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SEC reviews specific disclosure requirements for companies

On Thursday, the US Securities and Exchange Commission resolved to remove certain disclosure requirements for companies. This is one of the last rule changes to pass under the retiring Chairman Jay Clayton.

Regulators have decided to make additional changes to Regulation SK, which is the basis of the reporting rules for listed companies in the United States. The SEC proposed a revision in January.

Thursday’s amendment, among other disclosures, focuses on the management discussion and analysis section of a company’s financial statements.

This change eliminates the need for companies to provide the SEC with selected annual financial data for the last five years. Companies no longer need to disclose contractual obligations related to leases, purchases and other liabilities in the form of tables.

The SEC’s changes also eliminate the obligation for companies to have a separate section of disclosure to discuss off-balance sheet arrangements that affect or may affect their financial position. Companies need to discuss off-balance sheet items in the context of managing the entire business, not individual parts.

The SEC finally approved the SK change in August, giving companies more flexibility in reporting risk factors and legal proceedings in their financial statements. This move is part of a broader shift from rigorous guidance during Clayton’s term to more principle-based, company-specific disclosure aimed at simplifying information for investors. ..

“The improved approach to these disclosures reflects the wide variety of issuers in the public market, reducing the burden and cost of compliance for investors and making strong investments,” Clayton said in a statement Thursday. You can make better capital allocation decisions while maintaining home protection. ” ..

Some companies have endorsed the proposed amendment to Regulation SK. Costco Wholesale Corp. Dan Hines, a corporate controller for Said it was necessary.

SEC Commissioners Caroline Clenshaw and Allison Helen Lee opposed the amendment, stating that they would eliminate certain disclosures that provide investors with insights into supply chain and risk management. The Commissioner said in a joint statement that the change also failed to address the need for standardized disclosure of climate risks.

Rule changes will take effect 30 days after they are published in the official bulletin.

The SEC announced on Monday that Mr. Clayton will resign at the end of the year after completing his three-and-a-half-year term. Clayton said he would continue to work on the committee until then.

Write to mark.maurer@wsj.com Mark Maurer

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SEC reviews specific disclosure requirements for companies

Source link SEC reviews specific disclosure requirements for companies

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