be material to an
understanding of the registrant's financial condition, changes in
financial condition, and results of operations? For example, should we
not allow registrants to exclude discussion of the earliest year if
there has been a material change to either of the two earlier years due
to a restatement or a retrospective adoption of a new accounting
principle?
8. Should we revise Instruction 1 to Item 303(a) as proposed to
eliminate the reference to year-to-year comparisons? Would eliminating
that reference encourage registrants to use a different presentation?
Alternatively, should we retain the references to year-to-year
comparisons and revise the instruction to identify specific
alternatives to year-to-year comparisons? If so, what alternatives
should we include?
9. Should we eliminate the reference to five-year selected
financial data in Instruction 1 to Item 303(a) as proposed? Would there
be a significant impact on the total mix of information available?
Would eliminating this reference discourage registrants from providing
trend disclosure in their MD&A?
2. Application to Foreign Private Issuers
The disclosure requirements for Item 5 of Form 20-F \65\ (Operating
and Financial Review and Prospects) are substantively comparable to the
MD&A requirements under Item 303 of Regulation S-K.\66\ To maintain a
consistent approach to MD&A for domestic registrants and foreign
private issuers, we are proposing changes to Form 20-F that conform to
our proposed amendments to Instruction 1 to Item 303(a). Accordingly,
our proposals would amend the instructions to Item 5 of Form 20-F to
provide that, when financial statements included in a filing cover
three years, discussion about the earliest year would not be required
if (i) that discussion is not material to an understanding of the
registrant's financial condition, changes in financial condition, and
results of operations and (ii) the registrant has filed its prior year
Form 20-F on EDGAR containing Item 5 disclosure of the earliest of the
three years included in the financial statements of the current filing.
Similar to our proposals for Item 303, we are proposing to amend the
instructions to Item 5 of Form 20-F to emphasize that registrants may
use any presentation that, in the registrant's judgment, would enhance
a reader's understanding.
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\65\ 17 CFR 249.220f.
\66\ When the Commission revised the wording of Item 5 of Form
20-F in 1999, the adopting release noted that the requirements
correspond with Item 303 of Regulation S-K. See International
Disclosure Standards, Release No. 33-7745 (Sept. 28, 1999) [64 FR
53900 (Oct. 5, 1999)], at 53904.
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We are not proposing similar changes to Form 40-F.\67\ Form 40-F
generally permits Canadian issuers to use Canadian disclosure documents
to satisfy the Commission's registration and disclosure requirements.
As a result, the MD&A contained in Form
[[Page 50994]]
40-F is largely prepared in accordance with Canadian disclosure
standards.
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\67\ 17 CFR 249.240f.
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Request for Comment
10. Should we make corresponding changes to the instructions to
Item 5 in Form 20-F as proposed? Why or why not? Are there any unique
considerations with respect to foreign private issuers in this context?
11. Should we include additional conditions on allowing registrants
to exclude the earliest of the three years or provide guidance on when
a discussion of the earliest of the three years would be material to an
understanding of the registrant's financial condition, changes in
financial condition, and results of operations when providing Item 5
disclosure on Form 20-F? For example, should we not allow registrants
to exclude discussion of the earliest year if there has been a material
change to either of the two earlier years due to a restatement or a
retrospective adoption of a new accounting principle?
12. Should we make corresponding changes to Form 40-F? Why or why
not?
13. Would the proposed amendments conflict with home-country
requirements in some jurisdictions? If so, please explain.
C. Management, Security Holders and Corporate Governance
1. Directors, Executive Officers, Promoters, and Control Persons (Item
401)
Item 401 \68\ requires disclosure of identifying and background
information about a registrant's directors, executive officers, and
significant employees.\69\ The information required by Item 401 must be
included in several of the Commission's disclosure forms, including
Part III of an annual report on Form 10-K. General Instruction G of
Form 10-K allows Part III disclosure to be incorporated into the Form
10-K by reference to the registrant's definitive proxy or information
statement.\70\
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\68\ 17 CFR 229.401.
\69\ Item 401 of Regulation S-K [17 CFR 229.401] was adopted in
1982 as part of the Commission's integrated disclosure initiative,
although similar requirements can be traced back to Schedule A of
the Securities Act. See Adoption of Integrated Disclosure System,
Release No. 33-6383 (Mar. 3, 1982) [47 FR 11380 (Mar. 16, 1982)]
(the ``Integrated Disclosure System Adopting Release''). See also
Securities Act, Schedule A, Paragraph 4 [15 U.S.C. 77aa(4)].
\70\ General Instruction G.3 allows the information required by
Item 401, along with other items required by Part III of Form 10-K,
to be incorporated by reference from the registrant's proxy
statement if it is filed with the Commission within 120 days after
the end of the fiscal year covered by the Form 10-K.
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As an alternative to incorporating all of the Part III disclosure
by reference to a definitive proxy or information statement,
Instruction 3 to Item 401(b) allows disclosure of information about
executive officers required under Item 401 to be included in Part I of
Form 10-K. If a registrant elects to follow this instruction, it is not
required to repeat that information in its definitive proxy or
information statement.
This instruction was introduced in 1978, when the executive officer
and director disclosure requirements were moved from separate parts of
Form 10-K into what was then Item 3 of Regulation S-K.\71\ The
instruction was intended to allow registrants to continue the practice
of disclosing information about their executives in Form 10-K while
incorporating disclosure about directors and other matters by reference
to their definitive proxy or information statement.\72\
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\71\ See Uniform and Integrated Reporting Requirements, Release
No. 33-5949 (July 28, 1978) [43 FR 34402 (Aug. 3, 1978)].
\72\ Id. At the time, Part I of Form 10-K required disclosure
regarding executive officers of the registrant and Part II required
disclosure about directors. Registrants could exclude the Part II
information if it would be included in the registrant's proxy
statement.
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As the staff observed in the FAST Act Report, the instruction's
location may cause confusion because it is included under paragraph
(b), despite the fact that other paragraphs of Item 401 also require
disclosure about executive officers.\73\ Although Instruction 3 refers
to ``this Item'' (rather than to paragraph (b) narrowly), the staff
issued interpretive guidance stating that disclosure of the business
experience of executive officers pursuant to Item 401(e) need not be
duplicated in proxy statements if it is already presented in Part I of
Form 10[dash]K.\74\
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\73\ FAST Act Report, supra note 2, at Recommendation D.1.
\74\ See Regulation S-K Compliance and Disclosure Interpretation
116.02, available at https://www.sec.gov/divisions/corpfin/guidance/regs-kinterp.htm (last updated July 26, 2016). General Instruction G
to Form 10-K also refers generally to the ``information regarding
executive officers required by Item 401'' when discussing the
accommodation provided in Instruction 3 to Item 401(b).
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To eliminate any confusion arising from the current location of the
instruction, we are proposing to clarify the instruction by moving it
from Item 401(b) and making it a general instruction to Item 401. The
amended instruction is intended to clarify its application to any
disclosure about executive officers required by Item 401. We are also
proposing to revise the required caption for the disclosure if it is
included in Part I of Form 10-K to reflect a ``plain English''
approach. The required caption would be ``Information about our
Executive Officers'' instead of ``Executive officers of the
registrant.''
Request for Comment
14. Should we amend Instruction 3 to Item 401(b) as proposed?
15. The proposed instruction would apply to all of the disclosure
about executive officers required by Item 401. Should we limit this
instruction to only certain paragraphs of Item 401, such as paragraphs
(b) and (e) but exclude paragraph (f)? \75\
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\75\ Item 401(b) (Identification of executive officers); Item
401(e) (Business experience) and Item 401(f) (Involvement in certain
legal proceedings).
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16. Where a registrant relies on General Instruction G to forward
incorporate by reference to its definitive proxy or information
statement, is there other Part III disclosure about executive officers
that we should specify need not be duplicated in the proxy or
information statement if it is already presented in Part I of Form 10-
K? For example, should we specify that disclosure about transactions
with executive officers pursuant to Item 404 does not need to be
duplicated in the proxy or information statement if it is already
disclosed in Part I of Form 10-K?
17. Instead of clarifying how Instruction 3 to Item 401(b) applies,
should we require disclosure about executive officers to be included in
a registrant's Form 10-K filing, so that it is easier to locate? \76\
Alternatively, should we require all Item 401 disclosure to be included
in a registrant's proxy or information statement instead of its Form
10-K if the registrant is required to file a proxy or information
statement? \77\
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\76\ See Letter from Davis Polk (Oct. 31, 2016) [Subpart 400
letter] (``Davis Polk 2'') (stating that requiring disclosure about
executive officers in Form 10-K would make it easier to find and
would be more appropriate because shareholders ``are not generally
asked to vote on matters related to a registrant's executive
officers other than with respect to executive compensation, and that
information is provided in the proxy statement'').
\77\ See Letter from Ernst & Young LLP (Nov. 30, 2016) [Subpart
400 letter] (recommending that all Item 401 disclosure be required
in a registrant's proxy or information statement because splitting
that disclosure is ``not conducive to investors assessing the
diversity and complementary mix of experience of the board in
conjunction with that of executive officers'').
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2. Compliance With Section 16(a) of the Exchange Act (Item 405)
Section 16(a) of the Exchange Act requires officers, directors, and
specified types of security holders to report their beneficial
ownership of a registrant's equity securities using forms
[[Page 50995]]
prescribed by the Commission.\78\ Item 405 \79\ requires registrants to
disclose each reporting person \80\ who failed to file on a timely
basis Section 16 reports during the most recent fiscal year or prior
fiscal years.\81\ The disclosure is required under the caption
``Section 16(a) Beneficial Ownership Reporting Compliance.'' Rule 16a-
3(e) requires reporting persons to furnish a duplicate of those Section
16 reports to the registrant.\82\ Item 405(a) states that registrants
shall provide the required disclosure based solely on a review of such
furnished reports and any written representation provided by such
persons that no Form 5 is required.\83\
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\78\ See Form 3, Form 4, and Form 5.
\79\ 17 CFR 229.405.
\80\ Item 405(a)(1) of Regulation S-K [17 CFR 229.405(a)(1)]
defines a ``reporting person'' as ``each person who, at any time
during the fiscal year, was a director, officer, beneficial owner of
more than ten percent of any class of equity securities of the
registrant registered pursuant to Section 12 of the Exchange Act, or
any other person subject to Section 16 of the Exchange Act with
respect to the registrant because of the requirements of Section 30
of the Investment Company Act.''
\81\ Item 405 was initially proposed in 1988 in an attempt to
reduce the high delinquency rate for Section 16 reports. See
Ownership Reports and Trading by Officers, Directors and Principal
Stockholders, Release No. 34-26333 (Dec. 2, 1988) [53 FR 49997 (Dec.
13, 1988)] and Ownership Reports and Trading by Officers, Directors
and Principal Security Holders, Release No. 34-27148 (Aug. 18, 1989)
[54 FR 35667 (Aug. 29, 1989)] (re-proposing Item 405 in response to
comments on the 1988 proposing release).
\82\ See 17 CFR 240.16a-3(e).
\83\ See 17 CFR 229.405(a) and (b)(1).
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In the FAST Act Report, the staff recommended that we consider
eliminating the delivery requirement in Rule 16a-3(e) and revising Item
405 to permit registrants to rely only on (i) a review of Section 16
reports submitted on EDGAR and (ii) any written representation that no
Form 5 is required, when determining whether there are any Section 16
delinquencies that must be disclosed pursuant to Item 405.\84\
Reporting persons have been required to file their Section 16 reports
electronically on EDGAR since 2003.\85\ The Commission has stated that
``[b]y reviewing Section 16 reports posted on EDGAR, an issuer is
readily able to evaluate their timeliness'' \86\ and ``issuers also may
consult EDGAR to obtain notice of new filings.'' \87\
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\84\ FAST Act Report, supra note 2, at Recommendation D.2.
\85\ See Mandated Electronic Filing and Web Site Posting for
Forms 3, 4 and 5, Release No. 33-8230 (May 7, 2003) [68 FR 25788
(May 13, 2003)] (the ``Section 16 Mandatory Electronic Filing
Release''). In addition, all registrants who maintain a corporate
website are required to post any Section 16 reports relating to the
equity securities of the registrant on such website pursuant to Rule
16a-3(k) of the Exchange Act [17 CFR 240.16a-3(k)], and many
registrants satisfy this requirement by providing hyperlinks
directly to the electronic filings once they are made on EDGAR. The
Commission has noted that any concerns a registrant may have about
obtaining an electronic copy of the filing from a Section 16
reporting person in order to satisfy the web posting requirement
``would not arise for issuers that rely on a hyperlink (for example,
to EDGAR) instead of, or in addition to, direct website posting.''
Id. at 25790.
\86\ See Ownership Reports and Trading by Officers, Directors
and Principal Security Holders, Release 33-8600 (Aug. 3, 2005) [70
FR 46080 (Aug. 9, 2005)], at 46086.
\87\ Section 16 Mandatory Electronic Filing Release, supra note
85, at 25790.
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Consistent with the staff's recommendations, we are proposing to
amend Item 405 to focus on a review of Section 16 reports available on
EDGAR rather than reports furnished to the registrant. We are also
proposing to eliminate the requirement in Rule 16a-3(e) that reporting
persons furnish Section 16 reports to the registrant. We believe that a
shift to reliance on electronically filed Section 16 reports, while
retaining the written representation in Item 405(b)(1), would modernize
and simplify compliance with Item 405 while still providing all
material information.
In the FAST Act Report, the staff recommended that the Commission
consider adding an instruction that permits a registrant to rely on the
information in the Section 16 reports submitted on EDGAR unless it
knows, or has reason to believe, that the information is not complete
or accurate or that a report or an amendment should have been filed but
was not.\88\ While there is a similar instruction in Item 403 of
Regulation S-K with respect to the contents of Section 13(d) and 13(g)
statements filed with the Commission,\89\ we have concerns that, if
implemented, this recommendation could lead to uncertainty about when a
registrant has a reporting obligation because of the difficulty
ascertaining when a registrant may have knowledge of delinquencies or a
reason to believe that delinquencies have occurred. Therefore, at this
time, we are not proposing to expand reporting under Item 405 in this
manner.
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\88\ FAST Act Report, supra note 2, at n.55.
\89\ See Instruction 3 to Item 403 [17 CFR 229.403].
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We are, however, proposing to change the language of Item 405 to
clarify that registrants may rely on Section 16 reports filed on EDGAR
but are not required to limit their inquiry to those filings. Item 405
currently states that the registrant ``shall'' make its disclosure
``based solely upon'' the Section 16 reports that are furnished to it
pursuant to Rule 16a-3(e) and any written representation from a
reporting person that no Form 5 is required. This language could be
read to suggest that registrants may not rely on information outside of
the Section 16 reports furnished to the registrant pursuant to Rule
16a-3(e). As proposed, Item 405(b) would state that registrants ``may''
rely only on the Section 16 reports and the written representation.
Therefore, if a registrant was aware that information in a Section 16
report submitted on EDGAR was not complete or accurate, or that a
reporting person failed to file a required report, it could provide
appropriate disclosure pursuant to Item 405. We are also soliciting
comment on the benefits and challenges of the proposed approach and how
it may affect compliance with Section 16(a) reporting obligations.
The staff's final recommendation for revising Item 405 was to
eliminate the use of the ``Section 16(a) Beneficial Ownership Reporting
Compliance'' heading when the registrant does not have Section 16(a)
delinquencies to report.\90\ The staff has observed that some
registrants have included this heading to disclose that they have
nothing to report pursuant to Item 405.\91\ To reduce unnecessary
disclosure and improve the ability to search a registrant's filings for
disclosure of Section 16(a) reporting delinquencies, we are proposing
to add an instruction to Item 405 that encourages registrants to
exclude the heading if they have no delinquencies to report. We are
also proposing to change the heading to ``Delinquent Section 16(a)
Reports'' to more precisely describe the required disclosure and to
further encourage registrants to exclude the heading if they do not
have delinquencies to report.
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\90\ See FAST Act Report, supra note 2, at Recommendation D.3.
\91\ Rule 12b-13 [17 CFR 240.12b-13] states that, unless
expressly provided otherwise, if any item is inapplicable or the
answer thereto is negative, an appropriate statement to that effect
shall be made. Item 405, however, only requires the use of this
heading when responsive disclosure is included. See Item 405(a)(1).
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We are also proposing to eliminate the checkbox on the cover page
of Form 10-K relating to Item 405 disclosures and the related
instruction in Item 10 of Form 10-K.\92\ Currently, registrants are
required to check a box on the cover page of Form 10-K to indicate that
disclosure pursuant to Item 405 is not contained in the Form 10-K and
will not be contained, to the best of the registrant's knowledge, in
any definitive proxy or information statement that is incorporated by
reference.\93\ This checkbox was included in Form 10-K to
[[Page 50996]]
assist the Commission and security holders in identifying registrants
that were disclosing delinquent filings by insiders.\94\ The related
instruction in Item 10 of Form 10-K is also intended to facilitate the
Form's processing and review.\95\ We believe that the proposed
amendments would lessen the need for this checkbox by reducing the
unnecessary use of the heading and thereby facilitating document
searches. Moreover, the checkbox may have limited use, because most
registrants defer their Item 405 disclosure to their definitive proxy
or information statement pursuant to General Instruction G of Form
10[dash]K.\96\
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\92\ 17 CFR 229.10.
\93\ See 17 CFR 249.310.
\94\ See Ownership Reports and Trading by Officers, Directors
and Principal Security Holders, Release No. 34-28869 [56 FR 7242
(Feb. 21, 1991)] (``Ownership Reports and Trading Release''), at
Section VI.B.
\95\ The Instruction to Item 10 specifies that checking the box
on the cover page to indicate that Item 405 disclosure of delinquent
Form 3, 4, or 5 filers is not contained is intended to facilitate
Form processing and review. The instruction also states that failure
to provide such indication will not create liability for violation
of the federal securities laws and that the space should be checked
only if there is no disclosure in the Form of reporting person
delinquencies in response to Item 405 and if the registrant, at the
time of filing the Form 10-K, has reviewed the information necessary
to ascertain, and has determined that, Item 405 disclosure is not
expected to be contained in Part III of the Form 10-K or
incorporated by reference.
\96\ See Ownership Reports and Trading Release at 7260 (``If at
the time of filing the Form 10-K the registrant does not yet know
whether such disclosure will be contained in the proxy or
information statement or the Form 10-K amendment containing the Part
III information, the box should not be checked. If the box is not
checked, this will not be taken as a statement that there will be
Item 405 disclosure of delinquent filers, but rather that the
registrant may not have the requisite knowledge at the time the Form
10-K is filed.''). The proposed approach would also have the
advantage of allowing for this disclosure to be located with a
simple text search whether it is included in the registrant's annual
report or its definitive proxy or information statement.
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Request for Comment
18. Would allowing registrants to rely on Section 16 reports filed
on EDGAR instead of reports furnished to them reduce the burden of
complying with Item 405 while preserving their ability to disclose
delinquencies? What effect, if any, would the proposed approach have on
compliance with the Section 16(a) reporting requirements? Should we
continue to require Section 16 reporting persons to furnish reports to
registrants, or should we require them to provide notice to the
registrant when the reporting person files a report on EDGAR?
19. Should we, instead of permitting, require a registrant to
disclose delinquencies under Item 405 if it knows, or has reason to
believe, that there is a delinquency that is not reflected on EDGAR?
Why or why not?
20. Should we revise the ``Section 16(a) Beneficial Ownership
Reporting Compliance'' heading as proposed? Is there an alternative
heading that would be more appropriate?
21. Should we continue to include a checkbox on Form 10-K, or
include a checkbox on Schedule 14A \97\ or Schedule 14C, to indicate
when the disclosure required by Item 405 is included in a filing? If
so, what benefits would it provide compared to our proposed approach of
encouraging registrants to exclude the proposed ``Delinquent Section
16(a) Reports'' heading if they do not have delinquencies to report?
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\97\ 17 CFR 240.14a-101.
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3. Corporate Governance (Item 407)
Several disclosure requirements related to corporate governance are
consolidated in Item 407.\98\ In the FAST Act Report, the staff
recommended updating a reference to an outdated auditing standard in
Item 407(d)(3)(i)(B) and revising Item 407(e)(5) to clarify that EGCs
are not required to provide a compensation committee report.\99\ We are
proposing amendments to implement both of these recommendations.
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\98\ 17 CFR 229.407. Item 407 was adopted in 2006 to consolidate
various corporate governance requirements under a single disclosure
item. See Executive Compensation and Related Person Disclosure,
Release No. 33-8732A (Aug. 29, 2006) [71 FR 53158 (Sept. 8, 2006)].
\99\ See FAST Act Report, supra note 2, at Recommendations D.4
and D.5.
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a. Audit Committee Discussions With Independent Auditor (Item
407(d)(3)(i)(B))
Under existing Item 407(d)(3)(i)(B), when a registrant files a
proxy or information statement relating to an annual or special meeting
of security holders at which directors are elected or written consents
are provided in lieu of a meeting, a registrant's audit committee must
state whether it has discussed with the independent auditor the matters
required by AU section 380, Communication with Audit Committees (``AU
sec. 380'').\100\ AU sec. 380 was part of the interim standards
previously adopted by the Public Company Accounting Oversight Board
(``PCAOB'') on April 16, 2003.\101\ As noted in the Commission's
concept release on audit committee disclosures (the ``Audit Committee
Concept Release''), the reference to AU sec. 380 is outdated, because
it was superseded by PCAOB Auditing Standard No. 16, Communications
with Audit Committees (``AS 16'').\102\ Furthermore, on March 31, 2015,
the PCAOB formally reorganized its auditing standards resulting in the
codification of AS 16 as Auditing Standard No. 1301, Communications
with Audit Committees (``AS 1301'').\103\
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\100\ See Instruction 3 to Item 407(d) of Regulation S-K.
\101\ See PCAOB Release No. 2003-006 (Apr. 16, 2003). AU sec.
380 required an auditor to discuss various matters related to the
conduct of an audit with those who have responsibility for oversight
of the financial reporting process.
\102\ See Possible Revisions to Audit Committee Disclosures,
Release No. 33-9862 (July 1, 2015) [80 FR 38995 (July 8, 2015)], at
39003.
\103\ See PCAOB Release No. 2015-02 (Mar. 31, 2015). The PCAOB
completed a reorganization of its auditing standards into a topical
structure and a single, integrated numbering system (the
``Reorganization''). The Commission approved the Reorganization on
September 17, 2015. See Order Granting Approval of Proposed Rules to
Implement the Reorganization of PCAOB Auditing Standards and Related
Changes to PCAOB Rules and Attestation, Quality Control, and Ethics
and Independence Standards, Release No. 34-75935 (Sept. 17, 2015)
[80 FR 57263 (Sept. 22, 2015)].
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Commenters on the Audit Committee Concept Release that addressed
this issue generally supported updating the AU sec. 380 reference.\104\
Commenters differed on how best to update this reference, as AS 1301 is
not the only requirement addressing communications between an auditor
and the audit committee. Specifically, both the Commission and PCAOB
have other rules and standards that require matters to be communicated
to a company's audit committee.\105\ Accordingly, several commenters
suggested aligning the disclosure requirements with the communication
requirements specific to the standards and rules of the PCAOB,\106\
while others suggested a more encompassing requirement that would refer
to all audit committee communications with the independent auditors
required by not only the PCAOB but also the Commission.\107\
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\104\ Comments on the Audit Committee Concept Release are
available at https://www.sec.gov/comments/s7-13-15/s71315.shtml. We
refer to these letters throughout as ``Audit Committee'' letters.
\105\ See, e.g., Appendix B to AS 1301; Section 10A(k) of the
Exchange Act [15 U.S.C. Sec. 78j-1(k)]; Rule 2-07 of Regulation S-X
[17 CFR 210.2-07]; and Rule 10A-3 [17 CFR 240.10A-3].
\106\ See, e.g., Letters from AngloGold Ashanti Limited (Sept.
7, 2015) [Audit Committee letter]; Deloitte & Touche LLP (Sept. 2,
2015) [Audit Committee letter]; National Association of State Boards
of Accountancy (Sept. 3, 2015) [Audit Committee letter]; and James
H. Edwards (Sept. 8, 2015) [Audit Committee letter].
\107\ See, e.g., Letters from AT&T Inc. (Sept. 8, 2015) [Audit
Committee letter]; Federal Regulation of Securities, Law and
Accounting, and Corporate Governance Committees of the American Bar
Association (Feb. 9, 2016) [Audit Committee letter]; and The Home
Depot, Inc. (Sept. 17, 2015) [Audit Committee letter]. One commenter
on the Regulation S-K Subpart 400 Release also recommended updating
Item 407(d) to refer to AS 16. See Letter from Davis Polk 2.
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[[Page 50997]]
After consideration of the comments we have received and the
recommendation of the staff in the FAST Act Report, we are proposing to
update the reference to AU sec. 380 by referring more broadly to the
applicable requirements of the PCAOB and the Commission. We believe
such an approach would accommodate future changes to audit committee
communication requirements.
Request for Comment
22. Should we amend Item 407(d)(3)(i)(B) to refer to the
``applicable requirements of the PCAOB and the Commission rules'' as
proposed? Is there a better reference or additional guidance that we
should provide to facilitate audit committee compliance and investor
understanding of this requirement?
b. Compensation Committee Report (Item 407(e)(5))
Item 407(e)(5) requires a registrant's compensation committee to
state whether it has reviewed and discussed the Compensation Discussion
and Analysis (``CD&A'') required by Item 402(b).\108\ Based on this
review and discussion, Item 407(e)(5) requires that the compensation
committee state whether it recommended to the board of directors that
the CD&A be included in the registrant's annual report, proxy statement
or information statement. As recommended by the staff, we are proposing
to amend Item 407 to explicitly exclude EGCs from the Item 407(e)(5)
requirement, because they are not subject to a requirement to include a
CD&A in their public disclosures.\109\ Specifically, we are proposing
to add a reference to EGCs in Item 407(g) instead of amending Item
407(e)(5). Item 407(g) currently excludes SRCs from Item 407(e)(5),
among other provisions of Item 407.
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\108\ 17 CFR 229.402(b).
\109\ See Item 402(l) of Regulation S-K.
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Request for Comment
23. Instead of amending Item 407(g) as proposed, should we amend
Item 407(e)(5)?
D. Registration Statement and Prospectus Provisions
1. Outside Front Cover Page of the Prospectus (Item 501(b))
Item 501 \110\ includes disclosure requirements related to the
forepart of the registration statement and the outside front cover page
of the prospectus. In the FAST Act Report, the staff made several
recommendations to streamline the requirements and to provide
registrants with greater flexibility in designing a cover page tailored
to their business and the particular offering.\111\ The proposed
amendments discussed below would implement these recommendations.
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\110\ 17 CFR 229.501.
\111\ FAST Act Report, supra note 2, at Recommendations E.1-5.
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a. Name (Item 501(b)(1))
Item 501(b)(1) requires disclosure of a registrant's name,
including an English translation of the name of foreign registrants.
The instruction to Item 501(b)(1) states that if a registrant's name is
the same as that of a ``well known'' company, or if the name leads to a
misleading inference about the registrant's line of business, the
registrant must include information to eliminate any possible confusion
with the other company. If disclosure is insufficient to eliminate the
confusion, the registrant may be required to change its name. An
exception, however, is available when the registrant is an
``established company,'' the character of the registrant's business has
changed, and the ``investing public is generally aware of the change
and the character of [the registrant's] current business.''
The policy reflected in Item 501(b)(1) with regards to misleading
company names was first articulated in 1969 in response to an increase
in the number of registrants using names that the staff considered to
be misleading.\112\ Although we continue to believe that a registrant's
name could mislead investors, the staff's experience administering this
provision suggests that these situations can typically be addressed
with clarifying disclosure. The Commission and the staff may be able to
address situations in which the registrant's name is either confusingly
similar or misleading in connection with any public interest finding
necessary to declare the filing effective.\113\ Accordingly, we are
proposing to streamline the instruction to Item 501(b)(1) by
eliminating the portion that discusses when a name change may be
required and the exception to that requirement.
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\112\ At the time, the Commission noted that registrants were
using words such as ``nuclear,'' ``missile,'' ``space,''
``nucleonics,'' and ``electronics'' in their names when they were
not engaged in activity normally associated with those words, or
were engaged to a limited extent. See Guide for Preparation and
Filing of Registration Statements; Misleading Names of Registrants,
Release No. 33-4959 (Apr. 16, 1969) [34 FR 6575 (Apr. 17, 1969)].
This policy was contained in Guide 53 of the Commission's Guides for
Preparation and Filing of Registration Statements before being moved
into Item 501 in 1982. See Integrated Disclosure System Adopting
Release, supra note 69; Rescission of Guides and Redesignation of
Industry Guides, Release No. 33-6384 (Mar. 3, 1982) [47 FR 11476
(Mar. 16, 1982)].
\113\ 15 U.S.C. 77h.
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Request for Comment
24. Should we eliminate the language about a registrant's being
required to change its name in the instruction to Item 501(b)(1) as
proposed, or should we retain the current version of the instruction?
Are there situations where disclosure would not be sufficient to
eliminate misleading inferences about the company or its line of
business?
b. Offering Price of the Securities (Item 501(b)(3))
Item 501(b)(3) requires disclosure of the price of the securities
being offered, the underwriter's discounts and commissions, and the net
proceeds that the registrant and any selling security holders will
receive.\114\ The disclosure must be provided on an aggregate and per
share basis, but registrants may present the required information in
any format that fits the design of the cover page and is clear, easily
read, and not misleading.
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\114\ 17 CFR 229.501(b)(3). Item 501(b)(3) also includes
specific disclosure requirements for offerings being made on a
minimum/maximum basis.
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Although in many cases the disclosure required by Item 501(b)(3)
will be straightforward, Instruction 2 states that ``[i]f it is
impracticable to state the price to the public, explain the method by
which the price is to be determined.'' \115\ In the FAST Act Report,
the staff recommended providing registrants with greater flexibility in
explaining the method by which the price is to be determined when it is
impracticable to state the price on the cover page.\116\
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\115\ The instruction also provides that if the securities are
to be offered at the market price, or if the offering price is to be
determined by a formula relating to the market price, indicate the
market and market price of the securities as of the latest
practicable date. We are not proposing any change to this portion of
the instruction.
\116\ See FAST Act Report, supra note 2, at Recommendation E.2.
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We are proposing to amend Instruction 2 to explicitly allow
registrants to include a clear statement that the offering price will
be determined by a particular method or formula that is more fully
explained in the prospectus. Under the proposed instruction,
registrants would be required to accompany that statement with a cross-
reference to the offering price method or formula disclosure, including
a page number that is
[[Page 50998]]
highlighted by prominent type or in another manner.\117\
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\117\ This cross-reference would be similar to the cross-
reference that is required for risk factor disclosure pursuant to
Item 501(b)(5) of Regulation S-K [17 CFR 229.501(b)(5)]. In the FAST
Act Report, the staff recommended the Commission consider amending
Instruction 2 to Item 501(b)(3) to require the cross-reference to
the offering price method or formula to be accompanied by a
hyperlink. Because the cross-reference to risk factors required
under Item 501(b)(5) does not currently require a hyperlink, we are
not proposing to require a hyperlink for the disclosure called for
by Item 501(b)(3).
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Request for Comment
25. As proposed, Item 501(b)(3) would allow registrants to choose
to include a cross-reference to the explanation of the method in which
the offering price will be determined when it is impracticable to state
the price method or formula to the public on the cover page. Should we
instead retain the requirement to present the explanation on the
prospectus cover page? Why or why not?
26. Should we amend Instruction 2 to Item 501(b)(3) to require the
cross-reference to be accompanied by a hyperlink? Item 501(b)(5)
currently requires on the prospectus cover page a cross-reference to
the risk factors section. Should we similarly amend Item 501(b)(5) to
also require a hyperlink?
c. Market for the Securities (Item 501(b)(4))
Item 501(b)(4) requires a registrant to name the national
securities exchanges that list the securities being offered and to
disclose the trading symbols for those securities. A ``national
securities exchange'' is a securities exchange that has registered with
the Commission under Section 6 of the Exchange Act.\118\ Under Item
501(b)(4), registrants are not required to name markets that are not a
``national securities exchange.''
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\118\ See Section 6 of the Securities Exchange Act of 1934 [15
U.S.C. 78f].
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Consistent with the staff's recommendation in the FAST Act
Report,\119\ we believe that information about markets that are not a
``national securities exchange'' could be important to investors and
should be disclosed on the prospectus cover page. Accordingly, we are
proposing to amend Item 501(b)(4) to require disclosure of the
principal United States market or markets for the securities being
offered and the corresponding trading symbols.\120\
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\119\ See FAST Act Report, supra note 2, at Recommendation E.3.
\120\ Our proposed changes to Item 501(b)(4) align with our
proposals to amend Item 201(a) [17 CFR 229.201(a)] in the Disclosure
Update and Simplification Proposing Release. See Disclosure Update
and Simplification Proposing Release supra note 13, at 51688.
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Also consistent with the staff's recommendation,\121\ we are
limiting disclosure of markets that are not national securities
exchanges to those principal United States markets where the
registrant, through the engagement of a registered broker-dealer, has
actively sought and achieved quotation. We agree with the staff that a
registrant cannot always control whether its securities are quoted on
an over-the-counter market and should not be burdened with making that
determination.
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\121\ See FAST Act Report, supra note 2, at Recommendation E.3.
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Request for Comment
27. Should we expand the disclosure required by Item 501(b)(4) to
include markets other than national securities exchanges as proposed?
Would expanding the disclosure requirement make it difficult for
registrants to determine which United States markets to disclose?
28. Should we limit the disclosure requirement to those principal
United States markets where the registrant has actively sought and
achieved quotation through the engagement of a registered broker-dealer
as proposed? Should there be any other limitations on the markets the
registrant would be required to disclose?
29. Should a domestic or foreign registrant be required to identify
principal foreign markets where the registrant, through the engagement
of a registered broker-dealer, has actively sought and achieved
quotation for the class of security being offered?
30. If a registrant discloses another trading market elsewhere in
its registration statement, should Item 501(b)(4) require disclosure of
that market on the cover page, even if it is not a national securities
exchange and even if the registrant did not actively seek quotation
through the engagement of a registered broker-dealer? For example, Item
201(a) of Regulation S-K \122\ requires disclosure of the principal
United States market or markets in which each class of the registrant's
common equity is traded.
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\122\ Item 201(a) of Regulation S-K.
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31. Should we provide additional guidance on when a market other
than a national securities exchange must be disclosed or when a
registrant would be considered to have actively sought quotation
through the engagement of a registered broker-dealer?
d. Prospectus ``Subject to Completion'' Legend (Item 501(b)(10))
Item 501(b)(10) requires a registrant that is using a preliminary
prospectus to include a legend advising readers that the information
will be amended or completed. The legend also must include a statement
that the prospectus is not an offer to sell or a solicitation of an
offer to buy securities in any state where the offer or sale is not
permitted. The latter statement was introduced in 1958 to harmonize the
legend with what was required by state securities administrators at the
time.\123\
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\123\ See Amendment of Rules 134 and 433, Release No. 33-3885
(Jan. 7, 1958) [23 FR 184 (Jan. 10, 1958)]. This requirement was
originally in Rule 433, a predecessor to the current requirement.
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The legend requirement has remained mostly unchanged since 1958,
even after the National Securities Markets Improvement Act (``NSMIA'')
allowed for preemption of state blue sky laws in many offerings.\124\
Consistent with the staff's recommendations in the FAST Act
Report,\125\ we are proposing to amend Item 501(b)(10) to permit
registrants to exclude from the prospectus the portion of the legend
relating to state law for offerings that are not prohibited by state
blue sky law. This change would allow for a more tailored prospectus
cover page in recognition of the changes to securities law brought by
NSMIA.
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\124\ Public Law No. 104-290, 110 Stat. 3416 (1996).
\125\ See FAST Act Report, supra note 2, at Recommendation E.4.
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Also consistent with the staff's recommendations,\126\ we are
proposing to streamline Item 501(b) by combining paragraphs (b)(10) and
(11) without substantive change. Thus, our proposed amendments to
paragraph (b)(10) would also require the ``subject to completion''
legend to be included if a registrant relies on Rule 430A \127\ to omit
pricing information and the prospectus is used after the effectiveness
of the registration statement but before the public offering price is
determined. Correspondingly, we are proposing to delete paragraph
(b)(11).
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\126\ See id., at Recommendation E.5.
\127\ 17 CFR 230.430A.
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Request for Comment
32. Should we allow registrants the discretion to exclude the
portion of the legend required by Item 501(b)(10) that relates to state
law prohibitions on offers or sales when it would not apply, as
proposed?
2. Risk Factors (Item 503(c))
Item 503(c) requires disclosure of the most significant factors
that make the
[[Page 50999]]
offering speculative or risky.\128\ The item specifies that the
discussion should be concise and organized logically. Although the
requirement is principles-based, it includes the following specific
examples as factors that may make an offering speculative or risky:
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\128\ 17 CFR 229.503(c).
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A registrant's lack of an operating history,
a registrant's lack of profitable operations in recent
periods,
a registrant's financial position,
a registrant's business or proposed business, or
the lack of a market for a registrant's common equity
securities or securities convertible into or exercisable for common
equity securities.\129\
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\129\ These factors were derived from previous stop order
proceedings under Section 8(d) of the Securities Act where the
Commission suspended the effectiveness of previously filed
registration statements due, in part, to inadequate disclosure about
speculative aspects of the registrant's business. See Guides for
Preparation and Filing of Registration Statements, Release No. 33-
4936 (Dec. 9, 1968) [33 FR 18617 (Dec. 17, 1968)] (citing In the
Matter of Doman Helicopters, Inc., 41 S.E.C. 431 (Mar. 27, 1963); In
the Matter of Universal Camera Corp., 19 S.E.C. 648 (June 28,
1945)).
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The item directs registrants to explain how each risk affects the
issuer or the securities being offered. Additionally, the item
discourages disclosure of risks that could apply to any issuer or
offering.
Risk factor disclosure was initially called for only in the
offering context.\130\ Accordingly, when Item 503(c) was adopted in
1982 as part of the integrated disclosure system, it was included with
other offering-related disclosure requirements in Subpart 500 of
Regulation S[dash]K.\131\ In 2005, risk factor disclosure requirements
were extended to periodic reports and registration statements on Form
10.\132\
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\130\ See Guides for Preparation and Filing of Registration
Statements, Release No. 33-4666 (Feb. 7, 1964) [29 FR 2490 (Feb. 15,
1964)] and Guides for Preparation and Filing of Registration
Statements, Release No. 33-4936 (Dec. 9, 1968) [33 FR 18617 (Dec.
17, 1968)].
\131\ See Integrated Disclosure System Adopting Release, supra
note 69.
\132\ See Securities Offering Reform, Release No. 33-8591 (July
19, 2005) [70 FR 44722 (Aug. 3, 2005)] (``Securities Offering Reform
Adopting Release'').
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As recommended by the staff in the FAST Act Report, we are
proposing to relocate Item 503(c) from Subpart 500 to Subpart 100 to
reflect the application of risk factor disclosure requirements to
registration statements on Form 10 \133\ and periodic reports.\134\
Subpart 100 covers a broad category of business information and is not
limited to offering-related disclosure. Accordingly, our proposed
amendments would move Item 503(c)'s requirement for risk factor
disclosure to new Item 105.\135\
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\133\ 17 CFR 249.210.
\134\ See FAST Act Report, supra note 2, at Recommendation E.6.
Additionally, the proposed amendments would use the term
``registrant'' instead of ``issuer.'' Use of and reference to
``registrant'' instead of ``issuer'' is intended to better reflect
the application of risk factor disclosure outside of the offering
context. The term ``registrant'' is defined under both the Exchange
Act and Securities Act. See Rule 12b-2 [17 CFR 240.12b-2] and Rule
405 [17 CFR 230.405].
\135\ See proposed Item 105. Consistent with this change, we are
also proposing amendments to several Commission forms that require
risk factor disclosure and reference Item 503(c). These proposed
amendments would revise references to Item 503 to specify new Item
105. A number of forms that require risk factor disclosure do not
reference Item 503(c). Our proposed amendments do not include
revisions to these forms. For example, Forms 10-Q and 20-F require
risk factor disclosure but do not reference Item 503(c).
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Additionally, our proposed amendments would eliminate the risk
factor examples that are currently enumerated in Item 503(c). Although
not addressed in the FAST Act Report, we solicited comment in the
Concept Release on whether we should retain or eliminate the examples
and whether we should revise our requirements to include additional or
different examples.
A number of commenters recommended retaining and revising the
examples in Item 503(c).\136\ Several of these commenters supported a
revision to specify examples of risk factors that are generic and
therefore should not be disclosed.\137\ For example, one of these
commenters recommended that the Commission prohibit disclosure of
generalized risks that affect all registrants or all registrants in a
particular industry, the risk of stock volatility, organizational
structure risks, and summaries of applicable regulation.\138\ Two
commenters recommended revising the examples to include risk factors
applicable to well-established Exchange Act registrants,\139\ while
another two supported expanding the list of examples.\140\ One of the
commenters that recommended expanding the list of examples pointed to
guidelines produced by the investor community as a source of additional
examples.\141\
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\136\ See, e.g., Letters from Center for Audit Quality (July 21,
2016) (``CAQ''); California Public Employees' Retirement System
(July 21, 2016) (``CalPERS''); PricewaterhouseCoopers LLP (July 21,
2016) (``PWC''); Edison Electric Institute and American Gas
Association (July 21, 2016) (``Edison Electric and AGA'');
Investment Program Association; Davis Polk 1; National Investor
Relations Institute (Aug. 4, 2016) (``NIRI''); Shearman & Sterling
(Aug. 31, 2016) (``Shearman 2''); NYSSCPA.
\137\ See, e.g., Letters from Edison Electric and AGA;
Investment Program Association; Davis Polk 1; NIRI; and Shearman 2.
\138\ See Letter from Investment Program Association.
\139\ See Letters from CAQ and PWC.
\140\ See Letters from CalPERS and NYSSCPA.
\141\ See Letter from CalPERS (referring to several sets of
guidelines such as the Principles for Responsible Investment and
those issued by the International Corporate Governance Network,
among others).
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A few commenters recommended eliminating the examples in Item
503(c).\142\ One of these commenters supported eliminating the examples
so as to emphasize the principles-based nature of the disclosure
requirement and to focus registrants on their own risk identification
process.\143\ Another of these commenters expressed a view that the
examples were outdated and only helpful when the requirement to
disclose risk factors was first introduced.\144\
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\142\ See Letters from Chris Barnard (June 23, 2016)
(``Barnard''); Fenwick; and SIFMA (stating that the five examples
are not ``cutting edge'' and ``could be eliminated,'' but that most
registrants recognize that Item 503(c) is focused on principles-
based disclosure of the most significant factors that make the
offering speculative or risky).
