Reopening of Comment Period for Share Repurchase Disclosure Modernization, 75975-75977 [2022-26898]
Download as PDF
Federal Register / Vol. 87, No. 237 / Monday, December 12, 2022 / Proposed Rules
Background
The FAA is planning to
decommission the VOR portion of the
Roseau, MN, VOR/DME in August,
2023. The Roseau VOR was one of the
candidate VORs identified for
discontinuance by the FAA’s VOR MON
program and listed in the Final policy
statement notice, ‘‘Provision of
Navigation Services for the Next
Generation Air Transportation System
(NextGen) Transition to PerformanceBased Navigation (PBN) (Plan for
Establishing a VOR Minimum
Operational Network),’’ published in the
Federal Register of July 26, 2016 (81 FR
48694), Docket No. FAA–2011–1082.
Although the VOR portion of the
Roseau VOR/DME NAVAID is planned
for decommissioning, the co-located
DME portion of the NAVAID is being
retained to support NextGen PBN flight
procedure requirements.
The VOR Federal airway affected by
the Roseau VOR decommissioning is V–
171. With the planned decommissioning
of the Roseau VOR, the remaining
ground-based NAVAID coverage in the
area is insufficient to enable the
continuity of the affected airway. As
such, the proposed modification to V–
171 would result in the airway being
shortened due to the Roseau VOR/DME
end point being removed
To overcome the proposed
modification, instrument flight rules
(IFR) traffic could use the adjacent VOR
Federal airway V–430 for conventional
navigation or Area Navigation (RNAV)
routes T–383 and T–407 for GPS
navigation by properly equipped
aircraft. Additionally, pilots equipped
with RNAV capabilities could also
navigate point to point using the
existing fixes that would remain in
place to support continued operations
though the affected area. IFR aircraft
may also receive air traffic control
(ATC) radar vectors to fly around or
through the affected area. Visual flight
rules (VFR) pilots who elect to navigate
via the affected VOR Federal airways
could also take advantage of the
adjacent ATS routes or ATC services
listed previously.
lotter on DSK11XQN23PROD with PROPOSALS1
The Proposal
The FAA is proposing an amendment
to 14 CFR part 71 to amend VOR
Federal airway V–171 due to the
planned decommissioning of the VOR
portion of the Roseau, MN, VOR/DME.
The proposed airway action is described
below.
V–171: V–171 currently extends
between the Lexington, KY, VOR/DME
and the Joliet, IL, VOR/DME; and
between the Nodine, MN, VOR/Tactical
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17:31 Dec 09, 2022
Jkt 259001
Air Navigation (VORTAC) and the
Roseau, MN, VOR/DME. The FAA
proposes to remove the airway segment
between the Grand Forks, ND, VOR/
DME and the Roseau, MN, VOR/DME.
As amended, the airway would be
changed to extend between the
Lexington VOR/DME and the Joliet
VOR/DME; and between the Nodine
VORTAC and the Grand Forks VOR/
DME.
The NAVAID radials contained in the
airway description below are unchanged
and stated in True degrees.
VOR Federal airways are published in
paragraph 6010(a) of FAA Order JO
7400.11G, dated August 19, 2022, and
effective September 15, 2022, which is
incorporated by reference in 14 CFR
71.1. The VOR Federal airway listed in
this document would be published
subsequently in FAA Order JO 7400.11.
FAA Order JO 7400.11, Airspace
Designations and Reporting Points, is
published yearly and effective on
September 15.
Regulatory Notices and Analyses
The FAA has determined that this
proposed regulation only involves an
established body of technical
regulations for which frequent and
routine amendments are necessary to
keep them operationally current. It,
therefore: (1) is not a ‘‘significant
regulatory action’’ under Executive
Order 12866; (2) is not a ‘‘significant
rule’’ under Department of
Transportation (DOT) Regulatory
Policies and Procedures (44 FR 11034;
February 26, 1979); and (3) does not
warrant preparation of a regulatory
evaluation as the anticipated impact is
so minimal. Since this is a routine
matter that will only affect air traffic
procedures and air navigation, it is
certified that this proposed rule, when
promulgated, will not have a significant
economic impact on a substantial
number of small entities under the
criteria of the Regulatory Flexibility Act.
