Proposed Rule:
Additional Form 8-K Disclosure Requirements and Acceleration of Filing Date

• Are there other individuals or groups that may have the responsibility of taking the action that would trigger the proposed disclosure? For example, do audit committees take these actions for companies?
   
• Should we require disclosure only if the expected charge would represent a certain percentage, such as 1%, 5%, or 10%, of the company's assets, equity, revenues or net income? Should it be another percentage of these items? If so, what?
   
• Is the scope of events covered by this proposed item appropriate? Should we require disclosure of other related events as well?
   
• Is the scope of disclosure appropriate? Should we require companies to disclose any other information in the Form 8-K report? For example, should we require companies to disclose the information required by EITF 94-3? Would a company have sufficient time to gather the information required to be disclosed, including calculation of an estimate of the amount of the write-off or restructuring charge that the company will incur? Are there situations where the accounting treatment is determined more than two business days after the business decision to terminate or exit an activity? If so, how should we deal with this situation?
   
• Should we require a company to update its report on Form 8-K if there is a material change in the amount or expected effect of the write-off or restructuring charge?

Item 2.06 Material Impairments

This proposed new item would require disclosure when a company's board of directors or the company's officer or officers authorized to make the relevant conclusion, if board approval is not required, concludes that the company is required to record a material charge for impairment to one or more of its assets, including an impairment of securities or goodwill, under generally accepted accounting principles. Specifically, the company would have to disclose:

• The date on which the conclusion was reached;
   
• A description of the asset or assets subject to impairment and the facts and circumstances leading to the impairment;
   
• the estimated amount of the impairment charge; and
   
• an analysis of the effect of the impairment charge on the company, including the segment affected.

Questions regarding proposed Item 2.06

• Are there other individuals or groups that may have the responsibility of making the conclusion that would trigger the proposed disclosure? For example, do audit committees make these conclusions for companies?
   
• Should we require disclosure only if the expected charge would represent a certain percentage, such as 1%, 5%, or 10%, of the company's assets, equity, revenues or net income? Should it be another percentage of these items? If so, what?
   
• Is the scope of events covered by this proposed item appropriate? Should we require disclosure of other related events as well?
   
• Is the scope of disclosure appropriate? Should we require companies to disclose any other information in the Form 8-K report? For example, should we require disclosure of the asset's carrying value after the impairment charge? Would a company have sufficient time to gather the information required to be disclosed, including calculation of an estimate of the amount of the impairment charge? Are there situations where the accounting treatment is determined more than two business days after the conclusion is made to take an impairment charge? If so, how should we deal with this situation?
   
• Should we require a company to update its report on Form 8-K if there is a material change in the expected effect of the event?

Question regarding proposed Section 2

We solicit comment as to whether there are other types of highly significant corporate events that should be included within the proposed Section 2 category of disclosure items ("Financial Information").

Section 3 — Securities and Trading Market

Item 3.01 Rating Agency Decisions

This proposed new item would require a company to file a report when it receives a notice or other communication from any rating agency to whom the company provides information to the effect that the organization has decided to:

• Change or withdraw the credit rating assigned to, or outlook on, the company or any class of debt or preferred security or other indebtedness of the company (including securities or obligations as to which the company is a guarantor or has a contingent financial obligation);
   
• Refuse to assign a credit rating to the company, to any class of its securities, or to any of its indebtedness after the company has requested the organization to do so;
   
• Place the company or any class of its securities or indebtedness on "credit watch" or similar status; or
   
• Take any similar action.

Under the proposed item, the company would have to disclose the date that the company received the rating agency's notice or communication, the name of the rating agency, and the nature of the rating agency's decision. The company also would have to discuss management's analysis of the effect of the change or other decision on the company. Disclosure under this item would not be required until the rating organization notifies the company that the rating organization has made a decision to take one of the enumerated actions. If the company is still in negotiations or appealing a preliminary indication that a rating agency intends an action covered by the proposed item, no disclosure would be required. However, once all good faith negotiations and appeals cease, disclosure would be required.

We note that there are many organizations that currently provide ratings of companies, their securities, and their indebtedness.⁷³ Some of these ratings are solicited by the company, and others are not. This proposed item does not distinguish between solicited and unsolicited ratings, except that a company only would have to disclose a rating agency's refusal to issue a rating if the company requested a rating. Because the proposed item would require disclosure only if the rating agency notifies or otherwise communicates with the company about its intended action and the company has provided information to the rating agency (other than annual reports or filings with the Commission), a company would not have to constantly monitor actions taken by all rating agencies to determine whether they are rating the company or its securities on an unsolicited basis. The issue of whether or not the company compensates the rating agency would be irrelevant under the proposed item. For purposes of the proposed item, a "rating agency" would mean an entity whose primary business is the issuance of credit ratings.⁷⁴

Rating organizations typically disclose rating changes publicly via press release at the same time or shortly after they notify affected companies of the changes. Therefore, investors already can rapidly obtain access to information about rating changes if they know where to find the press releases and are willing to routinely monitor these releases to find information about particular companies and securities. However, some investors may not routinely monitor all press releases issued by ratings organizations and therefore likely would benefit from disclosure about ratings changes filed by companies on Form 8-K.

In 1994, we issued a proposal to require companies to disclose ratings changes in their Form 8-K reports.⁷⁵ Although we did not adopt the proposal, we recognize that such rating changes can have a material impact on a company and its publicly traded securities. Therefore, such information can be useful to an investor in making investment and voting decisions. Although the Commission does not endorse the validity or accuracy of securities ratings, we recognize that investors find rating changes "newsworthy."

Questions regarding proposed Item 3.01

• Is this proposed item necessary in view of the typical practice by rating organizations to promptly issue press releases about rating changes? Is current disclosure by rating agencies through press releases adequate? Would investors benefit from having companies disclose this information in a uniform place?
   
• Should we limit the disclosure to ratings by nationally recognized statistical rating organizations? Should we limit the disclosure to some other specified group of rating agencies? Is the definition of "rating agency" adequate?
   
