The recently approved amendments to Items 101, 103, and 105 of Regulation S-K that were published on the Federal Register October 8, 2020, will become effective on November 9, 2020.
Companies should note that Form 10-Q reports for the quarter ended September 30, 2020 and other filings submitted after 5:30PM ET on Friday, November 6th will be treated by the SEC’s EDGAR system as filed on Monday, November 9, 2020. Therefore, these filings must comply with the amendments to Items 101, 103 and 105.
To review these amendments, see below highlights from the SEC announcement:
- amend Item 101(a) by:
- making it largely principles-based, requiring disclosure of information material to an understanding of the general development of the business;
- replacing the previously prescribed five-year timeframe with a materiality framework; and
- permitting a registrant, in filings made after a registrant’s initial filing, to provide only an update of the general development of the business focused on material developments that have occurred since its most recent full discussion of the development of its business, which will be incorporated by reference;
- amend Item 101(c) by:
- clarifying and expanding its principles-based approach, with a non-exclusive list of disclosure topic examples drawn in part from topics currently contained in Item 101(c);
- including, as a disclosure topic, a description of the registrant’s human capital resources to the extent such disclosures would be material to an understanding of the registrant’s business; and
- refocusing the regulatory compliance disclosure requirement by including as a topic all material government regulations, not just environmental laws;
- amend Item 103 by:
- expressly stating that the required information may be provided by hyperlink or cross-reference to legal proceedings disclosure located elsewhere in the document to avoid duplicative disclosure; and
- implementing a modified disclosure threshold for certain governmental environmental proceedings resulting in monetary sanctions that increases the existing quantitative threshold for disclosure of those proceedings from $100,000 to $300,000, but that also affords a registrant some flexibility by allowing the registrant, at its election, to select a different threshold that it determines is reasonably designed to result in disclosure of material environmental proceedings, provided that the threshold does not exceed the lesser of $1 million or one percent of the current assets of the registrant; and
- amend Item 105 by:
- requiring summary risk factor disclosure of no more than two pages if the risk factor section exceeds 15 pages;
- refining the principles-based approach of Item 105 by requiring disclosure of “material” risk factors; and
- requiring risk factors to be organized under relevant headings in addition to the subcaptions currently required, with any risk factors that may generally apply to an investment in securities disclosed at the end of the risk factor section under a separate caption.