Environmental Review
This proposal will be subject to an
environmental analysis in accordance
with FAA Order 1050.1F,
‘‘Environmental Impacts: Policies and
Procedures’’ prior to any FAA final
regulatory action.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference,
Navigation (air).
The Proposed Amendment
In consideration of the foregoing, the
Federal Aviation Administration
proposes to amend 14 CFR part 71 as
follows:
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Fmt 4702
Sfmt 4702
75975
PART 71—DESIGNATION OF CLASS A,
B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND
REPORTING POINTS
1. The authority citation for part 71
continues to read as follows:
■
Authority: 49 U.S.C. 106(f), 106(g); 40103,
40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR,
1959–1963 Comp., p. 389.
§ 71.1
[Amended]
2. The incorporation by reference in
14 CFR 71.1 of FAA Order JO 7400.11G,
Airspace Designations and Reporting
Points, dated August 19, 2022, and
effective September 15, 2022, is
amended as follows:
■
Paragraph 6010(a)
Airways
*
*
*
Domestic VOR Federal
*
*
V–171 [Amended]
From Lexington, KY; INT Lexington 251°
and Louisville, KY, 114° radials; Louisville;
Terre Haute, IN; Danville, IL; Peotone, IL;
INT Peotone 281° and Joliet, IL, 173° radials;
to Joliet. From Nodine, MN; INT Nodine 298°
and Farmington, MN, 124° radials;
Farmington; Darwin, MN; Alexandria, MN;
INT Alexandria 321° and Grand Forks, ND,
152° radials; to Grand Forks.
*
*
*
*
*
Issued in Washington, DC, on December 6,
2022.
Scott M. Rosenbloom,
Manager, Airspace Rules and Regulations.
[FR Doc. 2022–26881 Filed 12–9–22; 8:45 am]
BILLING CODE 4910–13–P
SECURITIES AND EXCHANGE
COMMISSION
17 CFR Parts 229, 232, 240, 249, and
274
[Release Nos. 34–96458; IC–34768; File No.
S7–21–21]
RIN 3235–AM94
Reopening of Comment Period for
Share Repurchase Disclosure
Modernization
Securities and Exchange
Commission.
ACTION: Proposed rule; reopening of
comment period.
AGENCY:
The Securities and Exchange
Commission (‘‘Commission’’) is
reopening the comment period for its
proposal, Share Repurchase Disclosure
Modernization, Exchange Act Release
No. 34–93783 (Dec. 15, 2021)
(‘‘Proposing Release’’). The Commission
proposed amendments to modernize
and improve disclosure about
SUMMARY:
E:\FR\FM\12DEP1.SGM
12DEP1
75976
Federal Register / Vol. 87, No. 237 / Monday, December 12, 2022 / Proposed Rules
repurchases of an issuer’s equity
securities that are registered under the
Securities Exchange Act of 1934.
Specifically, the proposed amendments
would require an issuer to provide more
timely disclosure on a new Form SR
regarding purchases of its equity
securities for each day that it, or an
affiliated purchaser, makes a share
repurchase. The proposed amendments
would also enhance the existing
periodic disclosure requirements about
these purchases. The Commission
subsequently reopened the comment
period for the Proposing Release in
Resubmission of Comments and
Reopening of Comment Periods for
Several Rulemaking Releases Due to a
Technological Error in Receiving Certain
Comments, Exchange Act Release No.
34–96005 (Oct. 7, 2022). In addition,
after the proposed amendments were
published for public comment, an
excise tax on share repurchases was
signed into law. A staff memorandum
was added to the public comment file
on December 7, 2022 to analyze the
impact of the new excise tax on the
potential economic effects of the
proposed amendments. The
Commission is reopening the comment
period to allow interested persons the
opportunity to analyze and comment on
the additional analysis.