• Should we require the proposed disclosure only if there is a contractual relationship between the rating agency and the company?
   
• Should we provide more guidance as to when a company has provided sufficient information to an agency to require disclosure?
   
• Do significant delays between a rating organization's decision to make a rating change and public announcement of the change frequently occur?
   
• We also solicit comment as to whether the types of actions that would trigger the proposed item are appropriate. Are there other actions by a rating organization that should trigger the proposed disclosure? For example, should we require disclosure when a rating agency changes an outlook on an entire industry group to which a company belongs?

Item 3.02 Notice of Delisting or Failure to Satisfy Listing Standards; Transfer of Listing

This proposed new item would require a company to report any notice from the national securities exchange or national securities association that is the principal trading market for a class of the company's common stock or similar equity securities that the company or a class of its securities no longer satisfies the listing requirements or standards of the exchange or association, or that a class of the company's securities has been delisted by the exchange or association.⁷⁶ Specifically, a company would have to file a copy of the notice, if in writing, and disclose or provide:

• The date that it received the notice;
   
• The listing requirement or standard that the company failed to satisfy or the reason for the delisting as indicated by the exchange or association; and
   
• A discussion of the company's planned response to the notice and management's analysis of the effect of the delisting or failure to satisfy a listing standard on the company.

This proposed item also would require a company to file a Form 8-K when the company has taken definitive action to terminate the listing of a class of its common stock or similar equity securities on the exchange or inter-dealer quotation system that is the principal trading market for those securities, including by reason of a transfer of the listing or quotation to another securities exchange or quotation system. In the Form 8-K, the company would have to describe the action taken and state the date of the action.

Questions regarding proposed Item 3.02

• Should the company have to file the notice as an exhibit to Form 8-K, as proposed, or is the required disclosure sufficient? Conversely, if the company has to file the actual notice, should we require less disclosure about the notice?
   
• Is the requirement to file a report upon receipt of a notice that the company no longer satisfies a listing requirement premature? Would such a filing adversely affect the liquidity of the company's securities so as to warrant removal of this requirement?
   
• Should we not require disclosure under this proposed item while the company is negotiating with or appealing a decision by an exchange or association regarding delisting or the company's failure to satisfy a listing standard following notice?
   
• Should we require disclosure only upon actual delisting, rather than when the company receives notice that its securities may be delisted? Should we require disclosure both when the company receives notice about a possible delisting and when the company's stock actually is delisted?

Item 3.03 Unregistered Sales of Equity Securities

This proposed item would require a company to disclose the information in paragraphs (a) through (e) of Item 701 of Regulation S-K regarding the company's sale of equity securities in a transaction that is not registered under the Securities Act. This disclosure currently is required in Item 2(c) of Forms 10-Q and 10-QSB and Item 5(a) of Forms 10-K and 10-KSB.⁷⁷ We propose to move this disclosure from companies' annual and quarterly reports to Form 8-K. We believe that more timely disclosure of this information will benefit investors due to the fact that unregistered sales of equity securities can have a significant dilutive effect on existing investors' holdings.

Questions related to proposed Item 3.03

• We solicit comment as to whether we should move this disclosure to Form 8-K. Would investors benefit from more prompt disclosure of unregistered sales of a company's equity securities?
   
• Do we need to define the term "sells in a transaction" for purposes of this proposed item?
   
• Should the proposed item permit companies to aggregate sales occurring within a short period of time? If so, during what period should we permit aggregation?
   
• Even if we move this disclosure to Form 8-K as proposed, should we continue to require it in a company's quarterly and annual reports? Is there value to requiring an aggregate listing of sales made during the periods covered by these reports, even though the Form 8-K would report each sale as it occurs?
   
• Should we limit Form 8-K disclosure to only large unregistered sales? How should we define "large"? Should it be based on a percentage, such as 1%, 5% or 10%, of the company's outstanding shares? Should it be based on a percentage, such as 1%, 5% or 10%, of the market float?

Item 3.04 Material Modifications to Rights of Security Holders

This proposed item would require a company to disclose material modifications to the rights of holders of any class of the company's registered securities, and to briefly describe the general effect of such modifications on the company's security holders. In 1977, we moved this item from Form 8-K to Form 10-Q to lessen the burden on companies.⁷⁸ Under current requirements, a reporting company must disclose the general effects of those modifications in the Form 10-Q or Form 10-QSB for the quarter in which the modifications occur. That requirement allows reporting companies to delay filing this information for up to four and a half months after security holder rights have been modified. That timing is unnecessarily long given the significance of these matters to security holders and the possibility that modifications to their rights could dramatically affect the value of the securities they own. The substance of the disclosure would be the same as currently required by Items 2(a) and (b) of Forms 10-Q and 10-QSB.⁷⁹

Questions regarding proposed Item 3.04

• We solicit comment as to whether we should move this disclosure to Form 8-K. Would investors benefit from more prompt disclosure of these events?
   
• Even if we move this disclosure to Form 8-K as proposed, should we continue to require it in a company's quarterly reports?
   
• Should we require disclosure of such modifications only if the class of securities modified is registered or, in the case of unregistered debt, constitutes a certain percentage, such as 5%, of the company's assets?

Question regarding proposed Section 3

We solicit comment as to whether there are other types of highly significant corporate events that should be included within the proposed Section 3 category of disclosure items ("Securities and Trading Market").

Section 4 - Matters Related to Accountants

Item 4.01 Changes in Registrant's Certifying Accountant

This proposed item is substantively the same as Item 4 of existing Form 8-K. The only revision that we propose to make to the existing item is deletion of the phrase "and the related instructions to Item 304." We believe that it is implicit that a company will consider and comply with the instructions to our disclosure items. Therefore, we propose to delete this phrase as unnecessary.

Questions regarding proposed Item 4.01

• We solicit comment on whether we should make any changes to the substantive requirements imposed by Item 4 of existing Form 8-K.
   