\143\ See Letter from Barnard.
\144\ See Letter from Fenwick.
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As part of our mandate under the FAST Act to modernize and simplify
our disclosure requirements while still providing all material
information, we are proposing to eliminate these examples. These
examples may not apply to all registrants and may not correspond to the
material risks of any particular registrant. In addition, the inclusion
of these examples could suggest that a registrant must address each one
in its risk factor disclosures, regardless of the significance to its
business. Finally, several commenters suggested expanding the list of
examples or revising them to specify examples of generic risks that
should not be disclosed. We are concerned that inclusion of examples
could anchor or skew the registrant's risk analysis in the direction of
the examples.\145\ We believe that eliminating the examples would
encourage registrants to focus on their own risk identification
processes.
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\145\ See infra note 349 and accompanying text.
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Request for Comment
33. Should we move the requirement to provide risk factor
disclosure in Item 503(c) to a new Item 105 as proposed? Why or why
not?
34. Should we relocate Item 503(c)'s requirements to another
subsection of Regulation S-K? If so, which subsection and why?
35. Should we eliminate the risk factor examples as proposed, or do
they provide useful guidance to registrants? Instead of eliminating the
examples, should we provide different or
[[Page 51000]]
additional examples that would be more helpful to registrants? If so,
what examples would be most helpful?
3. Plan of Distribution (Item 508)
Item 508 requires disclosure about the plan of distribution for
securities in an offering, including information about
underwriters.\146\ Paragraph (a) requires disclosure about the
principal underwriters and underwriters that have a material
relationship with the registrant, while paragraph (h) requires
disclosure of the discounts and commissions to be allowed or paid to
dealers. If a dealer is paid any additional discounts or commissions
for acting as a ``sub-underwriter,'' paragraph (h) allows the
registrant to include a general statement to that effect without giving
the additional amounts to be sold.
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\146\ 17 CFR 229.508.
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``Sub-underwriter'' is not a defined term, and its application may
be unclear. ``Principal underwriter,'' however, is defined in
Regulation C as ``an underwriter in privity of contract with the issuer
of the securities as to which he is an underwriter.'' \147\ Consistent
with the staff's recommendation in the FAST Act Report,\148\ and in
light of the definition of ``principal underwriter'' and the disclosure
required by Item 508(a), we are proposing to amend Rule 405 \149\ to
define the term ``sub-underwriter'' 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.\150\
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\147\ 17 CFR 230.405.
\148\ See FAST Act Report, supra note 2, at Recommendation E.7.
\149\ 17 CFR 230.405.
\150\ The only other use of the term ``sub-underwriter'' or
``subunderwriter'' in Regulation S-K, the Securities Act rules, or
the Exchange Act rules is in Rule 491 [17 CFR 230.491]. We are
proposing to amend Rule 491 to reference ``sub-underwriter,''
consistent with our proposed amendments here. The proposed
definition of sub-underwriter would not change the meaning of that
term in Rule 491 and appears to be consistent with its use in that
context.
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Request for Comment
36. Should we amend Rule 405 to define ``sub-underwriter'' as
proposed? Should we define the term differently? For example, is the
concept of ``privity of contract'' sufficiently clear?
4. Undertakings (Item 512)
Item 512 \151\ provides undertakings that a registrant must include
in Part II of its registration statement, depending on the type of
offering. In the FAST Act Report, the staff recommended that the
Commission consider eliminating undertakings that are duplicative of
other rules or that have become unnecessary due to developments since
their adoption. We are proposing the following amendments to implement
the staff's recommendations.
---------------------------------------------------------------------------
\151\ 17 CFR 229.512.
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Item 512(c) sets forth undertakings that a registrant must include
if it registers a warrant or rights offering to existing security
holders and the securities not purchased by those security holders will
be reoffered to the public.\152\ The undertaking requires a registrant,
after the expiration of the subscription period, to supplement the
prospectus to disclose the results of the subscription offer and the
terms of any subsequent reoffer to the public. If any public reoffer is
made on terms different from the offer to existing security holders,
then the registrant must undertake to file a post-effective amendment
to disclose the terms of that offering. We are proposing to eliminate
this undertaking because it is no longer necessary. A registrant
conducting the type of offering described in Item 512(c) would already
have been required to register and disclose the offering to existing
security holders as well as the reoffering to the public. Furthermore,
Item 512(a)(1) requires registrants to undertake to file a post-
effective amendment to disclose fundamental changes in the information
set forth in the registration statement and material information with
respect to the plan of distribution or changes in the plan of
distribution.\153\ Thus, disclosure of material changes in the terms of
the reoffering would also be required as part of the Item 512(a)(1)
undertaking, thus obviating the need for the Item 512(c) undertaking.
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\152\ 17 CFR 229.512(c). The Item 512(c) undertaking was
included in the Securities Act forms and guides, prior to the
enactment of the integrated disclosure system in 1982. See, e.g.,
Notice of Proposed Revision of Form S[dash]4, Release No. 33-3667
(July 31, 1956) [21 FR 6025 (Aug. 11, 1956)] and Notice of Proposed
Form S-11 for Registration of Securities of Certain Real Estate
Companies, Release No. 33-4347 (Apr. 10, 1961) [26 FR 3280 (Apr. 18,
1961)].
\153\ 17 CFR 229.512(a)(1).
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Consistent with the recommendations made in the FAST Act Report, we
are also proposing to eliminate the Item 512(d), Item 512(e), and Item
512(f) undertakings, because they are obsolete.\154\ Item 512(d)
requires a registrant to include undertakings if the securities it
registers are to be offered at competitive bidding.\155\ The
undertaking requires a registrant to use its best efforts to distribute
a Section 10(a) prospectus to prospective bidders, underwriters, and
dealers and to file a post-effective amendment reflecting the results
of the bidding and any related terms. This undertaking arises from
former Rule 50 under the Public Utility Holding Company Act of 1935
(``PUHCA''), which formerly required public utility company securities
to be sold through competitive bids.\156\ We propose eliminating this
undertaking because the Commission rescinded Rule 50 in 1994,\157\ and
because Congress repealed PUHCA in 2005.\158\ Furthermore, this
undertaking was put into place prior to the adoption of Rule 430A,
which permits the omission of pricing and underwriter related terms
from the effective registration statement if the issuer includes that
information in a prospectus or post-effective amendment after the
effective date.\159\ To the extent that competitive bidding is still
used, registrants may file prospectuses that contain the pricing and
underwriter disclosure pursuant to Rule 430A and those documents will
be subject to the liability imposed by that rule.\160\
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\154\ See FAST Act Report, supra note 2, at Recommendation E.9.
\155\ 17 CFR 229.512(d).
\156\ See Notice of Proposal to Adopt Rule 415 Relating to
Competitive Bidding Registration Statements, to Amend Rules 424,
455, 471 and 472 and to Rescind Rule 460, Release No. 33-3491-Z
(Nov. 10, 1953) [18 FR 7300 (Nov. 18, 1953)]; Adoption of Rule 415
Relating to Competitive Bidding Registration Statements, Amendment
of Rules 424, 427, 455, 471 and 472 and Rescission of Rule 460,
Release No. 33-3494 (Jan. 13, 1954) [19 FR 399 (Jan. 22, 1954)]; and
Phase One Recommendations of Task Force on Disclosure
Simplification, Release No. 33-7300 (May 31, 1996) [61 FR 30397
(June 14, 1996)] (``1996 Disclosure Simplification
Recommendations'').
\157\ See 1996 Disclosure Simplification Recommendations (citing
Public Utility Holding Company Act Rules, Release No. 35-26031 (Apr.
20, 1994) [59 FR 21922 (Apr. 28, 1994)]).
\158\ See Energy Policy Act of 2005, Public Law No. 109-58, 119
Stat. 594 (2005).
\159\ 17 CFR 230.430A.
\160\ We understand that registration statements filed in
connection with securities to be offered through competitive bidding
are rarely used. See Louis Loss, Joel Seligman, & Troy Paredes,
Securities Regulation (5th ed. 2016) (``Loss et al.'') Sec. 2.A.4.
Competitive Bidding. According to Loss et al., competitive bidding
is now used by ``municipalities and public instrumentalities.'' Rule
430A provides that information omitted in reliance on that rule is
deemed part of the registration statement as of the time it was
declared effective, thus subjecting those disclosures to liability
under Section 11 of the Securities Act.
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Item 512(e) provides that, if a registrant's prospectus directly
incorporates by reference the registrant's annual report to security
holders meeting the requirements of Rule 14a-4 \161\ or Rule 14c-
3,\162\ the registrant must undertake to deliver the latest
[[Page 51001]]
annual report with the prospectus.\163\ If interim information is
required but is not included in the prospectus, the registrant must
undertake to deliver the latest quarterly report that is incorporated
by reference in the prospectus. The purpose of this undertaking is to
ensure that the registrant delivers incorporated annual and quarterly
reports with the prospectus, as required by former Form S[dash]2.\164\
The disclosure and delivery requirements of former Form S-2 were
intended to minimize duplicative reporting while still requiring
delivery of incorporated information.\165\ The Commission rescinded
Form S-2 as part of Securities Offering Reform, since its underlying
purpose was outdated because of EDGAR, other technological
developments, and the rapid dissemination of information in the
market.\166\ Similarly, we are now proposing to eliminate the related
undertaking, since any material information in a registrant's annual or
quarterly reports to security holders should be publicly available.
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\161\ 17 CFR 240.14a-4.
\162\ 17 CFR 240.14c-3.
\163\ 17 CFR 229.512(e).
\164\ See Proposed Comprehensive Revision to System for
Registration of Securities Offerings, Release No. 33-6235 (Sept. 2,
1980) [45 FR 63693 (Sept. 25, 1980)].
\165\ See Securities Offering Reform Adopting Release, supra
note 132.
\166\ See id.
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Finally, the undertaking in Item 512(f) applies to registrants that
prior to the offering had no obligation to file reports with the
Commission pursuant to Section 13(a) or 15(d) of the Exchange Act.\167\
If such a registrant conducts an underwritten equity offering, it must
undertake to provide the securities certificates required by the
underwriter at closing to permit prompt delivery to each purchaser. The
purpose of this undertaking is to ensure that the registrant delivers
sufficient certificates to the underwriter at closing to permit
aftermarket trading in new issues.\168\ We are proposing to eliminate
this undertaking because the need to deliver certificates to
underwriters has decreased dramatically since this undertaking was
adopted in the early 1970s. Today, equity securities trades in the
United States are typically cleared and settled using the depository
and book-entry services of the Depository Trust and Clearing
Corporation's clearing agency subsidiaries.\169\
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\167\ 17 CFR 229.512(f).
\168\ See Hot Issues, Release No. 33-5274 (July 26, 1972) [37 FR
16005 (Aug. 9, 1972)] (``Hot Issues Release''); Notice of Adoption
of Amendments to Registration Forms S-1 and S-2 under the Securities
Act of 1933 and to Forms 10, 10-K and 10-Q and Rules 13a-13 and 15d-
13 under the Securities Exchange Act of 1934, Release No. 33-5395
(June 1, 1973) [38 FR 17202 (June 29, 1973)]. In 1972, the
Commission conducted public hearings on the matter of hot issues
securities markets, which revealed that ``one of the imperfections
affecting aftermarket trading in new issues is the occasional
failure of issuers to furnish securities in such denominations and
registered in such manner as to permit adequate and prompt delivery
to each purchaser. Accordingly, one of the proposals is that non-
reporting registrants formally undertake in registration statements
filed on Forms S-1 and S-2 that they will deliver the certificates
to the underwriter at the closing for prompt delivery to
customers.'' See Hot Issues Release, supra at 16007.
\169\ See Loss et al. Sec. 7.E.2. Current Law (``Virtually all
equities securities trades in the United States are cleared and
settled through the National Securities Clearing Corporation (NSCC)
and the Depository Trust Company (DTC), clearing agency subsidiaries
of the Depository Trust and Clearing Corporation (DTCC).'');
Depository Trust & Clearing Corporation, FAQs: How Issuers Work With
DTC available at http://www.dtcc.com/matching-settlement-and-asset-services/issuer-services/how-issuers-work-with-dtc (last visited
Feb. 22, 2017) (``DTC provides (i) settlement services for virtually
all equity, corporate and municipal debt trades and Money Market
Instruments in the U.S.'').
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Request for Comment
37. Should we retain or modify any of the undertakings that we have
proposed eliminating? If so, please explain why.
38. In what instances are physical securities certificates still
delivered today? Should we retain the undertaking for those situations?
39. Are there other undertakings that we have not addressed in this
release that are duplicative, no longer necessary or that should be
eliminated for other reasons?
40. Are there undertakings we should consider requiring to
modernize and address developments for novel securities offerings?
E. Exhibits
1. Description of Registrant's Securities (Item 601(b)(4))
Item 202 requires registrants to provide a brief description of
their registered capital stock, debt securities, warrants, rights,
American Depositary Receipts, and other securities.\170\ Registrants
provide Item 202 disclosure about registered securities in their
registration statements \171\ but are not required to provide this
disclosure in their Form 10-K or Form 10-Q.\172\
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\170\ Items 202(a)-(d) and (f) [17 CFR 229.202(a)-(d) and (f)].
Item 202(e), ``Market information for securities other than common
equity,'' is outside the scope of this release; it requires that if
securities other than common stock are to be registered and there is
an established trading market for such securities, registrants are
required to provide market information for such securities
comparable to that required by Item 201(a) of Regulation S-K.
\171\ Item 202 disclosure is often incorporated by reference
into a registration statement on Form 8-A from a prior registration
statement on Form S-1. See Concept Release, supra note 6, at Section
IV.D.2. Registrants are not currently required to include Item 202
disclosure as an exhibit to any filings with the Commission.
\172\ 17 CFR 249.308a.
Registrants are required to file complete copies of their
articles and bylaws as exhibits to Form 10-K, but they are not
required to provide the descriptions called for by Item 202. See
Item 601(b)(3) [17 CFR 229.601(b)(3)]. Also, under Accounting
Standards Codification (``ASC'') Topic 505-10-50-3, registrants are
required to summarize the ``pertinent rights and privileges of the
various securities outstanding'' in the notes to their financial
statements. ASC Topic 470-10-50-5 requires the same information for
debt securities. While the date of sale is not required, registrants
usually include it in their discussions of the rights and privileges
of securities sold.
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Consistent with the staff's recommendation in the FAST Act
Report,\173\ we are proposing to amend Item 601(b)(4) \174\ to require
registrants to provide the information required by Item 202(a)-(d) and
(f) as an exhibit to Form 10-K, rather than limiting this disclosure to
registration statements.\175\ Proposed Item 601(b)(4)(vi) would require
Item 202 disclosure only for securities that are registered under
Section 12 of the Exchange Act.\176\ Because Item 202(e) requires Item
201(a) market information for securities other than common equity where
there is an established trading market for those securities, proposed
Item 601(b)(4)(vi) does not include Item 202(e). The proposed
requirement is intended to increase investors' ease of access to
information about the rights and obligations of each class of
securities registered.
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\173\ See FAST Act Report, supra note 2, at Recommendation F.1.
\174\ 17 CFR 229.601(b)(4).
\175\ To the extent that a registrant has previously filed an
exhibit containing Item 202 disclosure, it could incorporate that
exhibit by reference and hyperlink to the previously-filed exhibit
in future Form 10-K filings, assuming that the information contained
therein remains unchanged. See Exhibit Hyperlinks Adopting Release
supra note 15.
\176\ The proposed amendment includes an instruction requiring
disclosure for those classes of a registrant's securities that have
not been retired by the end of the period covered by the report. We
are also proposing to amend Item 202 to specify that Section
305(a)(2) of the Trust Indenture Act of 1939, 15 U.S.C. 77aa et
seq., as amended, would not affect a registrant's disclosure
obligations under proposed Item 601(b)(4)(vi).
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The proposed amendments would not change existing disclosure
obligations under Form 8-K and Schedule 14A, which currently require
registrants to disclose certain modifications to the rights of their
security holders and amendments to their articles of incorporation or
bylaws.\177\ As
[[Page 51002]]
proposed, any modifications and amendments during a fiscal year would
now also be reflected in the Item 202 disclosure provided in an exhibit
to the registrant's next annual report.\178\ The proposed amendments
would be in addition to the current requirement to file a complete copy
of the amended articles of incorporation or bylaws under Item
601(b)(3).\179\
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\177\ Item 3.03 of Form 8-K requires disclosure of material
modifications to rights of security holders while Item 5.03 requires
disclosure of amendments to the articles of incorporation or bylaws
for amendments not disclosed in a proxy or information statement.
Item 5.03 of Form 8-K also requires disclosure of changes in fiscal
year other than by means of a submission to a vote of security
holders through the solicitation of proxies (or otherwise) or an
amendment to the articles of incorporation or bylaws [17 CFR
249.308].
Item 12 of Schedule 14A requires disclosure if action is to be
taken regarding the modification of any class of securities of the
registrant, or the issuance or authorization for issuance of
securities of the registrant in exchange for outstanding securities.
Section (b) of Item 12 requires disclosure of any material
differences between the outstanding securities and the modified or
new securities in respect of any of the matters concerning which
information would be required in the description of the securities
in Item 202 of Regulation S-K. Item 19 of Schedule 14A requires
disclosure of amendments to the registrant's charter, bylaws, or
other documents.
\178\ Over the course of a given fiscal year, it is possible
that a registrant may make various non-material changes to the
rights and privileges of its securities that do not require separate
disclosure on Form 8-K. However, if any changes are made, whether
material or non-material, the proposed amendments would require a
registrant to update the description of securities in the exhibit
filed with its Form 10-K.
\179\ See Item 601(b)(3) of Regulation S-K [17 CFR
229.601(b)(3)]. The proposal would amend Item 601(b)(4) instead of
Item 601(b)(3) because (b)(4) is consistent with Item 202's
requirement to provide a description of capital stock that is
registered while (b)(3) is specific to the articles of incorporation
and bylaws.
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We recognize that some commenters opposed requiring Item 202
disclosure in periodic reports, stating that this information can
easily be found in registration statements,\180\ while other commenters
noted that the information overlaps with disclosure required under U.S.
GAAP.\181\ Requiring Item 202 disclosure as an exhibit to annual
reports could improve the ability of investors to gain access to
information about their rights as security holders. The proposed Item
601(b)(4)(vi) would allow investors to easily locate an updated
description of their rights as security holders in the most recent
annual report rather than require investors to search through prior
filings to find this disclosure. Where a registrant has previously
filed the Item 202 information as an exhibit, and so long as there has
not been any change to the information called for by Item 202, the
registrant may incorporate the information by reference and provide a
hyperlink to the previously filed exhibit. Therefore, we believe that
any additional compliance cost associated with the proposed amendment
should not be unduly burdensome.
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\180\ See, e.g., Letters from Fenwick; CGCIV; Chamber 2; and
FedEx. See also Davis Polk 1.
\181\ See Letters from CAQ and KPMG LLP (July 21, 2016)
(``KPMG''). Both commenters referenced Item 202 in the context of
broader recommendations to the Commission to work with the FASB and
the PCAOB to eliminate redundancies.
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Request for Comment
41. Should the proposed amendments include a requirement to file
Item 202 disclosure for each class of securities registered under
Section 12 of the Exchange Act as an exhibit to the annual report? Why
or why not? Should registrants also be required to include descriptions
of securities that are not registered under Section 12 of the Exchange
Act? For example, should issuers reporting only under Section 15(d) of
the Exchange Act (e.g., asset-backed issuers) be required to file Item
202 disclosure as a Form 10-K exhibit?
42. Do the requirements for Item 202, and our proposal to require
that the Item 202 information be provided as an exhibit to the annual
report, provide sufficient disclosure about debt securities or other
classes of stock with different or preferential voting rights?
43. Would the new requirements result in significantly higher
compliance costs? Would the new requirements provide benefits to
investors and facilitate informed investment decisions? Would the
proposed amendments require disclosure that is adequately provided
elsewhere in the annual report or on EDGAR? \182\
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\182\ See supra notes 172 and 181 and accompanying text.
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44. Would compliance with the proposed amendment be problematic for
issuers with multiples classes of registered securities (e.g., well-
known seasoned issuers or asset-backed issuers)? If so, how should we
revise the proposed amendments to avoid unnecessary burdens that may be
imposed on these issuers?
2. Information Omitted From Exhibits (Item 601)
Item 601 of Regulation S-K generally requires registrants to file
complete copies of exhibits.\183\ Securities Act Rule 406 \184\ and
Exchange Act Rule 24b-2 \185\ permit registrants to request
confidential treatment of information included in an exhibit to a
filing or any other document required to be filed under either the
Securities Act or the Exchange Act. Item 601(b)(2) states that
registrants shall not file schedules or similar attachments to material
plans of acquisition, reorganization, arrangement, liquidation, or
succession unless they contain information material to an investment
decision and unless that information is not otherwise disclosed in the
agreement or the disclosure document.\186\ The Commission staff
generally has not objected where a registrant omits personally
identifiable information from exhibits without submitting a
confidential treatment request.
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\183\ Item 601 of Regulation S-K [17 CFR 229.601].
\184\ 17 CFR 230.406.
\185\ 17 CFR 240.24b-2.
\186\ 17 CFR 229.601(b)(2).
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To modernize and simplify the disclosure requirements under Item
601, we are proposing to add new paragraphs (a)(5) and (a)(6) to expand
the existing accommodation in Item 601(b)(2) to include all exhibits
filed under Item 601 and permit the omission of personally identifiable
information. We also propose to add paragraph (b)(10)(iv) to Item 601
to reduce significantly the need for registrants to submit applications
for confidential treatment of information in material contract exhibits
required by that item.\187\ The proposals to add paragraphs (a)(6) and
(b)(10)(iv) are broader than the staff's recommendations in the FAST
Act Report. As explained more fully below, we believe that they are
consistent with our mandate under the FAST Act to modernize and
simplify our disclosure requirements while still providing all material
information.\188\
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\187\ Certain domestic forms include their exhibits requirements
in the form and/or do not separately reference Item 601 of
Regulation S-K (e.g., Schedule 13E-3 and Schedule 13D). As such, we
are considering whether the rationale for the proposed amendments to
Item 601 of Regulation S-K is also applicable to the exhibit
requirements in these forms. For example, Schedule 13E-3 and
Schedule 13D require registrants to file as exhibits certain
material agreements that may be deemed analogous to the exhibits
required under Item 601 of Regulation S-K. We are requesting further
comment to assist in our evaluation of this issue.
\188\ See FAST Act Report, supra note 2, at Recommendation F.2
(recommending only that the Commission permit registrants to omit
attachments and schedules filed with exhibits unless they contain
information that is material to an investment decision that has not
been otherwise disclosed).
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a. Schedules and Attachments to Exhibits
Proposed Item 601(a)(5) would permit registrants to omit entire
schedules and similar attachments to exhibits unless they contain
material information and unless that information is not otherwise
disclosed in the exhibit or the disclosure document. This exception,
which is similar to the existing accommodation in Item 601(b)(2) for
plans of acquisition, reorganization, arrangement, liquidation, or
succession, would be expanded to all exhibits under the proposed
amendments. Similar to the current provisions in Item 601(b)(2),
proposed Item 601(a)(5) would require registrants to provide with each
exhibit a list briefly identifying the contents of any omitted
schedules and attachments.
[[Page 51003]]
In addition, registrants would be required to provide, on a
supplemental basis, a copy of any omitted schedules or attachments to
the Commission staff upon request.\189\
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\189\ See proposed Item 601(a)(5) of Regulation S-K. Securities
Act Rule 418 [17 CFR 230.418] states that the Commission or its
staff may, where it is deemed appropriate, request supplemental
information concerning the registrant or a registration statement,
among other things. Exchange Act Rule 12b-4 [17 CFR 240.12b-4]
similarly indicates that the Commission or its staff may, where it
is deemed appropriate, request supplemental information concerning
the registrant, a registration statement, and a periodic or other
report filed under the Exchange Act. Unlike the current version of
Item 601(b)(2), registrants would not be required to include with
its list identifying the contents of all omitted schedules an
agreement to furnish a supplemental copy of any omitted schedule to
the Commission upon request. Instead, proposed Item 601(a)(5) would
require registrants to provide a copy of any omitted schedule to the
Commission staff upon request.
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The Commission requested comment in the Concept Release on whether
to allow registrants to omit schedules and attachments to all exhibits,
provided that the omitted schedules and attachments do not include
material information that is not otherwise included in the exhibit or
the disclosure document. Commenters uniformly supported expanding the
exception under Item 601(b)(2).\190\ Some noted that the current
requirement to file complete exhibits is unnecessarily cumbersome and
expensive where the schedules do not contain material information.\191\
Commenters also stated that these burdens are exacerbated where those
schedules contain, as is frequently the case, confidential information
that would require registrants to file confidential treatment
requests.\192\ A few commenters that supported allowing registrants to
omit schedules opposed requiring registrants to provide a list of their
omitted schedules.\193\ Another commenter supported a requirement to
include a list, but stated that requiring registrants to provide a
materiality analysis supporting the decision to omit the schedules was
unnecessary.\194\ We believe that a list of omitted schedules, similar
to current Item 601(b)(2), would be informative for investors.
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\190\ See, e.g., Letters from Committee on Securities Law of the
Business Law Section of the Maryland State Bar Association
(``Maryland Bar Securities Committee'') (July 21, 2016); ABA;
NYSSCPA; FedEx; Fenwick; and Davis Polk 1. See also Letter from
CGCIV (supporting exemption from filing immaterial attachments to
material agreements for smaller reporting companies).
\191\ See, e.g., Letters from Fenwick and Davis Polk 1.
\192\ See, e.g., Letters from Fenwick; Fenwick and West LLP,
Cooley LLP and Wilson Sonsini Goodrich & Rosati, PC (June 19, 2012)
[S-K Study Letter] (``Silicon Valley''); and Mike Liles (Apr. 10,
2013) [S-K Study Letter] (endorsing the comments expressed in the
Silicon Valley Letter).
\193\ See Letter from Fenwick (stating that it does not believe
``the burden of completing such a list of omitted schedules is
offset by any meaningful advantage to investors''); see also letters
from NYSSCPA and FEI.
\194\ See Letter from Maryland Bar Securities Committee.
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Request for Comment
45. Should the proposed amendments permit registrants to omit
entire schedules and attachments to exhibits unless the schedules or
attachments contain material information and unless that information is
not otherwise disclosed in the exhibit or the disclosure document?
Similarly, should we amend our investment company rules or forms to
permit investment companies to omit entire schedules and attachments?
46. Should Item 601(a)(5) require registrants to provide a list of
the contents of the omitted schedules and attachments as proposed?
Would a list of the titles of the schedules and attachments be
sufficient to identify the contents of the omitted schedules and
attachments? Should we provide guidance on the registrant's description
of any omitted schedule or attachment?
47. As proposed, Item 601(a)(5) would expand the existing Item
601(b)(2) accommodation to all exhibits. Should we require exhibits
filed pursuant to certain subsections of Item 601(b) to include all
schedules and attachments even if they are not material? If so, which
exhibits and subsections?
b. Personally Identifiable Information
The Commission generally does not publish or make available
information that ``would constitute a clearly unwarranted invasion of
personal privacy.'' \195\ This information includes personally
identifiable information (``PII''). Exhibits filed pursuant to Item 601
may include PII such as bank account numbers, social security numbers,
home addresses and similar information. The staff generally does not
object where a registrant omits PII from exhibits without submitting a
confidential treatment request.
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\195\ 17 CFR 200.80(b)(6) (exempting personnel and medical files
and similar files the disclosure of which would constitute a clearly
unwarranted invasion of personal privacy).
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In the Concept Release, the Commission requested comment about
whether to continue or modify the current accommodation on PII.
Numerous commenters recommended codifying the current staff practice of
permitting registrants to omit PII from exhibits without making a
formal confidential treatment request.\196\
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\196\ See, e.g., Letters from NYSSCPA; Chamber 2; FedEx; CGCIV;
Maryland Bar Securities Committee; General Motors; and Financial
Executives International.
---------------------------------------------------------------------------
Consistent with our mandate under the FAST Act to modernize and
simplify our disclosure requirements while still providing all material
information, Item 601(a)(6), as proposed, would permit registrants to
omit PII without submitting a confidential treatment request under Rule
406 or Rule 24b-2. Allowing registrants to omit PII without submitting
a confidential treatment request is also intended to better safeguard
PII by limiting its dissemination. Under the proposed amendment,
registrants also would not be required to provide an analysis to redact
PII from exhibits.
Request for Comment
48. Should we codify the current staff practice of permitting
registrants to omit PII without making a formal confidential treatment
request as proposed? Similarly, should we amend our investment company
rules or forms to similarly permit investment companies to omit PII?
c. Redaction of Confidential Information in Material Contract Exhibits
The proposed revisions to Item 601(b)(10) would permit registrants
to omit confidential information from material contracts filed pursuant
to that item where such information is both (i) not material and (ii)
competitively harmful if publicly disclosed, even where the registrant
has not submitted a confidential treatment request to the Commission.
Instead, registrants would be required to mark the exhibit index to
indicate that portions of the exhibit or exhibits have been omitted and
include 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. Registrants would also
be required to indicate with brackets where the information has been
omitted from the filed version of the exhibit.\197\
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\197\ These proposals are consistent with the marking
requirements for confidential treatment requests under Rule 406 and
Rule 24b-2.
---------------------------------------------------------------------------
Although registrants would not be required to file a confidential
treatment request in accordance with Rule 406 or Rule 24b-2 in
connection with the redacted exhibit, the responsibility of a
registrant to determine whether all material information has been
disclosed and whether they may redact the
[[Page 51004]]
information under the proposed rules would remain unchanged.\198\ The
Commission staff would continue its selective review of registrant
filings and would selectively assess whether redactions from exhibits
appear to be limited to information that is not material and that would
subject the registrant to competitive harm if publicly disclosed. As is
currently the case, the redacted information should include no more
text than necessary to prevent competitive harm to the registrant. Upon
request, registrants would be expected to promptly provide supplemental
materials to the staff similar to those currently required in a
confidential treatment request, including an unredacted paper copy of
the exhibit and an analysis of why the redacted information is both (i)
not material and (ii) would cause competitive harm if publicly
disclosed.\199\ The timing of any staff review would not alleviate a
registrant's obligation to disclose all material information and its
obligation to limit redactions to those provisions and terms that are
both (i) not material and (ii) would cause competitive harm if publicly
disclosed. Registrants could request confidential treatment of this
supplemental information pursuant to Rule 83 while it is in the staff's
possession. If the registrant's supplemental materials do not support
its redactions, similar to the process the staff currently follows for
confidential treatment requests under Rule 406 and Rule 24b-2, the
staff may request that the registrant file an amendment that includes
some, or all, of the previously redacted information.\200\
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\198\ See Rule 12b-20 [17 CFR 240.12b-20], Rule 408(a) [17 CFR
230.408(a)] and proposed Item 601(b)(10)(iv).
\199\ This analysis would be substantially the same as is
currently required in confidential treatment requests submitted in
reliance on Rule 80(b)(4) [17 CFR 200.80(b)(4)] pursuant to Rule 406
or Rule 24b-2.
\200\ Upon completion of the staff's review, the materials would
be returned or destroyed if the registrant complies with the
procedures outlined in Rule 418 or 12b-4.
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The Concept Release did not request comment on the confidential
treatment process, other than its request for comment about omitting
schedules and attachments to exhibits; however, two commenters noted
that the requirement to file material agreements causes registrants to
expend significant resources in preparing confidential treatment
requests.\201\ We believe that simplifying and streamlining this
process would be consistent with the FAST Act mandate to revise
Regulation S-K in a manner that reduces the costs and burdens on
registrants while providing investors all material information. In
addition, we believe the proposal would result in limiting the
dissemination of sensitive information because registrants would not be
required to provide an un-redacted copy of each exhibit at the time of
filing in order to request confidential treatment. Instead, this
information would only be required on request in connection with a
staff filing review.
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\201\ See Letter from Fenwick and letter from Davis Polk 1
(requesting that the Commission reconsider the utility of the
(b)(10) exhibit filing requirement).
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Request for Comment
49. Should registrants be permitted to omit confidential
information from exhibits filed pursuant to Item 601(b)(10) that is
both (i) not material and (ii) competitively harmful if publicly
disclosed without submitting a confidential treatment request as
proposed? Similarly, should we amend our investment company forms to
permit investment companies to omit confidential information from
exhibits?
50. Would the disclosure provided in exhibits change under the
proposed amendments? Why or why not?
51. Under the proposed amendments, if the registrant's supplemental
materials do not support its redactions, the staff may request that the
registrant file an amendment that includes some, or all, of the
previously redacted information. In these situations, should we require
registrants to include an explanatory note describing why the amendment
is being provided? Should we also require that any amendment highlight
the previously redacted information?
52. Should we allow registrants to omit confidential information
from exhibits other than those filed pursuant to Item 601(b)(10) that
is both (i) not material and (ii) competitively harmful if publicly
disclosed? For instance, should registrants be allowed to omit similar
information from exhibits filed pursuant to Item 601(b)(2)? Should they
be allowed to omit similar information from exhibits filed pursuant to
other subsections of Item 601? If so, which subsections and why?
53. Should we apply the proposed amendments discussed in Section
II.E.2. (Information Omitted from Exhibits) to forms that include their
exhibits requirements in the form or do not separately reference Item
601 of Regulation S-K (e.g., Schedule 13E-3 and Schedule 13-D)? If so,
what forms should be amended and to what extent? If not, why? Are there
special considerations associated with change of control transactions,
going private transactions, or beneficial ownership reporting that
render the provision of information in exhibits material to an
investment or voting decision? What are the costs and benefits of
applying the proposed amendments to these forms? How do they differ
from the costs and benefits of applying the proposed amendments to
Regulation S-K? \202\
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\202\ We are proposing to apply the proposed amendments to Form
20-F to maintain a consistent approach to the exhibit filing
requirements for domestic registrants and foreign private issuers.
See infra Section II.E.5 (Exhibits--Application to Foreign Private
Issuers).
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3. Material Contracts (Item 601(b)(10)(i))
Item 601(b)(10)(i) requires registrants to file every material
contract not made in the ordinary course of business, provided that one
of two tests is met: (i) The contract must be performed in whole or in
part at or after the filing of the registration statement or report, or
(ii) the contract was entered into not more than two years before that
filing.\203\
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\203\ Item 601(b)(10)(i) of Regulation S-K [17 CFR
229.601(b)(10)(i)].
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The first test captures contracts that have not been fully
performed prior to the filing date. The second test--the two-year look
back--captures material contracts that were fully performed before the
filing date.\204\ Currently, all registrants subject to Item 601 must
consider both tests when deciding whether a material, non-ordinary
course contract must be filed as an exhibit.
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\204\ The two-year look back is included in Schedule A of the
Securities Act [15 U.S.C. 77aa(24)] and serves as a ``cutoff
period'' so registrants would not have to file material contracts
that may have been fully performed many years prior to registration.
When Section 12(g) was added to the Exchange Act in 1964, the
Commission was authorized to issue rules requiring such material
contracts to be filed with Exchange Act reports. See Section
12(b)(1)(I) of the Exchange Act; H.R. Rep. No. 88-1418, 83rd Cong.,
2nd Sess., 1964. Prior to the enactment of Section 12(g), the
Exchange Act reporting requirements were applicable only to listed
companies.
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Consistent with the recommendations in the FAST Act Report,\205\ we
are proposing amendments to Item 601(b)(10)(i) that would limit the
two-year look back test to newly reporting registrants. Proposed
Instruction 1 to Item 601(b)(10)(i) defines a ``newly reporting
registrant'' 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
[[Page 51005]]
obligation.\206\ As an example, a registrant that is filing its first
registration statement under the Securities Act or the Exchange Act, or
filing its first Form 10-K since the revival of its reporting
obligation,\207\ would be required to file material agreements under
Item 601(b)(10)(i) for the two-year look back period.\208\ The
definition of ``newly reporting registrant'' under the proposed
instruction also would include any registrant that (a) was a shell
company, other than a business combination related shell company, as
defined in Rule 12b-2 under the Exchange Act, immediately before
completing a transaction that has the effect of causing it to cease
being a shell company, and (b) has not filed a registration statement
or Form 8-K, as required by Item 2.01 and Item 5.06 of that form, since
the completion of the transaction (or, in the case of foreign private
issuers, has not filed a Form 20-F since the completion of the
transaction).\209\ Under the proposed amendments, a registrant meeting
this definition would be required to file material agreements for the
two-year look back period. The proposed amendments would help ensure
that investors receive access to agreements containing material
information, including agreements entered into by newly reporting
registrants up to two years prior to the commencement of their
reporting obligations. Registrants with established reporting histories
would not be required to comply with the two-year look back requirement
because investors would continue to have access to any material
agreements previously filed on EDGAR.\210\ As such, the proposed
amendments would streamline reporting obligations while maintaining
investor protections.
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\205\ See FAST Act Report, supra note 2, at Recommendation F.3.
\206\ See proposed Instruction 1 to paragraph (b)(10) of Item
601.
\207\ See Exchange Act Rules Compliance and Disclosure
Interpretation 153.02 (stating that a Form 10-K for the previous
fiscal year is the first report due after a reporting obligation is
revived), available at https://www.sec.gov/divisions/corpfin/guidance/exchangeactrules-interps.htm (last updated December 8,
2016).
\208\ In the case of a registrant with a suspended reporting
obligation that, less than two years later, is revived, the proposed
requirement to file material agreements for the two-year look back
period may be satisfied by incorporating by reference and
hyperlinking to agreements previously filed on EDGAR and filing any
material agreements entered into while the registrant was not
reporting. See Exhibit Hyperlinks Adopting Release, supra note 14,
at 14135.
\209\ Under the proposed amendment, the definition of ``newly
reporting registrant'' would not include reporting companies
completing merger transactions with business combination-related
shell companies.
\210\ Schedule A of the Securities Act requires that registrants
file ``every material contract made, not in the ordinary course of
business, which contract is to be executed in whole or in part at or
after the filing of the registration statement or which contract has
been made not more than two years before such filing.'' See Schedule
A, paragraph 24 [15 U.S.C. 77aa(24)]. Due to the availability of
filings on EDGAR, as noted above, we believe the two-year look back
requirement does not provide additional investor protection when
applied to registrants with a reporting history.
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Request for Comment
54. Should we revise Item 601(b)(10)(i) to limit the two-year look
back test to newly reporting registrants as proposed?
55. Should the two-year look back requirement apply to a registrant
completing a reverse merger involving any public shell company that is
not a business combination-related shell company as proposed? Why or
why not?
56. Should the proposed amendment be broadened to require that a
public company acquiring or merging with a non-public company must
apply the two-year look back test to agreements entered into by the
non-public company prior to the transaction date?
57. Should registrants that have revived reporting obligations be
required as proposed, to file material contracts for the full two-year
look back period, regardless of how long their prior reporting
obligation was suspended? Alternatively, if the registrant's reporting
obligation was suspended for less than two years prior to revival,
should the registrant only be required to file agreements entered into
while the obligation was suspended?
4. Subsidiaries of the Registrant and Entity Identifiers (Item
601(b)(21)(i))
Item 601(b)(21) requires a registrant to list as an exhibit all of
its subsidiaries, the state, or other jurisdiction of incorporation or
organization of each, and the names under which those subsidiaries do
business.\211\ The name of particular subsidiaries may be omitted if
the unnamed subsidiaries, considered in the aggregate as a single
subsidiary, would not constitute a ``significant subsidiary'' under
Rule 1-02(w) of Regulation S-X.\212\
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\211\ Item 601(b)(21)(i) of Regulation S-K [17 CFR
229.601(b)(21)(i)].
\212\ Item 601(b)(21)(ii) of Regulation S-K [17 CFR
229.601(b)(21)(ii)].
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Consistent with the staff's recommendation in the FAST Act
Report,\213\ we are proposing amendments to Item 601(b)(21)(i) that
would require registrants to include in the exhibit the legal entity
identifier (``LEI''), if one has been obtained, of the registrant and
each subsidiary listed. An LEI is a 20-character, alpha-numeric code
that allows for unique identification of entities engaged in financial
transactions. LEIs are intended to improve market transparency by
providing clear identification of participants.\214\ Fees are not
imposed on investors for use of, or access to, LEIs. All of the
associated reference data needed to understand, process, and use LEIs
is widely and freely available. These associated reference data also
are not subject to any usage restrictions. There is a cost of obtaining
an LEI for registrants: A one-time fee of $75-$119 and $50-$99 in
annual maintenance fees.\215\
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\213\ See FAST Act Report, supra note 2, at Recommendation F.4.
\214\ See Arthur B. Kennickell, Bd. of Governors of the Fed.
Reserve Sys., Identity, Identification and Identifiers: The Global
Legal Entity Identifier System (Nov. 8, 2016), available at https://www.federalreserve.gov/econresdata/feds/2016/files/2016103pap.pdf.
\215\ See Glob. Legal Entity Identifier Found., Frequently Asked
Questions--Fees, Payment and Taxes, available at https://lei.bloomberg.com/docs/faq; and Glob. Mkt. Entity Identifier Util.,
GMEI Utility Pricing, available at https://www.gmeiutility.org/gmeiUtilityPricing.jsp. See also, Letter from SIFMA.
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In the Concept Release, we solicited comment on whether we should
require registrants to disclose their LEI and the LEIs of their
subsidiaries (if available) in Exhibit 21 and how this information
would benefit investors. Many commenters supported requiring disclosure
of LEIs,\216\ with most of them
[[Page 51006]]
recommending that we require both the registrant and its subsidiaries
to obtain and disclose LEIs.\217\ These commenters generally stated
that the use of LEIs would improve investors' ability to understand
registrants' risk profiles. In this regard, commenters observed that
LEIs would allow investors to link third-party data with structured
data from the Commission to produce more meaningful analysis.\218\
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\216\ See, e.g., Letters from Data Coalition (July 21, 2016)
(``Data Coalition'') (recommending that the Commission adopt the
``if available'' disclosure standard as an interim step prior to
requiring registrants to obtain and disclose LEIs); Bloomberg
(recommending that filers should be required to obtain an LEI);
SIFMA (noting that regulators have driven the expansion of the LEI
system and expressing support for recent regulations that impose
requirements upon certain investment companies to obtain an LEI);
and XBRL US (recommending that the Commission require registrants to
obtain an LEI for every company in their corporate structure;
stating that use of LEIs would improve the functionality of filings
by identifying participants in financial transactions and bringing
clarity to interrelationships between entities). See also Letters
from E. Bean; SEC Investor Advisory Committee (June 15, 2016) (``IAC
1'') (stating that LEIs could facilitate the work of the Commission
and other prudential regulators related to systemic risk, firm
interconnectivity, and leverage at broker-dealers, asset managers,
and other market participants and benefit investors trying to
understand complex structures); Owner Subcommittee of the SEC's
Investor Advisory Committee (Nov. 22, 2016) (``IAC 2''); Main Street
Alliance (July 5, 2016); The Financial Accountability and Corporate
Transparency Coalition (July 6, 2016); Citizens for Tax Justice; GRI
(July 21, 2016); American Sustainable Business Council, Citizens for
Tax Justice, FACT Coalition, Fair Share, Global Financial Integrity
and Main Street Alliance (July 21, 2016); Americans for Tax Fairness
(July 21, 2016); AFL-CIO (July 21, 2016); Oxfam America (July 21,
2016); S. Percoco; Americans for Financial Reform (Aug. 10, 2016);
NYSCRF; Global Legal Identity Identifier Foundation (July 21, 2016);
and CFA Institute. See also letter from TagniFi, LLC (Jan. 27, 2016)
[Disclosure Effectiveness letter] (``TagniFi'').