DATES: The comment period for the
proposed amendments published
February 15, 2022, at 87 FR 8443, which
was initially reopened on October 7,
2022, at 87 FR 63016, is again reopened.
Comments should be received on or
before January 11, 2023.
ADDRESSES: Comments may be
submitted by any of the following
methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
how-to-submit-comments); or
lotter on DSK11XQN23PROD with PROPOSALS1
Paper Comments
• Send paper comments to Secretary,
Securities and Exchange Commission,
100 F Street NE, Washington, DC
20549–1090.
All submissions should refer to File
Number S7–21–21. This file number
should be included on the subject line
if email is used. To help us process and
review your comments more efficiently,
please use only one method of
submission. The Commission will post
all comments on the Commission’s
website (https://www.sec.gov/rules/
proposed.shtml). Comments also are
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
VerDate Sep<11>2014
17:31 Dec 09, 2022
Jkt 259001
Washington, DC 20549–1090, on official
business days between the hours of 10
a.m. and 3 p.m. Operating conditions
may limit access to the Commission’s
public reference room. 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 our website. 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: John
Fieldsend, Special Counsel, Office of
Rulemaking, at (202) 551–3460, Division
of Corporation Finance; and, with
respect to the application of the
proposal to investment companies,
Quinn Kane, Special Counsel, at (202)
551–6792, Investment Company
Regulation Office, Division of
Investment Management; U.S. Securities
and Exchange Commission, 100 F Street
NE, Washington, DC 20549.
SUPPLEMENTARY INFORMATION: As
described more fully in the Proposing
Release, the Commission proposed
changes to the requirements for
disclosure of purchases of equity
securities made by or on behalf of an
issuer or any affiliated purchaser.1 The
proposed amendments were intended to
improve the quality, relevance, and
timeliness of information related to
issuer share repurchases. The proposed
amendments would modernize and
improve the disclosure required about
repurchases of an issuer’s equity
securities by:
• Requiring daily repurchase
disclosure on a new Form SR, which
would be furnished to the Commission
one business day after execution of an
issuer’s share repurchase order;
• Amending Item 703 2 of Regulation
S–K,3 with corresponding changes to
Item 16E of Form 20–F 4 for foreign
private issuers and Item 9 of Form N–
CSR for certain registered-closed end
1 In the Proposing Release, the term ‘‘issuer’’
included affiliated purchasers and any person
acting on behalf of the issuer or an affiliated
purchaser. The term ‘‘affiliated purchaser’’ as used
in Item 703 is defined in 17 CFR 10b–18(a)(3).
2 17 CFR 229.703.
3 17 CFR 229.10 through 229.1305.
4 17 CFR 249.220f.
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Frm 00032
Fmt 4702
Sfmt 4702
investment management companies,5 to
require additional detail regarding the
structure of an issuer’s repurchase
program and its share repurchases; and
• Requiring information disclosed
pursuant to Item 703, Item 16E of Form
20–F, Item 9 of Form N–CSR, and new
Form SR to be reported using a
structured data language (specifically,
Inline eXtensible Business Reporting
Language).
After the proposed amendments were
published for public comment, The
Inflation Reduction Act of 2022 (‘‘Act’’)
was signed into law on August 16,
2022.6 Section 10201 of the Act adds
new section 4501 of the Internal
Revenue Code of 1986 (‘‘Internal
Revenue Code’’),7 which imposes upon
‘‘covered corporations’’ a nondeductible excise tax equal to one
percent of the fair market value of any
stock of the corporation which is
repurchased by such corporation during
the taxable year. Under the Act, a
‘‘covered corporation’’ is any domestic
corporation 8 the stock of which is
traded on an ‘‘established securities
market’’ (within the meaning of section
7704(b)(1) of the Internal Revenue
Code 9). The excise tax applies to share
repurchases after December 31, 2022.10
The staff of the Division of Economic
and Risk Analysis has prepared a
memorandum that discusses potential
economic effects of the new excise tax
5 17
CFR 249.331 and 17 CFR 274.128.