• Should we require similar disclosure regarding a change in the auditor of a company's employment benefit plan if that auditor is different from the company's independent accountant?

Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report

This proposed new item would require a company to file a Form 8-K if and when its audit committee, or the board of directors in the absence of an audit committee, or the company's officer or officers authorized to take such action, concludes that any of the company's previously issued financial statements no longer should be relied upon. A company similarly would be required to file a Form 8-K if and when it receives notice from its current or a previously engaged independent accountant that the company should take action to prevent future reliance on a previously issued report related to any such financial statements.⁸⁰ The financial statements and audit reports covered by this proposal are those required pursuant to Regulation S-X⁸¹ or Regulation S-B. This proposed item would require the company to file the notice, if it is in writing, and disclose or provide:

• the date on which the conclusion was reached or the registrant received the notice;
   
• a description of the events giving rise to the conclusion or notice related to the reliability of the financial statements;
   
• a statement of whether the audit committee, or the board of directors in the absence of an audit committee, discussed with the independent accountant the subject matter giving rise to the conclusion or notice; and
   
• a description of management's plans to alleviate the reliance issue.

In addition, when the company files a Form 8-K in response to a notice from the independent accountant, the company would have to provide the independent accountant with the Form 8-K disclosure no later than the business day after it files and request that the accountant furnish a letter to the company as soon as possible stating whether the accountant agrees with the disclosure, and if not, the respects in which it disagrees. Within two business days after it receives a letter from the accountant, the company would have to file that letter as an exhibit by amendment to the relevant Form 8-K.

Questions regarding proposed Item 4.02

• Would the proposed item elicit disclosure about any events that do not relate to the validity of the financial statements or report itself?
   
• Are there other actions taken by an independent accountant with respect to a previously issued audit report that should be disclosed?
   
• Should we require disclosure of events relating to a company's quarterly financial statements?
   
• We request comment as to whether the company should have to describe the events giving rise to the company's conclusion or the independent accountant's notice and whether the proposed disclosure regarding any discussions between the company's audit committee or board and the independent accountant regarding the subject matter of the notice is appropriate.
   
• Should the company have to furnish the disclosure required by the proposed item to the independent accountant? If so, should the company have to send the required disclosure to the independent accountant before it files the Form 8-K with the Commission? On the same day as the company files the Form 8-K?
   
• Should the independent accountant be asked to respond to the company's request for a letter by a specific date rather than "as soon as possible" after the company makes the request? Finally, should the company have to file the independent accountant's letter as an exhibit to the Form 8-K? If yes, should the company have to file the letter within two business days after the company receives it, as proposed? Should the proposed two business day period be shorter or longer?

Question regarding proposed Section 4

We solicit comment as to whether there are other types of highly significant corporate events that should be included within the proposed Section 4 category of disclosure items ("Matters Related to Accountants").

Section 5 - Corporate Governance and Management

Item 5.01 Changes in Control of Registrant

This proposed item is substantively the same as Item 1 of existing Form 8-K. We propose only to streamline this existing disclosure by, for example, breaking out lists and rearranging the requirements set forth in the item. Although the proposed item would continue to require disclosure regarding the source of funds used to effect a change in control, the proposed item would revise the wording regarding disclosure of the source of funds to make the requirements clearer. The proposed wording would more closely track Item 3 of Schedule 13D,⁸² which is more detailed. There are no substantive differences between the proposed disclosure requirements and the requirements in existing Item 1 of Form 8-K.

We also propose to add an instruction to the item to clarify that responses may be made by incorporation by reference of disclosure from an earlier filing. Hence, if the change of control occurs as a result of a previously reported merger agreement, any relevant details of the agreement could be furnished by the company's incorporation by reference of that earlier report.

Questions regarding proposed Item 5.01

• We solicit comment as to whether the proposed change to the source of funds disclosure is appropriate.
   
• Should we make any substantive amendments to Item 1 of existing Form 8-K?
   
• Should companies be allowed to respond to certain of the disclosure requirements by incorporation by reference to an earlier report? Would it be more appropriate to require companies to repeat prior disclosure in the report so that investors need not search for the previously filed report?

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

a. Disclosure Under Proposed Item 5.02(a) When a Director Resigns or Declines to Stand for Re-Election Due to a Disagreement or Is Removed for Cause

This proposed item would be similar to Item 6 of existing Form 8-K in that both the proposed and existing items pertain to the resignation of a corporate director. However, the proposed item would add several new substantive requirements.

Currently, Item 6 requires disclosure only if a director departs as a result of a disagreement, provides a letter to the company describing the disagreement and requests that the company publicly disclose the matter. Thus, the burden of knowing what actions are necessary to trigger disclosure pursuant to the item is placed solely on the director. If the director desires the company to disclose information about the disagreement, but is not aware that he or she must formally request the company to make such disclosure, no disclosure is required.

Under the proposal, if a director has resigned or declined to stand for re-election to the board of directors since the date of the last annual meeting of shareholders because of a disagreement with the company, known to an executive officer of the company, on any matter relating to the company's operations, policies or practices, or if a director has been removed for cause from the board of directors, the company would have to disclose:

• the date of such resignation, declination to stand for re-election, or removal;
   
• any positions held by the director on any committee of the board of directors before the director's resignation, declination to stand for re-election, or removal; and
   
• the circumstances of the director's resignation, declination to stand for re-election or removal.

If the director furnishes the company with any written correspondence concerning the circumstances surrounding his or her resignation, declination, or removal, the company would have to summarize the contents of that correspondence and file a copy of the correspondence as an exhibit to the report on Form 8-K regardless of whether the director requests disclosure of its contents. Furthermore, the company would have to provide the director with a copy of the disclosures it is making in response to this proposed item that the director would have to receive no later than the business day following the day that the company files the disclosures with the Commission. The company would have to request the director to furnish the company with a letter addressed to the Commission as soon as possible stating whether he or she agrees with the company's disclosures and, if not, stating the respects in which he or she does not agree. Finally, the company would have to file the director's letter with the Commission within two business days after receipt as an exhibit by amendment to the report on Form 8-K.

