Bryan Cave Combines with Berwin Leighton Paisner to Form Bryan Cave Leighton Paisner LLP Learn More

On August 17, 2018, the SEC adopted amendments to eliminate or modify certain disclosure requirements that have become redundant, overlapping, outdated or superseded in light of other SEC rules, GAAP or changes in the information environment.  The changes affect several disclosure requirements in Regulations S-K and S-X and various SEC forms.  The SEC also referred certain proposed changes to the FASB for further consideration.

 The SEC believes these changes may improve the ability to make investment decisions more efficiently and reduce issuer compliance costs, which may encourage capital formation.  The release discussing the changes (the “Release”) is available here ; an unofficial redlined version of the changes is available here.

The amendments will become effective 30 days after the date of publication in the Federal Register, which is expected within the next few weeks.

Regulation S-K

The SEC eliminated or revised certain requirements relating to the description of an issuer’s business, the stock price table, references to extraordinary items, seasonality and the ratio of earnings to fixed charges and other items in Reg. S-K. The SEC eliminated or revised the following Reg. S-K items:

S-K Item Affected

Description of Disclosure Requirement

Reason for Elimination or Revision

S-K Item 101(b) (and a related requirement in Rule 3-03(e) of Regulation S-X)

Disclosure of segment information in the business description section of filings, including restatement of prior periods and discussion of interim segment performance that may not be indicative of current or future performance

Eliminated.  Similar disclosure is required under GAAP and/or MD&A and will continue to be available in the notes to financial statements.

S-K Item 101(c)(1)(xi) (and corresponding requirements for smaller reporting companies and in Form 20-F and Form 1-A)

Amounts spent on research and development activities for all years presented, if material

Eliminated.  GAAP requires similar disclosure in the notes to financial statements.  The SEC also noted that R&D trend information, if material, would still be required in MD&A and that companies may voluntarily provide such disclosure.

S-K Item 101(d)(1), (2) and (3)

Disclosure of financial information by geographic area, including risks associated with foreign operations and any segment’s dependence on foreign operations

Eliminated. Such disclosures are required under GAAP and/or S-K Item 503(c) relating to risk factors, and will continue to be available in the notes to financial statements or the risk factors section of filings.  However, the SEC added an explicit reference to “geographic areas” to S-K Item 303(a) (MD&A) to highlight the need to consider their importance.

S-K Item 101(d)(4)

When interim financials are presented, discussion of facts that indicate that three year financial data for geographic performance may not be indicative of current or future operations.

Eliminated. Similar to requirements in instructions to S-K Item 303(a) and (b). Also, Item 303 (MD&A) is being revised to expressly refer to “geographic areas” as a topic to address when appropriate to an understanding of the business.


Portion of S-K Item 101(e)(2) (and comparable requirements in smaller reporting company rules and SEC forms)

Requirement to identify the SEC’s public reference room and its physical address and phone number.

Revised. Viewed as rarely used.  Also the qualifying phrase “if you are an electronic filer” has been eliminated because almost all issuers are so required.  In addition, the SEC added a requirement for all issuers (including smaller issuers) to disclose their web addresses, if they have one.


Portion of S-K Item 201(a)(1) (and comparable requirements in Form 20-F)

Requirement to provide sale or bid prices for issuers whose common equity is traded in an established public market

Revised.  Viewed as obsolete in light of the availability of market quotes on numerous websites. However, the SEC added a requirement to disclose the trading symbol.

Portion of S-K Item 201(a)(2)(i)

Requirement to disclose in Form S-1 or Form 10 the amount of common equity subject to outstanding options, warrants or convertibles, when the class of common equity has no established U.S. public trading market

Eliminated. GAAP requires similar disclosure in the notes to financial statements.

Portion of S-K Item 201(c)(1)

Frequency and amount of cash dividends declared

Eliminated.  Amended S-X Rule 3-04 will require disclosure of such amounts in interim periods and the frequency will be evident from such disclosure.

Portion of S-K Item 201(c)(1)

Restrictions, including on the ability of subsidiaries to transfer funds to their parent, that currently or are likely to materially affect the issuer’s ability to pay dividends

Eliminated. This requirement is being consolidated into a single requirement in S-X Rule 4-08(e)(3), while equity compensation plan disclosures are being referred to FASB, as discussed below.

Portion of S-K Item 302(a)(1) relating to supplemental quarterly financial information

References to “extraordinary items” and “cumulative effect of a change in accounting principle.”

Revised. FASB recently eliminated such term from GAAP and the requirement to report cumulative effect of a change in accounting principle in the income statement. As a result, the Item will now require disclosure of “income (loss) from continuing operations” instead of “income (loss) before extraordinary items and cumulative effect of a change in accounting.”

Instruction 5 to S-K Item 303(b)

Seasonal aspects of business in MD&A in interim reports, to the extent material

Eliminated.  Redundant, because disclosure is required under GAAP in combination with the remainder of Item 303. However, the SEC retained the requirement in S-K Item 101(c)(1)(v), which requires disclosure of seasonality at the segment level, to the extent material to the business as a whole, due to concern about potential loss of information in the fourth quarter.