Public Law 117–169, 136 Stat. 1818 (2022).
7 See 26 U.S.C. 4501.
8 A domestic corporation means a corporation
created or organized in the U.S. or under the law
of the U.S. or of any State or the District of
Columbia. See 26 U.S.C. 7701(a)(4). Section 4501(d)
of the Act also applies to certain domestic
subsidiaries that purchase the stock of their nonU.S. corporate parents, the shares of which are
traded on an established securities market.
9 See 26 U.S.C. 7704(b)(1). The use of
‘‘established securities market’’ in section
7704(b)(1) is defined in 26 CFR 1.7704–1(b). The
definition includes national securities exchanges
registered under Section 6 of the Securities
Exchange Act of 1934, 15 U.S.C. 78a et seq.,
national securities exchanges exempt from
registration because of the limited volume of
transactions, certain foreign securities exchanges,
regional or local exchanges, and certain interdealer
quotation systems.
10 Additionally, Section 10201(e) of the Act sets
forth certain exceptions to the applicability of the
excise tax. Among these exceptions are repurchases
that are treated as a dividend under the Internal
Revenue Code and repurchases made by a real
estate investment trust or by a ‘‘regulated
investment company.’’ Section 851(a) of the
Internal Revenue Code generally defines ‘‘regulated
investment companies’’ as domestic corporations
that are registered under the Investment Company
Act of 1940 (‘‘Investment Company Act’’), 15 U.S.C.
80a–2(c), as management companies or unit
investment trusts, have in effect an election under
the Investment Company Act to be treated as
business development companies, or are certain
common trust funds or similar funds. See 26 U.S.C.
851(a).
6 See
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Federal Register / Vol. 87, No. 237 / Monday, December 12, 2022 / Proposed Rules
on the incidence and level of share
repurchases,11 which are a part of the
market baseline for the proposed
amendments. We believe that the
information presented in the Staff
Memorandum has the potential to be
informative for evaluating the proposed
amendments in light of this recently
enacted legislation. We are, therefore,
reopening the comment period for an
additional 30 days to permit interested
parties to comment on the Staff
Memorandum, which has been included
in the comment file. In addition to the
requests for comment included in the
Proposing Release, the Commission
specifically seeks comments on the
following:
lotter on DSK11XQN23PROD with PROPOSALS1
Requests for Comment
1. Would the Act’s new excise tax
affect the proposed amendments’
potential economic effects? 12 If so, what
would the specific impact (or impacts)
of the new excise tax be? How would
the new excise tax interact with the
effects of the direct and indirect costs of
the proposed amendments on issuers
and investors?
2. The Staff Memorandum estimates
that,13 based on year 2020 (2021) data,
of the approximately 3,300 (3,600)
issuers engaged in repurchases and
subject to the proposed amendments,
approximately 2,000 (2,300) issuers
would be affected by the excise tax. Do
you agree with these estimates? If you
do not agree with these estimates, please
explain why. Please also provide
alternative estimates and explain why
you believe those alternatives would be
more accurate.
3. Do you agree with the qualitative
analysis in the Staff Memorandum of
the likely directional effects of the new
excise tax on share repurchases? 14 Is
there other, additional research the staff
should consider? If so, please discuss
this research and why you believe it is
relevant to the analysis.
4. What is the likelihood, if any, given
the Act’s new excise tax that issuers will
replace share repurchases with
dividends, including special
dividends? 15 Is it administratively more
costly to distribute a dividend, or
special dividend, as a means to return
11 Memorandum of the Staff of the Division of
Economic and Risk Analysis, Supplemental
Analysis of the Potential Implications of the
Recently Enacted Excise Tax on Share Repurchases
for the Economic Effects of Share Repurchase
Disclosure Modernization Amendments (Dec. 7,
2022) (‘‘Staff Memorandum’’), available at https://
www.sec.gov/comments/s7-21-21/s72121.htm.