Questions regarding Item 5.02(a)

• Is it appropriate to modify the existing disclosure requirements and disclosure trigger in the manner proposed when a director resigns or declines to stand for re-election or is removed for cause?
   
• Should the company have to file any written correspondence from a director regarding the director's resignation, declination or removal as a Form 8-K exhibit?
   
• Should the company have to describe the circumstances of the director's resignation, declination or removal? If so, should the company have to send the disclosure to the director? Should the company have to send the disclosure to the director before it files the Form 8-K with the Commission? Should the company have to ask the director to furnish the company with a response? On the same day as the company files the Form 8-K?
   
• Should the director be asked to respond to the company's request for a letter by a specific date rather than "as soon as possible" after the company makes the request?
   
• Should the company have to file the director's letter as a Form 8-K exhibit? If yes, should the company have to file the letter within two business days after the company receives it as proposed? Should the proposed two day period be shorter or longer?
   
• Also, would the proposals provide sufficient time for the company to make the required disclosures? If not, how much time would be required? Why?

b. Disclosure Under Proposed Item 5.02(b) When Certain Officers Resign or Are Terminated from a Position and Disclosure When a Director Resigns, Is Removed or Declines to Stand for Re-Election for Any Reason Other Than as a Result of a Disagreement or For Cause

Proposed Item 5.02(b) would require disclosure when the company's principal executive officer, president, principal financial officer, principal accounting officer, principal operating officer or any person serving in an equivalent position resigns or is terminated from that position. Therefore, if an officer is removed from one of the stated positions and reassigned elsewhere, disclosure would be required. The company would have to disclose the date that the event occurs and the reasons for the event. It also would require disclosure when a director resigns, is removed or declines to stand for re-election for any reason other than as a result of a disagreement or for cause.

One important difference between the proposed disclosure under this Item 5.02(b) and the proposed disclosure about a director's departure because of a disagreement under proposed Item 5.02(a) is that if an officer resigns, is terminated or reassigned, as the result of a disagreement with the company, the company would not be obligated to disclose the reasons for, or seek the officer's explanation of, the departure as it would be if a director departed under similar circumstances. We believe that the nature of the relationship between a director and the company's security holders, including the security holders that elect directors, is sufficiently different to justify the expanded procedures for directors. The function of directors is to oversee the company for the shareholders to whom they are directly answerable.

Questions regarding proposed Item 5.02(b)

• Should the item impose an obligation on the company to describe any disagreement between a departing officer and the company? If so, should this be the case only with respect to certain types of disagreements, e.g., a disagreement over an accounting matter, or only with respect to certain types of officers, e.g., financial officers? Should the item impose an obligation on the company to solicit an explanation from the departing officer of the reasons for his or her departure?
   
• Should we require disclosure of the reasons for an officer's or director's departure in instances where there is no dispute between the officer or director and the company?
   
• Is the list of officers covered by the proposed item appropriate? Should we require disclosure regarding the departure of other officers as well? If so, which officers?
   
• With respect to the resignation of one of the listed officers, is the timing appropriate? Should we delay the disclosure requirement until the officer or the company otherwise publicly announces a planned departure?

c. Disclosure Under Proposed Item 5.02(c) and (d) When the Company Appoints Certain New Officers or a New Director Is Elected

This proposed item also would require disclosure if the company appoints a new principal executive officer, president, principal financial officer, principal accounting officer, principal operating officer, or person serving an equivalent function. If such an event occurs, proposed Item 5.02(c) would require the company to disclose the officer's name, position, the date of the appointment, a brief description of any arrangement or understanding pursuant to which the officer was selected as an officer, the information required regarding the officer's background and certain related transactions with the company,⁸³ and a brief description of the material terms of any employment agreement between the company and that officer.

In addition, if a new director is elected to the board, except by a vote of security holders at an annual meeting, proposed Item 5.02(d) would require disclosure of the new director's name, the election date, a brief description of any arrangement or understanding pursuant to which the new director was selected as a director, any committees to which the new director has been, or at the time of the disclosure is expected to be, named, and information regarding certain related transactions between the new director and the company.⁸⁴ Certain information required to be disclosed regarding new officers and directors would be permitted to be filed by amendment after the company determines this information.

Questions regarding proposed Items 5.02(c) and (d)

• Does this proposal require disclosure of an adequate amount of information about new officers and directors? Is there any other pertinent information regarding a new officer or director that should be disclosed when such a person joins a company? Does the proposal require too much disclosure?
   
• Is it necessary for all of the proposed information to be disclosed immediately? Can some of the disclosures be delayed until the company files its annual report? If so, which disclosure requirements could be delayed?

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

This proposed item would require a company to disclose any amendment to its articles of incorporation or bylaws if the amendment was not disclosed in a proxy statement or information statement filed by the company. Proposed Item 5.03 would require the company to disclose the effective date of the amendment and a description of the provision adopted or changed by amendment and, if applicable, the previous provision. If the amendment changed the company's fiscal year from that used in its most recent filing with the Commission, the company would have to state the date of the new fiscal year end and the form on which the report covering the transition period will be filed. If the company determines to change the fiscal year from that used in its most recent filing with the Commission by means other than a submission to a vote of security holders through the solicitation of proxies or otherwise, or by an amendment to its articles of incorporation or bylaws, the proposal would require the company to state the date of that determination, the date of the new fiscal year end, and the form on which the report covering the transition period will be filed.

This would ensure that security holders are kept apprised of changes to these documents. Presumably, any amendment that is subject to security holder approval will be adequately disclosed in the company's proxy statement. We recognize that a company potentially would have to report changes to its articles of incorporation and bylaws that affect the rights of security holders under both this proposed item and proposed Item 3.04, Material Modifications to Rights of Security Holders. However, General Instruction D to Form 8-K states that a company need only file one report listing all relevant item numbers. Therefore, the company could file a single Form 8-K and include the disclosure in a single place under the captions for both items.