\217\ See id. Two commenters opposed an LEI requirement, stating
that ``there is no global standard for LEI.'' See Letters from
Financial Executives International and General Motors.
\218\ See, e.g., Letters from SIFMA, Bloomberg, and Data
Coalition. See also Nationally Recognized Statistical Rating
Organizations, Release No. 34-72936 (Aug. 27, 2014) [79 FR 55077
(Sept. 15, 2014)] (the ``2014 NRSRO Amendments Release'') and Credit
Risk Retention, Release No. 34-73407 (Oct. 22, 2014) [79 FR 77601
(Dec. 24, 2014)] (the ``Credit Risk Retention Release'').
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The proposed amendment is intended to modernize the disclosure
requirements under Regulation S-K by requiring registrants to provide
any LEIs obtained for themselves or their listed subsidiaries to
investors. This proposal would allow investors to use the LEI to more
quickly and precisely identify registrants and their subsidiaries. Our
proposal is consistent with prior regulatory efforts. For example, as
part of our recent investment company reporting modernization efforts,
we adopted rules requiring certain registrants and funds to obtain LEIs
to provide a consistent means of identification.\219\ Due in part to
these and other similar global regulatory efforts, the usage of LEIs
has increased over the last few years.\220\
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\219\ See Investment Company Reporting Modernization, Release
No. 33-10231 (Nov. 18, 2016) [81 FR 81870]) (the ``IM Modernization
Adopting Release''). See also id. at n. 61 (discussing additional
contexts in which the Commission has required LEIs, including Form
PF--Reporting Form for Investment Advisers to Private Funds and
Certain Commodity Pool Operators and Commodity Trading Advisors,
available at http://www.sec.gov/rules/final/2011/ia-3308-formpf.pdf); Regulation SBSR-Reporting and Dissemination of
Security-Based Swap Information, Release No. 34-74244 (Feb. 11,
2015) [80 FR 14564 (Mar. 19, 2015)]. See also 2014 NRSRO Amendments
Release, supra note 218; Credit Risk Retention Release, supra note
218.
\220\ See, e.g., Legal Entity Identifier Regulatory Oversight
Comm., The Global LEI System and regulatory uses of the LEI (Nov. 5,
2015), available at http://www.leiroc.org/publications/gls/lou_20151105-1.pdf (progress report by the Legal Identifier
Regulatory Oversight Committee, including an annex listing
regulatory actions in the United States, the EU countries, and eight
other countries which require, request, or allow the use of LEIs).
The global LEI system currently has over 580,000 registrations and
is growing. See Global LEI Foundation daily updated ``concatenated
file,'' which includes all LEIs issued globally and related LEI
reference data, available at https://www.gleif.org/en/lei-data/gleif-concatenated-file/lei-download#or http://openleis.com. See
also Glob. Legal Entity Identifier Found., Regulatory Use of the LEI
(providing an overview of current and proposed global regulatory
activities involving LEI), available at https://www.gleif.org/en/about-lei/regulatory-use-of-the-lei; Global LEI Data Quality Reports
Archive, available at https://www.gleif.org/en/lei-data/gleif-data-quality-management/about-the-data-quality-reports/archive# (showing
total number of LEIs issued, renewed, reactivated and lapsed from
January 2016 through April 2017).
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We recognize that many registrants and their subsidiaries may not
have LEIs. Accordingly, our proposals would require disclosure of LEIs
only for those registrants and subsidiaries that choose to obtain this
identifier. Below, we solicit comment as to whether to require
registrants and their subsidiaries to obtain LEIs.
Request for Comment
58. Should we require registrants to include in Exhibit 21 the LEI
(if one has been obtained) of the registrant and each subsidiary
required to be listed in the exhibit? Would requiring registrants to
disclose LEIs in Exhibit 21 as proposed, provide investors with
sufficient access to that information? Is there another location in
registrant filings, other than Exhibit 21, where LEI information would
be more accessible to investors? For example, should a registrant be
required to disclose its LEI, if it has one, on the cover page of each
registration statement, periodic filing, or current report and provide
the LEIs for its significant subsidiaries in an exhibit?
59. If we require registrants to include LEIs in Exhibit 21 as
proposed, should we also require them to provide that information as
machine-readable data? If so, what structured data format would be the
most useful to investors? For example, the Commission recently adopted
amendments requiring investment companies to provide LEIs in XML
format.\221\ Should we require registrants that have already obtained
LEIs to disclose their LEIs in XML format? Or, for consistency with the
proposal to tag information on the cover page of certain forms using
Inline XBRL format,\222\ should we require disclosure of LEIs in Inline
XBRL format? What would be the additional cost to registrants to
provide LEIs in XML, Inline XBRL, or another machine-readable format?
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\221\ See IM Modernization Adopting Release, supra note 219.
\222\ See infra Section II.G.1 (Tagging Cover Page Data).
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60. In light of the many comments received on the costs and
benefits of LEIs,\223\ should our rules encourage or require
registrants and each subsidiary thereof required to be listed in
Exhibit 21 to obtain an LEI? If so, how should we structure our rules
to achieve this purpose?
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\223\ See supra notes 216 to 218 and accompanying text.
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61. Some registrants have numerous subsidiaries or affiliates
operating globally, while other registrants have simple corporate
structures. Should we require certain types of registrants, such as
larger registrants or subsidiaries, to obtain LEIs? For example, should
we limit the requirement to large accelerated filers, well-known
seasoned issuers, or foreign private issuers?
5. Application to Foreign Private Issuers
The Commission previously adopted amendments to conform the exhibit
requirements in Form 20-F to the requirements in Item 601.\224\ To
maintain a consistent approach to the exhibit requirements for domestic
registrants and foreign private issuers, the proposed amendments would
require foreign private issuers to provide information in exhibit
filings comparable to the information provided by domestic registrants
under Item 601(a)(5), Item 601(a)(6), Item 601(b)(4)(vi), Item
601(b)(10)(i), Item 601(b)(10)(iv), and Item 601(b)(21), as proposed.
In each case, we believe that the justifications for the proposed
amendments to Item 601 are equally applicable to Form 20-F.
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\224\ See International Disclosure Standards Release, Release
No. 33-7637 (Feb. 2, 1999) [64 FR 6261 (Feb. 9, 1999)] (expressing
the Commission's intention ``to conform the exhibit requirements for
Form 20-F with the exhibit requirements for registration statements
filed by U.S. issuers under the Exchange Act'' and stating that all
of the Form 20-F exhibit requirements ``are required for domestic
issuers filing a registration statement on Form 10 or an annual
report on Form 10-K'').
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We are not proposing similar changes to Form 40-F. Form 40-F
generally permits Canadian issuers to use Canadian disclosure documents
to satisfy the Commission's registration and disclosure requirements.
As a result, the exhibit requirements in Form 40-F are largely in
accordance with Canadian disclosure standards.
Request for Comment
62. Should we amend the exhibit requirements of Form 20-F so that
they are consistent with the requirements under Item 601 as proposed?
Why or why not? Are there any unique considerations with respect to
foreign private issuers in this context?
63. Should we make corresponding changes to the exhibit
requirements in Form 40-F? Why or why not?
64. Would the proposed amendments conflict with home-country
requirements in some jurisdictions? If so, please explain.
[[Page 51007]]
F. Incorporation by Reference
To reduce duplicative disclosure, registrants have been permitted
to incorporate previously filed information into their filings since
the enactment of the Securities Act and the Exchange Act.\225\
Initially, incorporation by reference was limited to exhibits, but over
time we have increasingly permitted incorporation by reference in other
contexts. The rules and instructions governing incorporation by
reference are now found in a variety of regulations, including
Regulation S-K, Regulation C, Regulation 12B and many of the
Commission's forms.
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\225\ See Federal Trade Commission Release No. 33-47 (Sept. 22,
1933) (allowing for incorporation by reference of exhibits filed
with registration statements); Release No. 34-51 (Nov. 27, 1934)
(allowing for incorporation by reference of exhibits filed with the
Commission under the Exchange Act or filed with an exchange).
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In the FAST Act Report, the staff recommended that the Commission
consider consolidating, clarifying, and updating Item 10(d) of
Regulation S-K and the other rules governing incorporation by
reference.\226\ Consistent with our mandate under the FAST Act, our
proposed amendments would revise Item 10(d), Rule 411,\227\ Rule 12b-
23,\228\ and a number of our forms to simplify and modernize these
rules while still providing all material information. Our proposed
amendments would also rescind Rule 12b-32.\229\ In addition, to provide
for a consistent set of incorporation by reference rules for investment
companies and investment advisers, we are proposing parallel amendments
to Rule 0-4 \230\ and a number of forms under the Investment Company
Act,\231\ certain conforming amendments to Rule 0-6 \232\ under the
Investment Advisers Act,\233\ and the rescission of Rule 8b-23,\234\
Rule 8b-24,\235\ and Rule 8b-32 \236\ under the Investment Company Act
(certain provisions of which would be consolidated into proposed new
Rule 0-4). The proposed amendments would streamline the requirements
associated with incorporation by reference and facilitate investor
access to incorporated documents through the use of hyperlinks. The
proposed amendments are also consistent with the Commission's
longstanding acceptance of incorporation by reference in the interests
of encouraging registrants to eliminate duplicative disclosures.
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\226\ See FAST Act Report, supra note 2, at Recommendations A.1
and A.2.
\227\ 17 CFR 230.411.
\228\ 17 CFR 240.12b-23.
\229\ 17 CFR 240.12b-32.
\230\ 17 CFR 270.0-4.
\231\ 15 U.S.C. 80a-1 et seq.
\232\ 17 CFR 275.0-6.
\233\ 15 U.S.C. 80b-1 et seq.
\234\ 17 CFR 270.8b-23.
\235\ 17 CFR 270.8b-24.
\236\ 17 CFR 270.8b-32.
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Our proposed amendments respond to some of the recommendations from
commenters on the Concept Release. Commenters generally supported the
use of incorporation by reference.\237\ A number of commenters
recommended expanding the ability to incorporate by reference.\238\
Some commenters, while supporting the use of incorporation by
reference, cautioned that it should not excessively fragment disclosure
or make disclosure more difficult to access.\239\
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\237\ See Letters from Wachtell, Lipton, Rosen & Katz (May 16,
2016) (``Wachtell''); Ball Corporation (July 19, 2016) (``Ball'');
Chamber 2; FedEx; CGCIV; International Integrated Reporting Council
(July 20, 2016) (``IIRC''); California State Teachers' Retirement
System (July 21, 2016) (``CalSTRS''); Edison Electric and AGA;
American Federation of State, County and Municipal Employees (July
21, 2016) (``AFSCME''); Fenwick; and NIRI.
\238\ See Letters from Wachtell; Chamber 2; FedEx; CGCIV; IIRC;
Edison Electric and AGA; Fenwick; IAC 1; and NIRI.
\239\ See Letters from IIRC and CalSTRS. The IIRC recommended
emphasizing the use of incorporation by reference for
``supplementary'' information so as to focus the disclosure in a
document on ``core'' information.
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1. Item 10(d)
Item 10 of Regulation S-K \240\ contains general requirements on
the application of Regulation S-K. Item 10(d) focuses on incorporation
by reference.\241\ Item 10(d) states that, where rules, regulations, or
instructions to the forms permit incorporation by reference, a document
may be incorporated by reference to the specific document and to the
prior filing or submission in which that document was physically filed
or submitted. Item 10(d) generally prevents registrants from
incorporating by reference a portion of a document that itself also
incorporates pertinent information by reference.\242\ It also prohibits
incorporating documents by reference if they have been on file with the
Commission for more than five years and do not fall within one of the
exceptions provided in the rule.\243\
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\240\ 17 CFR 229.10.
\241\ 17 CFR 229.10(d).
\242\ Indirect incorporation by reference is permitted when the
registrant is expressly required to incorporate a document by
reference and, in the case of asset-backed issuers, under Item
1100(c) of Regulation AB [17 CFR 229.1100(c)]. See Item 10(d).
\243\ See infra note 247 and accompanying text (discussing the
exceptions).
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Consistent with the staff's recommendation in the FAST Act Report,
we are proposing to eliminate the five-year limit in Item 10(d). This
requirement originated from the Commission's policy on retention of
hard copy records of filings, as set forth in the Commission's Rules of
Practice.\244\ This requirement previously imposed a 10-year limit but
was reduced to five years in 1977 to allow for the Commission's
``orderly destruction of unneeded filings.'' \245\ At the time, the
Commission noted that the ``cost of storage outweighs the usefulness to
the Commission and to the public of many if not most of these
records.'' \246\ Nevertheless, exceptions were added for documents
contained in registration statements of reporting registrants and for
documents that a registrant identifies by file number that have not
been disposed of pursuant to the Commission's Records Control
Schedule.\247\ Given these broad exceptions and the current practice of
retaining documents electronically, the five-year limit now serves
little purpose and may lead to confusion about which documents may be
incorporated by reference.\248\
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\244\ See Rules of Practice, Release No. 34-35833 (June 9, 1995)
[60 FR 32738 (June 23, 1995)] (moving the requirements from Rule 24
of the Commission's Rules of Practice to Item 10(d)). We are also
proposing to eliminate remaining references to Rule 24 in Regulation
S-K and other rules and forms. See, e.g., Rule 411(d) and Form N-2.
\245\ See 25 FR 6719 (July 15, 1960) (adopting Rule 24);
Incorporation by Reference, Release No. 33-5818 (Mar. 18, 1977) [42
FR 16922 (Mar. 30, 1977)] (adopting an amendment to Rule 24 reducing
the 10-year limit to five years).
\246\ Notice of (1) Proposed Amendments to Rule 24 of the Rules
of Practice and All Other Commission Rules Relating to Incorporation
By Reference and Basic Documents and (2) Proposed Revocation of
Securities Exchange Act Rule 12b-34, Release No. 33-5711 (May 21,
1976) [41 FR 105 (May 28, 1976)] (proposing a three-year limit with
certain ``basic documents'' being retained for a longer period).
\247\ See Item 10(d)(1)-(2) and the Commission's Records Control
Schedule [17 CFR 200.80f].
\248\ We believe that it is very unlikely that a registrant
would attempt to incorporate by reference to a document that was
filed with the Commission but is no longer available because it was
not submitted on EDGAR and has been destroyed pursuant to the
Records Control Schedule. For example, the Commission retains
Securities Act and Exchange Act registration statements, reports and
proxy materials that have not been filed on EDGAR for 30 years. See
Records Control Schedule [17 CFR 200.80f]. Under the proposed
amendments, a registrant would not be permitted to incorporate by
reference to a destroyed document because it would render its
disclosure incomplete, unclear, or confusing. See, e.g., proposed
Rule 411(e) and Rule 12b-23(e).
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Without the provisions relating to the five-year limit, little
substance remains in Item 10(d). Therefore, to simplify the
requirements, we are proposing to move the remaining provision in Item
10(d) prohibiting indirect incorporation by reference into the other
rules governing incorporation by reference.\249\ In the
[[Page 51008]]
FAST Act Report, the staff recommended consolidating the incorporation
by reference rules in Item 10(d). After considering this
recommendation, we believe that consolidating these procedural rules in
Regulation C and Regulation 12B (and, for investment companies and
investment advisers, in Rule 0-4 under the Investment Company Act and
Rule 0-6 under the Investment Advisers Act, respectively \250\) would
better align with the Commission's original intent of focusing
Regulation S-K on substantive disclosure requirements.\251\
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\249\ See the proposed amendments to Rule 411, Rule 12b-23, Rule
0-4, and Rule 0-6. Paragraph (d) of Item 10 also states that, when
incorporation by reference is permitted, a document may be
incorporated by reference to the specific document and to the prior
filing or submission in which such document was physically filed or
submitted. We are proposing to eliminate this provision because
similar provisions exist in Rule 411(d), Rule 12b-23(b), Rule 0-
4(c), and Rule 0-6(c).
\250\ As part of these amendments, we are proposing amendments
to various Investment Company Act forms to eliminate references to
Item 10(d), along with outdated references in our forms and Rule 0-4
and Rule 0-6 to 17 CFR 228.10(f), a former rule under Regulation S-B
which was rescinded in 2007. See Smaller Reporting Company
Regulatory Relief and Simplification, Release No. 33-8876 (Dec. 19,
2007) [73 FR 934 (Jan. 4, 2008)].
\251\ See FAST Act Report, supra note 2, at Recommendation A.2
(``These rules could be consolidated in Item 10(d) for submissions
that are required to comply with Regulation S-K.''). When the
Commission adopted the integrated disclosure system, it indicated
that it intended to bifurcate the regulations into procedural
requirements and substantive disclosure requirements. See Proposed
Revision of Regulation C, Registration and Regulation 12B,
Registration and Reporting, Release No. 33-6333 (Aug. 6, 1981) [46
FR 41971 (Aug. 18, 1981)] (``In its development of an integrated
disclosure system, the Commission has sought to consolidate
requirements relating to substantive disclosure and document content
in Regulation S-K. The proposals in this release reflect the
continuation of that process and also the effort to simplify and
consolidate procedural requirements in Regulations C and 12B.'');
Integrated Disclosure System Adopting Release, supra note 69 (``The
third aspect of the integrated disclosure system consists of
Regulation C and Regulation 12B, which contain the procedures to be
used in preparing and filing registration statements and reports
under the Securities Act and the Exchange Act, respectively.'').
Nevertheless, the rules governing incorporation by reference could
be consolidated in Regulation S-K. We are soliciting comment on
whether such an approach would be preferable.
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Request for Comment
65. Should we consolidate the requirements governing incorporation
by reference as proposed? Would the proposed structure of the
incorporation by reference rules be simpler for registrants,
particularly smaller registrants, to follow? Instead of preserving the
different rules for incorporation by reference under Regulation C and
Regulation 12B, should we combine Rule 411, Rule 12b-23, and Rule 12b-
32 in a single item of Regulation S-K? Would that facilitate or
streamline compliance with the rules?
66. Should we eliminate Item 10(d)'s five-year limit on
incorporation by reference as proposed? Given the exceptions that exist
and the Commission's electronic filing requirements, is the five-year
limit obsolete? Would eliminating the five-year limit make it difficult
for investors to locate information that a registrant incorporates by
reference?
67. For investment companies and investment advisers, should we
consolidate the different rules for incorporation by reference into
Rule 0-4 and Rule 0-6, respectively as proposed? Would this structure
be simpler for investment companies and investment advisers to follow,
or are there special considerations regarding investment companies and
investment advisers that make the current or another structure more
appropriate?
2. Securities Act Rule 411, Exchange Act Rule 12b-23 and Rule 12b-32
and Related Rules Under the Investment Company Act and Investment
Advisers Act
Rule 12b-23 governs incorporation by reference for registration
statements filed pursuant to Sections 12(b) and 12(g) of the Exchange
Act and reports filed pursuant to Sections 13 and 15(d) of the Exchange
Act.\252\ Rule 12b-23 broadly allows for incorporation by reference in
answer, or partial answer, to any item of an Exchange Act registration
statement or report. Rule 12b-32 governs incorporation by reference for
exhibits filed with registration statements and reports. Rule 411
governs incorporation by reference for registration statements filed
under the Securities Act, including exhibits thereto.\253\ Rule 411
restricts incorporation by reference in a prospectus unless otherwise
provided in the appropriate form but allows for incorporation by
reference similar to Rule 12b-23 for the non-prospectus portions of a
registration statement.\254\
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\252\ See Rule 12b-1 [17 CFR 240.12b-1] (setting forth the scope
of Regulation 12B).
\253\ See Rule 400 [17 CFR 230.400] (setting forth the scope of
Regulation C).
\254\ See Integrated Disclosure System Adopting Release, supra
note 69; Proposed Revision of Regulation C, Registration and
Regulation 12B, Registration and Reporting, Release No. 33-6333
(Aug. 6, 1981) [46 FR 41971 (Aug. 18, 1981)] (``While it is
generally proper to prevent prospectuses from incorporating exhibits
which are not delivered, the Commission does not believe it is
necessary to impose such limits in connection with Exchange Act
reports which are not actually delivered in registered public
offerings of securities.'').
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Under the Investment Company Act, Rule 0-4 provides general
incorporation by reference rules for investment company registration
statements, applications, and reports filed with the Commission. Rule
8b-23 (additional incorporation by reference rules for registration
statements and reports), Rule 8b-24 (rules regarding summaries or
outlines of documents), and Rule 8b-32 (incorporation of exhibits by
reference) provide additional incorporation by reference rules for
investment company registration statements and reports. Under the
Investment Advisers Act, Rule 0-6 governs incorporation by reference
for investment adviser applications for Commission orders under the
Investment Advisers Act other than applications for registration as an
investment adviser.
a. Exhibit and Other Filing Requirements
Rule 12b-23(a)(3) under the Exchange Act requires that copies of
any information incorporated by reference must be filed as an exhibit,
with limited exceptions.\255\ This provision was introduced in 1971 so
that then-existing microfiche technology for the public dissemination
of reports and documents filed with the Commission could function
properly.\256\ Rule 411(b)(4) under the Securities Act has a more
limited exhibit filing provision for non-prospectus information that is
incorporated by reference into a document that does not comply with the
five-year limit in Item 10(d). Rule 8b-23 under the Investment Company
Act generally requires investment company registrants to file with a
registration statement or report a copy of any registration statement,
report, or prospectus from which information is incorporated by
reference, except in cases where the registration statement, report, or
prospectus was filed electronically.\257\ We are proposing to
[[Page 51009]]
eliminate these requirements, consistent with commenters' suggestions
and the staff's recommendation in the FAST Act Report to make the rules
for incorporation by reference more consistent, and to apply consistent
rules for incorporation by reference under the Investment Company Act
and Investment Advisers Act.\258\ We no longer believe that these
requirements are necessary as most Exchange Act filings are made
publicly available on EDGAR, and as we generally do not have similar
exhibit filing requirements for Securities Act registration
statements.\259\
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\255\ See Rule 12b-23(a)(3) [17 CFR 240.12b-23(a)(3)](providing
exceptions for a proxy or information statement incorporated by
reference in response to Part III of Form 10-K, a form of prospectus
filed pursuant to Rule 424(b) [17 CFR 230.424(b)] incorporated by
reference in response to Item 1 of Form 8-A, and information filed
on Form 8-K).
\256\ See Registration and Reporting and Form for Annual Reports
of Employee Stock Purchase Plans, Release No. 34-9048 (Jan. 4, 1971)
[36 FR 4483 (Mar. 6, 1971)] (``In order that the microfiche system
for the public dissemination of reports and documents filed with
[the] Commission may work, the amended rule requires that copies of
information or financial statements incorporated by reference, or
copies of the pertinent pages of any document containing such
information or statement, be filed with the registration statement
or report in which it is so incorporated.'').
\257\ See Rule 8b-23(a) [17 CFR 270.8b-23(a)]. In addition, Rule
0-4 under the Investment Company Act and Rule 0-6 under the
Investment Advisers Act permit the incorporation by reference as an
exhibit in any registration statement, application or report (in the
case of Rule 0-4) or in any application (in the case of Rule 0-6)
any document or part thereof previously or concurrently filed with
the Commission. Both rules also permit the incorporation by
reference of financial statements (or parts thereof), although Rule
0-6 specifies that the financial statements (or parts thereof) that
are incorporated are to be filed as exhibits. For consistent rules
under both Acts, we are proposing amendments to Rule 0-4 to specify
that financial statements may be filed as exhibits to investment
company applications, as Rule 0-6 currently specifies with respect
to applications filed under the Investment Advisers Act.
Furthermore, if the number of copies of any document from which
information is incorporated by reference is less than the number of
copies required to be filed with a registration statement,
application, or report, Rule 0-4 and Rule 0-6 require an investment
company or applicant, respectively, to file as many additional
copies of the document incorporated by reference as may be necessary
to meet the requirements of the registration statement, application,
or report. See Rule 0-4(a), Rule 0-6(a). We are proposing to
eliminate the requirement to file additional copies from Rule 0-4
because most investment company filings are available on EDGAR.
Although investment adviser applications are filed in paper format,
in the staff's experience, those applications rarely incorporate by
reference information as permitted by Rule 0-6. For our regulatory
purposes, we do not believe that the number of copies specified in
current Rule 0-6 is needed. Thus, for the foregoing reasons and for
consistency purposes, we are similarly proposing to eliminate the
requirement to file additional copies from Rule 0-6.
\258\ See Letters from ABA and Fenwick. See also FAST Act
Report, supra note 2, at Recommendation A.2.
\259\ We note that investment advisers register and submit some
filings to the Commission electronically through the Investment
Adviser Registration Depository (``IARD'').
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In connection with these proposed amendments, we are also proposing
to eliminate the corresponding exhibit requirement in Item
601(b)(99)(ii) of Regulation S-K, which was adopted in connection with
Rule 12b-23(a) and Rule 411(b)(4).\260\ In addition to Item 601(b)(99),
other provisions in Item 601 require documents to be filed as exhibits
only when they are incorporated by reference into a filing. For
example, Item 601(b)(13) requires a registrant to file an annual report
to security holders, Form 10-Q or quarterly report to security holders
as an exhibit when the registrant incorporates all or a portion of such
reports by reference. Although annual reports to security holders are
readily available to investors and the staff outside of EDGAR, we
believe it is appropriate to retain the exhibit requirement in these
circumstances because some registrants satisfy their disclosure
requirements by incorporating a significant amount of disclosure from
these reports. We are not proposing to eliminate these other exhibit
filing requirements in Item 601. Nonetheless, we are proposing to
eliminate the requirement in Item 601(b)(13) to file a Form 10[dash]Q
as an exhibit when it is specifically incorporated by reference into a
prospectus. This provision would no longer be necessary because, under
the proposed rules, a registrant would be required to include a
hyperlink to any information that is incorporated by reference to a
document available on EDGAR.\261\
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\260\ See Integrated Disclosure System Adopting Release, supra
note 69 (adopting Item 601(b)(28)(ii), which is now found in Item
601(b)(99)(ii)) and Proposed Revision of Regulation S-K and Proposed
Rescission of Guides for the Preparation and Filing of Registration
Statements and Reports, Release No. 33-6332 (Aug. 6, 1981) [46 FR
41925 (Aug. 18, 1981)].
\261\ See infra Section II.F.2.b. (Incorporation by Reference--
Hyperlinks).
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Request for Comment
68. Should we eliminate the requirement in Rule 12b-23(a)(3) and
Rule 411(b)(4) that copies of information incorporated by reference be
filed as exhibits to registration statements or reports? Would
eliminating these requirements encourage incorporation by reference as
suggested by some commenters? \262\ Would eliminating the requirement
make it difficult for investors to locate the incorporated information
on EDGAR?
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\262\ See Letters from ABA and Fenwick.
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69. Should we modify, as proposed, the exhibit filing provisions in
Rule 0-4, Rule 8b-23, and Rule 0-6 regarding materials incorporated by
reference? Are there special considerations regarding investment
companies and applications under the Investment Advisers Act that merit
maintaining or modifying the current provisions we are proposing to
eliminate? Should we specify in Rule 0-4, as proposed, that financial
statements may be filed as exhibits to investment company applications,
as Rule 0-6 currently specifies with respect to applications filed
under the Investment Advisers Act? Given that applications under the
Investment Advisers Act are filed with the Commission in paper, should
our final rules continue to require the filing of additional copies of
materials incorporated by reference?
70. Some documents are required to be filed as exhibits only when
they are incorporated by reference into a filing. For example, Item
601(b)(13) requires an annual report to security holders to be filed as
an exhibit to a Form 10-K when all or part of the annual report is
incorporated by reference into the text of Form 10-K. Should we amend
Item 601(b)(13) or other provisions in Item 601 to eliminate these
requirements (or is the proposed elimination of Rule 12b-23(a)(3)
sufficient to encourage incorporation by reference)? Please address the
availability of the information called for by Item 601 to investors and
the Commission in your response.\263\
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\263\ For example, annual reports are required to be delivered
to security holders. See Rule 14a-3(b) and Rule 14c-3(a) [17 CFR
240.14a-3(b) and 14c-3]. Such reports must also be provided to the
Commission. See Rule 14a-3(c) [17 CFR 240.14a-3] and Rule 14c-3(b)
(requiring hard copies of these reports to be delivered to the
Commission).
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b. Hyperlinks
Consistent with the recommendation of commenters and the staff, we
are proposing to facilitate greater investor access to disclosure by
amending Rule 411, Rule 12b-23, and Rule 0-4 to require hyperlinks to
information that is incorporated by reference if that information is
available on EDGAR.\264\ The Commission recently adopted rules
requiring hyperlinks to most exhibits filed pursuant to Item 601, Form
F-10 \265\ or Form 20-F.\266\ To accommodate hyperlinks, those filings
must be made in HTML format.\267\ The requirement to file documents in
HTML format would be expanded under the proposed rules to include
filings that are subject to the proposed hyperlinking requirements in
Rule 411, Rule 12b-23, and Rule 0-4.\268\ We believe that
[[Page 51010]]
expanding the hyperlinking requirement to other information that is
incorporated by reference would improve the readability and
navigability of disclosure documents and discourage repetition,
consistent with our FAST Act mandate.
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\264\ See Letters from Chamber; FedEx; Fenwick; and CGCIV. See
also FAST Act Report, supra note 2, at n.34. We are not proposing
similar amendments to Rule 0-6 because applications under the
Investment Advisers Act filed pursuant to that rule are not required
to be filed electronically. In addition, applications filed pursuant
to Rule 0-6 may incorporate information that may not be filed on
EDGAR.
\265\ 17 CFR 239.40.
\266\ See Exhibit Hyperlinks Adopting Release, supra note 14, at
14130.
\267\ See id. at 14130. Larger registrants were required to
comply with the rules requiring exhibit hyperlinks for filings
submitted on or after September 1, 2017. Id. The rules we adopted at
that time did not generally apply to investment companies. However,
as discussed below, we are proposing to apply similar requirements
to certain filings by investment companies in this release. See
infra Section II.G.2.
\268\ See proposed Rule 105(e) of Regulation S-T. We do not
believe that the proposed amendments would significantly increase
the number of filings that must be in HTML format. Filings that are
not subject to Rule 411 or Rule 12b--23, such as proxy statements on
Schedule 14A, would not be affected by this proposal.
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The proposed requirements for hyperlinking are similar to the
requirements for exhibit hyperlinking. Specifically, under the proposed
amendments, registrants would not be required to file an amendment to a
document solely to correct an inaccurate hyperlink unless, that
hyperlink was included in a pre-effective registration statement. An
inaccurate hyperlink alone would neither render the filing materially
deficient nor affect a registrant's eligibility to use Form S-3 \269\
or Form F-3.\270\ Lastly, we are not proposing to require refiling of
information that is incorporated by reference from a document that was
previously filed with the Commission in paper. Similar to our reasoning
in the Exhibit Hyperlinks Adopting Release, we believe that requirement
would have limited utility given that electronic filing has been
required for over two decades and paper filings are currently made in
very limited circumstances.\271\
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\269\ 17 CFR 239.13.
\270\ 17 CFR 239.33.
\271\ See Exhibit Hyperlinks Adopting Release, supra note 14, at
14131. See also FAST Act Report, supra note 2, at n.31 and
accompanying text.
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Unlike the requirements for exhibit hyperlinking, however, a
registrant would not be required to correct inaccurate hyperlinks in an
effective registration statement by including a corrected hyperlink in
a subsequent periodic report or a post-effective amendment. We
preliminarily believe that it would result in more confusion than
clarity if we were to require registrants to re-file disclosure to
correct a hyperlink or to include a section solely devoted to corrected
hyperlinks in the body of a periodic report or post-effective
amendment. This differs from exhibit hyperlinks where the corrected
hyperlink would be unobtrusively located in the exhibit index with
other exhibits. The requirement in proposed Rule 411, Rule 12b-23, and
Rule 0-4 to describe the location of the information incorporated by
reference should mitigate the impact of any inaccurate hyperlinks.
Request for Comment
71. As proposed, in most cases a registrant would be required to
include a hyperlink to information that it incorporates by reference.
Would the proposed hyperlinking requirements significantly increase the
compliance burden on registrants? Should we provide a delayed
compliance date for smaller reporting companies and ASCII filers? \272\
If so, what compliance date would be appropriate? Should we provide any
exceptions to the proposed hyperlinking requirement? For example,
should we exclude references to entire forms that are readily
accessible on EDGAR, such as Form 10-K, or for particular types of
disclosure? If so, which forms or types of disclosure would be
appropriate and why?
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\272\ See Exhibit Hyperlinks Adopting Release, at 14130.
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72. Should investment companies be required to include a hyperlink
to information incorporated by reference as proposed? Are there special
considerations regarding filings by investment companies that merit
modifying the requirement in any way? For example, should investment
company applications be required to include a hyperlink to information
that is incorporated by reference?
73. When should registrants be required to update inaccurate
hyperlinks? Should these updating requirements differ from the
requirements to update inaccurate exhibit hyperlinks as proposed? \273\
Should we instead require registrants to update hyperlinks in a post-
effective amendment or subsequent periodic report?
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\273\ See Exhibit Hyperlinks Adopting Release, supra note 14, at
n.73.
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74. Should we amend our forms to clarify that information
incorporated by reference must include a hyperlink to where that
information may be found on EDGAR? Would the requirements be
sufficiently clear if we include them only in the rules as proposed?
c. Financial Statements
In addition to addressing incorporation by reference, the FAST Act
Report recommended that we consider revising our rules and forms to
allow for consistent cross-referencing to disclosure found elsewhere in
a filing.\274\ To address the concern that cross-referencing to non-
financial information from within the financial statements may raise
questions about the scope of an audit or review, the staff recommended
that we consider prohibiting the use of such cross-referencing. Several
commenters on the Concept Release also supported using cross-references
to reduce repetitive disclosure while recommending that the Commission
clarify or delineate what information constitutes the set of audited or
reviewed financial statements.\275\
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\274\ See FAST Act Report, supra note 2, at Recommendation A.2.
\275\ See Letters from Deloitte & Touche LLP (July 15, 2016);
CAQ; Ernst & Young 3; PNC; Grant Thornton LLP (July 21, 2016); KPMG;
PWC; Crowe Horwath LLP (July 21, 2016) (``Crowe Horwath''); and CFA
Institute.
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In most cases, there is no prohibition on cross-referencing to or
incorporating information from the financial statements to satisfy the
narrative disclosure requirements of Regulation S-K.\276\ In some cases
cross-referencing is specifically permitted.\277\ Therefore, although
we encourage registrants to make use of the disclosure in their
financial statements to satisfy other disclosure requirements,\278\ we
are not proposing clarifying amendments to our rules or forms to
address incorporation by reference from the financial statements at
this time.
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\276\ Although Rule 411 restricts incorporation by reference in
a prospectus, it does not prohibit cross-references within a
prospectus. Also, Securities Act forms, such as Forms S-1 and S-3,
permit incorporation by reference in the prospectus if specified
conditions are met.
\277\ See, e.g., Item 101(b) and Item 101(d)(2) of Regulation S-
K [17 CFR 229.101(b) and (d)(2)].
\278\ For example, disclosure about legal proceedings,
transactions with related persons and matters relevant to MD&A might
be disclosed in the financial statements.
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By contrast, where financial statements cross-reference or
incorporate information from outside the financial statements, it can
raise questions as to the scope of an auditor's responsibilities.\279\
To address this concern, we are proposing amendments to our rules and
forms that would prohibit that type of incorporation by reference or
cross-referencing.\280\ These amendments would not prohibit cross-
references to other parts of a filing when otherwise specifically
permitted by our rules.\281\ These amendments would also not prohibit
incorporating financial information from other filings to satisfy
[[Page 51011]]
financial reporting requirements when otherwise permitted or
required.\282\
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\279\ See supra note 275 and accompanying text.
\280\ See our proposed amendments to Rule 411, Rule 12b-23, and
Rule 0-4 and Securities Act Forms S-1, S-3, S-11, and F-1. This
approach would also avoid the concern raised by one commenter that
registrants may lose their Securities Act Section 27A [15 U.S.C.
77z-2] safe harbor by cross-referencing to the body of a periodic
report within their financial statements. See Letter from General
Motors. Because Rule 0-6 governs incorporation by reference only for
applications filed under the Investment Advisers Act, we are not
proposing to make similar amendments to that rule, but request
comment on whether the final rule should include such provision.
\281\ For example, registrants would continue to be permitted to
include cross-references in the financial statements to information
outside of the financial statements about segments when that
information conforms with generally accepted accounting principles.
See Item 101(b) of Regulation S-K.
\282\ For example, registrants using Form S-3 would continue to
be permitted to incorporate financial statements filed with a Form
8-K that reports the acquisition of a significant business. Also,
registrants using Form S-4 to report a merger with another
registrant would continue to be able to incorporate the financial
statements of the registrant filed on Form 10-K and Form 10-Q.
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We are also proposing an amendment to Rule 0-4 that, except as
provided in the Commission's rules, would restrict the 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.\283\ We are proposing this amendment to provide for consistency
with similar restrictions under both current and proposed Rule 411 and
Rule 12b-23 and request comment on whether this amendment is
appropriate.
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\283\ See proposed Rule 0-4(b).
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Request for Comment
75. Should we amend our rules or forms to clarify or expand when
financial statement disclosure may be used to satisfy other disclosure
requirements? If so, are there particular areas of disclosure that we
should address?
76. To clarify the scope of the financial statements and an
auditor's responsibilities, we have proposed prohibiting registrants
from incorporating or cross-referencing information outside of the
financial statements into their financial statements unless otherwise
specifically permitted or required by the Commission's rules. Is the
proposed approach appropriate or would an alternative approach better
achieve this goal? Should we provide other exceptions to the proposed
rule?
77. Are the proposed amendments appropriate for investment
companies? Do investment companies raise special considerations that
our rules and forms should address? Should we amend Rule 0-6 to provide
for similar rules regarding the incorporation by reference of financial
statements into applications under the Investment Advisers Act? Why or
why not?
d. Other Amendments
We are also proposing several non-substantive changes to Rule 411,
Rule 12b-23 and Rule 0-4 to streamline, clarify, and conform these
rules. One of these proposed changes relates to the current provisions
governing how financial information from another filing may be
incorporated by reference.\284\ Rule 12b-23 states that financial
information incorporated by reference must comply with the requirements
of the form or report into which it is incorporated. Rule 411 and Rule
0-4 contain similar language.\285\ These provisions could be read to
imply that the financial statements must comply with the form on which
they were originally filed, rather than the form into which they are
being incorporated. We are proposing to eliminate these provisions
because all information, not just information incorporated by reference
or financial information, must comply with the requirements of the form
in which it is used unless otherwise permitted by rule or statute.
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\284\ See Rule 411(b)(2) (discussing the incorporation by
reference of financial information in the non-prospectus portion of
a registration statement) and Rule 12b-23(a)(1).
\285\ Similar language also exists in Rule 8b-23, which we are
proposing to rescind.
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The proposed amendments would also eliminate several redundant
provisions in Rule 411 and Rule 12b-23. Rule 411(b) provides that
information may be incorporated by reference in answer, or partial
answer, to any item that calls for information not required to be
included in a prospectus ``subject to the following provisions.''
Although presented as conditions to using incorporation by reference,
the provisions that follow mostly discuss situations where
incorporation by reference is permitted by other parts of these rules.
For example, Rule 411(b)(1) states that non-financial information may
be incorporated by reference to any document in response to the non-
prospectus disclosure requirements in filings under the Securities Act.
Rule 12b-23(a) contains a similar structure for any item of a
registration statement or report. Further, Rule 411(b)(3) (for non-
prospectus disclosure requirements) and Rule 12b-23(a)(2) both state
that incorporating information by reference to other parts of the same
filing is generally permitted. Incorporation by reference in all of
these contexts is permitted by the broader provisions of Rule 411(b)
and Rule 12b-23(a). Accordingly, we are proposing to eliminate
paragraphs (b)(1) and (b)(3) of Rule 411 and paragraph (a)(2) of Rule
12b[dash]23, as these provisions are unnecessary.
We are also proposing to move the provisions relating to
incorporating exhibits by reference from Rule 12b-32 into Rule 12b-23.
Previously, Regulation C had a bifurcated structure, similar to Rule
12b-32 and Rule 12b-23, with both Rule 411 and Rule 447 governing the
incorporation of exhibits by reference for Securities Act filings. Rule
447 was consolidated into Rule 411 in 1982.\286\ Although Rule 12b-32
is currently found under the exhibits subheading of Regulation 12B, we
believe that reducing the number of separate rules governing
incorporation by reference would simplify compliance. We are not
proposing any substantive changes to Rule 12b-32.\287\
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\286\ See Integrated Disclosure System Adopting Release, supra
note 69.
\287\ The proposed amendments would conform the language of Rule
12b-32 (as incorporated into Rule 12b-23) with similar language
currently found in Rule 411(c). References to 17 CFR 228.10(f),
which no longer exists, would be eliminated.
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For similar reasons, we are proposing to move the provisions
relating to incorporating exhibits by reference from Rule 8b-32 into
Rule 0-4, with one exception.\288\ Under Rule 8b-32(c), an investment
company may only incorporate by reference into a registration statement
or report required to be filed electronically an exhibit that was filed
in electronic format, unless the exhibit was filed in paper under a
hardship exemption and any required confirming copy has been
submitted.\289\ Given that EDGAR is now the primary method for the
filing of investment company registration statements, applications, and
reports with the Commission and our rules require the filing of
electronic format copies of paper format documents filed under a
hardship exemption,\290\ this provision is obsolete, and therefore, we
are proposing to eliminate it.\291\
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\288\ As with the proposed amendments to Rule 12b-23, we are
proposing to conform the language of paragraphs (a) and (b) of Rule
8b-32 (as incorporated into Rule 0-4) with similar language
currently found in Rule 411(c). References to 17 CFR 228.10(f),
which no longer exists, would similarly be eliminated.
