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Securities Regulation

SEC Increases the Number of Companies Eligible for Reduced Disclosure

By Nicole Brookshire, Kenneth Guernsey, Chadwick Mills, Cydney Posner, Brent Siler & Nancy Wojtas, Cooley LLP

On August 17, 2018, the SEC adopted final amendments relating to an ambitious housekeeping effort, “Disclosure Update and Simplification,” a component of the SEC's disclosure effectiveness project. The final amendments address certain disclosure requirements that have become redundant, duplicative, overlapping, outdated or superseded, in light of other SEC disclosure requirements, US GAAP or “changes in the information environment.” This “demonstration version” of the final amendments provides a blacklined version displaying the changes. The final rules become effective 30 days after publication in the Federal Register, and the staff has indicated that it will review the impact of the amendments within five years thereafter.

The final amendments eliminate entirely a number of provisions that are completely duplicative, as well as a variety of references to obsolete terms such as “pooling-of-interests accounting” and “extraordinary items.”  In another nod to modernity, the SEC removed the requirement to identify the SEC’s Public Reference Room and disclose its physical location and phone number; instead, the SEC will retain the requirement to disclose the SEC’s internet address and require all issuers to disclose their internet addresses if they have one. SEC disclosure requirements that overlap with GAAP, IFRS or other SEC disclosure requirements have, in some instances, been deleted and, in other instances, where the requirement involved incremental material information, been integrated into other requirements. In some cases where the disclosure requirements overlap with GAAP but require material incremental information, the SEC retained the requirement, but referred the items to FASB for potential incorporation into GAAP in the future.


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