Questions regarding proposed Items 5.03

• Should all amendments of the articles or bylaws require immediate disclosure?
   
• Should we limit the disclosure requirement to only particular types of amendments? If so, what should the criteria be?

Item 5.04 Material Events Regarding the Registrant's Employee Benefit, Retirement and Stock Ownership Plans

This proposed new item would require a company to disclose any known event that would have the effect of materially limiting, restricting or prohibiting participants in an employee benefit, retirement or stock ownership plan from acquiring, disposing or converting their holdings, other than a periodic or other limitation, restriction or prohibition based on presumed or actual knowledge of or access to material non-public information if that plan is broadly available to the company's employees. This item would require a company to disclose the period or expected period of the limitation, the nature of the limitation, and the circumstances surrounding, or reasons for, the limitation. Such notice is important to investors who are plan participants in making financial decisions and who are entitled to the benefits of the disclosure regime of the U.S. securities laws.

This proposed disclosure would not be necessary when a company imposes temporary trading "black-outs" on its senior officers and directors because they possess material non-public information, such as during the period surrounding the announcement of an earnings release or during negotiation of a merger agreement.

Questions regarding proposed Item 5.04

• Should we include this disclosure in Form 8-K? Is this information important to investors other than plan participants?
   
• Might investors who are not part of a relevant plan believe that the limitations apply to them, causing unjustified market reaction?
   
• If this information is only important to plan participants, is there a better means of ensuring that those plan participants get this information?
   
• Is it appropriate to carve-out trading black-outs applicable to those with presumed or actual knowledge of or access to material non-public information? Should we otherwise limit the item to events affecting "all participants" or "a majority of the participants"? Would such a limitation exclude events that should be disclosed?
   
• We note that Congress currently is considering legislation that, among other things, would require companies to provide employees with 30 days notice prior to any lockout period.⁸⁵ Would this legislation, if enacted, preempt the need for this proposed item? Should we delay our determination on this item until we can determine whether one of these bills will be enacted?

Question regarding proposed Section 5

We solicit comment as to whether there are other types of highly significant corporate events that should be included within the proposed Section 5 category of disclosure items ("Corporate Governance and Management").

2. Boilerplate Explanations

Throughout the proposed Form 8-K items, there are requirements that companies provide explanations on such issues as management's analysis of the expected effect of an event on the company. These proposals are designed to improve the disclosure made available to the public. General, boilerplate-type statements that an event may have a material adverse effect on the company, or similar statements, provide limited useful disclosure about a corporation.

Therefore, if the proposals are adopted, we would expect responses to these items to be as specific as possible, and we would encourage companies to provide quantitative information whenever possible. We also would urge companies choosing to avail themselves of the safe harbors for forward-looking statements under the Private Securities Litigation Reform Act⁸⁶ and the Commission's rules⁸⁷ to tailor the required cautionary language to the specific forward-looking statements being made.

3. Request for Comments Regarding Proposed Disclosure Items

• We solicit comment on whether we should add each of the proposed new items to Form 8-K. Are there any items that we should not adopt? Are there additional items about significant corporate events that we should add to Form 8-K? Are there any other disclosure items currently required to be disclosed in companies' annual and quarterly reports, such as disclosure of results of matters submitted to security holder vote, that would more appropriately be the subject of Form 8-K disclosure? If so, which items?
   
• Are any of the proposed disclosure items, or portions thereof, unnecessary? If so, why?
   
• Would adoption of the proposed Form 8-K disclosure items add value from an investor perspective? Do investors frequently review companies' Form 8-K reports?
   
• We are proposing to reorganize the items into sections based on subject matter of the item. Should we provide a general item under each of the proposed sections to solicit disclosure of other important events under that section? For example, under Section 1, Registrant's Business and Operations, should we include an item soliciting disclosure of other material events related to the company's business and operations? If so, should that item be voluntary or mandatory?
   
• Are the proposed new disclosure items sufficiently clear and detailed?
   
• Should we add any disclosure requirements to any of the proposed items? Should we modify or delete any of the proposed disclosure requirements within the proposed new items? If we should modify any, how?
   
• Does the cost of disclosure of any of the items listed above so outweigh the benefits to investors of such disclosure as to warrant exclusion of the item? If so, provide data to support this conclusion.
   
• Would any of the proposed disclosure requirements discourage a company from entering into transactions that would be beneficial to the company and its investors?
   
• Would the proposed addition of the new Form 8-K items make the form itself unwieldy or difficult to understand? How can we make the form itself more useful to investors?
   
• In lieu of, or in addition to, the current approach involving a list of specific disclosure items, should we adopt a broad principle requiring companies to report highly important corporate events, leaving the company to determine the trigger for and scope of the necessary disclosure?⁸⁸ If so, how should we define the types of events requiring disclosure?
   
• Would investors find such a system useful? Would companies be able to identify and disclose events in a timely fashion without strict guidelines? Would the open-ended obligation give companies too much discretion in setting the timing and scope of disclosure? Would such a system be more or less costly for companies to administer?
   
• Should we retain the proposed disclosure items but also require companies to disclose in the Form 8-K other highly significant events that occur within the identified general disclosure categories? If so, how should the category of events requiring disclosure be defined and what should be the triggering event for such disclosure?
   
• Some of the proposed new items may call for disclosure of forward-looking information regarding the effect of the triggering event. Do we need to consider modifying the current liability standards if we adopt a more generalized requirement for disclosure of material information, including trend information? If so, please explain why and how we should modify the standards.
   
• Would the requirements imposed by the new items be particularly burdensome to small business issuers? Which items in particular would impose such a burden on small business issuers? Should small business issuers be subject to fewer reporting requirements than larger companies? Should we create a separate form on which small business issuers would be required to disclose such extraordinary events on a current basis?