\289\ See Rule 8b-32(c).
\290\ See, e.g., Rule 201(b) of Regulation S-T [17 CFR
232.201(b)], Notes 2 and 3 to Rule 202 of Regulation S-T [17 CFR
232.202].
\291\ See paragraph (a)(iv) of Rule 101 of Regulation S-T [17
CFR 232.101] (specifying the investment company filings required to
be submitted electronically).
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We are also proposing additional modifications to Rule 0-4 and Rule
0-6 to modernize and simplify these rules. First, we are proposing to
eliminate the requirement that if a certificate of an independent
public accountant previously or concurrently filed is incorporated by
reference by an investment company (with respect to the filing of a
registration statement, application, or report) or an investment
adviser (with respect to the filing of an application) a written
consent of the accountant must be filed with the filing.\292\ We note
that Rule 439 under
[[Page 51012]]
the Securities Act \293\ provides a similar requirement for these types
of consents for registration statements under the Securities Act. We
further note that our investment company registration forms do not
require the filing of these consents where a registration statement or
amendment is filed only under the Investment Company Act.\294\ We are
unaware of circumstances under which a consent would be required in
connection with an investment company report or an application filed by
an investment company or investment adviser. Therefore, we are
proposing to eliminate this requirement from Rule 0-4 and Rule 0-6 but
request comment on whether the final rules should retain it.
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\292\ See Rule 0-4(b), Rule 0-6(b).
\293\ 17 CFR 239.439.
\294\ See, e.g., General Instruction B.2(b) of Form N-1A.
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Second, we are proposing to eliminate the restrictions currently
contained in Rule 0-4(d) and Rule 0-6(d) on incorporating by reference
exhibits or financial statements made in certain filings.\295\ Given
that EDGAR is now the primary method for the filing of registration
statements and reports with the Commission, and that documents filed on
EDGAR remain available regardless of whether a filing is withdrawn,
whether a registration statement ceases to be effective, and whether
the other circumstances outlined in Rule 0-4(d) and Rule 0-6(d) apply
to a particular filing, these provisions are no longer necessary.\296\
For our regulatory purposes, we do not believe that the restrictions
are needed. Thus, for the foregoing reasons and for consistency
purposes, we are proposing to eliminate this provision from Rule 0-4
and Rule 0-6 but request comment on whether the final rules should
retain it.
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\295\ Specifically, the rules restrict the incorporation by
reference of exhibits or financial statements which (1) have been
withdrawn, (2) were filed in connection with certain registration
statements that have ceased to be effective, (3) are contained in
filings subject to pending proceedings under (i) Section 8(b) or
8(d) of the Securities Act, (ii) Section 8(e) of the Investment
Company Act, (iii) in the case of applications under Rule 0-6,
Section 203(e)(1) of the Investment Advisers Act, or (iv) orders
under any of the foregoing, and (4) in the case of investment
companies, were documents filed in paper and with respect to an
electronic filer under a temporary hardship exemption under Rule 201
of Regulation S-T and an electronic copy has not been submitted.
\296\ As noted earlier, investment advisers register and submit
some filings to the Commission electronically through IARD.
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Finally, we are proposing to eliminate the provisions currently
contained in Rule 0-4(e) and Rule 0-6(e). These provisions provide that
the Commission may refuse to permit incorporation by reference in any
case in which, in the Commission's judgment, such incorporation would
render a registration statement or report of an investment company or
an application filed by an investment adviser incomplete, unclear, or
confusing. Instead, for consistency with proposed Rule 411(e) and
proposed Rule 12b-23(e), we are proposing to amend Rule 0-4 and Rule 0-
6 to contain a general requirement that information must not be
incorporated by reference in any case where such information would
render the disclosure incomplete, unclear, or confusing.\297\
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\297\ See proposed Rule 0-4(e), proposed Rule 0-6(b). A
substantially similar provision exists in current Rule 8b-23(c)
(which we are proposing to rescind) pertaining to information
incorporated by reference into an investment company registration
statement or report.
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Request for Comment
78. We are proposing to eliminate several redundant parts of the
rules that address incorporation by reference. Are those provisions
helpful to understanding whether and when incorporation by reference is
permitted? Should we include those provisions in instructions to the
rules or in other guidance?
79. Are the proposed amendments appropriate with respect to
investment companies, or do investment companies raise special
considerations that our rules should address? For example, should our
rules maintain the current restriction contained in Rule 8b-32(c)
regarding exhibits filed as part of registration statements and reports
required to be filed electronically? Should our rules retain the
current requirement that a consent be filed where an independent public
accountant certificate is incorporated by reference? Should our rules
retain the current prohibitions on incorporating by reference
information filed as part of certain filings specified in Rule 0-4(d)
and Rule 0-6(d)? In these cases, should our rules retain the current
provisions of our rules, or should they be modified in any way? If so,
how?
80. Are the proposed amendments to Rule 0-4 and Rule 0-6 sufficient
to help ensure that information incorporated by reference into a
registration statement, report, or application does not render the
disclosure in these documents incomplete, unclear, or confusing? If so,
should we, as proposed to provide regulatory consistency between
operating companies on the one hand and investment companies and
investment advisers on the other, eliminate the current provisions in
Rule 0-4(e) and Rule 0-6(e) that the Commission may refuse to permit
incorporation by reference in any case in which in its judgment the
incorporation would render a registration statement, report, or
application incomplete, unclear, or confusing? Why or why not? If
retained, should the provisions be modified in any way, and if so, how?
81. Are the proposed rules governing incorporation by reference
under the Investment Company Act or Investment Advisers Act
sufficiently clear? Should we modify them in any other respect? For
example, should our rules expressly permit or prohibit information to
be incorporated into the body of an application?
3. Forms
Incorporation by reference is also addressed in our forms.\298\
Accordingly, we are proposing revisions to several of the Commission's
forms to implement the proposed amendments discussed above. In addition
to conforming changes, we are proposing amendments to Form 10, Form 10-
K and Form 20-F to allow registrants to exclude item numbers and
captions or to create their own captions tailored to their
disclosure.\299\ The proposed amendments would not affect captions that
are expressly required by the forms or Regulation S[dash]K. For
example, Form 10-K and Form 20-F require captions for ``audit fees,''
``audit-related fees,'' ``tax fees,'' and ``all other fees.''
Regulation S-K requires a caption for ``risk factors.'' \300\ These
proposed amendments are intended to reduce the use of unnecessary
cross-references
[[Page 51013]]
when information may be responsive to more than one disclosure item in
the Exchange Act forms.\301\
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\298\ Although, as stated above, Rule 411, Rule 12b-23 and Rule
12b-32 generally govern incorporation by reference for filings
subject to Regulation C or Regulation 12B, provisions in the forms
that cover the same subject matter are controlling. See Rule 400 [17
CFR 230.400] (stating that the provisions in a form, or an item of
Regulation S-K referred to in such form, will control when they
cover the same subject matter as a rule in Regulation C, unless
otherwise specifically provided in Regulation C) and Rule 12b-1
(stating that provisions in a form will control when they cover the
same subject matter as a rule in Regulation 12B).
\299\ Rule 12b-13 requires registrants to include the numbers
and captions of all items in these forms. Although provisions in a
form control when they cover the same subject matter as a rule in
Regulation 12B, these forms do not contradict Rule 12b-13.
\300\ The proposed amendments are not intended to change
instances where the staff has interpreted a requirement to allow for
a caption to be excluded. See, e.g., Regulation S-K Compliance and
Disclosure Interpretation 233.02 (discussing the caption called for
by Item 407(e)(4)). The proposed amendments would also not eliminate
General Instruction G.4 of Form 10-K, which requires captions when
the registrant incorporates all of the information in its Form 10-K
by reference to its annual report to security holders and its
definitive proxy or information statement. In connection with this
proposal, we are also proposing to amend Rule 12b-13 to make it
clearer that the provisions of a form control over the requirements
of that rule.
\301\ A commenter recommended amending our rules to include a
``policy'' on avoidance of duplication that would clarify that a
registrant is not required to repeat or include cross-references to
disclosure found elsewhere in a document when responding to specific
line item requirements; however, we believe amending our forms in
the manner proposed would provide clearer guidance for registrants.
See Letter from ABA.
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While item numbers and captions are generally not required in the
prospectus portion of most Securities Act filings, they are required in
many Exchange Act forms.\302\ Although clear disclosure will often call
for appropriate headings or captions, the proposed amendments would
provide registrants with more flexibility in how they present their
disclosure. Increasing flexibility in this manner may reduce repetitive
disclosure or unnecessary cross-references when information may be
responsive to more than one item and thereby enhance the overall
readability of required disclosures.
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\302\ See Securities Act Rule 404 [17 CFR 230.404] and Exchange
Act Rule 12b-13 [17 CFR 240.12b-13]. Rule 404 does not require the
numbers or captions of items to be included in a prospectus, but
does require them for the non-prospectus portion of a registration
statement. See Rule 404(d).
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Request for Comment
82. Should we amend Form 10, Form 10-K, and Form 20-F to eliminate
the requirements to include most item numbers and captions as proposed?
Would the proposed amendments to these forms lead to disclosure that is
less clear or less comparable across registrants? Under the proposed
amendments, a few required captions would remain, such as the caption
for ``risk factors'' and the captions required by General Instructions
G.4 of Form 10-K.\303\ Should we retain these requirements, or should
they also be eliminated?
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\303\ See supra note 300 and accompanying text.
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83. Would increasing flexibility in how the disclosure in Form 10,
Form 10-K, and Form 20-F is presented lead to less repetitive
disclosure? Should we eliminate the requirements to include item
numbers and captions in other forms, such as in Part II of Form 10-Q or
in Form 8-K?
84. In addition to or in lieu of eliminating the requirements for
most item numbers and captions, should we amend our rules to provide
guidance on the use of cross-references, as suggested by one commenter?
\304\ If so, how should the guidance discourage excessive cross-
referencing while acknowledging that some cross-references may be
necessary to provide clear disclosure? Should the cross-referencing
guidance differ based on the nature of the document or the disclosure?
For example, should the guidance treat a prospectus differently from a
Form 10-K filing, or treat information in the financial statements
differently from narrative disclosure?
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\304\ See Letter from ABA.
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85. The proposed amendments would not alter the general rule that a
prospectus may not incorporate information by reference unless
permitted by the appropriate form. Our forms, however, typically
provide registrants with significant latitude to incorporate
information by reference when specified conditions are met.\305\ Should
we change the information that may be incorporated by reference into a
prospectus under any of our forms? If so, which information, and why?
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\305\ For example, subject to certain conditions, Form S-1
allows registrants to incorporate information by reference in most
of the items of Part I--Information Required in Prospectus. See
General Instruction VII and Item 12 of Form S-1.
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G. Manner of Delivery 306
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\306\ After consideration of the staff's recommendation G.2. in
the FAST Act Report, we are not, at this time, proposing to require
the use of external hyperlinks whenever our rules call for the
inclusion of an internet address. In the FAST Act Report, the staff
recommended requiring external hyperlinks provided that the
appropriate technology is available to prevent these hyperlinks from
jeopardizing the security and integrity of the EDGAR system. See
FAST Act Report, supra note 2, at n.15.
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1. Tagging Cover Page Data
Currently, operating company registrants are required to file their
financial statements as an exhibit in a machine-readable format using
eXtensible Business Reporting Language (``XBRL'').\307\ This disclosure
is required as an exhibit to periodic reports and Securities Act
registration statements, including reports on Form 8-K or Form 6-K that
contain revised or updated financial statements.
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\307\ For domestic disclosure forms, the XBRL data-tagging
requirements are imposed through Item 601(b)(101) of Regulation S-K
and Rule 405(b) of Regulation S-T. See Item 601(b)(101) of
Regulation S-K and Rule 405(b) of Regulation S-T [17 CFR
232.405(b)]. For foreign disclosure forms, analogous XBRL tagging
requirements are included in the instructions to the relevant forms.
See, e.g., paragraphs 100 and 101 of the Instructions to Exhibits to
Form 20-F.
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Registrants must also tag in XBRL a specific group of data points
that appears on the cover page of the filing. These specific data
points, which are tagged according to Regulation S-T and the EDGAR
Filer Manual, are known as document and entity identifier elements
(``DEIs'') and include, among others, form type, company name, filer
size, and public float.\308\ This information corresponds to some, but
not all, of the information that registrants are required to include on
the filing cover page. For example, the Form 10[dash]K cover page
contains approximately 25 data points. Less than half of those data
points are currently required to be tagged in XBRL. The non-tagged data
points include, among others, the exchange on which securities are
registered and the state (or jurisdiction) of incorporation.
---------------------------------------------------------------------------
\308\ See Rule 405 of Regulation S-T [17 CFR 232.405]; See also
Interactive Data to Improve Financial Reporting, Release No. 33-9002
(Jan. 30, 2009) [74 FR 15666] (discussing the requirement to tag
document and entity identifier elements, such as form type, company
name, and public float, according to Regulation S-T and the EDGAR
Filer Manual).
---------------------------------------------------------------------------
In the FAST Act Report, the staff recommended that the Commission
consider requiring operating company registrants to tag in XBRL all the
data points on the cover pages of Form 10-K, Form 10-Q, Form 8-K, Form
20-F, and Form 40-F. The staff also recommended that the Commission
consider revising the cover page of these forms to include the trading
symbol for each class of securities registered under the Exchange Act
and require registrants to format this additional data point in
XBRL.\309\
---------------------------------------------------------------------------
\309\ See FAST Act Report, supra note 2, at Recommendations G.1.
---------------------------------------------------------------------------
We are proposing amendments to require all of the information on
the cover pages of Form 10-K, Form 10-Q, Form 8-K, Form 20-F, and Form
40-F to be tagged in Inline XBRL in accordance with the EDGAR Filer
Manual. Under the proposed amendments, the cover page data would appear
in HTML format with embedded XBRL data. We recently proposed to require
the use of the Inline XBRL format, where XBRL data is embedded into an
HTML document, instead of the traditional XBRL format \310\ for the
submission of operating company financial statements.\311\ We intend
for
[[Page 51014]]
the cover page data to be tagged in the same format as this other
information. Therefore, if the Inline XBRL proposal is not adopted, we
are proposing, as an alternative, to require operating company filers
to tag each cover page data point in an XBRL exhibit to the relevant
filing.
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\310\ In the traditional XBRL format currently required for
financial statements, none of the registrant's XBRL data is embedded
into an HTML document. Instead, an exhibit containing all XBRL data
is filed with the relevant form. Inline XBRL allows filers to embed
XBRL data directly into an HTML document, eliminating the need to
tag a copy of the information in a separate document.
\311\ See Inline XBRL Filing of Tagged Data, Release No. 33-
10323 (Mar. 1, 2017) [82 FR 14282 (Mar. 17, 2017)] (``Inline XBRL
Proposing Release''). As part of the proposal, we also proposed to
require the use of Inline XBRL format for the submission of mutual
fund risk/return summary information. See also Order Granting
Limited and Conditional Exemption Under Section 36(a) of the
Securities Exchange Act of 1934 from Compliance with Interactive
Data File Exhibit Requirement in Forms 6-K, 8-K, 10-Q, 10-K, 20-F
and 40-F to Facilitate Inline Filing of Tagged Financial Data,
Release No. 34-78041 (Jun. 13, 2016) [81 FR 39741 (June 17, 2016)]
(exercising exemptive authority ``to permit, but not require,
operating companies to use Inline XBRL in their periodic and current
reports under the Exchange Act through March 2020'').
---------------------------------------------------------------------------
To implement the cover page tagging requirements, we propose to add
new Rule 406 to Regulation S-T, new Item 601(b)(104) to Regulation S-K,
new paragraph 104 to the ``Instructions as to Exhibits'' of Form 20-F
and new paragraph B.17 to the ``General Instructions'' of Form 40-F to
require registrants to file with each of the specified forms a ``Cover
Page Interactive Data File.'' Under the proposed amendments,
registrants filing Form 20-F and Form 40-F would be required to tag
cover page data only when those forms are used as annual reports. The
proposed amendments would not apply to Form 20-F and Form 40-F when
used as registration statements. We are also proposing to revise Rule
11 of Regulation S-T to add the term ``Cover Page Interactive Data
File.'' The term would be defined as the machine readable computer code
that presents the information required by Rule 406 of Regulation S-T in
Inline XBRL format.
We believe that the proposal to require mandatory tagging of all
data points on the cover pages of the specified forms would allow
investors to automate their use of this information. This would enhance
their ability to identify, count, sort, and analyze registrants and
disclosures to the extent these data points otherwise would be
formatted solely in ASCII or HTML. At the same time, we do not expect
the incremental compliance burden associated with tagging the
additional cover page information to be significant, given that
registrants already are required to tag some of this information as
well as information in their financial statements. We therefore believe
that the enhanced comparability and usability of these proposed
disclosures would justify the burden of requiring registrants to tag
the additional data and would help to modernize our disclosure system
in a manner consistent with the FAST Act mandate.
We are also proposing amendments to the cover pages of these forms
to include the trading symbol for each class of registered
securities.\312\ Because the cover pages of Form 10-K, Form 20-F, and
Form 40-F already require disclosure of the title of each class of
securities registered pursuant to Section 12(b) of the Exchange Act and
each exchange on which they are registered, our proposed amendments to
these forms would revise the cover page to include a corresponding
field for the trading symbol. Unlike Form 10-K, Form 20-F, and Form 40-
F, however, the cover pages of Form 10-Q and Form 8-K do not currently
require disclosure of the title of each class of securities and each
exchange on which they are registered. Accordingly, to ensure that
registrants and their registered securities are identified in a
consistent manner across forms, we are proposing to revise the cover
pages of Form 10-Q and Form 8-K to include this disclosure in addition
to the trading symbol.
---------------------------------------------------------------------------
\312\ In the Disclosure Update and Simplification Proposing
Release, we have proposed to amend Item 201(a) to also require
disclosure of the trading symbol(s) for each class of a registrant's
common equity. See Disclosure Update and Simplification Proposing
Release, supra note 13, at 51637.
---------------------------------------------------------------------------
Requiring the disclosure of trading symbols on the cover pages of
periodic reports would facilitate investors' efforts to search news
websites and stock market databases for information about registrants
and distinguish among similarly named companies. Further, we believe
that requiring the tagging of trading symbols would allow investors to
sort and compare filings and disclosures more easily and accurately.
Request for Comment
86. Should we require as proposed, all of the information on the
cover pages of Form 10-K, Form 10-Q, Form 8-K, Form 20-F, and Form 40-F
to be tagged in Inline XBRL? Should the proposed cover page tagging
requirement apply to any other forms (e.g., Form 6-K)?
87. Should we amend the cover pages of Form 10-K, Form 20-F, and
Form 40-F to include the trading symbol for each class of registered
securities as proposed? Should we also revise the cover pages of Form
10-Q and Form 8-K as proposed, to include the title, trading symbol and
exchange of each class of registered securities?
88. Under the proposed amendments, Form 10-K, Form 10-Q, Form 8-K,
Form 20-F, and Form 40-F would require each registrant to identify on
the cover page of those forms the exchange on which each class of
securities is registered. The proposed amendments to Item 501(b)(4)
would require each registrant to identify on the cover page of the
prospectus its principal U.S. market or markets for the securities
being offered. Should we reconcile these differing cover page
disclosures? If so, how?
89. If we do not adopt Inline XBRL for the submission of operating
company financial statements, should we instead require the cover page
data to be tagged using traditional XBRL format?
90. Instead of requiring the cover page data to be tagged using
Inline XBRL or traditional XBRL format, should we require the cover
page data to be submitted using an XML format? Why or why not?
91. Are there any changes we should make to the proposed amendments
to better ensure accurate and consistent tagging? If so, which changes
should we make and why?
92. Are there any disclosures discussed in this release that we
should require to be provided in a structured format? For example,
should we require the use of structured data within Item 303(a) to
facilitate readability and navigability of this disclosure for
investors? Are there specific elements of Item 303(a) disclosure, such
as the table of contractual obligations, which should be provided in a
machine-readable structured data format? Would it be useful to
investors to require registrants to provide any of the property
disclosures under Item 102 in a machine-readable format, such as
geospatial coordinates? To the extent that we consider additional
structured data requirements in periodic reports, what level and type
of structured data requirements would be appropriate? For example,
should we require registrants to identify sections, subsections or
topics with ``block text'' labels, or should we require registrants to
structure numeric elements and tables individually? What would be the
challenges and costs of such an approach? What would be the benefits?
2. Exhibit Hyperlinks and HTML Format for Investment Companies
As discussed above, the Commission recently adopted rules requiring
hyperlinks to most exhibits filed pursuant to Item 601, Form F-10, and
Form 20-F, and, to accommodate hyperlinks, those filings will be
required to be made in HTML.\313\ In this release, we are proposing
parallel amendments to certain of our forms that are used by investment
companies and amendments to Rule 102 \314\ of Regulation S-T to apply
similar hyperlinking and HTML requirements to those registrants to
facilitate access to these exhibits for investors and other users of
the information.
---------------------------------------------------------------------------
\313\ See Exhibit Hyperlinks Adopting Release, supra note 14 at
14130.
\314\ 17 CFR 232.102.
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[[Page 51015]]
Under the proposed amendments, affected registrants would be
required to include a hyperlink to each exhibit identified in a
filing's exhibit index, unless the exhibit is filed in paper pursuant
to a temporary or continuing hardship exemption under Rule 201 or Rule
202 of Regulation S[dash]T, or pursuant to Rule 311 of Regulation S-
T.\315\ This requirement would apply to registration statements on Form
S-6, Form N-1A, Form N-2, Form N-3, Form N-4, Form N-5, Form N-6, and
Form N-14 and to reports on Form N-CSR.\316\ Consistent with our rules
for operating companies, we are not proposing to require registrants to
refile electronically any exhibits filed only in paper.\317\ Under the
proposed amendments, an electronic filer would also be required to
correct an inaccurate or nonfunctioning link or hyperlink to an
exhibit.\318\
---------------------------------------------------------------------------
\315\ As with the rules for operating companies, the proposed
rules for investment companies would exclude any XBRL exhibits. See
id. at 14133.
\316\ See proposed Instructions as to Exhibits of Form S-6;
proposed Instruction to Item 28 of Form N-1A; proposed Instruction 4
to Item 25.2 of Form N-2; proposed Instruction 3 to Item 29(b) of
Form N-3; proposed Instruction 3 to Item 24(b) of Form N-4; proposed
Instructions as to Exhibits of Form N-5; proposed Item 26 of Form N-
6; proposed Instruction to Item 16 of Form N-14; proposed
Instruction to Item 12 of Form N-CSR. We are also proposing to amend
Forms N-3 and N-14 to clarify that Rule 303 of Regulation S-T
applies to registration statements on Forms N-3 and N-14 that are
electronically filed. See proposed General Instruction G to Form N-
3; proposed Instruction to Item 16 of Form N-14.
\317\ See Exhibit Hyperlinks Adopting Release, supra note 14, at
14133.
\318\ 17 CFR 232.105(d)(2). In the case of a registration
statement that is not yet effective, the filer would be required to
file an amendment to the registration statement containing the
inaccurate or nonfunctioning link or hyperlink. In the case of a
report on Form N-CSR, the filer would be required to correct the
inaccurate or nonfunctioning link or hyperlink in its next report on
Form N-CSR. In the case of a registration statement on Form S-6,
Form N-14, Form N-5, Form N-1A, Form N-2, Form N-3, Form N-4, or
Form N-6 that has become effective, the filer would be required to
correct an inaccurate or nonfunctioning link or hyperlink in the
next post-effective amendment, if any, to the registration
statement. Alternatively, an electronic filer may correct an
inaccurate or nonfunctioning link or hyperlink in a registration
statement that has become effective by filing a post-effective
amendment to the registration statement. Id.
---------------------------------------------------------------------------
In connection with the proposed exhibit hyperlinking requirements,
we are also proposing amendments to Rule 105 of Regulation S[dash]T to
require investment company registrants to file registration statements
and reports that include exhibits in HTML format. Currently, investment
company registrants must submit electronic filings to the Commission
using the EDGAR system in either ASCII format or HTML format. Because
the ASCII format does not support hyperlink functionality, the exhibit
hyperlinking requirement would be feasible only if registrants are
required to file in HTML. Under the proposed requirement, registrants
would be required to file registration statements and reports on Form
S-6,\319\ Form N-1A,\320\ Form N-2,\321\ Form N-3,\322\ Form N-4,\323\
Form N-5,\324\ Form N-6,\325\ Form N-14, and Form N-CSR \326\ in HTML
format. While the affected registration statements and reports would be
required to be filed in HTML pursuant to the proposed amendments to
Rule 105, registrants would continue to be permitted to file in ASCII
any schedules or forms that are not subject to the exhibit filing
requirements, such as proxy statements, or other documents included
with a filing, such as an exhibit.
---------------------------------------------------------------------------
\319\ 17 CFR 239.16.
\320\ 17 CFR 239.15A and 17 CFR 274.11A.
\321\ 17 CFR 239.14 and 17 CFR 274.11a-1.
\322\ 17 CFR 239.17a and 17 CFR 274.11b.
\323\ 17 CFR 239.17b and 17 CFR 274.11c.
\324\ 17 CFR 239.24 and 17 CFR 274.5.
\325\ 17 CFR 239.17c and 17 CFR 274.11d.
\326\ 17 CFR 249.331 and 17 CFR 274.128.
---------------------------------------------------------------------------
Request for Comment
93. Should we require investment company registrants to include
hyperlinks in the exhibit index for registration statements and reports
as proposed? Should we amend Rule 105 of Regulation S[dash]T to require
investment company registrants to file registration statements and
reports that include exhibits in HTML format as proposed?
94. Should we revise any additional forms to require exhibit
hyperlinks? For example, should we revise a form to require exhibit
hyperlinks even though all exhibits filed with this form will be
attached to it?
95. Should we require, as proposed, that electronic filers correct
an inaccurate or nonfunctioning link or hyperlink? If so, when should
the correction be required to be filed?
96. Should we require registrants to refile electronically any
exhibit previously filed in paper so that they can include a hyperlink
in the exhibit index?
97. What compliance date would be appropriate for investment
companies to begin filing in HTML format? Should the compliance date be
the same for all affected investment companies, or should we
distinguish between larger and smaller investment companies, for
example, by providing an extended compliance date for smaller entities?
If we provide an extended compliance date for smaller entities, what
additional compliance period would be necessary and how should we
define those smaller entities? For example, should we define smaller
investment companies for these purposes as investment companies that,
together with other investment companies in the same group of related
investment companies have net assets of less than $1 billion as of the
end of the most recent fiscal year of the investment company?
H. General Request for Comment
We request and encourage any interested person to submit comments
regarding the proposed amendments, specific issues discussed in this
release and other matters that may have an effect on the proposals. We
note that comments that are accompanied by supporting data and analysis
are of particular assistance to us.
III. Economic Analysis
We are mindful of the costs and benefits of our rules. Section 2(b)
of the Securities Act, Section 3(f) of the Exchange Act, Section 2(c)
of the Investment Company Act, and Section 202(c) of the Investment
Advisers Act require us, when engaging in rulemaking that requires us
to consider or determine whether an action is necessary or appropriate
in (or, with respect to the Investment Company Act, consistent with)
the public interest, to consider, in addition to the protection of
investors, whether the action will promote efficiency, competition, and
capital formation.\327\ Additionally, Exchange Act Section 23(a)(2)
requires us, when adopting rules under the Exchange Act, to consider,
among other things, the impact that any new rule would have on
competition and not to adopt any rule that would impose a burden on
competition that is not necessary or appropriate in furtherance of the
Exchange Act.\328\
---------------------------------------------------------------------------
\327\ 15 U.S.C. 77b(b), 15 U.S.C. 78c(f), 15 U.S.C. 80a-2(c),
and 15 U.S.C. 80b-2(c).
\328\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------
In this release, we are proposing amendments to simplify and
modernize disclosure requirements in Regulation S-K and related rules
and forms as required by Section 72003 of the FAST Act.\329\ The
proposed amendments are based on the staff's recommendations in the
FAST Act Report. The FAST Act Report was tailored to the statutory
mandate of providing specific and detailed recommendations on
modernizing and simplifying Regulation S-K in a manner that reduces
costs and burdens on registrants while still providing all material
information. As discussed above, the proposed amendments reflect the
input of public commenters as well as the Commission's experience with
[[Page 51016]]
Regulation S-K arising from the Division of Corporation Finance's
disclosure review program. To promote consistency, we are also
proposing parallel amendments to certain rules and forms applicable to
investment companies and investment advisers, including proposed
amendments that would require certain investment company filings to be
submitted in HTML format.
---------------------------------------------------------------------------
\329\ Public Law 114-94, Sec. 72003, 129 Stat. 1312 (2015).
---------------------------------------------------------------------------
A. Background
1. The Benefits of Information Disclosure
The primary purpose of disclosure under the federal securities laws
is to provide investors with the information they need to make informed
investment and voting decisions. The separation of ownership and
management typically prevents investors from directly observing many
managerial decisions and requires them to rely on financial and
qualitative disclosures for information. Absent regulation, managers
may lack incentives to voluntarily disclose or standardize relevant
information. As a result, in the absence of disclosure requirements, an
information asymmetry often exists between managers and investors that
limits the ability of investors to distinguish between well-run and
poorly-run companies and can lead to under-supply and inefficient
allocation of capital.\330\ A disclosure regime that facilitates the
disclosure of material, reliable information can reduce informational
asymmetries between managers of companies and investors, which can
enhance capital formation and the allocative efficiency of the capital
markets.
---------------------------------------------------------------------------
\330\ See, Akerlof, George A., The Market for ``Lemons'':
Quality Uncertainty and the Market Mechanism, 84 Q. J. ECON. 488-500
(1970).
---------------------------------------------------------------------------
Materiality is a key principle of public company reporting.\331\
Efforts to make disclosures more effective typically focus on
evaluating whether existing or proposed disclosures provide material
information to those using the disclosures. Material disclosures can
reduce information asymmetries between managers of companies and
investors, decrease the cost of capital, and lead to more efficient
share prices and heightened accountability of the managers of
companies.\332\
---------------------------------------------------------------------------
\331\ See Report of the Advisory Committee on Corporate
Disclosure to the Securities and Exchange Commission, Cmte. Print
95-29, House Cmte. On Interstate and Foreign Commerce, 95th Cong.,
1st. Sess. (Nov. 3, 1977), at 320. available at http://opc-ad-ils/
InmagicGenie/DocumentFolder/
report%20of%20the%20advisory%20committee%20on%20corporate%20disclosur
e%20to%20the%20sec%2011011977.pdf.
\332\ See Br[uuml]ggemann, Ulf and Kaul, Aditya and Leuz,
Christian and Werner, Ingrid M., The Twilight Zone: OTC Regulatory
Regimes and Market Quality (June 14, 2017). IGM Working Paper #95;
Fisher College of Business Working Paper No. 2013-03-09; European
Corporate Governance Institute (ECGI)--Law Working Paper No. 224/
2013; Charles A. Dice Center Working Paper No. 2013-09. Available at
SSRN: https://ssrn.com/abstract=2290492 or http://dx.doi.org/10.2139/ssrn.2290492.
See also C. Leuz and P. Wysocki, 2016, The Economics of
Disclosure and Financial Reporting Regulation: Evidence and
Suggestions for Future Research, Journal of Accounting Research Vol.
54, 525-622 and M. Lang, K. Lins, and M. Maffett. Transparency,
Liquidity, and Valuation: International Evidence on When
Transparency Matters Most, Journal of Accounting Research 50 (2012):
729-774.
---------------------------------------------------------------------------
2. The Costs of Disclosure
Although disclosure requirements benefit investors and financial
markets, there are potential drawbacks associated with these
requirements. For example, disclosure can be costly for registrants to
produce and disclosure of sensitive information can result in
competitive disadvantages.
Disclosure of information that is unnecessary or that may not be
material also entails costs to investors, if it affects their ability
to discern material information effectively. While material disclosures
provide important information to investors about their investments,
sorting through information that is unnecessary or not material can
obscure material information that investors find useful. Consistent
with this view, research has found that attention to one subject
generally leaves less attention available for others.\333\
---------------------------------------------------------------------------
\333\ See Pashler, H.E., The Psychology of Board: Attention
(Cambridge, MA: MIT Press 1998) and Hirshleifer, David & Siew Hong
Teoh, Limited attention, information disclosure, and financial
reporting, 36 J. Acct. & Econ. 337-386 (2003).
---------------------------------------------------------------------------
In the economic analysis that follows, we first examine the current
regulatory and economic landscape that forms the baseline for our
analysis. We then analyze the likely economic effects arising from the
proposed amendments relative to that baseline. These economic effects
include the costs and benefits and impact on efficiency, competition,
and capital formation.
B. Baseline
To assess the economic effect of the proposed amendments, we are
using as our baseline the current state of the Commission's filing and
disclosure regime. In characterizing the baseline, it is useful to
distinguish between operating companies and investment companies.
Although both types of registrants are subject to similar registration
and reporting requirements, there are differences in the specific rules
and forms applicable to each. In particular, on March 1, 2017, the
Commission adopted amendments requiring registrants that file
registration statements and reports subject to the exhibit requirements
under Item 601 of Regulation S-K, or that file Form F-10 or Form 20-F,
(i.e., operating companies) to submit these filings in HTML format and
to include a hyperlink to each exhibit listed in the exhibit index of
these filings.\334\ In contrast, there is currently no comparable
requirement for investment companies; however, this proposal includes
amendments to a set of forms under the Investment Company Act that
would apply HTML and hyperlinking requirements to filers of those
forms.
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\334\ While compliance with these rules was required by
September 1, 2017, smaller reporting companies, as well as
registrants that are neither accelerated filers nor large
accelerated filers, are not required to comply until September 1,
2018. Although these registrants are not yet required to comply with
the exhibit hyperlinks and HTML rules, we are treating these rules
as part of the baseline for all filers subject to Regulation S-K.
---------------------------------------------------------------------------
For operating companies, the baseline includes the disclosure
requirements in Regulation S-K and related rules and forms as well as
Commission and staff guidance on the application of those requirements.
Table 1 below suggests that the proposed amendments to Regulation S-K
and related rules and forms would apply to a substantial number of
operating companies. On average, 7,800 different registrants per year
have filed periodic reports on Form 10-K and Form 10-Q in recent years.
As shown in the table below, approximately 800 foreign private issuers
provided periodic information to investors in the U.S. capital markets
using Form 20-F and Form 40-F. The number of registrants filing
definitive proxy statements on Schedule 14A has exceeded 5,000 each
year.\335\
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\335\ We note that, in addition to operating companies,
registered investment companies file proxy statements as well.
[[Page 51017]]
Table 1--Number of Registrants Filing Various Disclosure Forms From 2012-2016
----------------------------------------------------------------------------------------------------------------
Year 10-K 10-Q 20-F 40-F DEF 14A
----------------------------------------------------------------------------------------------------------------
2012............................ 8240 8381 712 153 5371
2013............................ 7898 8031 690 145 5382
2014............................ 7857 7872 669 143 5259
2015............................ 7767 7676 687 131 5390
2016............................ 7373 7147 675 126 5126
----------------------------------------------------------------------------------------------------------------
As discussed above, investment companies that file certain forms
required by the Investment Company Act would also be affected by the
proposed amendments. Table 2 below lists the number of filings filed by
investment companies in fiscal year 2016 using EDGAR submission types
potentially affected by the proposed amendments, broken out by the
number of filings in HTML and ASCII format. From January 1, 2016 to
December 31, 2016, investment companies filed 64,522 filings using
EDGAR submission types potentially affected by the proposed amendments.
Of these filings, the vast majority (58,429) were filed in HTML, while
fewer than ten percent (6,093) were filed in ASCII format. As shown in
Table 2, most of the filers had substantially more HTML filings than
ASCII filings, while the Form S-6 filers had more ASCII filings than
HTML filings in 2016.
---------------------------------------------------------------------------
\336\ The figures in this table are presented on the basis of
filer type, not on the basis of the form on which the document was
filed. Therefore, not all of the filings presented in the table
would be subject to the proposed requirements.
Table 2--Number of Potentially Affected Filings From January 1, 2016 to
December 2016 \336\
------------------------------------------------------------------------
Number of Number of
HTML ASCII
Filings Filings
------------------------------------------------------------------------
N-1A Filers................................... 48,150 1,280
N-2 Filers.................................... 2,965 77
N-3 Filers.................................... 42 6
N-4 Filers.................................... 5,247 758
N-6 Filers.................................... 1,549 245
S-6 Filers.................................... 476 3,727
-------------------------
Total....................................... 58,429 6,093
------------------------------------------------------------------------
The proposed amendments would require registrants to include
hyperlinks in the case of exhibits included with the forms and exhibits
that are incorporated by reference from a previously filed document. To
draw a baseline indicative of current disclosure practices, we selected
a random sample of 400 filings (359 in HTML and 41 in ASCII) submitted
in 2016 that may be affected by the proposed amendments. Table 3 below
shows the average and median number of exhibits listed in the sampled
filings by the type of exhibit (i.e., filed with the form vs.
incorporated by reference).
Table 3--Number of Exhibits in Sampled Filings \337\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of exhibits listed in Number of exhibits filed with Number of exhibits
the index the filing incorporated by reference Number of
------------------------------------------------------------------------------------------------ sampled
Average Median Average Median Average Median filings
--------------------------------------------------------------------------------------------------------------------------------------------------------
N-1A.................................... 5.8 0 0.6 0 5.2 0 267
N-2..................................... 7.4 2 2.1 2 5.0 0 21
N-3..................................... 0 0 0 0 0 0 1
N-4..................................... 13.6 0 0.7 0 12.9 0 31
N-6..................................... 11.1 0 0.8 0 10.3 0 11
N-14.................................... 38.0 38.5 1.5 1 36.5 37.0 6
N-CSR................................... 2.3 3 1.9 0 0.1 0 43
S-6..................................... 36 36 5.0 5.0 31.0 31.0 30
---------------------------------------------------------------------------------------------------------------
All Filings......................... 6.7 N/A 0.9 N/A 5.8 N/A 400
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 3 shows a significant variation in the number of exhibits
listed in the exhibit index across different types of filings.
Registration statements on Form N-4, Form N-14, and Form S-6 typically
contain a large number of exhibits and had significantly more exhibits
incorporated by reference than filings on other forms affected by the
proposed amendments. Of the 400 sampled filings, we found that none of
them included hyperlinked indexes.
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\337\ In counting the number of exhibits, we did not include the
following exhibits: 101.INS XBRL Instance Taxonomy; 101.SCH XBRL
Taxonomy Extension Schema Document; 101.CAL XBRL Taxonomy Extension
Calculation Linkbase Document; 101.DEF XBRL Taxonomy Extension
Definition Linkbase Document; 101.LAB XBRL Taxonomy Extension Labels
Linkbase Document; and 101.PRE XBRL Taxonomy Extension Presentation
Linkbase Document because XBRL exhibits are not covered by the
proposal.
Average represents the sum of the number of exhibits divided by
the number of sampled forms for each form type. Median represents
the middle number of exhibits for each form type when the numbers of
exhibits are listed from the smallest to the largest. For instance,
for Form N-2, the number of exhibits listed in the index ranged from
0 to 55, with 2 as the middle number.
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As discussed above, disclosure requirements involve trade-offs
between benefits to investors in terms of reducing information
asymmetries and costs to registrants associated with producing
disclosure. While the proposed amendments would apply to all
registrants subject to the regulation, the trade-offs between the costs
and benefits of disclosure requirements would vary across different
types of registrants. For example, smaller companies typically have
proportionately higher disclosure costs as well as proportionately
higher disclosure benefits.\338\ That is, the fixed costs of disclosure
requirements typically constitute a higher percentage of revenues for
smaller companies than
[[Page 51018]]
for larger companies. However, the benefits of disclosure may be
greater for smaller companies because information asymmetries between
investors and managers of smaller companies are typically higher than
for larger, more seasoned companies with a large following.\339\
Compliance costs could be also higher for foreign registrants to the
extent that the disclosure requirements in the United States are
different from the disclosure requirements in their home countries.
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\338\ In its 2015 proposing release to amend the definition of
``smaller reporting company,'' the Commission observed that, based
on a review of filings, approximately 42% of registrants qualified
as smaller reporting companies. See Amendments to Smaller Reporting
Company Definition, Release No. 33-10107 (Jun. 27, 2017) [81 FR
43130 (Jul. 1, 2016)], available at https://www.sec.gov/rules/proposed/2016/33-10107.pdf.
\339\ See, e.g., R. Frankel and X. Li, Characteristics of a
firm's information environment and the information asymmetry between
insiders and outsiders, 37 J. Acct. Econ. 229, 229-259 (June 2004).
See also, L. Cheng, S. Liao, and H. Zhang, The Commitment Effect
versus Information Effect of Disclosure--Evidence from Smaller
Reporting Companies, 88 Acct. Rev. 1239, 1239-1263 (2013).
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C. Economic Analysis of the Proposed Amendments: General Assessment,
Including Impact on Efficiency, Competition, and Capital Formation
In this subsection, we evaluate the broad economic effects of the
proposed amendments, including a discussion of their impact on
efficiency, competition, and capital formation. The proposals amend a
well-established and robust disclosure regime that has existed for many
years. As a result, we expect the aggregate impact of the proposed
amendments to be incremental to the effects that have already been
realized from the existing disclosure regime.
As discussed above, disclosure provides benefits to participants in
financial markets by reducing information asymmetries that exist
between investors in a company and managers tasked with operating the
company. Both registrants and investors alike would generally benefit
from the proposed amendments, because they would simplify the
requirements and resulting content of existing disclosures while still
providing all material information. The proposed changes to the
requirements and resulting improved presentation are expected to
increase the usefulness of the disclosures for investors and generally
lower the regulatory burden (and compliance costs) for registrants. In
addition, the improved information environment associated with
modernized and simplified disclosures is expected to incrementally
enhance capital formation and the allocative efficiency of the capital
markets through more accurate share prices, better accountability of
managers and increased capital market liquidity.
We expect some of the proposed amendments to entail modest initial
implementation costs. However, we believe that the initial costs would
be in manageable amounts. Furthermore, those costs would be offset by
future savings as a result of simplified and streamlined disclosure
requirements, after implementation. Some of the proposed amendments,
such as those that impose new data tagging, hyperlinking, or disclosure
requirements, would involve not only implementation costs but would
also increase compliance costs for registrants going forward, although
as discussed below, we do not expect these additional costs to be
significant.