12 See Staff Memorandum, supra note 11, Section
II.
13 See id., supra note 11, Section II.A.
14 See id., supra note 11, Section II.C.
15 See id., supra note 11.
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17:31 Dec 09, 2022
Jkt 259001
cash to shareholders as compared to
repurchases? If so, please discuss how
the costs differ.
5. The Staff Memorandum states that
issuers subject to the proposed
amendments, but that are exempted
from the new excise tax, would not be
directly affected by the new excise tax
(but they may incur indirect effects). 16
Are there any additional impacts that
the staff should consider? Would these
issuers incur any indirect effects? For
example, the Staff Memorandum
includes as possible indirect effects
competitive spillovers of a decrease in
repurchases among issuers subject to the
excise tax, or changes in investor
sentiment regarding repurchases in
response to the decline in share
repurchases among a considerable
number of issuers. Would competitive
spillovers or changes in investor
sentiment affect share repurchase
activity by issuers subject to the
proposed amendments, but that are
exempted from the new tax? If so, what
would these impacts be? What other
indirect effects would occur?
6. The Staff Memorandum states that
the excise tax is not expected to change
the direction of the expected economic
effects of the proposed amendments
with respect to any particular share
repurchase that takes place, but that it
may affect the total number of share
repurchases that occur, and thus may
affect the aggregate impact of the
proposed amendments.17 Do you agree?
Please provide the reasoning for your
response.
7. The Staff Memorandum states that
the categories of costs and benefits
described in the Proposing Release
would likely remain the same, but the
magnitude may change as a result of the
excise tax.18 Do you agree with this
assessment? If not, what other costs or
benefits should be considered in
assessing the potential economic effects
of the proposed amendments?
8. Do you agree with the conclusion
in the Staff Memorandum that the
general efficiency, competition, and
capital formation considerations
discussed in the Proposing Release are
expected to continue to apply except for
the potential competitive effects
discussed in the Staff Memorandum? 19
We request and encourage any
interested person to submit comments
regarding the proposed amendments,
specific issues discussed in this release,
the Staff Memorandum, or the
Proposing Release, and other matters
16 See
id., supra note 11.
id., supra note 11, Section III.A.
18 See id., supra note 11, Section III.B.
19 See id., supra note 11, Section III.D.
17 See
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75977
that may have an effect on the proposed
amendments. Commenters are urged to
be as specific as possible; when
commenting, it would be most helpful
if you include the reasoning behind
your position or recommendation. All
comments received to date on the
proposed amendments will be
considered and need not be
resubmitted.
By the Commission.
Dated: December 7, 2022.
J. Mathew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–26898 Filed 12–9–22; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
50 CFR Parts 10, 17, and 21
[Docket No. FWS–HQ–MB–2022–0036;
FXMB12320900000//223//FF09M30000]
RIN 1018–BG04
General Provisions; Revised List of
Migratory Birds
Fish and Wildlife Service,
Interior.
ACTION: Proposed rule.
AGENCY:
We, the U.S. Fish and
Wildlife Service (Service), propose to
revise the List of Birds protected by the
Migratory Bird Treaty Act (MBTA) by
both adding and removing species.
Reasons for the changes to the list
include adding species based on new
taxonomy and new evidence of natural
occurrence in the United States or U.S.
territories, removing species no longer
known to occur within the United States
or U.S. territories, and changing names
to conform to accepted use. The net
increase of 13 species (16 added and
three removed) would bring the total
number of species protected by the
MBTA to 1,106. We also propose to
revise the scientific name of a species
subject to specific migratory-bird-permit
regulations and to revise corresponding
entries for several migratory bird species
that are also listed on the List of
Endangered and Threatened Wildlife
under the Endangered Species Act to
reflect currently accepted taxonomy and
nomenclature.