In our February 13, 2002, press release, we indicated that we were considering adding several new Form 8-K items. As noted earlier in this release, we have not included two of these items in our proposals.⁸⁹ These items would require disclosure of waivers of corporate ethics and conduct rules and of a material change in a critical accounting policy. We are continuing to evaluate these items and solicit public comment on the following questions to assist us in our evaluation.

Questions regarding waivers of corporate codes of conduct

• Should disclosure apply to a waiver for any officer or director, or a smaller group of individuals? Should disclosure apply to all waivers or are some more significant than others?
   
• If we propose a Form 8-K item to require disclosure regarding waivers, what should the triggering event be? Should it be the date on which the board of directors grants the waiver or some other point? Should we require disclosure only when the board approves a waiver request?
   
• If we propose waiver disclosure, should we require the company to describe the board's reasons for approving a waiver request?
   
• Should we limit disclosure to waivers of requirements regarding conflicts of interest between the company and one of its directors or executive officers?

Questions regarding critical accounting policies

• On May 10, 2002, we issued a release proposing disclosure about a company's application of its critical accounting policies.⁹² We are considering whether a change in a company's critical accounting policy should be disclosed on Form 8-K. If so, what should the triggering event be? What information should we require about the change in policy?

4. Application to Foreign Private Issuers

Foreign private issuers that are subject to the periodic reporting requirements under the Exchange Act are not required to file current reports on Form 8-K. Instead, foreign private issuers furnish reports on From 6-K.⁹³ Form 6-K on its own does not require the disclosure of any specific information. Rather, Form 6-K requires a foreign private issuer to furnish publicly to the Commission any information:

• that the foreign private issuer makes or is required to make public pursuant to the foreign private issuer's home country law,
   
• that is filed or required to be filed with a stock exchange and which is made public by the stock exchange, or
   
• that is distributed or is required to be distributed to its security holders.

The information that is required to be furnished under Form 6-K is that information which is material with respect to an issuer and its subsidiaries. The form contains an illustrative list of matters that may be considered material. This list generally tracks the general subject matters that are contained in current Forms 8-K and 10-Q. We are not proposing to amend Form 6-K to require the disclosure of any specific information or to change the illustrative list of items.

• We solicit comment as to whether we should amend Form 6-K to require disclosure of specific information.
   
• Is there some information (such as, for example, a change of auditors or the filing of a bankruptcy petition) that, because of its high level of importance, should be required to be the subject of a filing on Form 6-K even if such disclosure is not required under the foreign private issuer's home country law or stock exchange rules?
   
• Would this type of mandatory requirement impose undue burdens on foreign companies that have chosen to register their securities in the United States?
   
• Should we amend Form 6-K so that the list of illustrative matters which may be the subject of disclosure tracks the items proposed to be included in Form 8-K?
   
• Would this change provide better guidance to foreign private issuers on what information they should furnish under Form 6-K?

B. Shortened Filing Deadline For Form 8-K

The proposed amendments would require domestic issuers that are subject to the reporting requirements of Section 13(a) and Section 15(d) of the Exchange Act to file required current reports on Form 8-K within two business days of a triggering event.⁹⁴ These amendments would not affect the filing deadline for disclosures under Regulation FD, voluntary disclosures or the proposed deadlines under recently proposed Item 10 of Form 8-K.⁹⁵ This would shorten significantly the deadlines of five business days or 15 calendar days, depending on the nature of the event currently requiring a Form 8-K filing. Disclosure of all of the proposed new items also would have to be made within the two business day timeframe. We are proposing such changes given the significance of "real time" disclosure of these events to participants in the secondary markets.

In 1998, we solicited comment on shortening the Form 8-K deadline to five business days for most items and one business day for several key items.⁹⁶ As noted earlier, a number of commenters, including investor groups, issuers and law firms, indicated that two days may be workable at least for some items. A relatively equal number of commenters indicated that two business days would be insufficient. The proposals for which we sought comment were not exactly the same as those proposed in this release. Therefore, for many commenters, it is not possible to infer how they would have responded to a proposal of two business days for all items.

Questions regarding proposed shortening of filing deadline

• We seek comment on the proposed two business day deadline. Is this shortened deadline reasonable? Can companies compile the required information and file a Form 8-K with regard to these items within the proposed timeframe?
   
• Should the deadline be longer or shorter for any or all of the existing and proposed disclosure items? Should the deadline be the same business day as the event or one business day after the event for some or all of the items? Should the deadline be longer, such as three or five business days after the event for some or all of the items? Which Form 8-K items should have a longer or shorter deadline? Why should those items have such deadlines?
   
• Are there particular existing or proposed Form 8-K items that are more significant than others so as to warrant a same day filing requirement? If so, which items?
   
• Would companies incur added costs as a result of the shorter time periods? If so, what types of costs would they incur?
   
• Would the quality of Form 8-K disclosure be negatively affected as a result of the shorter time period for preparing these filings?
   
• Should we use business or calendar days as a measure?
   
• We always are concerned about the effect that our rules have on small business issuers.⁹⁷ Would compliance with the two business day deadline be significantly more difficult for small business issuers? Why?
   
• Should the deadline for small business issuers be longer? If so, what should the deadline be? Would varying the deadlines for different issuers be confusing to the public?
   
• Should we exempt small business issuers from some or all of the proposed Form 8-K disclosure requirements?

C. Reorganization of Form 8-K Items

Due to the limited number of disclosure items in existing Form 8-K and the discrete nature of those items, to date, there has been no compelling need to organize them in any particular fashion. Because we propose to add a significant number of new items to the form, it seems appropriate to organize them into logical categories. Therefore, we propose to number and arrange the items under the following section headings:

We propose to renumber the items in a way that avoids re-use of former item numbers to avoid confusion about the subject of particular item numbers. Rather than solely a single digit item number, each Form 8-K item will be designated a three digit number containing a decimal point. For example, under the proposed system, an acquisition or disposition of assets, currently Item 2, would become proposed Item 2.01. Therefore, anyone searching for such filings made before and after the change would search for Item 2 and Item 2.01. The designation "Item 2" would not be reassigned to a new item to avoid confusion.