While the purpose of the proposed amendments is to simplify and
modernize public company disclosure requirements without loss of
material information, we acknowledge that the proposed amendments could
result in a loss of some information in specific cases, as discussed
below. This loss of information could potentially increase information
asymmetry in those cases, which may have negative implications for
investor protection, market transparency, efficiency, and capital
formation. In turn, such loss of information could raise the firm's
cost of capital.\340\ However, we believe this potential adverse effect
would be mitigated by the fact that registrants will continue to be
required to provide further material information, if any, as may be
necessary to make the required statements, in the light of the
circumstances under which they are made, not misleading.\341\
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\340\ See Easley, D., Hvidkjaer, S., & M. O'Hara, Is information
risk a determinant of asset returns? 57 J. Finance. 2185-2221
(2002).
\341\ See Rule 12b-20 [17 CFR 240.12b-20] and Rule 408(a) [17
CFR 230.408(a)].
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D. Economic Analysis of the Specific Amendments: Proposals That Clarify
and Update Existing Rules
1. Proposals That Clarify or Streamline a Rule's Requirements
a. Description of Property (Item 102)
Item 102 requires disclosure of the location and general character
of the principal plants, mines, and other materially important physical
properties of the registrant and its subsidiaries. The staff has
observed, however, that the item may elicit disclosure that is not
material.\342\ The proposed amendments to Item 102 would clarify that a
description of property is required only to the extent physical
properties are material to the registrant and make other clarifying
amendments.\343\ The proposed amendments would not modify the Item 102
requirements for companies in the mining, real estate, and oil and gas
industries.
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\342\ See FAST Act Report, supra note 2, at Recommendation B.1.
See also Concept Release, supra note 6, at Section IV.A.6.b and SEC
Staff's Report of the Task Force on Disclosure Simplification (Mar.
5, 1996) available at https://www.sec.gov/news/studies/smpl.htm.
\343\ See Section II.A (Description of Property).
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The main benefit of the proposed amendments would be to reduce the
amount of duplicative disclosure that is not material by emphasizing
materiality and harmonizing the rule's thresholds for disclosure. The
proposed amendments also could facilitate compliance and avoid any
confusion associated with different disclosure standards. The aggregate
reduction in regulatory burden due to the proposed amendments to Item
102 may extend to approximately 6,500 registrants.\344\
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\344\ We derive this number by taking the average number of
registrants filing annual reports as reported in Table 1 and
excluding all companies in the mining, oil and natural gas, and real
estate industries.
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When Item 102 was originally adopted, registrants were more likely
to maintain large physical properties and other assets, such as mines
and manufacturing plants.\345\ However, the nature of enterprise has
changed dramatically over the last thirty years. Currently, many of the
largest and most profitable firms operate in the services and
technology industries that are often not characterized by large
physical assets. Nevertheless, many modern firms are highly
geographically dispersed. As a consequence, information about the
geographic operations of these companies--including information about
the location of physical properties--could be highly relevant for
investors by providing information about important firm customers and
employees. We expect that any risk of exclusion of relevant information
under the proposed amendment would be minimal, because Item 102
explicitly solicits the disclosure of material information. This risk
is further mitigated by the fact that registrants may disclose relevant
property information elsewhere in their filings, such as in response to
Item 101 (Description of Business).
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\345\ Since 1935, we have required disclosure similar to that
required under Item 102. See Release No. 33-276 (January 14, 1935)
[not published in the Federal Register].
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b. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Item 303)
We are proposing a series of amendments to Item 303. In this
subsection, we discuss all amendments to Item 303 that are intended to
clarify the rule's requirements, while in
[[Page 51019]]
Subsection E.1 below, we discuss proposals intended to amend the
content of MD&A. Instruction 1 to Item 303(a) provides that, generally,
MD&A shall cover the three-year period covered by the financial
statements and either use year-to-year comparisons or any other formats
that in the registrant's judgment would enhance a reader's
understanding. Additionally, the instruction states that reference to
the five-year selected financial data may be necessary where trend
information is relevant.
We are proposing to amend the instructions to Item 303(a) to
emphasize that a registrant may use any presentation that would enhance
a reader's understanding. As discussed above, our proposed amendments
to Item 303(a) are consistent with the Commission's existing
interpretive guidance on MD&A. We are also proposing to eliminate
mention of the five-year selected financial data in the instructions to
Item 303(a) because disclosure requirements for liquidity, capital
resources, and results of operations already require trend disclosure.
The proposed amendments emphasize the flexibility available to
registrants with respect to the form of MD&A presentation. The major
benefit of flexibility is that it allows registrants to frame the
information in a way that emphasizes material information. One
potential cost associated with this aspect of the rule is that, in
framing the discussion in a way that emphasizes material information,
registrants may inadvertently de-emphasize information that investors
nevertheless find useful or relevant. To the extent the proposed
amendment leads to more tailored disclosure, it also could make
disclosure less comparable across registrants and over time.
To maintain a consistent approach to MD&A for domestic registrants
and foreign private issuers, we are proposing changes to Form 20-F
similar to the proposed changes to Item 303(a).\346\ The disclosure
requirements for Item 5 of Form 20-F are substantively comparable to
the MD&A requirements under Item 303 of Regulation S-K. The economic
effects of the proposed amendments to Form 20-F are therefore similar
to those for the proposed amendments to Item 303(a) described above.
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\346\ See supra Section II.C.B.2.
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c. Risk Factors (Item 503(c))
Item 503(c) requires disclosure of the most significant factors
that make an offering speculative or risky. We are proposing to
relocate Item 503(c) from Subpart 500 to Subpart 100 of Regulation S-
K.\347\ We believe that Subpart 100 is a more appropriate location for
the risk factor disclosure requirements, because it covers a broad
category of business information and is not limited to offering-related
disclosure. Additionally, our proposed amendments would eliminate the
risk factor examples that are enumerated currently in Item 503(c).\348\
---------------------------------------------------------------------------
\347\ See supra Section II.D.2.
\348\ See id.
---------------------------------------------------------------------------
We do not expect that relocating the disclosure requirement within
Regulation S-K would pose any additional costs to registrants or
investors because we are only proposing to change the location of the
requirement. The content of the requirement would not change.
With respect to the proposed elimination of the examples in Item
503(c), we believe that this could prompt registrants to more carefully
evaluate and classify their risk exposures, which could ultimately
benefit investors through more specific and relevant risk factor
disclosures. Although examples could be useful to registrants in some
cases, they could also anchor or skew the registrant's risk analysis in
the direction of the examples. \349\
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\349\ There is extensive evidence in psychology and economics
that individuals tend to rely too heavily on the first piece of
information offered (the ``anchor'') when making decisions. See
e.g., Tversky, A. & Kahneman, D., Judgment under Uncertainty:
Heuristics and Biases. 185 Science. 1124-1131 (1974).
---------------------------------------------------------------------------
An alternative to the proposed amendments, as suggested by some
commenters, would be to expand or update the list of examples or revise
them to specify generic risks that should not be disclosed. While such
an approach might lead to incremental improvements in existing
disclosures, it would not eliminate the anchoring effect discussed
above nor would it serve to discourage generic or ``boilerplate''
disclosures as effectively as the proposed amendments. It is also
possible that a list of generic risks could inadvertently be viewed as
exhaustive. In addition, specifying a list of generic risks that should
not be disclosed may create a rule that needs to be regularly updated.
d. Plan of Distribution (Item 508)
Item 508 requires disclosure about the plan of distribution for
securities in an offering, including information about underwriters. We
are proposing to amend Rule 405 to define the term ``sub-underwriter''
to clarify its application in Item 508 of Regulation S-K.\350\ We
believe that defining the term ``sub-underwriter'' would reduce
compliance costs by helping registrants to more easily determine what
disclosure is required under Item 508. We also believe that a defined
term could help investors better understand the role of ``sub-
underwriters'' in the offering process. We do not believe there would
be additional costs associated with the proposed amendment, since it
merely clarifies an existing disclosure requirement.
---------------------------------------------------------------------------
\350\ See supra Section II.D.3.
---------------------------------------------------------------------------
e. Material Contracts (Item 601(b)(10))
Item 601(b)(10)(i) currently requires registrants to file every
material contract not made in the ordinary course of business, provided
that the contract meets one of two tests: (i) The contract must be
performed in whole or in part at or after the filing of the
registration statement or report, or (ii) the contract was entered into
not more than two years before that filing.
The second test, the two-year look back, captures material
contracts that were fully performed before the filing date. We are
proposing amendments to Item 601(b)(10)(i) that would limit the two-
year look back test to newly reporting registrants.\351\ Proposed
Instruction 1 to Item 601(b)(10)(i) defines a ``newly reporting
registrant'' 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.\352\ As an example, a registrant that is filing
its first registration statement under the Securities Act or the
Exchange Act, or filing its first Form 10-K since the revival of its
reporting obligation, would be required to file material agreements
under Item 601(b)(10)(i) for the two-year look back period. The
definition of ``newly reporting registrant'' under the proposed
instruction also would include any registrant that (a) was a shell
company, other than a business combination related shell company, as
defined in Rule 12b-2 under the Exchange Act, immediately before
completing a transaction that has the effect of causing it to cease
being a shell company, and (b) has not filed a registration statement
or Form 8-K, as required by Item 2.01 and Item 5.06 of that form, since
the completion of the
[[Page 51020]]
transaction (or in the case of foreign private issuers, has not filed a
Form 20-F since the completion of the transaction).\353\ Under the
proposed amendments, a registrant meeting this definition would be
required to file material agreements for the two-year look back period.
---------------------------------------------------------------------------
\351\ See supra Section II.E.3.
\352\ See supra Section II.E.3.
\353\ See supra Section II.E.3
---------------------------------------------------------------------------
We expect that the proposed amendments would streamline reporting
obligations while maintaining investor protections. Although the two-
year look back test captures material contracts that were fully
performed before the filing date, this test does not provide any new
information to the market for registrants with established reporting
histories. Excluding these registrants from the two-year look back
requirement would marginally reduce their compliance burdens, because
they would not need to re-file (or incorporate by reference) agreements
that were previously filed and are no longer in effect. At the same
time, investors would continue to have access to any material
agreements that a registrant previously filed on EDGAR.
f. Proposals With a Minor Effect on Disclosure
The following proposed amendments are expected to have minor
impacts on the disclosure provided:
Item 401--proposal would clarify what disclosure about
executive officers does not need to be repeated in proxy or information
statements if it is already included in Form 10-K.
Item 405--proposal would simplify the Section 16 reporting
process by allowing registrants to rely on a review of Section 16
reports submitted on EDGAR instead of gathering reports furnished to
the registrant.\354\
---------------------------------------------------------------------------
\354\ The proposal would also eliminate the requirement for
reporting persons to furnish Section 16 reports to registrants,
which could ease the compliance burden on reporting persons.
---------------------------------------------------------------------------
Item 501(b)(1)--proposal would eliminate the portion of
the item that discusses when a name change may be required and the
exception to that requirement.
Item 501(b)(3)--proposal would allow registrants to move
details of an offering price method or formula from the prospectus
cover page to another location in the prospectus; the proposal also
would require registrants to state that the price will be more fully
explained in the prospectus and accompany that statement with a cross-
reference to the more detailed offering price disclosure.
Item 501(b)(10)--proposal would streamline the prospectus
legend requirements.
Incorporation by Reference--proposals would (i) provide
clearer guidance on cross-referencing; (ii) consolidate the
requirements for incorporation by reference in Securities Act Rule 411,
Exchange Act Rule 12b-23 and related rules under the Investment Company
Act and Investment Advisers Act to eliminate redundant or unnecessary
requirements; and (iii) allow registrants more flexibility in excluding
item numbers and captions or creating their own captions tailored to
their disclosure in Form 10, Form 10-K and Form 20-F.
Since the proposed amendments listed above would alter existing
disclosure practices only to a minor degree, their implementation would
have little economic effect. We believe that the proposed amendments
would allow registrants to improve the readability and navigability of
disclosure documents and reduce repetition. The proposed amendments
also would reduce compliance costs for registrants while preserving all
material information. We do not envision any significant incremental
costs associated with the proposed amendments because they do not
significantly change the required disclosures.
2. Proposals To Update Rules to Account for Subsequent Developments
The following proposed amendments would update existing rules to
account for subsequent developments and are expected to have minor
impacts on the disclosure provided:
Item 407(d)--proposal would update the outdated reference
to AU sec. 380 in Item 407(d)(3)(i)(B).
Item 407(e)--proposal would update requirements for
compensation committee disclosure to exclude EGCs because they are not
required to include a CD&A.
Item 512--proposal would eliminate certain undertakings
that are redundant and obsolete.
We believe that the proposed amendments listed above would reduce
potential confusion in applying our rules, result in more consistent
disclosure practices, and ease compliance burdens for registrants, with
a minimal impact on the information available to investors. We do not
envision any significant incremental costs associated with the proposed
amendments, because the substance of the rules would not change.
E. Economic Analysis of the Specific Amendments: Proposals That
Simplify the Disclosure Process or Eliminate Disclosures
1. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Item 303)
Under the proposed amendments to Item 303 of Regulation S-K, when
the financial statements included in a filing cover three years,
discussion about the earliest year would not be required if (i) this
discussion is not material to an understanding of the registrant's
financial condition, changes in financial condition, and results of
operations, and (ii) the registrant has filed its prior year Form 10-K
on EDGAR containing MD&A of the earliest of the three years included in
the financial statements of the current filing.
We believe that the main economic benefit of the proposed
amendments would be to simplify and modernize MD&A as well as increase
its readability while still providing all material information. This
may facilitate a better understanding of the firm's financial
prospects. Because MD&A is typically one of the most labor-intensive
pieces of disclosure to produce, eliminating the requirement to discuss
the earliest year financial statements in some circumstances could
meaningfully reduce compliance costs for registrants.
One potential cost of the proposed amendments is that investors may
receive less comparative discussion about earlier period financial
results within a filing. Although previously disclosed information
could provide helpful context for the new information being disclosed,
this information would have been incorporated into market prices when
it was originally presented. There may be certain situations in which
this context may be particularly useful in assessing a firm's financial
condition--for example, in the case of restatements of prior period
financials. Although we recognize these potential costs, we believe
their impact would be mitigated by the fact that discussion of earlier
year financial results could be excluded only under specified
conditions, including that the discussion was not material to an
understanding of the registrant's financial condition, changes in
financial condition, and results of operations.
An alternative to the proposed amendments would be to retain the
earliest year requirement but permit registrants to hyperlink to the
prior year's report in lieu of repeating this disclosure. This
alternative would likely reduce search costs for investors and allow
efficient access to previously
[[Page 51021]]
disclosed information about a firm's financial condition. However, we
believe that this alternative would not reduce compliance costs to
registrants as effectively as the proposed amendments. Furthermore,
this alternative may detract from investor understanding of material
information about a firm's financial condition to the extent that it
resulted in hyperlinking to information that is no longer material to
such an understanding.
2. Information Omitted From Exhibits (Item 601): Item 601(a)(5), Item
601(a)(6), and Item 601(b)(10)(iv)
Proposed Item 601(a)(5) would permit registrants to omit schedules
and attachments to exhibits unless they contain information material to
an investment or voting decision and that information is not otherwise
disclosed in the exhibit or the disclosure document.\355\ The proposed
amendments also would require registrants to provide with each exhibit
a list briefly identifying the contents of all omitted schedules and
attachments.\356\ In addition, registrants would be required to
provide, on a supplemental basis, a copy of any of the omitted
schedules or attachments to the Commission staff upon request.\357\
---------------------------------------------------------------------------
\355\ See supra Section II.E.2.a (Exhibits--Information Omitted
from Exhibits, Schedules and Attachments).
\356\ See id.
\357\ See id.
---------------------------------------------------------------------------
Allowing registrants to omit schedules and attachments that are not
material to all exhibits would lower their filing costs. As noted in
Section II.E.2.a above, some commenters have noted that these burdens
are exacerbated if the schedules contain commercially sensitive
information that would require registrants to file confidential
treatment requests. The omission of schedules that are not material
would also help investors more clearly focus on the material
disclosures.
Based on our review of confidential treatment requests submitted
under Rule 406 and Rule 24b-2 granted in fiscal year 2016, we estimate
that over 90% of confidential treatment requests are granted for
material contracts based on competitive harm to the registrant,
discussed below. For the subset of confidential treatment requests that
were granted for reasons other than competitive harm to the registrant,
we expect that many of those exhibits likely contain schedules or
attachments that could be omitted under proposed Item 601(a)(5),
although we are unable to reliably estimate how many, because this
would depend, in part, on whether the schedules contain material
information. Any reduction in burden would be incremental to that
attributable to the proposed amendments to Item 601(b)(10)(iv), which
would likely address over 90% of confidential treatment requests.
Item 601(a)(6), as proposed to be amended, would permit registrants
to omit PII without submitting a confidential treatment request under
Rule 406 or Rule 24b-2.\358\ Under the proposed amendment, registrants
also would not be required to provide an analysis in order to redact
PII from exhibits. Since the proposed amendment leaves the decision
about omission of PII entirely to the registrant, it could result in
more liberal redactions. Thus, there is a tradeoff between reduced
compliance costs and the potentially adverse effects of reduced
disclosure. However, our analysis indicates that the Commission granted
very few confidential treatment requests in reliance on the Freedom of
Information Act \359\ (``FOIA'') exemption concerning PII. As an
illustration, in fiscal year 2016 only nine confidential treatment
requests were granted pursuant to this FOIA exemption. Presumably, most
registrants are currently taking advantage of existing staff guidance
that PII may be omitted without filing a confidential treatment
request. As a result, we do not expect that codifying this
accommodation would significantly alter existing disclosure practices.
---------------------------------------------------------------------------
\358\ See supra Section II.E.2.b.
\359\ 5 U.S.C. 552.
---------------------------------------------------------------------------
We are also proposing to add paragraph (b)(10)(iv) to Item 601 to
permit registrants to omit confidential information in material
contract exhibits filed pursuant to that item that is both (i) not
material and (ii) competitively harmful if publicly disclosed, without
submitting a confidential treatment request.\360\ Instead, registrants
would be required to mark the exhibit index to indicate that portions
of the exhibit or exhibits have been omitted and include a prominent
statement on the first page of each redacted exhibit that certain
information is omitted from the filed version of the exhibit.\361\ The
registrant would also be required to indicate with brackets where the
information is omitted from the filed version of the exhibit.\362\
---------------------------------------------------------------------------
\360\ See supra Section II.E.2.c.
\361\ See id.
\362\ See id.
---------------------------------------------------------------------------
Registrants could be asked by the Commission staff to provide on a
supplemental basis an unredacted copy of the exhibit.\363\ The staff
also could request that the registrant provide an analysis of why the
redacted information is both (i) not material and (ii) competitively
harmful.\364\ Registrants could request confidential treatment of this
supplemental information pursuant to Rule 83 while it is in the
possession of the staff.
---------------------------------------------------------------------------
\363\ See id.
\364\ See id.
---------------------------------------------------------------------------
The proposed amendment would significantly reduce the costs
associated with preparing confidential treatment requests and expedite
the filing process. In this regard, one commenter on the Concept
Release reviewed seven different confidential treatment requests on
which it assisted clients since 2012 and found that legal fees alone
ranged from approximately $35,000 to over $200,000.\365\
---------------------------------------------------------------------------
\365\ See Letter from Fenwick.
---------------------------------------------------------------------------
Because more than 90% of the confidential treatment requests
granted by the Commission in fiscal year 2016 were made in reliance on
the FOIA exemption concerning competitive harm, the proposed amendments
to Item 601(b)(10) to allow registrants to omit competitively harmful
information that is not material without filing a confidential
treatment request could correspondingly reduce the number and cost of
confidential treatment requests pursuant to Rule 406 and Rule 24b-2 by
over 90%. However, this reduction in cost would be partially offset by
the proposed amendment's provision that the staff may request an
analysis similar to the current competitive harm analysis. Registrants
would incur costs to prepare and provide this analysis in response to
any request from the staff.
One potential cost of the proposed amendments is that information
may be redacted that would not otherwise be afforded confidential
treatment by the staff. However, based on previous experience and a
review of confidential treatment requests, we believe that such
instances would be rare. Over the past five fiscal years, very few
confidential treatment requests were denied by the staff. Specifically,
of the confidential treatment requests filed over the last five fiscal
years, on average, approximately 1.0% were withdrawn because the staff
determined that the information likely was material to investors.\366\
During this time, on
[[Page 51022]]
average, approximately 95% of confidential treatment requests filed
were granted, and requests were rarely denied.\367\ Also during the
past five fiscal years, on average, approximately 12% of confidential
treatment requests filed were revised prior to the request being
granted to limit the number of terms redacted based on likely
materiality or over broad redactions.\368\ Under the proposed
amendments, the Commission staff would continue its selective review of
registrant filings and would selectively assess whether redactions from
exhibits appear to be limited to information that is not material and
that would subject the registrant to competitive harm if publicly
disclosed.
---------------------------------------------------------------------------
\366\ The following confidential treatment requests were filed
and withdrawn for likely materiality during the last five fiscal
years: 2016: 1,271 filed and approximately 7 withdrawn; 2015: 1,369
filed and approximately 14 withdrawn; 2014: 1,413 filed and
approximately 19 withdrawn; 2013: 1,290 filed and approximately 16
withdrawn; and 2012: 1,466 filed and approximately 6 withdrawn.
\367\ In fiscal years 2016 and 2015, no confidential treatment
requests were denied. In fiscal years 2014, 2013, and 2012, one, two
and one CTR(s) were denied, respectively. On average, during the
last five fiscal years, approximately 95% of confidential treatment
requests were granted in full and approximately 5% were withdrawn.
In addition to withdrawals based on staff determinations that the
information was likely material, other reasons confidential
treatment requests are withdrawn include that the offering is no
longer going forward, the information is already public, or the
contract is no longer material.
\368\ Confidential treatment requests revised based on
materiality and/or overbroad redactions in fiscal years 2016, 2015,
2014, 2013, and 2012, were approximately 119, 139, 183, 184, and
182, respectively.
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F. Economic Analysis of the Specific Amendments: Proposals That Require
More Disclosure or the Incorporation of New Technology
1. Description of Registrant's Securities (Item 601(b)(4))
Item 202 requires registrants to provide a brief description of
their registered capital stock, debt securities, warrants, rights,
American Depositary Receipts, and other securities. We are proposing to
amend Item 601(b)(4) to require registrants to provide Item 202
disclosure as an exhibit to Form 10-K for each class of securities that
is registered under the Exchange Act, rather than limiting this
disclosure to registration statements. The proposed amendments would
not change existing disclosure obligations under Form 8-K and Schedule
14A, which currently require registrants to disclose certain
modifications to the rights of their security holders and amendments to
their articles of incorporation or bylaws. Any modifications and
amendments during a fiscal year to the information called for by Item
202 would now also be reflected in an exhibit to the registrant's next
annual report.
Information about Exchange Act registered securities allows
investors to assess the existing capital structure of registrants,
which can help investors understand better their exposure to risks and
their control rights. Requiring Item 202 disclosure as an exhibit to
annual reports would improve investors' access to information about
their rights as security holders, thereby facilitating more informed
investment and voting decisions.
The proposed requirements would impose some incremental compliance
costs for registrants to include the proposed disclosure with their
annual reports. Table 1 above shows that on average 7,800 registrants
file Form 10-K each year and therefore would be subject to the new Item
601(b)(4) exhibit filing requirement. However, because registrants
already prepare very similar disclosure to satisfy existing disclosure
obligations under Form 8-K and Schedule 14A and would be able to
incorporate by reference and hyperlink to prior disclosure, so long as
there has not been any change to the information called for by Item
202, we expect these incremental costs to be minimal.
2. Subsidiaries of the Registrant and Entity Identifiers (Item
601(b)(21))
Item 601(b)(21) requires a registrant to list in an exhibit its
subsidiaries, the state or other jurisdiction of incorporation or
organization of each, and the names under which those subsidiaries do
business. We are proposing amendments to Item 601(b)(21)(i) that would
require registrants to include in the exhibit the LEI, if one has been
obtained, of the registrant and each subsidiary listed.\369\
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\369\ See supra Section II.E.4.
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A key benefit of LEIs is that they allow for unique identification
of entities engaged in commercial and financial transactions. For
various reasons, firm and subsidiary names can be spelled and recorded
differently across filings, corporate websites, and standard databases.
In addition, subsidiaries can share the same (or very similar) names.
These issues can make names poor identifiers of market participants,
which could be an obstacle in some forms of investment analysis
involving computerized data access.
In contrast, LEIs provide clear and unique identification of market
participants that facilitates the statistical analysis and aggregation
of firm financial data. In this regard, some commenters have observed
that improved identifiers would allow investors to link third-party
data with structured data from Commission filings to produce more
meaningful analysis.\370\ As a consequence, a standard identifier of
firms and firm subsidiaries has the potential to improve not only
individual investment decisions but also the efficiency of the overall
market.
---------------------------------------------------------------------------
\370\ See id.
---------------------------------------------------------------------------
Disclosure of LEIs would also facilitate the ability of investors
and the Commission to link the information disclosed in Commission
filings with data from other filings or sources as LEIs become more
widely used by regulators and the financial industry. This could aid in
the performance of market analysis studies, surveillance activities,
and systemic risk monitoring by the Commission and other regulators.
The proposed amendments would impose an incremental cost on
registrants to include LEIs in the Item 601(b)(21) exhibit. We do not
expect this incremental cost to be significant, however, given that
this information should be readily available to registrants. Our
proposals would require disclosure of LEIs only for those registrants
and subsidiaries that have obtained this identifier, thereby not
imposing additional costs.\371\ As a result, the benefits of LEI
disclosure outlined above may be limited to the extent that not all
reporting entities obtain an identifier.
---------------------------------------------------------------------------
\371\ The use of and access to LEIs is free for investors. All
of the associated reference data needed to understand, process and
use LEIs is also widely and freely available. However, the cost of
obtaining a LEI for registrants currently entails a one-time fee of
$75-$119, and $50-$99 per year in annual maintenance fees.
---------------------------------------------------------------------------
Moreover, standard identifiers, such as LEIs, are most beneficial
to registrants and investors when a broad array of firms in the market
adopt them. For example, a widely adopted identifier would facilitate
the electronic link and cross-referencing of various informational
items over a large group of registrants. Staff experience indicates
that LEI adoption rates are currently low, which limits its benefits to
investors and other users of financial information.\372\ If LEIs are
not widely used, firms may not have incentives to obtain an LEI. Since
coordination among firms with regard to adoption is difficult to
accomplish, LEIs could remain underutilized.
---------------------------------------------------------------------------
\372\ For example, in the context of Form ADV, which similarly
requires an LEI to be reported only if the entity already has one,
the Commission has noted that just 6.8% of registered investment
advisers report an LEI when filing the form. See Form ADV and
Investment Advisers Act Rules, Release No. IA-4509 (Aug. 25, 2016)
[81 FR 60417 (Sept. 1, 2016)], at 114.
However, see also the discussion in the text around note 220,
supra. Although overall adoption rates appear low, the use of LEIs
may be increasing as a result of global regulatory efforts. See
Glob. Legal Entity Identifier Found., Regulatory Use of the LEI,
available at https://www.gleif.org/en/about-lei/regulatory-use-of-the-lei (last visited July 13, 2017).
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[[Page 51023]]
3. Tagging Cover Page Data
We are proposing to require registrants to tag all of the
information on the cover page of Form 10-K, Form 10-Q, Form 8-K, Form
20-F, and Form 40-F using Inline XBRL (or, if the Commission's recent
proposal to require Inline XBRL for the submission of operating company
financial statements is not adopted, in an XBRL exhibit to the relevant
filing) in accordance with the EDGAR Filer Manual. To implement the
cover page tagging requirements, we propose to add new Rule 406 to
Regulation S-T, new Item 601(b)(104) to Regulation S-K, new paragraph
104 to the ``Instructions as to Exhibits'' of Form 20-F and new
paragraph B.17 to the ``General Instructions'' of Form 40-F to require
registrants to file with each of the specified forms a ``Cover Page
Interactive Data File'' containing cover page data. We are also
proposing to revise Rule 11 of Regulation S-T to add the term ``Cover
Page Interactive Data File.'' Our proposals also would amend the cover
pages of these forms to include the trading symbol for each class of
the registrant's registered securities.\373\
---------------------------------------------------------------------------
\373\ Because the cover pages of Form 10-K, Form 20-F, and Form
40-F already require disclosure of the title of each class of
securities registered pursuant to Section 12(b) of the Exchange Act
and each exchange on which they are registered, our proposed
amendments to these forms would revise the cover page to include a
corresponding field for the trading symbol. Unlike these forms,
however, the cover pages of Form 10-Q and Form 8-K do not currently
require disclosure of the title of each class of securities and each
exchange on which they are registered. Accordingly, to ensure that
registrants and their registered securities are identified in a
consistent manner across forms, we are proposing to revise the cover
pages of Form 10-Q and Form 8-K to include this disclosure in
addition to the trading symbol.
---------------------------------------------------------------------------
Investment analysis increasingly relies on quantitative statistical
methods. Machine-readable formats greatly facilitate quantitative
analysis because they allow for the corresponding items to be imported
directly into various platforms for data analysis. Thus, tagging all
the data points on the cover pages of Form 10-K, Form 10-Q, Form 8-K,
Form 20-F, and Form 40-F could decrease the costs to investors for
implementing quantitative data analysis. We acknowledge that the
amendment would impose additional costs on registrants but expect the
additional burden to be minimal, given that registrants already furnish
a substantial amount of information contained in these forms in a
structured format.
An alternative to the Inline XRBL or traditional XBRL format is to
specify an XML format for the cover pages of Form 8-K, Form 10-K, Form
10-Q, Form 20-F, and Form 40-F. An XML format could have a variety of
implementations ranging from filers submitting the data according to a
designated technical framework to inputting the cover page information
in a web-fillable format within EDGAR. We are not proposing this
approach, because the Inline XBRL and traditional XBRL format provide
more precise rules that facilitate consistent input and data validation
by filers and enhance the analytical capabilities of data users.
Moreover, the Inline XBRL and traditional XBRL format have more robust
data validation capabilities, which could help to ensure better data
quality for investors. Inline XBRL also would not suffer from possible
data quality discrepancies that may occur from filers rekeying the
information from their cover page for submission in XBRL or XML.
4. Proposals for Additional Disclosure With Minimal Additional Costs to
Registrants
The following proposed amendments are expected to impose only
limited compliance costs on registrants:
Incorporation by Reference--proposal would require
hyperlinks internal to EDGAR for documents incorporated by
reference.\374\
---------------------------------------------------------------------------
\374\ See supra Section II.F.2.
---------------------------------------------------------------------------
Item 501(b)(4)--proposal would require disclosure on the
prospectus cover page of any national securities exchange where the
securities being offered are listed or, if not listed, the principal
United States market or markets for the securities being offered and
the corresponding trading symbols, if any. \375\
---------------------------------------------------------------------------
\375\ See supra Section II.D.1.c.
---------------------------------------------------------------------------
Requiring registrants to include hyperlinks to information that is
incorporated by reference could improve the readability and
navigability of disclosure documents by allowing users to be taken
directly to the incorporated information by clicking on a link rather
than having to locate the information on EDGAR. Although requiring the
inclusion of hyperlinks for incorporated information would impose an
additional compliance burden on registrants, we do not expect this
burden to be significant given that hyperlinks are relatively easy to
implement and involve minimal cost.
In the case of Item 501(b)(4), expanding the existing requirements
for trading market disclosure to encompass information about markets
that are not ``national securities exchanges'' would benefit investors
by helping them to better assess their trading costs. The disclosure
would impose some additional disclosure costs on registrants. However,
we do not expect these costs to be significant given that registrants
should have ready access to this information. In this regard, we note
that the required disclosure would be limited to the principal United
States market or markets where the registrant, through the engagement
of a registered broker-dealer, has actively sought and achieved
quotation.
G. Economic Analysis of HTML and Hyperlinking Requirements of Forms
Under the Investment Company Act
As discussed above, we are proposing HTML and hyperlinks
requirements for filers of certain forms under the Investment Company
Act. Broadly speaking, we believe the proposed amendments would reduce
search costs for investors. In particular, we believe that exhibit
hyperlinks would help investors and other users to access a particular
exhibit more efficiently as they would not need to search within the
filing or through different filings made over time to locate the
exhibit. Requiring exhibit hyperlinks may make it easier for investors
and other users to find and access a particular exhibit that was
originally filed with a previous filing.
To the extent that hyperlinks ease the navigation process for
investors and other users, hyperlinks may also facilitate a more
thorough review of a registrant's registration statements,
applications, and reports and encourage more effective monitoring over
time. The potential reduction of search costs and the enhanced ability
of investors to review a registrant's disclosure may result in more
informed investment and voting decisions, potentially enhancing
allocative efficiency, and capital formation by registrants.
We expect that hyperlinks would be more beneficial in reducing
search costs in the case of exhibits incorporated by reference than in
the case of exhibits filed with the filing, and in particular, we
expect these benefits to be most pronounced in the case of
incorporation by reference from a filing that was not recently filed
because more recent filings are displayed first on the EDGAR search
results page. Further, we expect hyperlinks would have greater benefits
in the case of registrants that submit more filings.
As a result of the proposed amendments, we expect that both HTML
and ASCII registrants would incur compliance costs to include
hyperlinks in their exhibit indexes. The cost of inserting a hyperlink
to an exhibit incorporated by reference would likely be greater than
the cost of
[[Page 51024]]
inserting a hyperlink to an exhibit filed with the document. While the
average cost itself of inserting a hyperlink is minimal, the total
hyperlinking costs for registrants would be a function of two main
factors: (1) How many registration statements, applications and reports
a registrant files that require an exhibit index; and (2) how many
exhibits in the exhibit index of these registration statements,
applications, and reports are either filed with the filing or
incorporated by reference.
Filers reporting in ASCII would incur costs to switch to HTML, in
addition to the costs of including hyperlinks in their exhibit indexes.
We expect that the costs of switching to HTML would not be significant
because the cost of software with built-in HTML and hyperlink features
is minimal. Overall, given the modest costs involved, we do not expect
that the proposed amendments would have significant competitive effects
for registrants.
Request for Comment
We request comment on all aspects of our economic analysis,
including the potential costs and benefits of the proposed amendments
and whether the rules, if adopted, would promote efficiency,
competition, and capital formation or have an impact on investor
protection. Commenters are requested to provide empirical data,
estimation methodologies, and other factual support for their views, in
particular, on costs and benefits estimates.
IV. Paperwork Reduction Act
A. Background
Certain provisions of our rules and forms that would be affected by
the proposed amendments contain ``collection of information''
requirements within the meaning of the Paperwork Reduction Act of 1995
(``PRA'').\376\ The Commission is submitting the proposal to the Office
of Management and Budget (``OMB'') for review in accordance with the
PRA.\377\ The hours and costs associated with preparing and filing the
forms and reports constitute reporting and cost burdens imposed by each
collection of information. An agency may not conduct or sponsor, and a
person is not required to respond to, a collection of information
requirement unless it displays a currently valid OMB control number.
Compliance with the information collections is mandatory. Responses to
the information collections are not kept confidential and there is no
mandatory retention period for the information disclosed. The titles
for the collections of information are:
---------------------------------------------------------------------------
\376\ 44 U.S.C. 3501 et seq.
\377\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
---------------------------------------------------------------------------
``Regulation S-K'' (OMB Control No. 3235-0071); \378\
---------------------------------------------------------------------------
\378\ The paperwork burdens for Regulation S-K, Regulation S-T,
Regulation C and Regulation 12B are imposed through the forms that
are subject to the requirements in these regulations and are
reflected in the analysis of those forms. To avoid a PRA inventory
reflecting duplicative burdens and for administrative convenience,
we assign a one-hour burden to each of these regulations.
---------------------------------------------------------------------------
``Regulation S-T'' (OMB Control No. 3235-0424);
``Regulation 12B'' (OMB Control No. 3235-0062);
``Regulation C'' (OMB Control No. 3235-0074);
``Family of rules under section 8(b) of the Investment Company Act
of 1940'' (OMB Control No. 3235-0176);
``Form S-1'' (OMB Control No. 3235-0065);
``Form S-3'' (OMB Control No. 3235-0073);
``Form S-4'' (OMB Control No. 3235-0324);
``Form S-6'' (OMB Control No. 3235-0184);
``Form S-11'' (OMB Control No. 3235-0067);
``Form N-14'' (OMB Control No. 3235-0336);
``Form F-1'' (OMB Control No. 3235-0258);
``Form F-3'' (OMB Control No. 3235-0256);
``Form F-4'' (OMB Control No. 3235-0325);
``Form F-7'' (OMB Control No. 3235-0325);
``Form F-8'' (OMB Control No. 3235-0378);
``Form F-80'' (OMB Control No. 3235-0404);
``Form F-10'' (OMB Control No. 3235-0380);
``Form SF-1'' (OMB Control No. 3235-0707);
``Form SF-3'' (OMB Control No. 3235-0690);
``Form 10'' (OMB Control No. 3235-0064);
``Form 20-F'' (OMB Control No. 3235-0288);
``Form 40-F'' (OMB Control No. 3235-0381);
``Form 10-K'' (OMB Control No. 3235-0063);
``Form 10-Q'' (OMB Control No. 3235-0070);
``Form 8-A'' (OMB Control No. 3235-0056);
``Form 8-K'' (OMB Control No. 3235-0060);
``Form 10-D'' (OMB Control No. 3235-0604);
``Schedule 14A'' (OMB Control No. 3235-0059);
``Schedule 14C'' (OMB Control No. 3235-0057); ``Form N-1A'' (OMB
Control No. 3235-0307); ``Form N-2'' (OMB Control No. 3235-0026);
``Form N-3'' (OMB Control No. 3235-0316); ``Form N-4'' (OMB Control No.
3235-0318); ``Form N-5'' (OMB Control. No. 3235-0169); ``Form N-6''
(OMB Control No. 3235-0503); and ``Form N-CSR'' (OMB Control No. 3235-
0570).
The forms, reports, and regulations listed above were adopted under
the Securities Act, the Exchange Act or the Investment Company Act. The
regulations, schedules, and forms set forth the disclosure requirements
for registration statements, periodic and current reports, distribution
reports and proxy, and information statements filed by registrants to
help investors make informed investment and voting decisions. Other
forms and reports are filed by entities regulated by the Investment
Company Act in connection with the Commission's oversight of these
entities.
We are proposing amendments, which are described in more detail in
Section II above, based on the recommendations made in the FAST Act
Report, as required by Section 72003 of the FAST Act. The proposed
amendments are intended to modernize and simplify certain disclosure
requirements in Regulation S-K and related rules and forms in a manner
that reduces the costs and burdens on registrants while continuing to
provide all material information to investors. The proposed amendments
are also intended to improve the readability and navigability of the
Commission's disclosure documents and discourage repetition and
disclosure of immaterial information. In addition, we are proposing
parallel amendments to several rules and forms applicable to investment
companies and investment advisers to provide for a consistent set of
incorporation by reference and hyperlinking rules for these entities,
including proposed amendments that would require certain investment
company filings to be submitted in HTML format.
B. Summary of the Proposed Amendments' Impact on Collection of
Information
In this section, we summarize the proposed amendments and their
general impact on the paperwork burden associated with the forms listed
in Section IV.A. In Section IV.C. below, we provide revised burden
estimates for each form.
[[Page 51025]]
1. Proposed Amendments Expected To Decrease Burdens
a. Description of Property (Item 102)
The proposed amendments to Item 102 of Regulation S-K would clarify
that a description of property is only required to the extent physical
properties are material to the registrant and make other clarifying
amendments.\379\ The staff has observed that the current disclosure
standard may lead registrants, in some instances, to devote resources
to providing disclosure on properties that are not material. Although
the proposed amendments to Item 102 are expected to help registrants
avoid unnecessary disclosure in some instances, the amendments are
clarifying in nature and therefore we do not believe they would
significantly affect the paperwork burden associated with affected
forms. Accordingly, we estimate that the paperwork burden would be
reduced by 0.5 hours for each form affected by the proposed amendments.
We expect that Form S-1,\380\ Form S-4,\381\ Form 10, and Form 10-K
would be affected by this proposed amendment.
---------------------------------------------------------------------------
\379\ See supra Section II.A.
\380\ 17 CFR 239.11.
\381\ 17 CFR 239.25.
---------------------------------------------------------------------------
b. Management's Discussion and Analysis (Item 303)
The proposed amendments to Item 303 would allow registrants, in
some circumstances, to eliminate the earliest year of the MD&A
discussion.\382\ The proposed amendments would also eliminate the
reference to five-year selected financial data in Instruction 1 to Item
303(a) and clarify that registrants may use their discretion in
selecting the best format for their MD&A presentation.\383\ The
combined effects of these amendments would be to eliminate the burden
on registrants to prepare and provide repetitive disclosure that is not
material. The proposed amendments are of particular significance,
because MD&A is typically one of the most labor-intensive sections of
any form in which it is required. We anticipate that the proposed
amendments to simplify and clarify the MD&A requirements would reduce
the paperwork burden associated with related forms.
---------------------------------------------------------------------------
\382\ See supra Section II.B.
\383\ See supra id.
---------------------------------------------------------------------------
We estimate that the aggregate impact of the proposed amendments
would be a four hour reduction in paperwork burden each time Item 303
information is required to be included in a form. We estimate that the
aggregate impact of the proposed corresponding amendments to Form 20-F
would result in a four hour reduction each time information under Item
5 of that form is required. We expect that Form S-1,\384\ Form S-
4,\385\ Form S-11,\386\ Form F-1,\387\ Form F-4,\388\ Form 10, Form 10-
K, Form 10-Q, and Form 20-F would be affected by this proposed
amendment.
---------------------------------------------------------------------------
\384\ 17 CFR 239.11.
\385\ 17 CFR 239.25.
\386\ 17 CFR 239.18.
\387\ 17 CFR 239.31.
\388\ 17 CFR 239.34.
---------------------------------------------------------------------------
c. Directors, Executive Officers, Promoters and Control Persons (Item
401, Item 405 and Item 407)
The proposed amendments to Item 401, Item 405, and Item 407 of
Regulation S-K would simplify and modernize executive officer, Section
16(a) compliance and corporate governance disclosure requirements. The
proposed amendments to Item 401 would simplify the rules for
determining what disclosure about executive officers may be included in
Form 10-K when other disclosure in Part III of Form 10-K will be
incorporated by reference to the registrant's definitive proxy or
information statement.\389\ The proposed amendments to Item 405 would
allow registrants to rely on a review of Section 16 reports submitted
on EDGAR rather than reports furnished to the registrant when providing
disclosure about Section 16(a) compliance.\390\ Finally, the proposed
amendments to Item 407 clarify the applicable auditing standard and the
disclosure requirements for the compensation committees of EGCs.\391\
---------------------------------------------------------------------------
\389\ See supra Section II.C.