We regulate the taking, possession,
transportation, sale, purchase, barter,
exportation, and importation of
migratory birds. An accurate and up-todate list of species protected by the
MBTA is essential for public
notification, regulatory, and law-
SUMMARY:
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Agencies
[Federal Register Volume 87, Number 237 (Monday, December 12, 2022)]
[Proposed Rules]
[Pages 75975-75977]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-26898]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 229, 232, 240, 249, and 274
[Release Nos. 34-96458; IC-34768; File No. S7-21-21]
RIN 3235-AM94
Reopening of Comment Period for Share Repurchase Disclosure
Modernization
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule; reopening of comment period.
-----------------------------------------------------------------------
SUMMARY: The Securities and Exchange Commission (``Commission'') is
reopening the comment period for its proposal, Share Repurchase
Disclosure Modernization, Exchange Act Release No. 34-93783 (Dec. 15,
2021) (``Proposing Release''). The Commission proposed amendments to
modernize and improve disclosure about
[[Page 75976]]
repurchases of an issuer's equity securities that are registered under
the Securities Exchange Act of 1934. Specifically, the proposed
amendments would require an issuer to provide more timely disclosure on
a new Form SR regarding purchases of its equity securities for each day
that it, or an affiliated purchaser, makes a share repurchase. The
proposed amendments would also enhance the existing periodic disclosure
requirements about these purchases. The Commission subsequently
reopened the comment period for the Proposing Release in Resubmission
of Comments and Reopening of Comment Periods for Several Rulemaking
Releases Due to a Technological Error in Receiving Certain Comments,
Exchange Act Release No. 34-96005 (Oct. 7, 2022). In addition, after
the proposed amendments were published for public comment, an excise
tax on share repurchases was signed into law. A staff memorandum was
added to the public comment file on December 7, 2022 to analyze the
impact of the new excise tax on the potential economic effects of the
proposed amendments. The Commission is reopening the comment period to
allow interested persons the opportunity to analyze and comment on the
additional analysis.
DATES: The comment period for the proposed amendments published
February 15, 2022, at 87 FR 8443, which was initially reopened on
October 7, 2022, at 87 FR 63016, is again reopened. Comments should be
received on or before January 11, 2023.
ADDRESSES: Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/how-to-submit-comments); or
Paper Comments
Send paper comments to Secretary, Securities and Exchange
Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number S7-21-21. This file number
should be included on the subject line if email is used. To help us
process and review your comments more efficiently, please use only one
method of submission. The Commission will post all comments on the
Commission's website (https://www.sec.gov/rules/proposed.shtml).
Comments also are available for website viewing and printing in the
Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549-1090, on official business days between the hours of 10 a.m. and
3 p.m. Operating conditions may limit access to the Commission's public
reference room. 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 our website. 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: John Fieldsend, Special Counsel,
Office of Rulemaking, at (202) 551-3460, Division of Corporation
Finance; and, with respect to the application of the proposal to
investment companies, Quinn Kane, Special Counsel, at (202) 551-6792,
Investment Company Regulation Office, Division of Investment
Management; U.S. Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549.
SUPPLEMENTARY INFORMATION: As described more fully in the Proposing
Release, the Commission proposed changes to the requirements for
disclosure of purchases of equity securities made by or on behalf of an
issuer or any affiliated purchaser.\1\ The proposed amendments were
intended to improve the quality, relevance, and timeliness of
information related to issuer share repurchases. The proposed
amendments would modernize and improve the disclosure required about
repurchases of an issuer's equity securities by:
---------------------------------------------------------------------------
\1\ In the Proposing Release, the term ``issuer'' included
affiliated purchasers and any person acting on behalf of the issuer
or an affiliated purchaser. The term ``affiliated purchaser'' as
used in Item 703 is defined in 17 CFR 10b-18(a)(3).
