Although the amendments do not impose any major new disclosure requirements, the amended rules and new guidance will require registrants to augment, revise, or restructure their MD&A. The SEC has updated its rules and guidance on a variety of MD&A topics – including capital resources disclosure and analysis of the impact of known trends or uncertainties on operations – that will warrant a critical review of current presentations. Consistent with its emphasis on principles-based disclosure, the SEC has eliminated some line-item disclosures and directed registrants to discuss the affected matters in a materiality-focused disclosure tailored to their particular businesses and circumstances. The amendments also modify corresponding disclosure requirements that apply to foreign private issuers.
In related amendments the SEC has eliminated Item 301 of Regulation S-K, which requires disclosure of five years of selected financial data. The SEC also has significantly curtailed the scope of Item 302, which requires disclosure of selected quarterly financial data, replacing the current requirement for quarterly tabular disclosure with a principles-based requirement for disclosure of material retrospective changes.
The amendments will become effective 30 days after publication in the Federal Register, but registrants will not be required to comply with the amended rules until their first fiscal year ending on or after 210 days following publication. Registrants may elect to comply with any amended item between the effective date and the mandatory compliance date. A registrant choosing to provide disclosure consistent with an amended item during this period must comply with the amended item in its entirety.
The discussion of the amendments in the SEC's adopting release (No. 33-10890) can be viewed here.
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Authored by Alan Dye, Richard Parrino, and Abigail Smith