\390\ See id.
\391\ See id.
---------------------------------------------------------------------------
The proposed amendments to Item 401, Item 405, and Item 407 would
clarify and streamline existing disclosure requirements, and in that
respect are expected to marginally reduce compliance costs for
registrants. We estimate that the proposed amendments would reduce the
paperwork burden for each affected form by 0.5 hours. We expect that
Form S-1, Form S-4, Form S-11, Form 8-K, Form 10, Form 10-K, and Form
10-Q would be affected by this proposed amendment.
d. Exhibits (Item 601)
i. Information Omitted From Exhibits (Item 601(a)(5), Item 601(a)(6),
and Item 601(b)(10)(iv))
We are proposing several amendments to Item 601 of Regulation S-K.
Many of these amendments affect provisions related to the Commission's
confidential treatment process. Specifically, the proposed amendments
to Item 601(a)(5), Item 601(a)(6), and Item 601(b)(10)(iv) would permit
registrants to omit, without submitting a confidential treatment
request, schedules and attachments that are not material, personally
identifiable information and confidential information in material
contract exhibits that is both (i) not material and (ii) competitively
harmful if publicly disclosed.
For purposes of the PRA, we consider the time and cost to prepare
and submit a confidential treatment request to be part of the paperwork
burden associated with preparing and filing the related disclosure
form. We estimate that elimination of the need to prepare and submit a
confidential treatment request to omit confidential information from
exhibits filed pursuant to Item 601(b)(10) that is both (i) not
material and (ii) competitively harmful if publicly disclosed would
reduce internal burden hours by ten hours per request for an estimated
20% of registrants that prepare the confidential treatment request
without relying on outside counsel, and reduce external costs by $4,000
per request for an estimated 80% of registrants that retain outside
counsel for this work.\392\
---------------------------------------------------------------------------
\392\ The $4,000 cost estimate is calculated as follows: 10
hours x $400 per hour of outside counsel work = $4,000. See infra
note 412.
---------------------------------------------------------------------------
Proposed Item 601(a)(5) would permit registrants to omit entire
schedules and attachments to exhibits unless the schedules contain
information material to an investment or voting decision and that
information is not otherwise disclosed in the exhibit or the disclosure
document. The threshold for omission under proposed Item 601(a)(5) is
lower than for omission under the proposed amendment to Item 601(b)(10)
because registrants would not be required to show that the information
would cause competitive harm if publicly disclosed.
Based on our review of confidential treatment requests granted in
fiscal year 2016, we estimate that over 90% of these requests were
granted for material contracts based on competitive harm to the
registrant. For the remainder, we expect that many of those exhibits
likely contain schedules that could be omitted under proposed Item
601(a)(5). However, we are unable to reliably estimate how many of
these requests would be unnecessary under the proposed amendments to
Item 601(a)(5) because this would depend, in part, on whether the
schedules contain material
[[Page 51026]]
information. Given that the proposed amendments to Item 601(b)(10)
would likely address over 90% of the confidential treatment requests
submitted to the Commission, and to avoid overestimating the decrease
in paperwork burden arising from the proposed amendments, we are not
making an additional adjustment to our burden estimates in respect of
the amendment to Item 601(a)(5) but are soliciting comment on ways to
reasonably estimate such an adjustment.\393\
---------------------------------------------------------------------------
\393\ For similar reasons, we are making no additional
adjustment to our burden estimates in respect of the amendments to
Item 601(a)(6). In fiscal year 2016, only nine confidential
treatment requests were granted by the Commission for documents
containing PII. This suggests that most registrants are currently
taking advantage of existing staff guidance that PII may be omitted
without filing a confidential treatment request.
---------------------------------------------------------------------------
Based on these assumptions, we expect the annual internal burden
hours and professional costs devoted to the confidential treatment
process to decrease each time exhibit information described in Item
601(a)(5), Item 601(a)(6), or Item 601(b)(10)(iv) is omitted or
redacted. In fiscal year 2016, 43% of confidential treatment requests
were filed for Form 10-Q, 18% for Form 10-K, 13% for Form 8-K, 8% for
Form S-1, 4% for Form 20-F, and 1% each for Form 10 and Form F-1. We
are therefore ascribing changes in paperwork burdens and costs to these
forms in these same proportions.
ii. Material Contracts Exhibits (Item 601(b)(10)(i))
The proposed amendment to Item 601(b)(10)(i) would limit the two-
year look back filing requirement for material contracts to newly
reporting registrants. Registrants that are not newly reporting
registrants would no longer be required to comply with this filing
requirement and thus would incur reduced compliance burdens. However,
we believe that the current burden associated with the two-year look
back requirement is minimal. Therefore, the proposed amendments are not
expected to result in a significant reduction of the paperwork burden
associated with the affected forms. We estimate that the paperwork
burden would be reduced by 0.5 hours for each form affected by the
proposed amendment. We expect that Form 10, Form 10-K, Form S-1, Form
S-4, Form F-1, Form F-3, Form F-4, Form S-11, and Form SF-1 would be
affected by this proposed amendment.
2. Proposed Amendments Expected To Increase Burdens
a. Registration Statement and Prospectus Provisions (Item 501(b))
We are proposing to amend Item 501(b) to require disclosure on the
cover page of the prospectus of any national securities exchange where
the securities being offered are listed or, if not listed, the
principal United States market or markets for the securities being
offered and the corresponding trading symbols, if any.\394\ The
proposed amendments would incrementally increase the compliance burden
on registrants by requiring them to provide disclosure about trading
markets other than national exchanges. Because we are proposing to
limit the incremental disclosure to those trading markets where the
registrants, through the engagement of a registered broker-dealer, has
actively sought and achieved quotation, we believe this information
should be readily available to registrants and impose only a minimal
paperwork burden.
---------------------------------------------------------------------------
\394\ See supra Section II.D.
---------------------------------------------------------------------------
Accordingly, we estimate that the proposed amendment would slightly
increase the paperwork burden associated with each affected form by
0.25 hours. We expect that Form S-1, Form S-3, Form S-4, Form S-11,
Form F-1, Form F-3, Form F-4, Form SF-1,\395\ and Form SF-3 \396\ would
be affected by this proposed amendment.
---------------------------------------------------------------------------
\395\ 17 CFR 239.44.
\396\ 17 CFR 239.45.
---------------------------------------------------------------------------
b. Exhibits (Item 601(b)(4)(vi) and (b)(21))
Proposed new Item 601(b)(4)(vi) would require registrants to file
an Item 202 description of their Exchange Act registered securities as
an exhibit to Form 10-K. The proposed amendments to Item 601(b)(21)
would require disclosure of an LEI (if one has been obtained) for each
registrant and any subsidiaries required to be disclosed in the
exhibit.
We expect that the new requirements under Item 601(b)(4)(vi) would
slightly increase the paperwork burden on registrants because
registrants would be required to provide a description of registered
securities annually. However, registrants would be able to incorporate
by reference and hyperlink to prior disclosure if the information
called for by Item 202 remains unchanged from prior years, thus
mitigating any increase in the anticipated burden. Accordingly, we
estimate the proposed amendments would increase the paperwork burden
associated with Form 10-K and Form 20-F by 0.5 hours.
We expect that the proposed amendments to Item 601(b)(21) would
also increase the burden on registrants; however, we expect this
increase to be slight because LEI information should be readily
available and would be only required if an identifier has already been
obtained. Those registrants that have not obtained LEIs would not incur
an additional burden. Accordingly, we estimate that the proposed
amendments to Item 601(b)(21) would increase the paperwork burden
associated with each affected form by 0.25 hours. We expect that Form
S-1, Form S-4, Form F-1, Form 10, Form 10-K, Form S-11, Form SF-1, and
Form SF-3 would be affected by the proposed amendment to Item
601(b)(21).
c. Manner of Delivery
Proposed new Rule 406, proposed new Item 601(b)(104), proposed new
paragraph 104 to ``Instructions as to Exhibits'' of Form 20-F and
proposed new Instruction 17 to ``Information To Be Filed on this Form''
of Form 40-F would require registrants to tag every data point on the
cover pages of Form 10-K, Form 10-Q, Form 8-K, Form 20-F, and Form 40-F
using Inline XBRL, including certain new data points added pursuant to
the proposed amendments.\397\ Although expanded data tagging would
result in an increase in the burden associated with related forms, we
note that registrants are already required to tag certain cover page
information as well as financial statement information. For this
reason, we believe most registrants already will have developed the
internal resources or engaged outside professionals to assist them in
complying with existing data tagging requirements.\398\ In this
respect, we do not believe the cover page tagging requirement would
result in significant additional burdens for registrants.
---------------------------------------------------------------------------
\397\ See supra Section II.G.1.
\398\ As discussed above, the Commission recently proposed to
require the use of the Inline XBRL format instead of the traditional
XBRL format for the submission of operating company financial
statements, and we intend for the cover page data to be tagged in
the same format as this other information. See id. In the Inline
XBRL Proposing Release, we provided estimates of the change in
paperwork burden associated with the transition to Inline XBRL. See
supra note 310. Because we expect to require the Inline XBRL format
for tagging cover page data only if the Inline XBRL proposal has
been adopted, we are not including PRA burden estimates related to
the transition to Inline XBRL in this release.
---------------------------------------------------------------------------
Accordingly, we estimate that the requirement to tag additional
cover page items would impose an increased paperwork burden of one hour
for each affected form. We expect that Form 10-
[[Page 51027]]
K, Form 10-Q, Form 8-K, Form 20-F, and Form 40-F would be affected by
the proposed new rules and form amendments.
As described in more detail above, we are proposing amendments to
certain of our forms that are used by investment companies and
amendments to Rule 102 of Regulation S-T to apply hyperlinking and HTML
requirements to those registrants to facilitate access to most exhibits
for investors and other users of the information.\399\ We anticipate
that the proposed amendments will increase the burdens and costs for
registrants to prepare and file registration statements and reports on
the affected forms. Because the software tools to prepare and file
documents in HTML are widely used and available at minimal cost, we do
not believe this requirement would appreciably change the existing
burden estimates for the affected registration statements or reports,
which already include the time and expense to prepare and file in
electronic format on EDGAR. We believe the burdens associated with
hyperlinking exhibits would be small as the registrant would already be
preparing the exhibits and exhibit index for the related filing and
would have readily available all the information necessary to create
the hyperlinks. We assume that the average burden hours of requiring
exhibit hyperlinks would vary based on the number of exhibits that are
included with a filing, as discussed in detail below.\400\
---------------------------------------------------------------------------
\399\ See supra Section II.G.2.
\400\ See infra Section IV.C.4.
---------------------------------------------------------------------------
3. Proposed Amendments Not Expected to Meaningfully Affect Burdens
a. Registration Statement and Prospectus Provisions (Item 501(b), Item
503(c), Item 508 and Item 512)
The proposed amendments to Item 501(b)(1), Item 501(b)(3), and Item
501(b)(10) would, respectively, eliminate misleading company name
disclosure requirements, explicitly allow registrants to include a
clear statement that the offering price will be determined by a
particular method or formula (and require a cross reference to the
offering price method or formula disclosure), and permit registrants to
exclude some portion of the legend relating to state law in the
prospectus for an offering that is not prohibited by state blue sky
law.\401\ The proposed amendments to Item 503(c) would relocate the
current risk factor disclosure requirements to Subpart 100 and
eliminate the risk factor examples without substantively changing the
underlying disclosure requirements.\402\ The proposed amendment to Item
508 would define the term ``sub-underwriter'' to clarify one aspect of
the required disclosure about the plan of distribution for a registered
securities offering.\403\ The proposed amendments to Item 512 would
eliminate certain undertakings that are redundant or obsolete.\404\
---------------------------------------------------------------------------
\401\ The proposed amendments would also streamline 501(b) by
combining paragraphs (b)(10) and (b)(11) without substantive change.
\402\ See supra Section II.D.2.
\403\ See supra Section II.D.3.
\404\ See supra Section II.D.4.
---------------------------------------------------------------------------
We believe these proposed amendments would not meaningfully affect
the paperwork burden associated with the related forms because these
amendments modernize and clarify certain requirements and do not
substantively change the required disclosure. Therefore, we are not
making any adjustments to the paperwork burden of affected forms due to
these proposed amendments.
b. Incorporation by Reference
We are proposing amendments to simplify and modernize the rules and
forms governing incorporation by reference. Under the proposed
amendments, certain existing requirements for incorporation by
reference would be consolidated into Rule 411, Rule 12b-23, Rule 0-4,
and Rule 0-6.\405\ The proposed amendments would also eliminate several
redundant or outdated requirements. In addition, the proposed
amendments would provide registrants with additional flexibility in
organizing the disclosure in Form 10, Form 10-K, and Form 20-F by
permitting them to exclude item numbers and captions or create their
own captions tailored to the disclosure in these forms \406\ These
proposals are expected to decrease reporting burdens associated with
incorporating information by reference in Commission filings, leading
to an estimated 0.5 hour reduction in paperwork burden per affected
form. However, this decrease would be offset by an estimated 0.5 hour
increase in paperwork burden per affected form due to the proposed
amendments requiring registrants to include hyperlinks to information
incorporated by reference when that information is available on
EDGAR.\407\ Accordingly, we are not making any adjustments to the
paperwork burden of affected forms due to these proposed amendments.
---------------------------------------------------------------------------
\405\ See supra Section II.F.
\406\ See id.
\407\ See id.
---------------------------------------------------------------------------
C. Burden and Cost Estimates to the Proposed Amendments
As discussed below, we expect that the proposed amendments would,
in the aggregate, reduce the paperwork burden on respondents. The
change in burden, however, would differ depending on the form because
not all of the proposed amendments would apply to each form.
These estimates represent the average burden for all registrants,
both large and small. In deriving our estimates, we recognize that the
burdens will likely vary among individual registrants based on a number
of factors, including the nature of their business.
The burden estimates were calculated by multiplying the estimated
number of responses by the estimated average amount of time it would
take a registrant to prepare and review disclosure required under the
proposed amendments. The portion of the burden carried by outside
professionals is reflected as a cost, while the portion of the burden
carried by the registrant internally is reflected in hours.
1. Form 10-K and Form 10-Q; Schedule 14A and Schedule 14C
The proposed amendments are estimated to significantly reduce the
paperwork burdens associated with Form 10-K \408\ and Form 10-Q as well
as Schedule 14A and Schedule 14C.\409\ For purposes of the PRA, we
estimate that 75% of the burden of preparation for these Exchange Act
reports is carried by the registrant internally and that 25% of the
burden of preparation is carried by outside professionals retained by
the company at an average cost of $400 per hour.\410\
---------------------------------------------------------------------------
\408\ Schedules 14A and 14C require disclosure under Subpart 400
of Regulation S-K. This disclosure is often incorporated, in
relevant part, into Part III of a registrant's Form 10-K. Therefore,
our burden estimates for Form 10-K contemplate that Part III
disclosure may be incorporated by reference to Schedules 14A or 14C.
\409\ Schedule 14A requires that registrants, under certain
circumstances, provide disclosure under Item 303. Our burden
estimate for Schedule 14A assumes that registrants would duplicate
the disclosure provided under this Item in the most recent Form 10-K
and/or Form 10-Q.
\410\ We recognize that the costs of retaining outside
professionals may vary depending on the nature of the professional
services, but for purposes of this PRA analysis, we estimate that
such costs would be an average of $400 per hour. This estimate is
based on consultations with several registrants, law firms and other
persons who regularly assist registrants in preparing and filing
reports with the Commission.
---------------------------------------------------------------------------
Table 4 below illustrates the total annual compliance burden, in
hours and in costs, \411\ of the affected
[[Page 51028]]
collections of information resulting from the proposed amendments.\412\
---------------------------------------------------------------------------
\411\ For convenience, the estimated hour and cost burdens in
the tables in this section have been rounded to the nearest whole
number.
\412\ The burdens associated with the proposed amendments to the
forms listed in Table 4, other than the confidential treatment
request proposal, have been estimated by assuming that 75% of the
burden is borne by the company and 25% is borne by outside counsel
at $400 per hour. The burdens associated with submitting
confidential treatment requests in connection with the forms listed
in Table 4 have been estimated by assuming that the average request
requires approximately ten hours of preparation and that 20% of the
burden is borne by the company and 80% of the burden is borne by
outside counsel at $400 per hour.
Table 4--Incremental Paperwork Burden Under the Proposed Amendments for Exchange Act Forms
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed
Current annual number of Current burden Change in Change in Change in Change in
responses affected hours burden hours company hours professional professional
responses hours costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
10-K.................................... 8,137 8,137 12,228,620 (32,703) (23,325) (9,378) ($3,715,600)
10-Q.................................... 22,907 22,907 3,220,037 (73,181) (63,884) (9,297) (3,718,800)
8-K..................................... 118,387 118,387 507,665 116,867 88,490 28,377 11,350,800
--------------------------------------------------------------------------------------------------------------------------------------------------------
2. Form S-1, Form S-3, Form S-4, Form F-3, Form F-4, Form SF-1, Form
SF-3, Form 10, and Form 20-F
The proposed amendments are estimated to significantly reduce the
paperwork burden associated with Form S-1, Form S-3, Form S-4, Form F-
3, Form F-4, and Form 20-F. For registration statements on Form 10,
Form S-1, Form S-3, Form S-4, Form F-1, Form F-3, Form F-4, Form SF-1,
and Form SF-3, and Exchange Act report Form 20-F, we estimate that 25%
of the burden of preparation is carried by the company internally and
that 75% of the burden of preparation is carried by outside
professionals retained by the company at an average cost of $400 per
hour.
Table 5 below illustrates the total annual compliance burden, in
hours and in costs, of the affected collections of information
resulting from the proposed amendments.\413\
---------------------------------------------------------------------------
\413\ The burdens associated with the proposed amendments to the
forms listed in Table 5, other than the confidential treatment
request proposal, have been estimated by assuming that 25% of the
burden is borne by the company and 75% is borne by outside counsel
at $400 per hour. The burdens associated with submitting
confidential treatment requests in connection with the forms listed
in Table 5 have been estimated by assuming that the average request
requires approximately ten hours of preparation and that 20% of the
burden is borne by the company and 80% of the burden is borne by
outside counsel at $400 per hour.
Table 5--Incremental Paperwork Burden Under the Proposed Amendments for Registration Statements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed
Current annual number of Current burden Change in Change in Change in Change in
reponses affected hours burden hours company hours professional professional
responses hours costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
S-1..................................... 901 901 150,242 (5,514) (1,325) (4,189) ($1,675,600)
S-3..................................... 1,082 1,082 127,806 (301) (78) (223) (89,200)
S-4..................................... 551 551 564,731 (2,803) (700) (2,103) (841,200)
S-11.................................... 100 100 19,476 (450) (112) (338) (135,200)
SF-3.................................... 71 71 24,495 36 9 27 10,800
F-1..................................... 63 63 26,917 (431) (98) (333) (133,200)
F-3..................................... 107 107 4,467 (10) (1) (9) (3,600)
F-4..................................... 68 68 24,769 (281) (70) (211) (84,400)
10...................................... 238 238 12,805 (1390) (342) (1,048) (419,200)
20-F.................................... 725 725 479,501 (2454) (588) (1,866) (746,400)
40-F.................................... 160 160 17,197 160 40 120 40,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 6--Current and Revised Burdens Under the Proposed Amendments for Securities Act
and Exchange Act Forms
----------------------------------------------------------------------------------------------------------------
Current burden Revised burden
-------------------------------------------------------------------
Burden hours Burden hours
(A) Cost (B) (C) Costs (D)
----------------------------------------------------------------------------------------------------------------
10-K........................................ 12,228,620 $1,631,470,000 12,205,295 $1,627,754,400
10-Q........................................ 3,220,037 429,368,808 3,156,153 425,650,008
8-K......................................... 507,665 67,688,700 596,155 79,039,500
S-1......................................... 150,242 180,290,100 148,917 178,614,900
S-3......................................... 127,806 153,367,008 127,728 153,277,808
S-4......................................... 564,731 677,677,104 564,031 676,835,904
S-11........................................ 19,476 23,371,200 19,364 23,236,000
SF-3........................................ 24,495 29,394,000 24,504 29,404,800
F-1......................................... 26,917 32,300,100 26,819 32,166,900
F-3......................................... 4,467 5,360,700 4,465 5,357,100
F-4......................................... 24,769 29,722,800 24,699 29,638,400
10.......................................... 12,805 15,366,042 12,463 14,946,842
20-F........................................ 479,501 575,400,600 478,913 574,654,200
[[Page 51029]]
40-F........................................ 17,197 20,636,800 17,237 20,684,800
----------------------------------------------------------------------------------------------------------------
3. Form 8-A, Form 10-D, Form 40-F, Form F-7, Form F-8, Form F-10, and
Form F-80
The proposed amendments to Form 8-A,\414\ Form 10-D, Form 40-F,
Form F-7,\415\ Form F-8,\416\ Form F-10, and Form F-80 \417\ are not
expected to meaningfully reduce the associated paperwork burden for
these forms. Accordingly, we have not included a tabular presentation
of the impact on the total annual compliance burden of these forms as a
result of these proposed amendments.
---------------------------------------------------------------------------
\414\ 17 CFR 249.208a.
\415\ 17 CFR 239.37.
\416\ 17 CFR 239.38.
\417\ 17 CFR 239.41.
---------------------------------------------------------------------------
4. Form S-6, Form N-1A, Form N-2, Form N-3, Form N-4, Form N-5, Form N-
6, Form N-14, and Form N-CSR
The proposed amendments to Form S-6,\418\ Form N-1A,\419\ Form N-
2,\420\ Form N-3,\421\ Form N-4,\422\ Form N-5,\423\ Form N-6,\424\
Form N-14, and Form N-CSR \425\ are expected to increase the burdens
and costs for registrants to prepare and file registration statements
and reports on the affected forms, but we believe the burdens
associated with hyperlinking exhibits would be small.\426\ We assume
that the average burden hours of requiring exhibit hyperlinks would
vary based on the number of exhibits that are included with a filing.
For purposes of the PRA, based on the average and median number of
exhibits shown in Table 3 above and the staff's experience, we estimate
that the average burden for a registrant to hyperlink to exhibits would
be one hour per response for each of the affected forms. As discussed
above, we are not making any adjustments to the paperwork burden of
affected forms due to the proposed amendments to simplify and modernize
the rules and forms governing incorporation by reference.\427\
---------------------------------------------------------------------------
\418\ 17 CFR 239.16.
\419\ 17 CFR 239.15A and 17 CFR 274.11A.
\420\ 17 CFR 239.14 and 17 CFR 274.11a-1.
\421\ 17 CFR 239.17a and 17 CFR 274.11b.
\422\ 17 CFR 239.17b and 17 CFR 274.11c.
\423\ 17 CFR 239.24 and 17 CFR 274.5.
\424\ 17 CFR 239.17c and 17 CFR 274.11d.
\425\ 17 CFR 249.331 and 17 CFR 274.128.
\426\ See supra Section IV.B.2.c.
\427\ See supra Section IV.B.3.b.
---------------------------------------------------------------------------
The table below shows the total annual compliance burden, in hours
and in costs, of the collections of information resulting from the
proposed amendments.\428\ The burden estimates were calculated by
multiplying the estimated number of responses by the estimated average
amount of time it would take an issuer to prepare and review the
exhibit hyperlinks. The portion of the burden carried by outside
professionals is reflected as a cost, while the portion of the burden
carried by the issuer internally is reflected in hours. For purposes of
the PRA, we estimate that 25% of the burden of preparation is carried
by the registrant internally and that 75% of the burden of preparation
is carried by outside professionals retained by the company at an
average cost of $400 per hour.\429\
---------------------------------------------------------------------------
\428\ For convenience, the estimated hour and cost burdens in
the table have been rounded to the nearest whole number.
\429\ We recognize that the costs of retaining outside
professionals may vary depending on the nature of the professional
services, but for purposes of this PRA analysis, we estimate that
such costs would be an average of $400 per hour. These estimates are
based on our estimates for the parallel requirement for operating
companies. Exhibit Hyperlinks Adopting Release, supra note 14 at
14139.
Table 6--Incremental Paperwork Burden Under the Proposed Amendments to Forms for Investment Companies
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed number
Forms of affected Incremental Total incremental 25% internal 75% outside Professional
responses burden hours/form burden hours burden professional costs
(A) (B) (C) = (A) x (B) (D) = (C) x 0.25 (E) = (C) x 0.75 (F) = E x $400
--------------------------------------------------------------------------------------------------------------------------------------------------------
Form S-6.............................. 2,498 1 2,498 625 1,874 $749,600
Form N-1A............................. 6,002 1 6,002 1,501 4,502 1,800,800
Form N-2.............................. 166 1 166 42 125 50,000
Form N-3.............................. 20 1 20 5 15 6,000
Form N-4.............................. 1,653 1 1,653 413 1,240 496,000
Form N-5.............................. 1 1 1 0 1 400
Form N-6.............................. 472 1 472 118 354 141,600
Form N-14............................. 192 1 192 48 144 57,600
Form N-CSR............................ 6,898 1 6,898 1,725 5,174 2,069,600
-----------------------------------------------------------------------------------------------------------------
Total............................. ................. ................. 17,902 ................. ................. 5,371,600
--------------------------------------------------------------------------------------------------------------------------------------------------------
D. Request for Comment
Pursuant to 44 U.S.C. 3506(c)(2)(B), we request comment in order
to:
Evaluate whether the proposed collections of information
are necessary for the proper performance of the functions of the
Commission, including whether the information will have practical
utility;
Evaluate the accuracy of our assumptions and estimates of
the
[[Page 51030]]
burden of the proposed collection of information;
Determine whether there are ways to enhance the quality,
utility, and clarity of the information to be collected;
Evaluate whether there are ways to minimize the burden of
the collection of information on those who respond, including through
the use of automated collection techniques or other forms of
information technology; and
Evaluate whether the proposed amendments would have any
effects on any other collection of information not previously
identified in this section.
Any member of the public may direct to us any comments concerning
the accuracy of these burden estimates and any suggestions for reducing
these burdens. Persons submitting comments on the collection of
information requirements should direct their comments to the Office of
Management and Budget, Attention: Desk Officer for the U.S. Securities
and Exchange Commission, Office of Information and Regulatory Affairs,
Washington, DC 20503, and send a copy to, Brent J. Fields, Secretary,
U.S. Securities and Exchange Commission, 100 F Street NE., Washington,
DC 20549, with reference to File No. S7-08-17. Requests for materials
submitted to OMB by the Commission with regard to the collection of
information should be in writing, refer to File No. S7-08-17 and be
submitted to the U.S. Securities and Exchange Commission, Office of
FOIA Services, 100 F Street NE., Washington DC 20549. OMB is required
to make a decision concerning the collection of information between 30
and 60 days after publication of this proposed rule. Consequently, a
comment to OMB is best assured of having its full effect if the OMB
receives it within 30 days of publication.
V. Small Business Regulatory Enforcement Fairness Act
For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996,\430\ a rule is ``major'' if it has resulted, or is likely
to result in:
---------------------------------------------------------------------------
\430\ 5 U.S.C. 801 et seq.
---------------------------------------------------------------------------
An annual effect on the U.S. economy of $100 million or
more;
a major increase in costs or prices for consumers or
individual industries; or
significant adverse effects on competition, investment, or
innovation.
We request comment on whether our proposal would be a ``major
rule'' for purposes of the Small Business Regulatory Enforcement
Fairness Act. We solicit comment and empirical data on:
The potential effect on the U.S. economy on an annual
basis;
any potential increase in costs or prices for consumers or
individual industries; and
any potential effect on competition, investment, or
innovation.
VI. Initial Regulatory Flexibility Act Analysis
This Initial Regulatory Flexibility Act Analysis has been prepared
in accordance with the Regulatory Flexibility Act.\431\ It relates to
proposed amendments to modernize and simplify certain disclosure
requirements in Regulation S-K and related rules and forms to implement
Section 72003 of the FAST Act and provide consistent incorporation by
reference and hyperlinking requirements in the rules and forms
applicable to investment companies and investment advisers.
---------------------------------------------------------------------------
\431\ 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------
A. Reasons for, and Objectives of, the Proposed Action
The purpose of the proposed amendments is to modernize and simplify
Commission disclosure requirements in a manner that reduces costs and
burdens on companies while still providing all material information.
Specifically, the proposed amendments would modernize and simplify
these disclosure requirements by clarifying, consolidating, relocating
and eliminating, or updating various Commission rules that govern
public company disclosure. The proposed amendments would also modernize
the rules by requiring cover page data to be tagged in a machine-
readable format, requiring disclosure of LEIs and requiring hyperlinks
to be included in some documents filed on EDGAR. The proposed
amendments would largely implement the staff's recommendations in the
FAST Act Report, as required by Section 72003(d) of the FAST Act. In
addition, the proposed amendments would apply parallel incorporation by
reference and hyperlinking requirements in the rules and forms used by
investment companies and investment advisers to provide a consistent
set of requirements for these registrants.
B. Legal Basis
We are proposing the rule and form amendments contained in this
document under the authority set forth in Sections 7, 10, 19(a), and 28
of the Securities Act of 1933, as amended, Sections 3(b), 12, 13, 14,
15, 16, 23(a), and 36 of the Securities Exchange Act of 1934, as
amended, Sections 6(c), 8, 24(a), 30, and 38 of the Investment Company
Act of 1940, as amended and Sections 204, 206A, 210, and 211 of the
Investment Advisers Act of 1940, as amended.
C. Small Entities Subject to the Proposed Rules
The proposed amendments would affect some registrants that are
small entities. The Regulatory Flexibility Act defines ``small entity''
to mean ``small business,'' ``small organization,'' or ``small
governmental jurisdiction.'' \432\ For purposes of the Regulatory
Flexibility Act, under our rules, an issuer, other than an investment
company or an investment adviser, is a ``small business'' or ``small
organization'' if it had total assets of $5 million or less on the last
day of its most recent fiscal year and is engaged or proposing to
engage in an offering of securities that does not exceed $5
million.\433\ An investment company, including a business development
company,\434\ is considered to be a ``small business'' if it, together
with other investment companies in the same group of related investment
companies, has net assets of $50 million or less as of the end of its
most recent fiscal year.\435\ An investment adviser generally is a
small entity if it: (1) Has assets under management having a total
value of less than $25 million; (2) did not have total assets of $5
million or more on the last day of the most recent fiscal year; and (3)
does not control, is not controlled by, and is not under common control
with another investment adviser that has assets under management of $25
million or more, or any person (other than a natural person) that had
total assets of $5 million or more on the last day of its most recent
fiscal year.\436\ We estimate that there are 837 issuers that file with
the Commission, other than investment companies and investment
advisers, that may be considered small entities.\437\ In addition, we
estimate that, as of
[[Page 51031]]
December 2016, there are 130 investment companies that would be subject
to the proposed amendments that may be considered small entities.
Finally, we estimate that, as of August 1, 2017, there are 557
investment advisers that may be subject to the proposed amendments that
may be considered small entities.\438\
---------------------------------------------------------------------------
\432\ 5 U.S.C. 601(6).
\433\ See Securities Act Rule 157 [17 CFR 230.157] and Exchange
Act Rule 0-10(a) [17 CFR 240.0-10(a)].
\434\ Business development companies are a category of closed-
end investment company that are not registered under the Investment
Company Act [15 U.S.C. 80a-2(a)(48) and 80a-53-64].
\435\ See Investment Company Act Rule 0-10(a) [17 CFR 270.0-
10(a)].
\436\ See Investment Advisers Act Rule 0-7(a) [17 CFR 275.0-
7(a)].
\437\ This estimate is based on a review of Form 10-K and 20-F
filings (from EDGAR XBRL) with fiscal periods ending between January
31, 2015 and January 31, 2016.
\438\ This estimate is based on Commission-registered investment
adviser responses to Form ADV, Item 5.F and Item 12.
---------------------------------------------------------------------------
D. Reporting, Recordkeeping, and Other Compliance Requirements
As noted above, the purpose of the proposed amendments is to
modernize and simplify the Commission's disclosure requirements and
provide consistent incorporation by reference and hyperlinking rules
for investment companies and investment advisers. If adopted, the
majority of the proposed amendments are expected to have an incremental
effect on existing reporting, recordkeeping and other compliance
burdens for all issuers, including small entities.\439\ Many of the
proposed amendments would simplify and streamline existing disclosure
requirements in ways that are expected to reduce compliance burdens.
Some of the proposed amendments, like those that impose new data
tagging,\440\ hyperlinking \441\ or disclosure requirements \442\ would
increase compliance costs for registrants, although we do not expect
these additional costs to be significant.
---------------------------------------------------------------------------
\439\ We recognize that the fixed costs of disclosure
requirements typically constitute a higher percentage of revenues
for smaller companies than for larger companies. However, the
benefits of disclosure may be greater for smaller companies because
information asymmetries between investors and managers of smaller
companies are typically higher than for larger, more seasoned
companies with a large following. See, e.g., R. Frankel and X. Li,
Characteristics of a firm's information environment and the
information asymmetry between insiders and outsiders, 37 J. Acct.
Econ. 229, 229-259 (June 2004). See also, L. Cheng, S. Liao, and H.
Zhang, The Commitment Effect versus Information Effect of
Disclosure--Evidence from Smaller Reporting Companies, 88 Acct. Rev.
1239, 1239-1263 (2013).
\440\ See, e.g., supra Section 0 (Tagging Cover Page Data).
\441\ See, e.g., supra Section 0 (Exhibit Hyperlinks and HTML
format for Investment Companies).
\442\ See e.g., supra Section II.D.1.c (Market for the
Securities (Item 501(b)(4)).
---------------------------------------------------------------------------
E. Duplicative, Overlapping, or Conflicting Federal Rules
We believe that the proposed amendments would not duplicate,
overlap, or conflict with other federal rules.
F. Significant Alternatives
The Regulatory Flexibility Act directs us to consider alternatives
that would accomplish our stated objectives, while minimizing any
significant adverse impact on small entities. In connection with the
proposed amendments, we considered the following alternatives:
Establishing different compliance or reporting
requirements that take into account the resources available to small
entities;
Clarifying, consolidating, or simplifying compliance and
reporting requirements under the rules for small entities;
Using performance rather than design standards; and
Exempting small entities from all or part of the
requirements.
We believe the proposed amendments would clarify, consolidate and
simplify compliance and reporting requirements for small entities and
other registrants. As discussed above, we believe the majority of the
proposed amendments would simplify and streamline disclosure
requirements in ways that are expected to reduce compliance
burdens.\443\ We do not believe that the proposed amendments would
impose any significant new compliance obligations. Accordingly, we
generally do not believe it is necessary to establish different
compliance and reporting requirements or timetables or to exempt small
entities from all or part of the proposed amendments. We note in this
regard that the Commission's existing disclosure requirements provide
for scaled disclosure requirements and other accommodations for small
entities, and the proposed amendments would not alter these existing
accommodations.
---------------------------------------------------------------------------
\443\ See supra Sections (Economic Analysis) and IV (Paperwork
Reduction Act).
---------------------------------------------------------------------------
Finally, with respect to using performance rather than design
standards, the proposed amendments generally use design rather than
performance standards in order to promote uniform filing requirements
for all registrants. In some instances, the proposed amendments would
modernize and simplify existing design standards. For example, the
proposed amendments to Item 303(a) would emphasize the flexibility
currently available to registrants with respect to the form of MD&A
presentation.\444\ In other instances, the proposed amendments may
result in additional flexibility when preparing disclosures. For
example, proposed Item 601(a)(5) would expand registrants' ability to
omit schedules and attachments that are not material to exhibits.\445\
As another example, the proposed amendments to Item 102 would clarify
that the threshold for disclosure about registrants' physical
properties is based on materiality.\446\
---------------------------------------------------------------------------
\444\ See supra Section (Year-to-Year Comparisons (Instruction 1
to Item 303(a)).
\445\ See supra Section (Schedules and Attachments to Exhibits).
\446\ See supra Section (Description of Property).
---------------------------------------------------------------------------
G. Request for Comment
We encourage the submission of comments with respect to any aspect
of this Initial Regulatory Flexibility Analysis. In particular, we
request comments regarding:
how the proposed rule and form amendments can achieve
their objective while lowering the burden on small entities;
the number of small entity companies that may be affected
by the proposed rule and form amendments;
the existence or nature of the potential effects of the
proposed amendments on small entity companies discussed in the
analysis; and
how to quantify the effects of the proposed amendments.
Commenters are asked to describe the nature of any effect and
provide empirical data supporting the extent of that effect. Comments
will be considered in the preparation of the Final Regulatory
Flexibility Analysis, if the proposed rules are adopted, and will be
placed in the same public file as comments on the proposed rules
themselves.
VII. Statutory Authority and Text of Proposed Rule and Form Amendments
We are proposing the rule and form amendments contained in this
document under the authority set forth in Sections 7, 10, 19(a), and 28
of the Securities Act of 1933, as amended, Sections 3(b), 12, 13, 14,
15, 16, 23(a), and 36 of the Securities Exchange Act of 1934, as
amended, Sections 6(c), 8, 24(a), 30, and 38 of the Investment Company
Act of 1940, as amended, and Sections 204, 206A, 210, and 211 of the
Investment Advisers Act of 1940, as amended.
List of Subjects in 17 CFR Parts 229, 230, 232, 239, 240, 249, 270,
274, and 275
Administrative practice and procedure, Reporting and recordkeeping
requirements, Securities.
In accordance with the foregoing, we are proposing to amend Title
17, Chapter II of the Code of Federal Regulations as follows:
[[Page 51032]]
PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES
ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND
CONSERVATION ACT OF 1975--REGULATION S-K
0
1. The authority citation for part 229 continues to read as follows:
Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2,
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj,
77nnn, 77sss, 78c, 78i, 78j, 78j-3, 78l, 78m, 78n, 78n-1, 78o, 78u-
5, 78w, 78ll, 78 mm, 80a-8, 80a-9, 80a-20, 80a-29, 80a-30, 80a-
31(c), 80a-37, 80a-38(a), 80a-39, 80b-11 and 7201 et seq.; 18 U.S.C.
1350; sec. 953(b), Pub. L. 111-203, 124 Stat. 1904 (2010); and sec.
102(c), Pub. L. 112-106, 126 Stat. 310 (2012).
Sec. 229.10 [Amended].
0
2. Remove and reserve paragraph (d) of Sec. 229.10.
0
3. Amend Sec. 229.102 by revising the introductory text, Instruction 1
and Instruction 2 to read as follows:
Sec. 229.102 (Item 102) Description of property.
To the extent material, disclose the location and general character
of the registrant's principal physical properties. In addition,
identify the segment(s), as reported in the financial statements, that
use the properties described. If any such property is not held in fee
or is held subject to an encumbrance that is material to the
registrant, so state and describe briefly how held.
Instructions to Item 102: 1. What is required is information that
will reasonably inform investors as to the suitability, adequacy,
productive capacity, and extent of utilization of the principal
physical properties of the registrant and its subsidiaries, to the
extent the described properties are material. A registrant should
engage in a comprehensive consideration of the materiality of its
properties. If appropriate, descriptions may be provided on a
collective basis; detailed descriptions of the physical characteristics
of individual properties or legal descriptions by metes and bounds are
not required and shall not be given.
2. Disclosures with respect to this item need only be provided to
the extent the properties are material to the registrant. In
determining materiality under this Item, the registrant should take
into account both quantitative and qualitative factors. See Instruction
1 to Item 101 of Regulation S-K (Sec. 229.101).
* * * * *
0
4. Add Sec. 229.105 to read as follows:
Sec. 229.105 (Item 105) Risk factors.
Where appropriate, provide under the caption ``Risk Factors'' a
discussion of the most significant factors that make an investment in
the registrant or offering speculative or risky. This discussion must
be concise and organized logically. Do not present risks that could
apply generically to any registrant or any offering. Explain how the
risk affects the registrant or the securities being offered. Set forth
each risk factor under a subcaption that adequately describes the risk.
If the risk factor discussion is included in a registration statement,
it must immediately follow the summary section. If you do not include a
summary section, the risk factor section must immediately follow the
cover page of the prospectus or the pricing information section that
immediately follows the cover page. Pricing information means price and
price-related information that you may omit from the prospectus in an
effective registration statement based on Rule 430A (Sec. 230.430A(a)
of this chapter). The registrant must furnish this information in plain
English. See Sec. 230.421(d) of Regulation C of this chapter.
0
5. Amend Sec. 229.202 by revising Instruction 3 under ``Instructions
to Item 202'' to read as follows:
Sec. 229.202 (Item 202) Description of registrant's securities.
* * * * *
3. Section 305(a)(2) of the Trust Indenture Act of 1939, U.S.C.
77aaa et seq., as amended (``Trust Indenture Act''), shall not be
deemed to require the inclusion in a registration statement,
prospectus, or annual report on Form 10-K of any information not
required by this Item or Item 601(b)(4)(vi) of this chapter.
* * * * *
0
6. Amend Sec. 229.303 by revising Instruction 1 under ``Instructions
to paragraph 303(a)'' to read as follows:
Sec. 229.303 (Item 303) Management's discussion and analysis of
financial condition and results of operations.
* * * * *
Instructions to paragraph 303(a): 1. The registrant's discussion
and analysis shall be of the financial statements and other statistical
data that the registrant believes will enhance a reader's understanding
of its financial condition, changes in financial condition and results
of operations. Generally, the discussion shall cover the periods
covered by the financial statements included in the filing and the
registrant may use any presentation that in the registrant's judgment
enhances a reader's understanding. A smaller reporting company's
discussion shall cover the two-year period required in Article 8 of
Regulation S-X and may use any presentation that in the registrant's
judgment enhances a reader's understanding. For registrants providing
financial statements covering three years in a filing, discussion about
the earliest year would not be required if (i) that discussion is not
material to an understanding of the registrant's financial condition,
changes in financial condition and results of operations and (ii) the
registrant has filed its prior year Form 10-K on EDGAR containing
management's discussion and analysis of the earliest of the three years
included in the financial statements of the current filing. An emerging
growth company, as defined in Rule 405 of the Securities Act (Sec.
230.405 of this chapter) or Rule 12b-2 of the Exchange Act (Sec.
240.12b-2 of this chapter), may provide the discussion required in
paragraph (a) of this Item for its two most recent fiscal years if,
pursuant to Section 7(a) of the Securities Act of 1933 (15 U.S.C
77g(a)), it provides audited financial statements for two years in a
Securities Act registration statement for the initial public offering
of the emerging growth company's common equity securities.