Questions regarding proposed reorganization of Form 8-K items

• Should we reorganize the Form 8-K items in this way? Is there a better way to reorganize the Form 8-K items?
   
• Is it preferable not to change the numbering and order of the existing Form 8-K items and to simply designate each of the proposed new disclosure requirements as a separate Form 8-K item without grouping them into disclosure categories?
   
• Would such rearrangement and the corresponding re-numbering of items be confusing to investors who research these reports? If so, what would be a viable alternative for designating the items?
   
• On April 12, 2002, we proposed to add a new item to Form 8-K that would require disclosure by a company of transactions by its officers and directors in the company's securities.⁹⁹ We expect a substantial number of filings as a result of that proposed item on Form 8-K. Should we create a separate form to disclose those transactions?

D. Liability Issues and the Proposed Safe Harbors

Under the proposals, information on Form 8-K would continue to be considered "filed" under Section 18 of the Exchange Act, except for information provided pursuant to Regulation FD under proposed Item 6.01 (currently Item 9), which is not deemed "filed" for purposes of Section 18. We believe that because most of the disclosures in the proposed new items relate to specific events that have occurred, providing that the information not be "filed" would be inappropriate. The efficiency of the securities markets relies not only on the amount and timeliness of information, but also on the quality of that information. Form 8-K items, other than the Regulation FD requirement, historically have been subject to liability under all relevant sections of the Exchange Act. By subjecting Form 8-K disclosure to the appropriate level of liability, we ensure that our rules promote the dissemination of high-quality, balanced disclosure. We do not believe that quality should be sacrificed for the sake of speed. We note, however, that to the extent that companies provide forward-looking statements, safe harbors may be available under the Exchange Act¹⁰⁰ and the Commission's rules.¹⁰¹

Similarly, we do not intend for these proposals, if adopted, to affect existing law regarding a determination of the materiality of information for purposes of other provisions of the securities laws, including Rule 10b-5 under the Exchange Act. The courts and the Commission have developed an extensive body of law concerning materiality standards,¹⁰² and these proposed amendments are not intended to change any aspect of that body of law.

To accommodate companies that do not file a report in a timely manner despite making a good faith effort to file such reports, we are proposing to create a safe harbor. The proposal would add a new paragraph to each of Rule 13a-11¹⁰³ and Rule 15d-11¹⁰⁴ under the Exchange Act. The proposed new paragraphs would provide a safe harbor for a company that fails to file a required Form 8-K in a timely manner if the company satisfies all of the safe harbor's conditions. Under the proposed safe harbor, a company would not be liable under Sections 13 and 15(d) of the Exchange Act for such a failure to file if:

• On the Form 8-K due date, the company maintained sufficient procedures to provide reasonable assurances that the company is able to collect, process and disclose, within the specified time period the information required to be disclosed by Form 8-K; ¹⁰⁵ and
   
• No officer, employee or agent of the company knew, or was reckless in not knowing, that a report on Form 8-K was required to be filed and once an executive officer of the company became aware of its failure to file a required Form 8-K, the company promptly (and not later than two business days after becoming aware of its failure to file) filed a Form 8-K with the Commission containing the required information and stating the date, or approximate date, on which the report should have been filed.

A company that complies with these requirements would not be liable for a violation of Section 13(a) or 15(d). This safe harbor, however, would not provide protection for violations of other provisions of the securities laws. Accordingly, the obligation to disclose information on Form 8-K would not be affected by the safe harbor and thus would continue to exist for purposes of determining liability under Section 10 and Rule 10b-5 under the Exchange Act and Sections 11, 12 and 17 of the Securities Act. In addition, this safe harbor would not apply to a company's eligibility to use short form registration statements.¹⁰⁶

Although compliance with the safe harbor would shield the company from liability under Section 13 and 15(d) for a late Form 8-K filing, that filing would not be considered timely unless filed within the time period required by Form 8-K. A company that fails to file a Form 8-K in a timely manner would not be eligible to use short form registration statements. In addition, a company could not use Form S-8 and its security holders could not rely on Rule 144 unless the company was current in its Exchange Act filings, including Form 8-K. As discussed later in this release, proposed amendments to Rule 12b-25 would afford relief with regard to the timeliness of filings and short form eligibility.

Questions regarding the proposed safe harbor

• Are the requirements of the proposed safe harbor appropriate?
   
• Should there be additional conditions to the safe harbor that would encourage good faith compliance with the disclosure requirements? Are any of the conditions in the proposed safe harbor unnecessary?
   
• Is our recommendation regarding creation of a committee to ensure that the company maintains adequate disclosure procedures appropriate? Is the suggested composition of the committee appropriate? Are there better ways to ensure maintenance of adequate disclosure procedures?
   
• Is it appropriate to condition the availability of the safe harbor on no officer, employee or agent knowing or being reckless in not knowing that a report on Form 8-K is required? Should the safe harbor instead be based on a negligence standard?
   
• Should we subject all of the new Form 8-K disclosure requirements to all liability provisions? Conversely, should we extend the safe harbor to any other liability provisions, such as Rule 10b-5 under the Exchange Act or Section 11 of the Securities Act? What would the consequences be for the quality of disclosure if we expanded the safe harbor to provide more protection from liability?
   
• Should we permit companies to furnish, rather than file, Form 8-K for purposes of Section 18 of the Exchange Act? Are there particular items that should be furnished rather than filed?
   
• Should a company's short form eligibility continue to be conditioned on the company's timely filing of Form 8-K? Similarly, should we continue to condition a company's Form S-8 eligibility and resales of the company's securities under Rule 144 of the Securities Act on the currency of Exchange Act filings, including Form 8-K filings? Should companies have to file all required Forms 8-K, even if late, to effect a shelf takedown?