S-K Item 503(d) (and Item 1010(a)(3) of Regulation M-A) and S-K Item 601(b)(12)(exhibit) and comparable requirement in Form 20-F

Historical and pro forma ratios of earnings to fixed charges and/or preference dividends, along with related exhibit

Eliminated.  Several reasons: (i) a variety of analytical tools are available to investors to provide similar information; (ii) debt investors often negotiate contractual agreements to obtain specific information desired; (iii) companies need to disclose material impacts of debt covenants to the extent reasonably likely to limit future financings or to be breached; and (iv) Item 504 of Regulation S-K requires disclosure of the interest rate and maturity of indebtedness being from net proceeds of an offering.

Portion of Instruction 3 to S-K Item 504

Requirement to disclose sources of any material amounts of other funds needed to accomplish the specific purpose

Revised. Language repeated twice in instruction.

S-K Item 601(b)(11) (Exhibit)

Computation of earnings per share

Eliminated. Redundant, because addressed by GAAP and Regulation S-X

S-K Item 601(b)(19) (Exhibit)

Incorporation of information provided to security holders into 10-Q

Eliminated. Redundant, because addressed in S-K Item 601(b)(13) and Instruction D.3 to Form 10-Q.

S-K Item 601(b)(22) (Exhibit)

Published report regarding matters submitted to vote of security holders

Eliminated. Redundant in light of changes made in 2009 to disclose voting results in Item 5.07 of Form 8-K and Forms 10-K and 10-Q.

S-K Item 601(b)(26) (Exhibit)

Invitations for competitive bids

Eliminated. Unnecessary, as bidders would directly receive the invitation and other investors would have access to the registration statement covering the securities offered at the competitive bidding.


The SEC noted that the relocation of some disclosures to the financial statements will subject them to XBRL tagging requirements. Additionally, it noted that the safe-harbor for forward-looking statements is unavailable for financial statement disclosures, although issuers have the option of providing forward-looking information outside the financial statements.

Regulation S-X and Accounting Requirements

The SEC also identified a number of SEC accounting requirements, mostly in Regulation S-X, that are substantially redundant or duplicative of GAAP (or IFRS) requirements, or other SEC disclosure requirements, or that overlap, and that will be eliminated. 1

Due to overlapping requirements with GAAP or other SEC disclosure requirements, the SEC also eliminated the requirements in Regulation S-X to disclose:

  • Derivative accounting policies, except to the extent not addressed by GAAP;2 and
  • Supplemental pro forma financial information in interim filings for business combination (Rule 8-03(b)(4) and 10-01(b)(4) of Regulation S-X) in light of overlapping requirements with GAAP and Item 9.01 of Form 8-K; however, the pro forma disposition disclosure requirement is being retained.3

The SEC also adopted conforming changes to Regulation S-X to integrate certain financial reporting requirements relating to:

  • Disclosure of foreign currency exchange restrictions on the issuer’s financial position and operating results;4 and
  • Disclosure of restrictions on the payment of dividends or net assets.5

Referrals to FASB for Further Consideration

The SEC identified a number of areas where its disclosure requirements overlap with, but require incremental information to, GAAP and is referring these to FASB for its consideration whether to incorporate such requirements into GAAP as part of its normal standard-setting process, with a view to potentially eliminating the SEC disclosure requirement if integrated into GAAP:

  • Currency requirements for foreign private issuers;
  • Repurchase and reverse repurchase agreements;
  • Effect of derivatives on statements of cash flows;
  • Certain equity compensation plan information;
  • Discount on shares in the equity section of financial statements;
  • Income taxes in the notes to financial statements;
  • Major customers (Item 101(c)(1)(vii) of Regulation S-K); and
  • Additional financial reporting items set forth in the table on pages 93-97 of the Release.

The SEC considered but ultimately declined to refer S-K Item 103 relating to legal proceedings to FASB for possible integration with GAAP.

Other Changes

The SEC also deleted several financial reporting requirements in Regulation S-X that have been superseded by changes in GAAP  or other SEC requirements over time, including with respect to:

  • Gains or loss on sales of properties by REITS;6
  • Various requirements relating to consolidation;7
  • Development stage companies;8
  • Insurance companies;9
  • Replacing references to GAAS with applicable PCAOB references;10 and
  • Various other items as set forth in the tables on pages 120-123 and 127 of the Release.

The SEC also deleted several technical references in certain rules and forms that have become obsolete due to the passage of time or that contain incorrect references.11

For further information on this topic, please contact Randy Wang, Bill Cole or any other Bryan Cave Leighton Paisner  Securities and Corporate Governance lawyer. You may also contact us through the direct link to our Website, Bryan Cave Leighton Paisner Securities and Corporate Governance. Bryan Cave Leighton Paisner LLP makes available the information and materials in its Website for informational purposes only. The information is general in nature and does not constitute legal advice. Further, the use of this site, and the sending or receipt of any information, does not create any attorney-client relationship between us. Therefore, your communication with us through this Website will not be considered as privileged or confidential.

1. These are set forth on pages 29-34, 34-36, 60-62, 62-63 and 76-77 of the Release, as well as the narrative text following the tables adjusting the final changes. 

2. See pages 42-46 of the Release.

3. See pages 64-70 of the Release.

4. See pages 77-80 of the Release.

5. See pages 80-82 of the Release.

6. See pages 109-110 of the Release.

7. See pages 110-112, as adjusted on page 114, of the Release.

8. See pages 115 of the Release.

9. See pages 115-118 of the Release.

10. See table on pages 124- 125 of the Release.

11. See pages 128-131 of the Release.