* * * * *
0
7. Amend Sec. 229.401 by removing Instruction 3 to paragraph (b) of
Item 401and adding an Instruction to Item 401 to read as follows:
Sec. 229.401 (Item 401) Directors, executive officers, promoters and
control persons.
* * * * *
Instruction to Item 401. The information regarding executive
officers called for by this Item need not be furnished in proxy or
information statements prepared in accordance with Schedule 14A or
Schedule 14C under the Exchange Act (Sec. 240.14a-101 and Sec.
240.14c-101 of this chapter) if you are relying on General Instruction
G of Form 10-K under the Exchange Act (Sec. 249.310 of this chapter),
such information is furnished in a separate section captioned
``Information about our Executive Officers,'' and is included in Part I
of your annual report on Form 10-K.
0
8. Revise Sec. 229.405 to read as follows:
Sec. 229.405 (Item 405) Compliance with Section 16(a) of the
Exchange Act.
(a) Reporting obligation. Every registrant having a class of equity
securities registered pursuant to Section 12 of the Exchange Act (15
U.S.C. 78l) and every closed-end investment company registered under
the
[[Page 51033]]
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) must:
(1) Under the caption ``Delinquent Section 16(a) Reports,''
identify each person who, at any time during the fiscal year, was a
director, officer, beneficial owner of more than ten percent of any
class of equity securities of the registrant registered pursuant to
Section 12 of the Exchange Act, or any other person subject to Section
16 of the Exchange Act with respect to the registrant because of the
requirements of Section 30 of the Investment Company Act (``reporting
person'') that failed to file on a timely basis reports required by
Section 16(a) of the Exchange Act during the most recent fiscal year or
prior fiscal years.
(2) For each such person, set forth the number of late reports, the
number of transactions that were not reported on a timely basis, and
any known failure to file a required form. A known failure to file
would include, but not be limited to, a failure to file a Form 3, which
is required of all reporting persons, and a failure to file a Form 5 in
the absence of the written representation referred to in paragraph
(b)(3) of this section, unless the registrant otherwise knows that no
Form 5 is required.
Instruction 1 to paragraph (a) of Item 405. If no disclosure is
required, registrants are encouraged to exclude the caption
``Delinquent Section 16(a) Reports.''
Instruction 2 to paragraph (a) of Item 405. The registrant is only
required to disclose a failure to file timely once. For example, if in
the most recently concluded fiscal year a reporting person filed a Form
4 disclosing a transaction that took place in the prior fiscal year,
and should have been reported in that year, the registrant should
disclose that late filing and transaction pursuant to this Item 405
with respect to the most recently concluded fiscal year, but not in
material filed with respect to subsequent years.
(b) Scope of the Inquiry. In determining whether disclosure is
required pursuant to paragraph (a), the registrant may rely only on the
following:
(1) A review of Forms 3 and 4 (17 CFR 249.103 and 249.104) and
amendments thereto filed electronically with the Commission during the
registrant's most recent fiscal year;
(2) A review of Forms 5 (17 CFR 249.105) and amendments thereto
filed electronically with the Commission with respect to the
registrant's most recent fiscal year; and
(3) Any written representation from the reporting person that no
Form 5 is required. The registrant must maintain the representation in
its records for two years, making a copy available to the Commission or
its staff upon request.
0
9. Amend Sec. 229.407 by revising paragraphs (d)(3)(i)(B) and (g) to
read as follows:
Sec. 229.407 (Item 407) Corporate governance.
* * * * *
(d) * * *
(3)(i) * * *
(B) The audit committee has discussed with the independent auditors
the matters required to be discussed by the applicable requirements of
the Public Company Accounting Oversight Board (``PCAOB'') and the
Commission;
* * * * *
(g) Smaller reporting companies and emerging growth companies. (1)
A registrant that qualifies as a ``smaller reporting company,'' as
defined by Sec. 229.10(f)(1), is not required to provide:
(A) The disclosure required in paragraph (d)(5) of this Item in its
first annual report filed pursuant to Section 13(a) or 15(d) of the
Exchange Act (15 U.S.C. 78m(a) or 78o(d)) following the effective date
of its first registration statement filed under the Securities Act (15
U.S.C. 77a et seq.) or Exchange Act (15 U.S.C. 78a et seq.); and
(B) The disclosure required by paragraphs (e)(4) and (e)(5) of this
Item.
(2) A registrant that qualifies as an ``emerging growth company,''
as defined in Rule 405 of the Securities Act (Sec. 230.405 of this
chapter) or Rule 12b-2 of the Exchange Act (Sec. 240.12b-2 of this
chapter) , is not required to provide the disclosure required by
paragraph (e)(5) of this Item.
* * * * *
0
10. Amend Sec. 229.501 by:
0
a. Revising the instruction under ``Instruction to paragraph
501(b)(1)'', Instruction 2 under ``Instructions to paragraph
501(b)(3)'', paragraph (b)(4) and paragraph (b)(10); and
0
b. Removing paragraph (b)(11) to read as follows:
Sec. 229.501 (Item 501) Forepart of Registration Statement and
Outside Front Cover Page of Prospectus.
* * * * *
(b) * * *
(1) * * *
Instruction to paragraph 501(b)(1): If your name is the same as
that of a company that is well known, include information to eliminate
any possible confusion with the other company. If your name indicates a
line of business in which you are not engaged or in which you are
engaged only to a limited extent, include information to eliminate any
misleading inference as to your business.
* * * * *
Instructions to paragraph 501(b)(3): * * *
2. If it is impracticable to state the price to the public, explain
the method by which the price is to be determined. Instead of
explaining the method on the outside front cover page of the
prospectus, you may state that the offering price will be determined by
a particular method or formula that is described in the prospectus and
include a cross-reference to the location of such disclosure in the
prospectus, including the page number. Highlight the cross-reference by
prominent type or in another manner. If the securities are to be
offered at the market price, or if the offering price is to be
determined by a formula related to the market price, indicate the
market and market price of the securities as of the latest practicable
date.
* * * * *
(4) Market for the securities. The national securities exchange(s)
where the securities being offered are listed. If the securities being
offered are not listed on a national securities exchange, the principal
United States market(s) where the registrant, through the engagement of
a registered broker-dealer, has actively sought and achieved quotation.
In each case, also disclose the corresponding trading symbol(s) for the
securities on such market(s).
* * * * *
(10) Prospectus ``Subject to Completion'' legend.
(i) If you use the prospectus before the effective date of the
registration statement or if you use Rule 430A [Sec. 230.430A of this
chapter] to omit pricing information and the prospectus is used before
you determine the public offering price, include a prominent statement
that:
(A) The information in the prospectus will be amended or completed;
(B) A registration statement relating to these securities has been
filed with the Securities and Exchange Commission;
(C) The securities may not be sold until the registration statement
becomes effective; and
(D) 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.
(ii) The legend called for by paragraph (b)(10)(i) of this Item may
be in the following or other clear, plain language:
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the
[[Page 51034]]
registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
(iii) Registrants may exclude the statement in paragraph (b)(i)(D)
of this Item if the offering is not prohibited by state law.
* * * * *
Sec. 229.503 [Amended].
0
11. Amend Sec. 229.503 by removing ``risk factors'' from the section
heading and removing and reserving paragraph (c).
Sec. 229.512 [Amended].
0
12. Remove and reserve paragraphs (c), (d), (e), and (f) of Sec.
229.512.
0
13. Amend Sec. 229.601 by:
0
a. Revising paragraph (a)(1);
0
b. Adding paragraphs (a)(5) and (a)(6);
0
c. Revising entry (b)(4) from the exhibit table in paragraph (a) to add
a subsection (vi) titled ``Description of registrant's securities'' and
to add an ``X'' under column 10-K;
0
d. Revising entry (21) from the exhibit table in paragraph (a) to read
``Subsidiaries of the registrant and entity identifiers '';
0
e. Revising entry (104) from the exhibit table in paragraph (a) to read
``Cover Page Interactive Data File'' and adding an ``X'' under columns
8-K, 10-Q and 10-K;
0
f. Adding paragraph (b)(4)(vi) and the instructions to paragraph
(b)(4)(vi) and paragraph (b)(10)(iv);
0
g. Revising paragraphs (b)(2), (b)(10), (b)(13), (b)(21)(i), and
(b)(99); and
0
h. Adding paragraph (b)(104) to read as follows:
Sec. 229.601 (Item 601) Exhibits.
(a) Exhibits and index required. (1) Subject to Rule 411(c) (Sec.
230.411(c) of this chapter) under the Securities Act and Rule 12b-23(c)
(Sec. 240.12b-23(c) of this chapter) under the Exchange Act regarding
incorporation of exhibits by reference, the exhibits required in the
exhibit table must be filed as indicated, as part of the registration
statement or report.
* * * * *
(5) Schedules (or similar attachments) to the exhibits required by
this Item are not required to be filed unless such schedules contain
information material to an investment or voting decision and that
information is not otherwise disclosed in the exhibit or the disclosure
document. Each exhibit filed must contain a list briefly identifying
the contents of all omitted schedules. In addition, the registrant must
provide a copy of any omitted schedule to the Commission staff upon
request.
(6) The registrant may redact information from exhibits required to
be filed by this Item if disclosure of such information would
constitute a clearly unwarranted invasion of personal privacy (e.g.,
disclosure of bank account numbers, social security numbers, home
addresses and similar information).
* * * * *
(b) * * *
(2) Plan of acquisition, reorganization, arrangement, liquidation,
or succession. Any material plan of acquisition, disposition,
reorganization, readjustment, succession, liquidation, or arrangement
and any amendments thereto described in the statement or report.
* * * * *
(4) * * *
(vi) For each class of securities that is registered under Section
12 of the Exchange Act, provide the information required by Item
202(a)-(d) and (f) of Regulation S-K (Sec. 229.202 of this chapter),
Description of registrant's securities.
* * * * *
Instruction 1 to paragraph (b)(4)(vi). A registrant is only
required to provide the information called for by Item 601(b)(4)(vi) if
it is filing an annual report under Exchange Act Section 13(a) or
15(d).
Instruction 2 to paragraph (b)(4)(vi). For purposes of Item
601(b)(4)(vi), all references in Item 202 to securities to be or being
registered, offered, or sold will mean securities that are registered
as of the end of the period covered by the report with which the
exhibit is filed. In addition, for purposes of this Item, the
disclosure will be required for classes of securities that have not
been retired by the end of the period covered by the report.
Instruction 3 to paragraph (b)(4)(vi). The registrant may
incorporate by reference to a prior annual report under Exchange Act
Section 13(a) or 15(d) containing the disclosure required by Item
601(b)(4)(vi) of Regulation S-K, as applicable, so long as there has
not been any change to the information called for by Item 202,
(Description of the registrant's securities) since the filing date of
the linked filing. Such hyperlink will be deemed to satisfy the
requirements of Item 601(b)(4)(vi) for the current filing.
* * * * *
(10) Material contracts. (i) Every contract not made in the
ordinary course of business that is material to the registrant and is
to be performed in whole or in part at or after the filing of the
registration statement or report. In addition, for newly reporting
registrants, every contract not made in the ordinary course of business
that is material to the registrant and that was entered into not more
than two years before the date on which such registrant:
(A) First files a registration statement or report; or
(B) completes a transaction that had the effect of causing it to
cease being a public shell company.
The only contracts that need to be filed are those to which the
registrant or a subsidiary of the registrant is a party or has
succeeded to a party by assumption or assignment or in which the
registrant or such subsidiary has a beneficial interest.
* * * * *
(iv) The registrant may redact provisions or terms of exhibits
required to be filed by paragraph (b)(10) of this Item if those
provisions or terms are both (i) not material and (ii) competitively
harmful to the registrant if publicly disclosed. If it does so, the
registrant should mark the exhibit index to indicate that portions of
the exhibit or exhibits have been omitted and include a prominent
statement on the first page of the redacted exhibit that certain
identified information has been excluded from the exhibit because it is
both (i) not material and (ii) competitively harmful to the registrant
if publicly disclosed. The registrant also must indicate by brackets
where the information is omitted from the filed version of the exhibit.
If requested by the Commission staff, the registrant must promptly
provide an unredacted paper copy of the exhibit on a supplemental
basis. The Commission staff also may request the registrant to provide
its materiality and competitive harm analyses on a supplemental basis.
Upon evaluation of the registrant's supplemental materials, the
Commission staff may request the registrant to amend its filing to
include in the exhibit any previously redacted information that is not
adequately supported by the registrant's materiality and competitive
harm analyses.
The registrant may request confidential treatment of the
supplemental material submitted under paragraph (iv) of this Item
pursuant to Rule 83 (Sec. 200.83 of this chapter) while it is in the
possession of the Commission staff. After completing its review of the
supplemental information, the Commission staff will return or destroy
it at the request of the registrant, if the registrant complies with
the procedures outlined in Rules 418 or
[[Page 51035]]
12b-4 (Sec. 230.418 or 240.12b-4 of this chapter).
Instruction 1 to paragraph (b)(10) of Item 601: For purposes of
paragraph (b)(10)(i) of this Item, a ``newly reporting registrant'' is
(i) 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), (ii) any registrant that has not filed an annual report
since the revival of a previously suspended reporting obligation, and
(iii) any registrant that (a) was a shell company, other than a
business combination related shell company, as defined in Rule 12b-2
under the Exchange Act (17 CFR 240.12b-2), immediately before
completing a transaction that has the effect of causing it to cease
being a shell company and (b) has not filed a registration statement or
Form 8-K as required by Items 2.01 and 5.06 of that form, since the
completion of such transaction. For example, newly reporting
registrants would include (i) a registrant that is filing its first
registration statement under the Securities Act or the Exchange Act,
and (ii) a registrant that was a public shell company, other than a
business combination related shell company, and completes a reverse
merger transaction causing it to cease being a shell company.
Instruction 2 to paragraph (b)(10): With the exception of
management contracts, in order to comply with paragraph (iii) above,
registrants need only file copies of the various compensatory plans and
need not file each individual director's or executive officer's
personal agreement under the plans unless there are particular
provisions in such personal agreements whose disclosure in an exhibit
is necessary to an investor's understanding of that individual's
compensation under the plan.
Instruction 3 to paragraph (b)(10): If a material contract is
executed or becomes effective during the reporting period reflected by
a Form 10-Q or Form 10-K, it must be filed as an exhibit to the Form
10-Q or Form 10-K filed for the corresponding period. See paragraph
(a)(4) of this Item. With respect to quarterly reports on Form 10-Q,
only those contracts executed or becoming effective during the most
recent period reflected in the report must be filed.
* * * * *
(13) Annual or quarterly report to security holders. (i) The
registrant's annual report to security holders for its last fiscal year
or its quarterly report to security holders, if all or a portion
thereof is incorporated by reference in the filing. Such report, except
for those portions thereof that are expressly incorporated by reference
in the filing, is to be furnished for the information of the Commission
and is not to be deemed ``filed'' as part of the filing. If the
financial statements in the report have been incorporated by reference
in the filing, the accountant's certificate must be manually signed in
one copy. See Rule 439 (Sec. 230.439 of this chapter).
(ii) Electronic filings. If all, or any portion, of the annual or
quarterly report to security holders is incorporated by reference into
any electronic filing, all, or such portion of the annual or quarterly
report to security holders so incorporated, must be filed in electronic
format as an exhibit to the filing.
* * * * *
(21) Subsidiaries of the registrant and entity identifiers. (i)
List the following information for the registrant and each of its
subsidiaries: The name, the legal entity identifier (if a legal entity
identifier has been obtained), the state or other jurisdiction of
incorporation or organization, and the names under which the entity
does business. This list may be incorporated by reference from another
filed document which includes a complete and accurate list. ``Legal
entity identifier'' means, with respect to any registrant or its
subsidiaries, the legal entity identifier as assigned by a utility
endorsed or otherwise governed by the Global LEI Regulatory Oversight
Committee or accredited by the Global LEI Foundation.
* * * * *
(99) Additional exhibits. (i) Any additional exhibits that the
registrant may wish to file must be so marked as to indicate clearly
the subject matters to which they refer.
(ii) If pursuant to Section 11(a) of the Securities Act (15 U.S.C.
77k(a)) an issuer makes generally available to its security holders an
earnings statement covering a period of at least 12 months beginning
after the effective date of the registration statement, and if such
earnings statement is made available by ``other methods'' than those
specified in paragraphs (a) or (b) of Sec. 230.158 of this chapter, it
must be filed as an exhibit to the Form 10-Q or the Form 10-K, as
appropriate, covering the period in which the earnings statement was
released.
* * * * *
(104) Cover Page Interactive Data File. A Cover Page Interactive
Data File (as defined in Sec. 232.11 of this chapter) as required by
Rule 406 of Regulation S-T (17 CFR 232.406), and in the manner provided
by the EDGAR Filer Manual.
* * * * *
0
14. Amend Sec. 229.1100 by:
0
a. Revising Instruction 1 to paragraph (c)(1) of Item 1100; and
0
b. Redesignating instructions 2 through 5 to paragraph (c)(1) as
``Instruction 2 to paragraph (c)(1) of Item 1100.'', ``Instruction 3 to
paragraph (c)(1) of Item 1100'', ``Instruction 4 to paragraph (c)(1) of
Item 1100.'', and ``Instruction 5 to paragraph (c)(1) of Item 1100'' to
read as follows:
Sec. 229.1100 (Item 1100) General.
* * * * *
Instruction 1 to paragraph (c)(1) of Item 1100. In addition to the
conditions in paragraph (c)(1) of this section, any information
incorporated by reference must comply with all applicable Commission
rules pertaining to incorporation by reference, such as Rule 303 of
Regulation S-T (Sec. 232.303 of this chapter), Rule 411 of Regulation
C (Sec. 230.411 of this chapter), and Rule 12b-23 of Regulation 12B
(Sec. 240.12b-23 of this chapter), except that for purposes of
paragraph (c)(1), an asset-backed issuer may incorporate by reference
to a second document that incorporates pertinent information by
reference to a third document.
* * * * *
PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933
0
15. The authority citation for part 230 continues to read in part as
follows:
Authority: 15 U.S.C. 77b, 77b note, 77c, 77d, 77f, 77g, 77h,
77j, 77r, 77s, 77z-3, 77sss, 78c, 78d, 78j, 78l, 78m, 78n, 78o,78o-7
note, 78t, 78w, 78ll(d), 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a-
30, and 80a-37, and Pub. L. 112-106, sec. 201(a), sec. 401, 126
Stat. 313 (2012), unless otherwise noted.
* * * * *
0
16. Amend Sec. 230.405 by adding in alphabetical order the definition
of Sub-underwriter to read as follows:
Sec. 230.405 Definition of terms.
* * * * *
Sub-underwriter. The term sub-underwriter means 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.
* * * * *
[[Page 51036]]
0
17. Revise Sec. 230.411 to read as follows:
Sec. 230.411 Incorporation by reference.
(a) Prospectus. Except as provided by this section, Item 1100(c) of
Regulation AB (Sec. 229.1100(c) of this chapter) for registered
offerings of asset-backed securities, or unless otherwise provided in
the appropriate form, information must not be incorporated by reference
into the prospectus. Where a summary or outline of the provisions of
any document is required in the prospectus, the summary or outline may
incorporate by reference particular items, sections or paragraphs of
any exhibit and may be qualified in its entirety by such reference. In
any financial statements, incorporating by reference, or cross-
referencing to, information outside of the financial statements is not
permitted unless otherwise specifically permitted or required by the
Commission's rules.
(b) Information not required in a prospectus. Information may be
incorporated by reference in answer, or partial answer, to any item of
a registration statement that calls for information not required to be
included in a prospectus. Except as provided in the Commission's rules,
financial information required to be given in comparative form for two
or more fiscal years or periods must not be incorporated by reference
unless the information incorporated by reference includes the entire
period for which the comparative data is given. In any financial
statements, incorporating by reference, or cross-referencing to,
information outside of the financial statements is not permitted unless
otherwise specifically permitted or required by the Commission's rules.
(c) Exhibits. Any document or part thereof filed with the
Commission pursuant to any Act administered by the Commission may be
incorporated by reference as an exhibit to any registration statement
filed with the Commission by the same or any other person. If any
modification has occurred in the text of any document incorporated by
reference since the filing thereof, the registrant must file with the
reference a statement containing the text of such modification and the
date thereof.
(d) Hyperlinks. Include an active hyperlink to information
incorporated into a registration statement or prospectus by reference
if such information is publicly available on the Commission's
Electronic Data Gathering, Analysis and Retrieval System (``EDGAR'') at
the time the registration statement or prospectus is filed. For
hyperlinking to exhibits, please refer to Item 601 of Regulation S-K
(Sec. 229.601 of this chapter) or the appropriate form.
(e) General. Include an express statement clearly describing the
specific location of the information you are incorporating by
reference. The statement must identify the document where the
information was originally filed or submitted and the location of the
information within that document. The statement must be made at the
particular place where the information is required, if applicable.
Information must not be incorporated by reference in any case where
such incorporation would render the disclosure incomplete, unclear, or
confusing. For example, unless expressly permitted or required,
disclosure must not be incorporated by reference from a second document
if that second document incorporates information pertinent to such
disclosure by reference to a third document.
0
18. Revise Sec. 230.491 to read as follows:
Sec. 230.491 Information to be furnished under paragraph (6) of
Schedule B.
Any foreign government filing a registration statement pursuant to
Schedule B of the act need state, in furnishing the information
required by paragraph (6), the names and addresses only of principal
underwriters, namely, underwriters in privity of contract with the
registrant, provided they are designated as principal underwriters and
a brief statement is made as to the discounts and commissions to be
received by sub-underwriters or dealers.
PART 232--REGULATION S-T--GENERAL RULES AND REGULATIONS FOR
ELECTRONIC FILINGS
0
19. The authority citation for part 232 continues to read in part as
follows:
Authority: 15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s(a), 77z-3,
77sss(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 78ll, 80a-6(c),
80a-8, 80a-29, 80a-30, 80a-37, and 7201 et seq.; and 18 U.S.C. 1350,
unless otherwise noted.
* * * * *
0
20. In Sec. 232.11 in alphabetical order add the definition of Cover
Page Interactive Data File in to read as follows:
Sec. 232.11 Definitions of terms used in Part 232.
* * * * *
Cover Page Interactive Data File. The term Cover Page Interactive
Data File means the machine-readable computer code that presents in
Inline XBRL electronic format the cover page information for specified
forms as required by Rule 406 (Sec. 232.406 of this chapter).
Note to definition of Cover Page Interactive Data File: When a
filing is submitted using Inline XBRL, if permitted or required and
as provided by the EDGAR Filer Manual, a portion of the Cover Page
Interactive Data File must be embedded into a form with the
remainder submitted as an exhibit to the form.
* * * * *
0
21. Revise the second sentence of paragraph (a) and the third sentence
of paragraph (d) of Sec. 232.102 to read as follows:
Sec. 232.102 Exhibits.
(a) * * * Previously filed exhibits, whether in paper or electronic
format, may be incorporated by reference into an electronic filing to
the extent permitted by Rule 411 under the Securities Act (Sec.
230.411 of this chapter), Rule 12b-23 under the Exchange Act (Sec.
240.12b-23 of this chapter), Rule 0-4 under the Investment Company Act
(Sec. 270.0-4 of this chapter) or Rule 303 of Regulation S-T (Sec.
232.303). * * *
* * * * *
(d) * * * For electronic filings on Form S-6 (Sec. 239.16 of this
chapter), Form N-14 (Sec. 239.23 of this chapter), Form F-10 (Sec.
239.40 of this chapter), Form 20-F (Sec. 249.220f of this chapter),
Form N-5 (Sec. 274.5 of this chapter), Form N-1A (Sec. 274.11A of
this chapter), Form N-2 (Sec. 274.11a-1 of this chapter), Form N-3
(Sec. 274.11b of this chapter), Form N-4 (Sec. 274.11c of this
chapter), Form N-6 (Sec. 274.11d of this chapter), Form N-CSR (Sec.
274.128 of this chapter), or filings subject to Item 601 of Regulation
S-K (Sec. 229.601 of this chapter), each exhibit identified in the
exhibit index (other than an exhibit filed in eXtensible Business
Reporting Language or an exhibit that is filed with Form ABS-EE (Sec.
249.1401 of this chapter)) must include an active link to an exhibit
that is filed with the document or, if the exhibit is incorporated by
reference, an active hyperlink to the exhibit separately filed on
EDGAR. * * *
* * * * *
0
22. Amend Sec. 232.105 by revising paragraph (d) and adding paragraph
(e) as follows:
Sec. 232.105 Use of HTML and hyperlinks.
* * * * *
(d) Electronic filers submitting Form S-6 (Sec. 239.16 of this
chapter), Form N-14 (Sec. 239.23 of this chapter), Form F-10 (Sec.
239.40 of this chapter), Form 20-F (Sec. 249.220f of this chapter),
Form N-5 (Sec. 274.5 of this chapter), Form N-1A (Sec. 274.11A of
this chapter), Form N-2 (Sec. 274.11a-1 of this chapter), Form N-3
(Sec. 274.11b of this chapter), Form N-4 (Sec. 274.11c of this
chapter), Form N-6
[[Page 51037]]
(Sec. 274.11d of this chapter), Form N-CSR (Sec. 274.128 of this
chapter), or a registration statement or report subject to Item 601 of
Regulation S-K (Sec. 229.601 of this chapter), must submit such
registration statement or report in HTML and each exhibit identified in
the exhibit index (other than an exhibit filed in eXtensible Business
Reporting Language or an exhibit filed with Form ABS-EE (Sec. 249.1401
of this chapter)) must include an active link to an exhibit that is
filed with the registration statement or report or, if the exhibit is
incorporated by reference, an active hyperlink to the exhibit
separately filed on EDGAR, unless such exhibit is filed in paper
pursuant to a temporary or continuing hardship exemption under Rules
201 or 202 of Regulation S-T (Sec. 232.201 or Sec. 232.202) or
pursuant to Rule 311 of Regulation S-T (Sec. 232.311).
Instructions to paragraph (d): (1) No hyperlink is required for any
exhibit incorporated by reference that has not been filed with the
Commission in electronic format.
(2) An electronic filer must correct an inaccurate or
nonfunctioning link or hyperlink to an exhibit, in the case of a
registration statement that is not yet effective, by filing an
amendment to the registration statement containing the inaccurate or
nonfunctioning link or hyperlink; or, in the case of a registration
statement that has become effective or an Exchange Act report, an
electronic filer must correct the inaccurate or nonfunctioning link or
hyperlink in the next Exchange Act periodic report that requires, or
includes, an exhibit pursuant to Item 601 of Regulation S-K (Sec.
229.601 of this chapter), Form N-CSR (Sec. 274.128 of this chapter),
or, in the case of a foreign private issuer (as defined in Sec.
229.405 of this chapter), Form 20-F (Sec. 249.220f of this chapter) or
Form F-10 (Sec. 239.40 of this chapter). In the case of a registration
statement on Form S-6 (Sec. 239.16 of this chapter), Form N-14 (Sec.
239.23 of this chapter), Form N-5 (Sec. 274.5 of this chapter), Form
N-1A (Sec. 274.11A of this chapter), Form N-2 (Sec. 274.11a-1 of this
chapter), Form N-3 (Sec. 274.11b of this chapter), Form N-4 (Sec.
274.11c of this chapter), or Form N-6 (Sec. 274.11d of this chapter)
that has become effective, an electronic filer must correct an
inaccurate or nonfunctioning link or hyperlink in the next post-
effective amendment, if any, to the registration statement.
Alternatively, an electronic filer may correct an inaccurate or
nonfunctioning link or hyperlink in a registration statement that has
become effective by filing a post-effective amendment to the
registration statement.
(e) Except for exhibits, which are covered by paragraph (d) of this
section, electronic filers that are incorporating information by
reference pursuant to Rule 411 under the Securities Act (Sec. 230.411
of this chapter), Rule 12b-23 under the Exchange Act (Sec. 240.12b-23
of this chapter), or Rule 0-4 under the Investment Company Act (Sec.
270.0-4 of this chapter) must submit such registration statement or
report in HTML and must include an active hyperlink to such
incorporated information when required by those rules. A hyperlink is
not required if the incorporated information is filed in paper pursuant
to a temporary or continuing hardship exemption under Rules 201 or 202
of Regulation S-T (Sec. 232.201 or Sec. 232.202) or pursuant to Rule
311 of Regulation S-T (Sec. 232.311).
Instruction 1 to paragraph (e) of Rule 105. No hyperlink is
required for any information incorporated by reference that has not
been filed with the Commission in electronic format.
Instruction 2 to paragraph (e) of Rule 105. In the case of a
registration statement that is not yet effective, an electronic filer
must correct an inaccurate or nonfunctioning hyperlink by filing an
amendment to such registration statement.
* * * * *
0
23. Revise the first sentence of paragraph (b) of Sec. 232.303 to read
as follows:
Sec. 232.303 Incorporation by reference.
* * * * *
(b) If a filer incorporates by reference into an electronic filing
any portion of an annual or quarterly report to security holders, it
must also file the portion of the annual or quarterly report to
security holders in electronic format as an exhibit to the filing, as
required by Regulation S-K Item 601(b)(13) (Sec. 229.601(b)(13) of
this chapter). * * *
0
24. Add Sec. 232.406 to read as follows:
* * * * *
Sec. 232.406 Cover Page XBRL Data Tagging.
Electronic filers submitting Forms 10-K (Sec. 249.310 of this
chapter), 10-Q (Sec. 249.308a of this chapter), 8-K (Sec. 249.308 of
this chapter), 20-F (Sec. 249.220f of this chapter) and 40-F (Sec.
249.240f of this chapter) must tag in Inline XBRL electronic format, in
the manner provided by the EDGAR Filer Manual, all of the information
provided by the electronic filer on the cover page of these forms.
* * * * *
PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933
0
25. The authority citation for part 239 continues to read in part as
follows:
Authority: 15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-
3, 77sss, 78c, 78l, 78m, 78n, 78o(d),78o-7 note, 78u-5, 78w(a),
78ll, 78mm, 80a-2(a), 80a-3, 80a-8, 80a-9, 80a-10, 80a-13, 80a-24,
80a-26, 80a-29, 80a-30, and 80a-37; and sec. 107, Pub. L. 112-106,
126 Stat. 312, unless otherwise noted.
* * * * *
0
26. Amend Form S-1 (referenced in Sec. 239.11) by revising the last
sentence of Instruction V. under ``General Instructions'', the first
paragraph of Instruction VII. under ``General Instructions'' and Item 3
to read as follows:
Note: The text of Form S-1 does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
GENERAL INSTRUCTIONS
* * * * *
V. Registration of Additional Securities
* * * See Rule 439(b) under the Securities Act (17 CFR 230.439(b)).
* * * * *
VII. Eligibility To Use Incorporation by Reference
If a registrant meets the following requirements in paragraphs A-F
immediately prior to the time of filing a registration statement on
this Form, it may elect to provide information required by Items 3
through 11 of this Form in accordance with Item 11A and Item 12 of this
Form. Notwithstanding the foregoing, in the financial statements,
incorporating by reference or cross-referencing to information outside
of the financial statements is not permitted unless otherwise
specifically permitted or required by the Commission's rules. * * *
* * * * *
Item 3. Summary Information, Risk Factors and Ratio of Earnings to
Fixed Charges.
Furnish the information required by Items 105 and 503 of Regulation
S-K
[[Page 51038]]
(Sec. 229.105 and Sec. 229.503 of this chapter).
* * * * *
0
27. Amend Form S-3 (referenced in Sec. 239.13) by revising the last
sentence of Instruction IV.A. under ``General Instructions'', Item 3,
and paragraph (d) of Item 12 to read as follows:
Note: The text of Form S-3 does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
GENERAL INSTRUCTIONS
* * * * *
IV. Registration of Additional Securities and Additional Classes of
Securities
A. Registration of Additional Securities Pursuant to Rule 462(b). *
* * See Rule 439(b) under the Securities Act [17 CFR 230.439(b)].
* * * * *
Item 3. Summary Information, Risk Factors and Ratio of Earnings to
Fixed Charges.
Furnish the information required by Items 105 and 503 of Regulation
S-K (Sec. 229.105 and Sec. 229.503 of this chapter).
* * * * *
Item 12. Incorporation of Certain Information by Reference.
* * * * *
(d) Any information required in the prospectus in response to Item
3 through Item 11 of this Form may be included in the prospectus
through documents filed pursuant to Section 13(a), 14, or 15(d) of the
Exchange Act that are incorporated or deemed incorporated by reference
into the prospectus that is part of the registration statement.
Notwithstanding the foregoing, in the financial statements,
incorporating by reference or cross-referencing to information outside
of the financial statements is not permitted unless otherwise
specifically permitted or required by the Commission's rules.
* * * * *
0
28. Amend Form S-6 (referenced in Sec. 239.16) by revising
``Instructions as to Exhibits'' to add a paragraph to read as follows:
Note: The text of Form S-6 does not, and this amendment will
not, appear in the Code of Federal Regulations.
Form S-6
* * * * *
INSTRUCTIONS AS TO EXHIBITS
* * * * *
Each exhibit identified in the exhibit index must include an active
link to an exhibit that is filed with the registration statement or, if
the exhibit is incorporated by reference an active hyperlink to the
exhibit separately filed on EDGAR. If the registration statement is
amended, each amendment must include active hyperlinks to the exhibits
required with the amendment.
* * * * *
0
29. Amend Form S-11 (referenced in Sec. 239.18) by revising the last
sentence of Instruction G. under ``General Instructions'', the first
paragraph of instruction H. under ``General Instructions'' and Item
3(a) to read as follows:
Note: The text of Form S-11 does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-11
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF
CERTAIN REAL ESTATE COMPANIES
GENERAL INSTRUCTIONS
* * * * *
G. Registration of Additional Securities
* * * Any opinion or consent required in the Rule 462(b)
registration statement may be incorporated by reference from the
earlier registration statement with respect to the offering, if: (i)
Such opinion or consent expressly provides for such incorporation; and
(ii) such opinion relates to the securities registered pursuant to Rule
462(b). See Rule 439(b) under the Securities Act [17 CFR 230.439(b)].
H. Eligibility to Use Incorporation by Reference
If a registrant meets the following requirements in paragraphs 1-6
immediately prior to the time of filing a registration statement on
this Form, it may elect to provide information required by Items 3
through 28 of this Form in accordance with Item 28A and Item 29 of this
Form. Notwithstanding the foregoing, in the financial statements,
incorporating by reference or cross-referencing to information outside
of the financial statement is not permitted unless otherwise
specifically permitted or required by the Commission's rules. * * *
* * * * *
Item 3. Summary Information, Risk Factors and Ratio of Earnings to
Fixed Charges.
(a) Furnish the information required by Items 105 and 503 of
Regulation S-K (Sec. 229.105 and Sec. 229.503 of this chapter).
* * * * *
0
30. Amend Form N-14 (referenced in Sec. 239.23) by:
0
a. Revising the third paragraph of General Instruction G; and
0
b. Revising the Instruction to Item 16 to add a paragraph to read as
follows:
Note: The text of Form N-14 does not, and this amendment will
not, appear in the Code of Federal Regulations.
Form N-14
* * * * *
GENERAL INSTRUCTIONS
* * * * *
G. Incorporation by Reference and Delivery of Prospectuses or Reports
Filed with the Commission
* * * * *
All incorporation by reference must comply with the requirements of
this Form and the following rules on incorporation by reference: rule
411 under the Securities Act [17 CFR 230.411] (general rules on
incorporation by reference in a prospectus) and rule 303 of Regulation
S-T [17 CFR 232.303] (specific requirements for electronically filed
documents).
* * * * *
Item 16. Exhibits
* * * * *
Instruction:
* * * * *
Each exhibit identified in the exhibit index must include an active
link to an exhibit that is filed with the registration statement or, if
the exhibit is incorporated by reference an active hyperlink to the
exhibit separately filed on EDGAR. If the registration statement is
amended, each amendment must include active hyperlinks to the exhibits
required with the amendment.
* * * * *
0
31. Amend Form S-4 (referenced in Sec. 239.25) by revising the last
sentence of Instruction K. under ``General
[[Page 51039]]
Instructions'' and the first sentence of Item 3 to read as follows:
Note: The text of Form S-4 does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
GENERAL INSTRUCTIONS
* * * * *
K. Registration of Additional Securities.
* * * Any opinion or consent required in the Rule 462(b)
registration statement may be incorporated by reference from the
earlier registration statement with respect to the offering, if: (i)
such opinion or consent expressly provides for such incorporation; and
(ii) such opinion relates to the securities registered pursuant to Rule
462(b). See Rule 439(b) under the Securities Act [17 CFR 230.439(b)].
* * * * *
Item 3. Risk Factors, Ratio of Earnings to Fixed Charges and Other
Information.
Provide in the forepart of the prospectus a summary containing the
information required by Items 105 and 503 of Regulation S-K (Sec.
229.105 and Sec. 229.503 of this chapter) and the following:
* * * * *
0
32. Amend Form F-1 (referenced in Sec. 239.31) by revising the last
sentence of Instruction V. under ``General Instructions'', the first
paragraph of instruction VI. under ``General Instructions'' and Item 3
to read as follows:
Note: The text of Form F-1 does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM F-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
GENERAL INSTRUCTIONS
* * * * *
V. Registration of Additional Securities
* * * See Rule 439(b) under the Securities Act [17 CFR 230.439(b)].
VI. Eligibility to Use Incorporation by Reference
If a registrant meets the following requirements immediately prior
to the time of filing a registration statement on this Form, it may
elect to provide information required by Item 3 and Item 4 of this Form
in accordance with Item 4A and Item 5 of this Form. Notwithstanding the
foregoing, in the financial statements, incorporating by reference or
cross-referencing to information outside of the financial statements is
not permitted unless otherwise specifically permitted or required by
the Commission's rules.
* * * * *
Item 3. Summary Information, Risk Factors and Ratio of Earnings to
Fixed Charges.
Furnish the information required by Items 105 and 503 of Regulation
S-K (Sec. 229.105 and Sec. 229.503 of this chapter).
* * * * *
0
33. Amend Form F-3 (referenced in Sec. 239.33) by revising the last
sentence of Instruction IV.A. under ``General Instructions'' and Item 3
to read as follows:
Note: The text of Form F-3 does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM F-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
GENERAL INSTRUCTIONS
* * * * *
IV. Registration of Additional Securities and Additional Classes of
Securities
A. Registration of Additional Securities Pursuant to Rule 462(b). *
* * See Rule 439(b) under the Securities Act [17 CFR 230.439(b)].
* * * * *
Item 3. Summary Information, Risk Factors and Ratio of Earnings to
Fixed Charges.
Furnish the information required by Items 105 and 503 of Regulation
S-K (Sec. 229.105 and Sec. 229.503 of this chapter).
* * * * *
0
34. Amend Form F-4 (referenced in 239.34) by revising the last sentence
of Instruction H. under ``General Instructions'' and Item 3 to read as
follows:
Note: The text of Form F-4 does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM F-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
H. * * * See Rule 439(b) under the Securities Act [17 CFR
230.439(b)].
* * * * *
Item 3. Risk Factors, Ratio of Earnings to Fixed Charges and Other
Information.
Provide in the forepart of the prospectus a summary containing the
information required by Items 105 and 503 of Regulation S-K (Sec.
229.105 and Sec. 229.503 of this chapter) and the following:
* * * * *
0
35. Revise Item 3 of Form F-7 (referenced in Sec. 239.37) to read as
follows:
Note: The text of Form F-7 does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM F-7
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
PART I--INFORMATION REQUIRED TO BE SENT TO SHAREHOLDERS
* * * * *
Item 3. Incorporation of Certain Information by Reference
Information called for by this Form, including exhibits, may be
incorporated by reference at the Registrant's option from documents
that the Registrant has filed previously with the Commission pursuant
to Section 13(a) or 15(d) of the Exchange Act or submitted to the
Commission pursuant to Rule 12g3-2(b)
[[Page 51040]]
under the Exchange Act. For information that you are incorporating by
reference, identify the document where the information was originally
filed or submitted and the specific location of the information within
that document. The statement must be made at the particular place where
the information is required, if applicable. Unless expressly permitted
or required, disclosure must not be incorporated by reference from a
second document if that second document incorporates information
pertinent to such disclosure by reference to a third document. If any
information is incorporated by reference into the prospectus, the
prospectus must provide the name, address and telephone number of an
officer of the Registrant from whom copies of such information may be
obtained upon request without charge.
* * * * *
0
36. Revise Item 3 of Form F-8 (referenced in Sec. 239.38) to read as
follows:
Note: The text of Form F-8 does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM F-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
PART I--INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS
* * * * *
Item 3. Incorporation of Certain Information by Reference
Information called for by this Form, including exhibits, may be
incorporated by reference at the Registrant's option from documents
that the Registrant has filed previously with the Commission pursuant
to Section 13(a) or 15(d) of the Exchange Act or submitted to the
Commission pursuant to Rule 12g3-2(b) under the Exchange Act. For
information that you are incorporating by reference, identify the
document where the information was originally filed or submitted and
the specific location of the information within that document. The
statement must be made at the particular place where the information is
required, if applicable. Unless expressly permitted or required,
disclosure must not be incorporated by reference from a second document
if that second document incorporates information pertinent to such
disclosure by reference to a third document. If any information is
incorporated by reference into the prospectus, the prospectus must
provide the name, address, and telephone number of an officer of the
Registrant from whom copies of such information may be obtained upon
request without charge.
* * * * *
0
37. Revise Item 4 of Form F-10 (referenced in Sec. 239.40) to read as
follows:
Note: The text of Form F-10 does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM F-10
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
PART I--INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS
* * * * *
Item 4. Incorporation of Certain Information by Reference
Information called for by this Form, including exhibits, may be
incorporated by reference at the Registrant's option from documents
that the Registrant has filed previously with the Commission pursuant
to Section 13(a) or 15(d) of the Exchange Act or submitted to the
Commission pursuant to Rule 12g3-2(b) under the Exchange Act. For
information that you are incorporating by reference, identify the
document where the information was originally filed or submitted and
the specific location of the information within that document. The
statement must be made at the particular place where the information is
required, if applicable. Unless expressly permitted or required,
disclosure must not be incorporated by reference from a second document
if that second document incorporates information pertinent to such
disclosure by reference to a third document. If any information is
incorporated by reference into the prospectus, the prospectus must
provide the name, address, and telephone number of an officer of the
Registrant from whom copies of such information may be obtained upon
request without charge.