---------------------------------------------------------------------------
Requiring daily repurchase disclosure on a new Form SR,
which would be furnished to the Commission one business day after
execution of an issuer's share repurchase order;
Amending Item 703 \2\ of Regulation S-K,\3\ with
corresponding changes to Item 16E of Form 20-F \4\ for foreign private
issuers and Item 9 of Form N-CSR for certain registered-closed end
investment management companies,\5\ to require additional detail
regarding the structure of an issuer's repurchase program and its share
repurchases; and
---------------------------------------------------------------------------
\2\ 17 CFR 229.703.
\3\ 17 CFR 229.10 through 229.1305.
\4\ 17 CFR 249.220f.
\5\ 17 CFR 249.331 and 17 CFR 274.128.
---------------------------------------------------------------------------
Requiring information disclosed pursuant to Item 703, Item
16E of Form 20-F, Item 9 of Form N-CSR, and new Form SR to be reported
using a structured data language (specifically, Inline eXtensible
Business Reporting Language).
After the proposed amendments were published for public comment,
The Inflation Reduction Act of 2022 (``Act'') was signed into law on
August 16, 2022.\6\ Section 10201 of the Act adds new section 4501 of
the Internal Revenue Code of 1986 (``Internal Revenue Code''),\7\ which
imposes upon ``covered corporations'' a non-deductible excise tax equal
to one percent of the fair market value of any stock of the corporation
which is repurchased by such corporation during the taxable year. Under
the Act, a ``covered corporation'' is any domestic corporation \8\ the
stock of which is traded on an ``established securities market''
(within the meaning of section 7704(b)(1) of the Internal Revenue Code
\9\). The excise tax applies to share repurchases after December 31,
2022.\10\
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\6\ See Public Law 117-169, 136 Stat. 1818 (2022).
\7\ See 26 U.S.C. 4501.
\8\ A domestic corporation means a corporation created or
organized in the U.S. or under the law of the U.S. or of any State
or the District of Columbia. See 26 U.S.C. 7701(a)(4). Section
4501(d) of the Act also applies to certain domestic subsidiaries
that purchase the stock of their non-U.S. corporate parents, the
shares of which are traded on an established securities market.
\9\ See 26 U.S.C. 7704(b)(1). The use of ``established
securities market'' in section 7704(b)(1) is defined in 26 CFR
1.7704-1(b). The definition includes national securities exchanges
registered under Section 6 of the Securities Exchange Act of 1934,
15 U.S.C. 78a et seq., national securities exchanges exempt from
registration because of the limited volume of transactions, certain
foreign securities exchanges, regional or local exchanges, and
certain interdealer quotation systems.
\10\ Additionally, Section 10201(e) of the Act sets forth
certain exceptions to the applicability of the excise tax. Among
these exceptions are repurchases that are treated as a dividend
under the Internal Revenue Code and repurchases made by a real
estate investment trust or by a ``regulated investment company.''
Section 851(a) of the Internal Revenue Code generally defines
``regulated investment companies'' as domestic corporations that are
registered under the Investment Company Act of 1940 (``Investment
Company Act''), 15 U.S.C. 80a-2(c), as management companies or unit
investment trusts, have in effect an election under the Investment
Company Act to be treated as business development companies, or are
certain common trust funds or similar funds. See 26 U.S.C. 851(a).
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The staff of the Division of Economic and Risk Analysis has
prepared a memorandum that discusses potential economic effects of the
new excise tax
[[Page 75977]]
on the incidence and level of share repurchases,\11\ which are a part
of the market baseline for the proposed amendments. We believe that the
information presented in the Staff Memorandum has the potential to be
informative for evaluating the proposed amendments in light of this
recently enacted legislation. We are, therefore, reopening the comment
period for an additional 30 days to permit interested parties to
comment on the Staff Memorandum, which has been included in the comment
file. In addition to the requests for comment included in the Proposing
Release, the Commission specifically seeks comments on the following:
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\11\ Memorandum of the Staff of the Division of Economic and
Risk Analysis, Supplemental Analysis of the Potential Implications
of the Recently Enacted Excise Tax on Share Repurchases for the
Economic Effects of Share Repurchase Disclosure Modernization
Amendments (Dec. 7, 2022) (``Staff Memorandum''), available at
https://www.sec.gov/comments/s7-21-21/s72121.htm.
