The SEC has issued a concept release on business and financial disclosure required by Regulation S-K. The goal of the release is to assess whether the requirements of Regulation S-K continue to provide the information that investors need to make informed investment and voting decisions and whether any of the SEC’s rules have become outdated or unnecessary.
The focus of the release is on business and financial disclosures that registrants provide in their periodic reports, which are a subset of the disclosure requirements in Regulation S-K. The SEC focused on these requirements because many of them have changed little since they were first adopted. The SEC is not at this time revisiting other disclosure requirements in Regulation S-K, such as executive compensation and governance, or the required disclosures for foreign private issuers, business development companies, or other categories of registrants. However, the SEC welcomes and encourages comments on any other disclosure topics not specifically addressed in the concept release.
At 341 pages in length, the release appears to leave no stone unturned within its scope. Even if you are not into writing comment letters, the release includes a good historical analysis of each of the provisions on which it seeks comment.
Some of the areas will not be without controversy. The SEC solicits comment on the importance of sustainability and public policy matters to informed investment and voting decisions.
Another area of controversy will be on the value of quarterly reporting and whether semi-annual reporting should be the standard, at least for some issuers.
Sadly, the SEC does not specifically request comment on the complete elimination of XBRL requirements.
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