* * * * *
0
38. Revise Item 3 of Form F-80 (referenced in Sec. 239.41) to read as
follows:
Note: The text of Form F-80 does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM F-80
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
PART I--INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS
* * * * *
Item 3 Incorporation of Certain Information by Reference
Information called for by this Form, including exhibits, may be
incorporated by reference at the Registrant's option from documents
that the Registrant has filed previously with the Commission pursuant
to Section 13(a) or 15(d) of the Exchange Act or submitted to the
Commission pursuant to Rule 12g3-2(b) under the Exchange Act. For
information that you are incorporating by reference, identify the
document where the information was originally filed or submitted and
the specific location of the information within that document. The
statement must be made at the particular place where the information is
required, if applicable. Unless expressly permitted or required,
disclosure must not be incorporated by reference from a second document
if that second document incorporates information pertinent to such
disclosure by reference to a third document. If any information is
incorporated by reference into the prospectus, the prospectus must
provide the name, address, and telephone number of an officer of the
Registrant from whom copies of such information may be obtained upon
request without charge.
* * * * *
0
39. Amend Form SF-1 (referenced in Sec. 239.44) by revising the last
sentence of Instruction III. under ``General Instructions'' and the
last sentence of Item 2 to read as follows:
Note: The text of Form SF-1 does not, and this amendment will
not, appear in the Code of Federal Regulations.
[[Page 51041]]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM SF-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
GENERAL INSTRUCTIONS
* * * * *
III. Registration of Additional Securities
* * * See Rule 439(b) under the Securities Act [17 CFR 230.439(b)].
* * * * *
Item 2. Inside Front and Outside Back Cover Pages of Prospectus.
Furnish the information required by Items 105 and 503 of Regulation
S-K (17 CFR 229.105 and 17 CFR 229.503) and Item 1103 of Regulation AB
(17 CFR 229.1103).
* * * * *
0
40. Amend Form SF-3 (referenced in Sec. 239.45) by revising the last
sentence of Instruction III. under ``General Instructions'' and the
last sentence of Item 2 to read as follows:
Note: The text of Form SF-3 does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM SF-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
GENERAL INSTRUCTIONS
* * * * *
III. Registration of Additional Securities Pursuant to Rule 462(b).
* * * See Rule 439(b) under the Securities Act [17 CFR 230.439(b)].
* * * * *
Item 2. Inside Front and Outside Back Cover Pages of Prospectus.
Furnish the information required by Items 105 and 503 of Regulation
S-K (17 CFR 229.105 and 17 CFR 229.503) and Item 1103 of Regulation AB
(17 CFR 229.1103).
* * * * *
PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934
0
41. The authority citation for part 240 continues to read in part as
follows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f,
78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4,
78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20,
80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, and 7201 et seq., and
8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350;
Pub. L. 111-203, 939A, 124 Stat. 1376 (2010); and Pub. L. 112-106,
sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise noted.
* * * * *
0
42. Revise Sec. 240.12b-13 to read as follows:
Sec. 240.12b-13 Preparation of statement or report.
Except as provided by the appropriate form, the statement or report
must contain the numbers and captions of all items of such form. The
text of the items may be omitted if the answers thereto are so prepared
as to indicate to the reader the coverage of the items without the
necessity of referring to the text of the items or instructions
thereto. Where any item requires information to be given in tabular
form, it must be given in substantially the tabular form specified in
the item. All instructions, whether appearing under the items of the
form or elsewhere therein, must be omitted. Unless expressly provided
otherwise, if any item is inapplicable or the answer thereto is in the
negative, an appropriate statement to that effect must be made.
0
43. Revise Sec. 240.12b-23 to read as follows:
Sec. 240.12b-23 Incorporation by reference.
(a) Registration statement or report. Except as provided by this
section or in the appropriate form, information may be incorporated by
reference in answer, or partial answer, to any item of a registration
statement or report.
(b) Financial information. Except as provided in the Commission's
rules, financial information required to be given in comparative form
for two or more fiscal years or periods must not be incorporated by
reference unless the information incorporated by reference includes the
entire period for which the comparative data is given. In the financial
statements, incorporating by reference, or cross-referencing to,
information outside of the financial statements is not permitted unless
otherwise specifically permitted or required by the Commission's rules.
(c) Exhibits. Any document or part thereof filed with the
Commission pursuant to any Act administered by the Commission may be
incorporated by reference as an exhibit to any statement or report
filed with the Commission by the same or any other person. Any document
or part thereof filed with an exchange pursuant to the Act may be
incorporated by reference as an exhibit to any statement or report
filed with the exchange by the same or any other person. If any
modification has occurred in the text of any document incorporated by
reference since the filing thereof, the registrant must file with the
reference a statement containing the text of any such modification and
the date thereof.
(d) Hyperlinks. You must include an active hyperlink to information
incorporated into a registration statement or report by reference if
such information is publicly available on the Commission's Electronic
Data Gathering, Analysis and Retrieval System (``EDGAR'') at the time
the registration statement or form is filed. For hyperlinking to
exhibits, please refer to Item 601 of Regulation S-K (Sec. 229.601 of
this chapter) or the appropriate form.
(e) General. Include an express statement clearly describing the
specific location of the information you are incorporating by
reference. The statement must identify the document where the
information was originally filed or submitted and the location of the
information within that document. The statement must be made at the
particular place where the information is required, if applicable.
Information must not be incorporated by reference in any case where
such incorporation would render the disclosure incomplete, unclear, or
confusing. For example, unless expressly permitted or required,
disclosure must not be incorporated by reference from a second document
if that second document incorporates information pertinent to such
disclosure by reference to a third document.
Sec. 240.12b-32 [Removed and reserved].
0
44. Remove and reserve Sec. 240.12b-32.
0
45. Revise the first sentence of Note D.1 of Sec. 240.14a-101 to read
as follows:
Sec. 240.14a-101 Schedule 14A. Information required in proxy
statement.
* * * * *
D. * * *
1. Disclosure must not be incorporated by reference from a second
document if that second document incorporates information pertinent to
[[Page 51042]]
such disclosure by reference to a third document. * * *
* * * * *
0
46. Remove and reserve paragraph (e) of Sec. 240.16a-3.
PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934
0
47. The authority citation for part 249 continues to read in part as
follows:
Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; 12 U.S.C.
5461 et seq.; 18 U.S.C. 1350; Sec. 953(b), Pub. L. 111-203, 124
Stat. 1904; Sec. 102(a)(3), Pub. L. 112-106, 126 Stat. 309 (2012);
Sec. 107, Pub. L. 112-106, 126 Stat. 313 (2012), and Sec. 72001,
Pub. L. 114-94, 129 Stat. 1312 (2015), unless otherwise noted.
* * * * *
0
48. Remove and reserve paragraph (c) of General Instruction 3 to Form 3
(referenced in Sec. 249.103).
0
49. Remove and reserve paragraph (c) of General Instruction 2 to Form 4
(referenced in Sec. 249.104).
0
50. Remove and reserve paragraph (c) of General Instruction 2 to Form 5
(referenced in Sec. 249.105).
0
51. Amend Form 8-A (referenced in Sec. 249.208a) by revising the
Instructions as to Exhibits to read as follows:
Note: The text of Form 8-A does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES PURSUANT TO SECTION
12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
* * * * *
INSTRUCTIONS FOR EXHIBITS
If the securities to be registered on this form are to be
registered on an exchange on which other securities of the registrant
are registered, or are to be registered pursuant to Section 12(g) of
the Act, copies of all constituent instruments defining the rights of
the holders of each class of such securities, including any contracts
or other documents which limit or qualify the rights of such holders,
must be filed as exhibits with each copy of the registration statement
filed with the Commission or with an exchange, subject to Rule 12b-
23(c) regarding incorporation of exhibits by reference.
0
52. Amend Form 10 (referenced in 249.210) by revising the first
sentence in Item 1A and Instruction C(a) under ``General Instructions''
to read as follows:
Note: The text of Form 10 does not, and this amendment will not,
appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES PURSUANT TO SECTION 12(b)
OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
* * * * *
INFORMATION REQUIRED IN REGISTRATION STATEMENT
* * * * *
Item 1A. Risk Factors.
Set forth, under the caption ``Risk Factors,'' where appropriate,
the risk factors described in Item 105 of Regulation S-K (Sec. 229.105
of this chapter) applicable to the registrant. * * *
* * * * *
GENERAL INSTRUCTIONS
* * * * *
C. Preparation of Registration Statement.
(a) This form is not to be used as a blank form to be filled in,
but only as a guide in the preparation of the registration statement on
paper meeting the requirements of Rule 12b-12 [17 CFR 240.12b-12]. The
numbers or captions of items are not required unless expressly required
by this form or the referenced disclosure requirements. The text of the
items may be omitted. Otherwise, the answers to the items must be
prepared in the manner specified in Rule 12b-13 [17 CFR 240.12b-13].
* * * * *
0
53. Amend Form 20-F (referenced in Sec. 249.220f) by:
0
a. Adding a field to the cover page to include trading symbol(s);
0
b. Revising Instruction C(a) under ``General Instructions'';
0
c. Adding Instruction 6 under ``Instructions to Item 5'';
0
d. Revising Instruction 1(b) under ``Instructions to Item 10'';
0
e. Revising Instructions 1 and 2 under ``Instructions to Item 12'';
0
f. Revising the introductory text, Instruction 4(a) and Instruction 8
and adding Instructions 2(d) and 104 under ``Instructions As To
Exhibits'' to read as follows:
Note: The text of Form 20-F does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 20-F
* * * * *
Securities registered or to be registered pursuant to Section 12(b)
of the Act.
----------------------------------------------------------------------------------------------------------------
Trading
Title of each class symbol(s) Name of each exchange on which registered
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
* * * * *
GENERAL INSTRUCTIONS
* * * * *
C. How to Prepare Registration Statements and Reports on This Form.
(a) Do not use this Form as a blank form to be filled in; use it
only as a guide in the preparation of the registration statement or
annual report. General Instruction E states which items must be
responded to in a registration statement and which items must be
responded to in an annual report. The number or captions of items are
not required unless expressly required by this form. You may also omit
the text following each caption in this Form, which describes what must
be disclosed under each item. Omit the text of all instructions in this
Form. If an item is inapplicable or the answer to the item is in the
negative, respond to the item by making a statement to that effect.
* * * * *
Item 5. Operating and Financial Review and Prospects
* * * * *
[[Page 51043]]
Instructions to Item 5:
* * * * *
6. Generally, the discussion shall cover the periods covered by the
financial statements and the registrant may use any format that in the
registrant's judgment enhances a reader's understanding.
For registrants providing financial statements covering three years
in a filing, disclosure about the earliest year would not be required
if (i) that disclosure is not material to an understanding of the
registrant's financial condition, changes in financial condition and
results of operations and (ii) the registrant has filed its prior year
Form 20-F on EDGAR containing an Operating and Financial Review and
Prospects discussion of the earliest of the three years included in the
financial statements of the current filing.
* * * * *
Item 10. Additional Information
* * * * *
Instructions to Item 10:
* * * * *
1 * * *
(b) If the information called for by Item 10.B has been reported
previously in a registration statement on Form 20[dash]F or a
registration statement filed under the Securities Act and has not
changed, you may incorporate that information by a specific reference
in the annual report to the previous registration statement or, to the
extent that this information has been provided in the exhibit required
by instruction 2(d) of the Instructions as to Exhibits, you may refer
to the exhibit for this information.
* * * * *
Item 12. Description of Securities Other than Equity Securities
* * * * *
Instructions to Item 12:
* * * * *
1. If you are using the form as an annual report, provide the
information required by Item 12.D.3 and Item 12.D.4 under this Item of
your annual report and provide the remainder of the information
required by this Item in an exhibit to such report pursuant to
paragraph 2(d) of Instructions as to Exhibits.
2. You do not need to include any information in a registration
statement, prospectus, or annual report on Form 20-F in response to
Item 305(a)(2) of the Trust Indenture Act of 1939, 15 U.S.C. 77aaa et
seq., as amended, if the information is not otherwise required by this
Item or Instruction 2(d) under Instructions as to Exhibits of this
Form.
INSTRUCTIONS AS TO EXHIBITS
File the exhibits listed below as part of an Exchange Act
registration statement or report. Exchange Act Rule 12b-23(c) explains
the circumstances in which you may incorporate exhibits by reference.
Exchange Act Rule 24b-2 explains the procedure to be followed in
requesting confidential treatment of information required to be filed.
Previously filed exhibits may be incorporated by reference. If any
previously filed exhibits have been amended or modified, file copies of
the amendment or modification or copies of the entire exhibit as
amended or modified.
If the Form 20-F registration statement or annual report requires
the inclusion, as an exhibit or attachment, of a document that is in a
foreign language, you must provide instead either an English
translation or an English summary of the foreign language document in
accordance with Exchange Act Rule 12b-12(d) (17 CFR 240.12b-12(d)) for
both electronic and paper filings. You may submit a copy of the
unabridged foreign language document along with the English translation
or summary as permitted by Regulation S-T Rule 306(b) (17 CFR
232.306(b)) for electronic filings or by Exchange Act Rule 12b-12(d)(4)
(17 CFR 240.12b-12(d) (4)) for paper filings.
Include an exhibit index in each registration statement or report
you file, immediately preceding the exhibits you are filing. The
exhibit index must list each exhibit according to the number assigned
to it below. If an exhibit is incorporated by reference, note that fact
in the exhibit index. For paper filings, the pages of the manually
signed original registration statement should be numbered in sequence,
and the exhibit index should give the page number in the sequential
numbering system where each exhibit can be found.
Schedules (or similar attachments) to the exhibits required by this
Form 20-F are not required to be filed unless such schedules contain
information material to an investment or voting decision and that
information is not otherwise disclosed in the exhibit or the disclosure
document. Each exhibit filed must contain a list briefly identifying
the contents of all omitted schedules. In addition, the registrant must
provide a copy of any omitted schedule to the Commission staff upon
request.
The registrant may redact information from exhibits required to be
filed by this Form 20-F if disclosure of that that information would
constitute a clearly unwarranted invasion of personal privacy (e.g.,
disclosure of bank account numbers, social security numbers, home
addresses and similar information). The registrant is not required to
undertake or provide to the Commission upon request a materiality or
competitive harm analysis of this redacted information.
* * * * *
2 * * *
(d) If a registrant is filing an annual report under Exchange Act
Section 13(a) or 15(d), the registrant must provide as an exhibit a
description of the rights of each class of securities that is
registered under Section 12 of the Exchange Act as of the end of the
period covered by the report with which the exhibit is filed. The
description must include information for the securities comparable to
that required by Item 9.A.3, A.5, A.6, and A.7, Item 10.B.3, B.4, B.6,
B.7, B.8, B.9, and B.10, and Item 12.A, 12.B, 12.C, and 12.D.1 and
12.D.2 of Form 20-F (collectively, the ``Description of Securities'').
However, for purposes of this paragraph 2(d), all references in those
Items to securities to be or being registered, offered or sold will
mean securities that are registered as of the end of the period covered
by the report with which the exhibit is filed. In addition, for
purposes of this Item, the disclosure will be required for classes of
securities that have not been retired by the end of the period covered
by the report. A registrant may incorporate by reference and provide an
active hyperlink to a prior periodic filing containing the disclosure
required by this paragraph 2(d) so long as there has not been any
change to the information called for by the Description of Securities
since the filing date of the linked filing. Such hyperlink will be
deemed to satisfy the requirements of this paragraph 2(d) for the
current filing.
* * * * *
4.(a) Every contract not made in the ordinary course of business
that is material to the registrant and is to be performed in whole or
in part at or after the filing of the registration statement or report.
In addition, for newly reporting registrants, every contract not made
in the ordinary course of business that is material to the registrant
and that was entered into not more than two years before the date on
which such registrant:
(i) first files a registration statement or report; or
(ii) completes a transaction that had the effect of causing it to
cease being a public shell company.
The only contracts that must be filed are those to which the
registrant or a subsidiary of the registrant is a party or
[[Page 51044]]
has succeeded to a party by assumption or assignment or in which the
registrant or such subsidiary has a beneficial interest.
The registrant may redact provisions or terms of exhibits required
to be filed by this Form 20-F if those provisions or terms are both (i)
not material and (ii) competitively harmful to the registrant if
publicly disclosed. If it does so, the registrant should mark the
exhibit or exhibits to indicate that portions of the exhibit or
exhibits have been omitted and include a prominent statement on the
first page of the redacted exhibit that certain identified information
has been excluded from the exhibit because it is both (i) not material
and (ii) competitively harmful to the registrant if publicly disclosed.
The registrant also must indicate by brackets where the information is
omitted from the filed version of the exhibit.
If requested by the Commission staff, the registrant must provide
an unredacted paper copy of the exhibit on a supplemental basis. The
Commission staff also may request the registrant to provide its
materiality and competitive harm analyses on a supplemental basis. Upon
evaluation of the registrant's supplemental materials, the Commission
staff may request the registrant to amend its filing to include in the
exhibit any previously redacted information that is not adequately
supported by the registrant's materiality and competitive harm
analyses.
The registrant may request confidential treatment of the
supplemental material submitted to the Commission or the staff pursuant
to Rule 83 (17 CFR 200.83) while it is in the possession of the
Commission staff. After reviewing the supplemental information, the
Commission staff will return or destroy it at the request of the
registrant, if the registrant complies with the procedures outlined in
Rules 418 or 12b-4 (17 CFR 230.418 or 17 CFR 240.12b-4).
Note: A ``newly reporting registrant'' is (i) 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), (ii) any registrant that has not filed an annual
report since the revival of a previously suspended reporting
obligation, and (iii) any registrant that (a) was a shell company,
other than a business combination related shell company, as defined
in Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2), immediately
before completing a transaction that has the effect of causing it to
cease being a shell company and (b) has not filed a Form 20-F since
the completion of such transaction. For example, newly reporting
registrants would include (i) a registrant that is filing its first
registration statement under the Securities Act or the Exchange Act,
and (ii) a registrant that was a public shell company, other than a
business combination related shell company, and completes a reverse
merger transaction causing it to cease being a shell company.
* * * * *
8. List the following information for the registrant and each of its
subsidiaries: the name, the legal entity identifier (if any), the state
or other jurisdiction of incorporation or organization, and the names
under which the entity does business. This list may be incorporated by
reference from another filed document which includes a complete and
accurate list. ``Legal entity identifier'' means, with respect to any
registrant or its subsidiaries, the legal entity identifier as assigned
by a utility endorsed by the Global LEI Regulatory Oversight Committee
or accredited by the Global LEI Foundation. You may omit the names of
subsidiaries that, in the aggregate, would not be a ``significant
subsidiary'' as defined in rule 1-02(w) of Regulation S-X as of the end
of the year covered by the report. You may omit the names of multiple
wholly owned subsidiaries carrying on the same line of business, such
as chain stores or service stations, if you give the name of the
immediate parent company, the line of business and the number of
omitted subsidiaries broken down by U.S. and foreign operations.
* * * * *
102 and 103 [Reserved]
104. Cover Page Interactive Data File. If the Form 20-F is being used
as an annual report, a Cover Page Interactive Data File (as defined in
17 CFR 232.11) as required by Rule 406 of Regulation S-T [17 CFR
232.406], and in the manner provided by the EDGAR Filer Manual.
0
54. Amend Form 40-F (referenced in Sec. 249.240f) by:
0
a. Adding a field to the cover page to include trading symbol(s); and
0
b. Adding paragraph B.17 under ``General Instructions'' to read as
follows:
Note: The text of Form 40-F does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 40-F
* * * * *
Securities registered or to be registered pursuant to Section 12(b)
of the Act.
----------------------------------------------------------------------------------------------------------------
Trading
Title of each class symbol(s) Name of each exchange on which registered
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
* * * * *
B. Information To Be Filed on this Form
* * * * *
(17) Cover Page Interactive Data File. If the Form 40-F is being used
as an annual report, a Cover Page Interactive Data File (as defined in
17 CFR 232.11) as required by Rule 406 of Regulation S-T [17 CFR
232.406], in the manner provided by the EDGAR Filer Manual and listed
as exhibit 104.
* * * * *
0
55. Amend Form 8-K (referenced in Sec. 249.308) by adding a field to
the cover page for securities registered pursuant to Section 12(b) of
the Exchange Act, the title of each class of such securities, trading
symbol(s) and name of each exchange on which registered:
Note: The text of Form 8-K does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
* * * * *
Securities registered pursuant to Section 12(b) of the Act:
[[Page 51045]]
----------------------------------------------------------------------------------------------------------------
Trading
Title of each class symbol(s) Name of each exchange on which registered
----------------------------------------------------------------------------------------------------------------
................................................
----------------------------------------------------------------------------------------------------------------
* * * * *
0
56. Amend Form 10-Q (referenced in Sec. 249.308a) by adding a field to
the cover page for securities registered pursuant to Section 12(b) of
the Exchange Act, the title of each class of such securities, trading
symbol(s) and name of each exchange on which registered:
Note: The text of Form 10-Q does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
* * * * *
Securities registered pursuant to Section 12(b) of the Act:
----------------------------------------------------------------------------------------------------------------
Trading
Title of each class symbol(s) Name of each exchange on which registered
----------------------------------------------------------------------------------------------------------------
................................................
----------------------------------------------------------------------------------------------------------------
* * * * *
0
57. Amend Form 10-K (referenced in Sec. 249.310) by:
0
a. Revising Instruction (C)(1) and the last sentence of Instruction
(G)(3) under ``General Instructions'', the first sentence in Item 1A,
and paragraph (a) under ``Supplemental Information to be Furnished With
Reports Filed Pursuant to Section 15(d) of the Act by Registrants Which
Have Not Registered Securities Pursuant to Section 12 of the Act'';
0
b. Removing the second sentence of Instruction (G)(4) under ``General
Instructions'', the checkbox that relates to disclosure under Item 405,
and the instruction to Item 10; and
0
c. Adding a field to the cover page to include trading symbol(s) to
read as follows:
Note: The text of Form 10-K does not, and this amendment will
not, appear in the Code of Federal Regulations.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
GENERAL INSTRUCTIONS
* * * * *
C. Preparation of Report.
(1) This form is not to be used as a blank form to be filled in,
but only as a guide in the preparation of the report on paper meeting
the requirements of Rule 12b-12. Except as provided in this instruction
and General Instruction G, the answers to the items must be prepared in
the manner specified in Rule 12b-13. The numbers or captions of items
are not required unless expressly required by this form or the
referenced disclosure requirements.
* * * * *
G. Information to be Incorporated by Reference.
* * * * *
(3) * * * See the Instruction to Item 401 of Regulation S-K (Sec.
229.401 of this chapter).
* * * * *
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
Securities registered pursuant to Section 12(b) of the Act:
----------------------------------------------------------------------------------------------------------------
Trading
Title of each class symbol(s) Name of each exchange on which registered
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
* * * * *
Item 1A. Risk Factors. Set forth, under the caption ``Risk
Factors,'' where appropriate, the risk factors described in Item 105 of
Regulation S-K (Sec. 229.105 of this chapter) applicable to the
registrant. * * *
* * * * *
Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered
Securities Pursuant to Section 12 of the Act
(a) Except to the extent that the materials enumerated in (1) and/
or (2) below are specifically incorporated into this Form by reference,
every registrant which files an annual report on this Form pursuant to
Section 15(d) of the Act must furnish to the Commission for its
information, at the time of filing its report on this Form, four copies
of the following: * * *
* * * * *
0
58. Amend Form 10-D (referenced in Sec. 249.312 of this chapter) by:
0
a. Removing and reserving General Instruction D(2)(a); and
0
b. Revising General Instruction D(2)(d) to read as follows:
Note: The text of Form 10-D does not, and this amendment will
not, appear in the Code of Federal Regulations.
[[Page 51046]]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-D
ASSET-BACKED ISSUER DISTRIBUTION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
GENERAL INSTRUCTIONS
* * * * *
(d) Exchange Act Rules 12b-23 (17 CFR 240.12b-23) (additional rules on
incorporation by reference for reports filed pursuant to Sections 13
and 15(d) of the Act).
* * * * *
PART 270--RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1934
0
59. The authority citation for part 270 continues to read in part as
follows:
Authority: 15 U.S.C. 80a-1 et seq., 80a-34(d), 80a-37, 80a-39,
and Pub. L. 111-203, sec. 939A, 124 Stat. 1376 (2010), unless
otherwise noted.
* * * * *
0
60. Revise Sec. 270.0-4 to read as follows:
Sec. 270.0-4 Incorporation by reference.
(a) Registration statements and reports. Except as provided by this
section or in the appropriate form, information may be incorporated by
reference in answer, or partial answer, to any item of a registration
statement or report. Where an item requires a summary or outline of the
provisions of any document, the summary or outline may incorporate by
reference particular items, sections, or paragraphs of any exhibit and
may be qualified in its entirety by such reference.
(b) Financial information. Except as provided in the Commission's
rules, financial information required to be given in comparative form
for two or more fiscal years or periods must not be incorporated by
reference unless the information incorporated by reference includes the
entire period for which the comparative data is given. In the financial
statements, incorporating by reference, or cross-referencing to,
information provided pursuant to the non-financial information
disclosure requirements is not permitted unless otherwise specifically
permitted or required by the Commission's rules.
(c) Exhibits. Any document or part thereof, including any financial
statement or part thereof, filed with the Commission pursuant to any
Act administered by the Commission may be incorporated by reference as
an exhibit to any registration statement, application, or report filed
with the Commission by the same or any other person. If any
modification has occurred in the text of any document incorporated by
reference since the filing thereof, the registrant must file with the
reference a statement containing the text of any such modification and
the date thereof.
(d) Hyperlinks. Include an active hyperlink to information
incorporated into a registration statement, application, or report by
reference if such information is publicly available on the Commission's
Electronic Data Gathering, Analysis and Retrieval System (``EDGAR'') at
the time the registration statement, application, or report is filed.
For hyperlinking to exhibits, please refer to the appropriate form.
(e) General. Include an express statement clearly describing the
specific location of the information you are incorporating by
reference. The statement must identify the document where the
information was originally filed or submitted and the location of the
information within that document. The statement must be made at the
particular place where the information is required, if applicable.
Information must not be incorporated by reference in any case where
such incorporation would render the disclosure incomplete, unclear, or
confusing. For example, unless expressly permitted or required,
disclosure must not be incorporated by reference from a second document
if that second document incorporates information pertinent to such
disclosure by reference to a third document.
Sec. 270.8b-23 [Removed and reserved].
0
61. Remove and reserve Sec. 270.8b-23.
Sec. 270.8b-24 [Removed and reserved].
0
62. Remove and reserve Sec. 270.8b-24.
Sec. 270.8b-32 [Removed and reserved].
0
63. Remove and reserve Sec. 270.8b-32.
* * * * *
PART 274--FORMS PRESCRIBED UNDER THE INVESTMENT COMPANY ACT OF 1934
0
64. The authority citation for part 274 continues to read in part as
follows:
Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78l, 78m,
78n, 78(o)(d), 80a-8, 80a-26, 80a-29, and Pub. L. 111-203, sec.
939A, 124 Stat. 1376 (2010), unless otherwise noted.
* * * * *
0
65. Amend Form N-5 (referenced in Sec. 274.5 of this chapter) by
revising ``Instructions as to Exhibits'' to add a paragraph to read as
follows:
Note: The text of Form N-5 does not, and this amendment will
not, appear in the Code of Federal Regulations.
Form N-5
* * * * *
INSTRUCTIONS AS TO EXHIBITS
* * * * *
Each exhibit identified in the exhibit index must include an active
link to an exhibit that is filed with the registration statement or, if
the exhibit is incorporated by reference an active hyperlink to the
exhibit separately filed on EDGAR. If the registration statement is
amended, each amendment must include active hyperlinks to the exhibits
required with the amendment.
* * * * *
0
66. Amend Form N-1A (referenced in Sec. 274.11A of this chapter) by:
0
a. Revising General Instruction D.2; and
0
b. Revising the Instruction to Item 28 to read as follows:
Note: The text of Form N-1A does not, and this amendment will
not, appear in the Code of Federal Regulations.
Form N-1A
* * * * *
GENERAL INSTRUCTIONS
* * * * *
D. Incorporation by Reference
* * * * *
2. General Requirements
All incorporation by reference must comply with the requirements of
this Form and the following rules on incorporation by reference: rule
411 under the Securities Act [17 CFR 230.411] (general rules on
incorporation by reference in a prospectus); rule 303 of Regulation S-T
[17 CFR 232.303] (specific requirements for electronically filed
documents); and rule 0-4 [17 CFR 270.0-4] (additional rules on
incorporation by reference for Funds).
* * * * *
Item 28. Exhibits
* * * * *
Instruction
Each exhibit identified in the exhibit index (other than an exhibit
filed in eXtensible Business Reporting Language) must include an active
link to an exhibit that is filed with the registration statement or, if
the exhibit is incorporated by reference an active hyperlink to the
exhibit separately filed
[[Page 51047]]
on EDGAR. If the registration statement is amended, each amendment must
include active hyperlinks to the exhibits required with the amendment.
A Fund that is a Feeder Fund also must file a copy of all codes of
ethics applicable to the Master Fund.
* * * * *
0
67. Amend Form N-2 (referenced in Sec. 274.11a-1 of this chapter) by:
0
a. Revising General Instruction F; and
0
b. Revising the Instructions to Item 25.2 to add Instruction 4 to read
as follows:
Note: The text of Form N-2 does not, and this amendment will
not, appear in the Code of Federal Regulations.
Form N-2
* * * * *
GENERAL INSTRUCTIONS
* * * * *
F. Incorporation by Reference
Incorporation by reference permits a Registrant to include
documents and exhibits filed previously with the Commission as part of
the registration statement by making reference to where, and under what
designation, these documents can be found in previous filings. A
Registrant may incorporate all or part of the Statement of Additional
Information (the ``SAI'') into the prospectus delivered to investors
without physically delivering the SAI with the prospectus, so long as
the SAI is available to investors upon request at no charge and any
information or documents incorporated by reference into the SAI are
provided along with the SAI, except to the extent provided by paragraph
F.3 below.
In general, a Registrant may incorporate by reference, in response
to any item of Form N-2 not required to be included in the prospectus,
any information contained elsewhere in the registration statement or in
other statements, applications, or reports filed with the Commission.
A Registrant may incorporate by reference into the prospectus or
the SAI in response to Item 4.1 or 24 of this form the information
contained in Form N-CSR [17 CFR 249.331 and 274.128] or any report to
shareholders meeting the requirements of Section 30(e) of the 1940 Act
[15 U.S.C. 80a-29(e)] and Rule 30e-1 [17 CFR 270.30e-1] thereunder (and
a Registrant that has elected to be regulated as a business development
company may so incorporate into Items 4.2, 8.6.c, or 24 of this form
the information contained in its annual report under the Securities
Exchange Act of 1934 [15 U.S.C. 78a et seq.] (the ``Exchange Act'')),
provided:
1. The material incorporated by reference is prepared in accordance
with, and covers the periods specified by, this form.
2. The Registrant states in the prospectus or the SAI, at the place
where the information required by Items 4.1, 4.2, 8.6.c, or 24 of this
form would normally appear, that the information is incorporated by
reference from a report to shareholders or a report on Form N-CSR. (The
Registrant also may describe briefly, in either the prospectus, the
SAI, or Part C of the registration statement (in response to Item 25.1)
those portions of the report to shareholders or report on Form N-CSR
that are not incorporated by reference and are not a part of the
registration statement.)
3. The material incorporated by reference is provided with the
prospectus and/or the SAI to each person to whom the prospectus and/or
the SAI is sent or given, unless the person holds securities of the
Registrant and otherwise has received a copy of the material. (The
Registrant must state in the prospectus and/or the SAI that it will
furnish, without charge, a copy of such material on request and provide
the name, address, and telephone number of the person to contact.)
All incorporation by reference must comply with the requirements of
this Form and the following rules on incorporation by reference: rule
411 under the Securities Act [17 CFR 230.411] (general rules on
incorporation by reference in a prospectus); rule 303 of Regulation S-T
[17 CFR 232.303] (specific requirements for electronically filed
documents); and rule 0-4 [17 CFR 270.0-4] (additional rules on
incorporation by reference for investment companies).
* * * * *
Item 25. Financial Statements and Exhibits
* * * * *
2. Exhibits:
* * * * *
Instructions
* * * * *
4. Each exhibit identified in the exhibit index must include an
active link to an exhibit that is filed with the registration statement
or, if the exhibit is incorporated by reference an active hyperlink to
the exhibit separately filed on EDGAR. If the registration statement is
amended, each amendment must include active hyperlinks to the exhibits
required with the amendment.
* * * * *
0
68. Amend Form N-3 (referenced in Sec. 274.11b of this chapter) by:
0
a. Revising General Instruction G; and
0
b. Revising the Instructions to Item 29(b) to add Instruction 3 to read
as follows:
Note: The text of Form N-3 does not, and this amendment will
not, appear in the Code of Federal Regulations.
Form N-3
* * * * *
GENERAL INSTRUCTIONS
* * * * *
G. Incorporation by Reference
A Registrant may, at its discretion, incorporate all or part of the
Statement of Additional Information into the prospectus, without
physically delivering the Statement of Additional Information to
investors with the prospectus. But the Statement of Additional
Information must be available to the investor upon request at no charge
and any information or documents incorporated by reference into the
Statement of Additional Information must be provided along with the
Statement of Additional Information.
In general, a Registrant may incorporate by reference, in the
answer to any item of Form N-3 not required to be in the prospectus,
any information elsewhere in the registration statement or in other
statements, applications, or reports led with the Commission.
Subject to these rules, a Registrant may incorporate by reference
into the prospectus or the Statement of Additional Information in
response to Items 4(a) or 28 of Form N-3 the information in Form N-CSR
[17 CFR 249.331 and 274.128] or any report to contract owners meeting
the requirements of Section 30(e) of the 1940 Act [15 U.S.C. 80a-29(e)]
and Rule 30e-1 [17 CFR 270.30e-1] provided:
1. The material incorporated by reference is prepared in accordance
with, and covers the periods specified by, this Form.
2. The Registrant states in the prospectus or the Statement of
Additional Information, at the place where the information would
normally appear, that the information is incorporated by reference from
a report to security holders or a report on Form N-CSR. The Registrant
may also describe, in either the prospectus, the Statement of
Additional Information, or Part C of the Registration Statement (in
response to Item 29(a)), any parts of the report to security holders or
the report on Form N-CSR that are not
[[Page 51048]]
incorporated by reference and are not a part of the Registration
Statement.
3. The material incorporated by reference is provided with the
prospectus or the Statement of Additional Information to each person to
whom the prospectus or the Statement of Additional Information is
given, unless the person holds securities of the Registrant and
otherwise has received a copy of the material. However, Registrant must
state in the prospectus or the Statement of Additional Information that
it will furnish, without charge, another copy of such report on request
and the name, address, and telephone number of the person to contact.
All incorporation by reference must comply with the requirements of
this Form and the following rules on incorporation by reference: rule
411 under the Securities Act [17 CFR 230.411] (general rules on
incorporation by reference in a prospectus); rule 303 of Regulation S-T
[17 CFR 232.303] (specific requirements for electronically filed
documents); and rule 0-4 [17 CFR 270.0-4] (additional rules on
incorporation by reference for investment companies).
* * * * *
Item 29. Financial Statements and Exhibits
* * * * *
(b) Exhibits:
* * * * *
Instructions
* * * * *
3. Each exhibit identified in the exhibit index must include an
active link to an exhibit that is filed with the registration statement
or, if the exhibit is incorporated by reference, an active hyperlink to
the exhibit separately filed on EDGAR. If the registration statement is
amended, each amendment must include active hyperlinks to the exhibits
required with the amendment.
* * * * *
0
69. Amend Form N-4 (referenced in Sec. 274.11c of this chapter) by:
0
a. Revising General Instruction G; and
0
b. Revising the Instructions to Item 24(b) to add Instruction 3 to read
as follows:
Note: The text of Form N-4 does not, and this amendment will
not, appear in the Code of Federal Regulations.
Form N-4
* * * * *
GENERAL INSTRUCTIONS
* * * * *
G. Incorporation by Reference
A Registrant may, at its discretion, incorporate all or part of the
Statement of Additional Information into the prospectus, without
physically delivering the Statement of Additional Information to
investors with the prospectus. But the Statement of Additional
Information must be available to the investor upon request at no charge
and any information or documents incorporated by reference into the
Statement of Additional Information must be provided along with the
Statement of Additional Information.
All incorporation by reference must comply with the requirements of
this Form and the following rules on incorporation by reference: rule
411 under the Securities Act [17 CFR 230.411] (general rules on
incorporation by reference in a prospectus); rule 303 of Regulation S-T
[17 CFR 232.303] (specific requirements for electronically filed
documents); and rule 0-4 [17 CFR 270.0-4] (additional rules on
incorporation by reference for investment companies).
In general, a Registrant may incorporate by reference, in the
answer to any item of Form N-4 not required to be in the prospectus,
any information elsewhere in the registration statement or in other
statements, applications, or reports led with the Commission.
* * * * *
Item 24. Financial Statements and Exhibits
* * * * *
(b) Exhibits:
* * * * *
Instructions:
* * * * *
3. Each exhibit identified in the exhibit index must include an
active link to an exhibit that is filed with the registration statement
or, if the exhibit is incorporated by reference an active hyperlink to
the exhibit separately filed on EDGAR. If the registration statement is
amended, each amendment must include active hyperlinks to the exhibits
required with the amendment.
* * * * *
0
70. Amend Form N-6 (referenced in Sec. 274.11d of this chapter) by:
0
a. Revising General Instruction D.2; and
0
b. Revising Item 26 to read as follows:
Note: The text of Form N-6 does not, and this amendment will
not, appear in the Code of Federal Regulations.
Form N-6
* * * * *
GENERAL INSTRUCTIONS
* * * * *
B. Filing and Use of Form N-6
* * * * *
4. What rules apply to the filing of a registration statement on Form
N-6?
* * * * *
D. Incorporation by Reference
* * * * *
2. General Requirements:
All incorporation by reference must comply with the requirements of
this Form and the following rules on incorporation by reference: rule
411 under the Securities Act [17 CFR 230.411] (general rules on
incorporation by reference in a prospectus); rule 303 of Regulation S-T
[17 CFR 232.303] (specific requirements for electronically filed
documents); and rule 0-4, [17 CFR 270.0-4] (additional rules on
incorporation by reference for investment companies).
* * * * *
Item 26. Exhibits
Subject to General Instruction D regarding incorporation by
reference and rule 483 under the Securities Act [17 CFR 230.483], file
the exhibits listed below as part of the registration statement. Letter
or number the exhibits in the sequence indicated and file copies rather
than originals, unless otherwise required by rule 483. Reflect any
exhibit incorporated by reference in the list below and identify the
previously filed document containing the incorporated material. Each
exhibit identified in the exhibit index must include an active link to
an exhibit that is filed with the registration statement or, if the
exhibit is incorporated by reference an active hyperlink to the exhibit
separately filed on EDGAR. If the registration statement is amended,
each amendment must include active hyperlinks to the exhibits required
with the amendment.
(a) * * *
* * * * *
0
71. Amend Form N-CSR (referenced in Sec. 274.128 of this chapter) by:
0
a. Revising General Instruction D; and
0
b. Revising the Instruction to Item 12 to read as follows:
Note: The text of Form N-CSR does not, and this amendment will
not, appear in the Code of Federal Regulations.
[[Page 51049]]
Form N-CSR
* * * * *
GENERAL INSTRUCTIONS
* * * * *
D. Incorporation by Reference
A registrant may incorporate by reference information required by
Items 4, 5, and 12(a)(1). No other Items of the Form shall be answered
by incorporating any information by reference. The information required
by Items 4 and 5 may be incorporated by reference from the registrant's
definitive proxy statement (filed or required to be filed pursuant to
Regulation 14A (17 CFR 240.14a-1 et seq.)) or definitive information
statement (filed or to be filed pursuant to Regulation 14C (17 CFR
240.14c-1 et seq.)) involving the election of directors, if such
definitive proxy statement or information statement is filed with the
Commission not later than 120 days after the end of the fiscal year
covered by an annual report on this Form. All incorporation by
reference must comply with the requirements of this Form and the
following rules on incorporation by reference: Rule 303 of Regulation
S-T (17 CFR 232.303) (specific requirements for electronically filed
documents); Rule 12b-23 under the Exchange Act (17 CFR 240.12b-23)
(additional rules on incorporation by reference for reports filed
pursuant to Sections 13 and 15(d) of the Exchange Act); and Rule 0-4
(17 CFR 270.0-4) (additional rules on incorporation by reference for
investment companies).
* * * * *
Item 12. Exhibits.
* * * * *
Instruction to Item 12.
Letter or number the exhibits in the sequence that they appear in this
item. Each exhibit identified in the exhibit index must include an
active link to an exhibit that is filed with the report or, if the
exhibit is incorporated by reference an active hyperlink to the exhibit
separately filed on EDGAR. If the report is amended, each amendment
must include active hyperlinks to the exhibits required with the
amendment.
* * * * *
PART 275--RULES AND REGULATIONS, INVESTMENT ADVISERS ACT OF 1940
0
72. The authority citation for Part 275 continues to read, in part, as
follows:
Authority: 15 U.S.C. 80b-2(a)(11)(G), 80b-2(a)(11)(H), 80b-
2(a)(17), 80b-3, 80b-4, 80b-4a, 80b-6(4), 80b-6a, and 80b-11, unless
otherwise noted.
* * * * *
73. Revise Sec. 275.0-6 to read as follows:
Sec. 275.0-6 Incorporation by reference in applications.
(a) Exhibits. Any document or part thereof, including any financial
statement or part thereof, filed with the Commission pursuant to any
Act administered by the Commission may be incorporated by reference as
an exhibit to any application filed with the Commission by the same or
any other person. If any modification has occurred in the text of any
document incorporated by reference since the filing thereof, the
registrant must file with the reference a statement containing the text
of any such modification and the date thereof.
(b) General. Include an express statement clearly describing the
specific location of the information you are incorporating by
reference. The statement must identify the document where the
information was originally filed or submitted and the location of the
information within that document. The statement must be made at the
particular place where the information is required, if applicable.
Information must not be incorporated by reference in any case where
such incorporation would render the disclosure incomplete, unclear, or
confusing. For example, unless expressly permitted or required,
disclosure must not be incorporated by reference from a second document
if that second document incorporates information pertinent to such
disclosure by reference to a third document.
(c) Definition of Application. For purposes of this rule, an
``application'' means any application for an order of the Commission
under the Act other than an application for registration as an
investment adviser.
By the Commission.
Dated: October 11, 2017.
Brent J. Fields,
Secretary.
[FR Doc. 2017-22374 Filed 11-1-17; 8:45 am]
BILLING CODE 8011-01-P