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Requests for Comment
1. Would the Act's new excise tax affect the proposed amendments'
potential economic effects? \12\ If so, what would the specific impact
(or impacts) of the new excise tax be? How would the new excise tax
interact with the effects of the direct and indirect costs of the
proposed amendments on issuers and investors?
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\12\ See Staff Memorandum, supra note 11, Section II.
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2. The Staff Memorandum estimates that,\13\ based on year 2020
(2021) data, of the approximately 3,300 (3,600) issuers engaged in
repurchases and subject to the proposed amendments, approximately 2,000
(2,300) issuers would be affected by the excise tax. Do you agree with
these estimates? If you do not agree with these estimates, please
explain why. Please also provide alternative estimates and explain why
you believe those alternatives would be more accurate.
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\13\ See id., supra note 11, Section II.A.
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3. Do you agree with the qualitative analysis in the Staff
Memorandum of the likely directional effects of the new excise tax on
share repurchases? \14\ Is there other, additional research the staff
should consider? If so, please discuss this research and why you
believe it is relevant to the analysis.
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\14\ See id., supra note 11, Section II.C.
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4. What is the likelihood, if any, given the Act's new excise tax
that issuers will replace share repurchases with dividends, including
special dividends? \15\ Is it administratively more costly to
distribute a dividend, or special dividend, as a means to return cash
to shareholders as compared to repurchases? If so, please discuss how
the costs differ.
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\15\ See id., supra note 11.
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5. The Staff Memorandum states that issuers subject to the proposed
amendments, but that are exempted from the new excise tax, would not be
directly affected by the new excise tax (but they may incur indirect
effects).\16\ Are there any additional impacts that the staff should
consider? Would these issuers incur any indirect effects? For example,
the Staff Memorandum includes as possible indirect effects competitive
spillovers of a decrease in repurchases among issuers subject to the
excise tax, or changes in investor sentiment regarding repurchases in
response to the decline in share repurchases among a considerable
number of issuers. Would competitive spillovers or changes in investor
sentiment affect share repurchase activity by issuers subject to the
proposed amendments, but that are exempted from the new tax? If so,
what would these impacts be? What other indirect effects would occur?
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\16\ See id., supra note 11.
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6. The Staff Memorandum states that the excise tax is not expected
to change the direction of the expected economic effects of the
proposed amendments with respect to any particular share repurchase
that takes place, but that it may affect the total number of share
repurchases that occur, and thus may affect the aggregate impact of the
proposed amendments.\17\ Do you agree? Please provide the reasoning for
your response.
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\17\ See id., supra note 11, Section III.A.
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7. The Staff Memorandum states that the categories of costs and
benefits described in the Proposing Release would likely remain the
same, but the magnitude may change as a result of the excise tax.\18\
Do you agree with this assessment? If not, what other costs or benefits
should be considered in assessing the potential economic effects of the
proposed amendments?
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\18\ See id., supra note 11, Section III.B.
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8. Do you agree with the conclusion in the Staff Memorandum that
the general efficiency, competition, and capital formation
considerations discussed in the Proposing Release are expected to
continue to apply except for the potential competitive effects
discussed in the Staff Memorandum? \19\
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\19\ See id., supra note 11, Section III.D.
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We request and encourage any interested person to submit comments
regarding the proposed amendments, specific issues discussed in this
release, the Staff Memorandum, or the Proposing Release, and other
matters that may have an effect on the proposed amendments. Commenters
are urged to be as specific as possible; when commenting, it would be
most helpful if you include the reasoning behind your position or
recommendation. All comments received to date on the proposed
amendments will be considered and need not be resubmitted.
By the Commission.
Dated: December 7, 2022.
J. Mathew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-26898 Filed 12-9-22; 8:45 am]
BILLING CODE 8011-01-P