E. Amendments to Rule 12b-25 and Form 12b-25 Regarding Late Filing

We also propose amendments to Rule 12b-25¹⁰⁷ and Form 12b-25¹⁰⁸ to require a company to file a Form 12b-25 if the company will not be able to file a current report on Form 8-K in a timely manner. Currently, there is no means by which a company can file a Form 8-K late without affecting its eligibility to use short form registration statements. Under the proposal, a company would have to file the Form 12b-25 one business day after the Form 8-K is due and file the Form 8-K within two business days after the original due date. If the company makes the appropriate representations that it was not able to file in a timely manner without unreasonable effort or expense, then the report would be deemed to be filed on the prescribed due date. A company that provides proper notice on Form 12b-25 would not lose its eligibility to use short form registration statements as the result of its inability to timely file a Form 8-K unless the company fails to file within the extended period permitted by Rule 12b-25.

Questions regarding proposed amendments to Rule 12b-25 and Form 12b-25

• Should we require companies to file a Form 12b-25 whenever they are unable to timely file a Form 8-K? Is this provision practical in light of the short timeframes involved? Instead of requiring companies to file a Form 12b-25 whenever they are unable to timely file a Form 8-K, should we permit companies to file the Form 12b-25 only when they need a two business day filing extension and reasonably expect that they will be able to file within the extended period?
   
• Should companies have to disclose in Form 12b-25 the reasons for their inability to timely file a Form 8-K?
   
• This amendment would effectively double the Form 8-K filing deadline to four business days. Should the extension period be longer or shorter than two business days? If so, what would an appropriate timeframe be?
   
• Should the proposed availability of Form 12b-25 apply with respect to Item 10 of Form 8-K that we proposed separately regarding disclosure of transactions by a company's officers and directors in the company's securities?¹⁰⁹
   
• In light of our intent to make the required disclosures available to the public in a timely manner, should we provide such an extension at all?

F. Conforming Amendments

1. Amendments to Item 601 of Regulation S-B and Item 601 of Regulation S-K

In connection with the proposed new Form 8-K disclosure items, we would require companies to file some documents as exhibits that previously have not been required to be filed under Item 601 of either Regulation S-B or Regulation S-K. Therefore, we propose to add entries describing these exhibits to the Item 601 exhibit table. These new exhibit entries would include: "letters on departure of principal officers," "notice of delisting or failure to satisfy listing standards," and "notice from auditor regarding validity of audit or consent." We also would amend the existing entry captioned, "letters on departure of director" to incorporate the changes proposed in this release.

We also propose amendments to Item 601 to footnote the "8-K" column in the Exhibit Table to clarify that a company need only file the exhibits marked in the "8-K" column of the table that are relevant to a particular report on Form 8-K. If a company previously has submitted an exhibit with another filing, it may incorporate that exhibit by reference into the Form 8-K report.

Finally, we propose to make a corrective amendment to eliminate the reference in Item 601 to submission of Financial Data Schedules.¹¹⁰ We eliminated the requirement to file a Financial Data Schedule on May 30, 2000.¹¹¹

2. Elimination of Items in Forms 10-Q, 10-QSB, 10-K and 10-KSB

We propose to eliminate several items in Forms 10-Q, 10-QSB, 10-K and 10-KSB. The disclosures called for in these items no longer would be required in quarterly and annual reports because they already would have been more promptly reported on Form 8-K. We propose to eliminate the following items in Part II of Forms 10-Q and 10-QSB:

(a) paragraphs (a) through (c) of Item 2, Changes in Securities and Use of Proceeds;

(b) Item 3, Defaults upon Senior Securities;

(c) Item 5, Other Information; and

(d) paragraph (b) of Item 6, Exhibits and Reports on Form 8-K

We are also proposing to make the following changes to Form 10-K:

(a) revise paragraph (a) of Item 5, Market for Registrant's Common Equity and Related Stockholder Matters;

(b) delete Item 9, Changes in and Disagreements With Accountants on Accounting and Financial Disclosure; and

(c) delete paragraph (b) of Item 14, Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

We propose to make the following changes to Form 10-KSB:

(a) revise paragraph (a) of Item 5, Market for Registrant's Common Equity and Related Stockholder Matters;

(b) delete Item 8, Changes in and Disagreements With Accountants on Accounting and Financial Disclosure; and

(c) delete paragraph (b) of Item 14, Exhibits and Reports on Form 8-K.

Questions regarding the proposed elimination of items from annual and quarterly reports

• Is there any reason to keep any of these items in Forms 10-Q, 10-QSB, 10-K and 10-KSB?
   
  
• Would it be helpful for investors to have companies provide a list of the current reports on Form 8-K that it filed during the reported quarter or fiscal year?

3. Other proposed conforming amendments.

We also propose amendments to Item 10 of Regulation S-B and Regulation S-K. ¹¹² This item currently encourages companies to report material changes in credit ratings on Form 8-K. The proposals would make such disclosure mandatory. Therefore, if we adopt the proposals, this provision no longer would be necessary.

In addition, we propose to amend Item 701 of Regulation S-B and Regulation S-K. ¹¹³ These items currently refer to disclosure of unregistered sales of securities in current reports, as well as annual and quarterly reports. We propose to move this disclosure out of the annual and quarterly reports. If we adopt these proposals, the references to Forms 10-QSB, 10-Q, 10-KSB and 10-K in this item no longer would be necessary.

Finally, we propose to amend the note at the end of Rule 15d-10 regarding transition reports.¹¹⁴ The current note refers to Item 8 of Form 8-K. If the proposals are adopted, this item would be re-designated as Item 5.03. Therefore, we propose to conform this reference accordingly.

G. General Request for Comment

We request and encourage any interested person to submit comments regarding:

(1) the proposed changes that are the subject of this release,

(2) additional or different changes, or

(3) other matters that may have an effect on the proposals contained in this release.

We request comment from the point of view of registrants, investors and other users of information about the resale of restricted securities and securities owned by affiliates of the issuer. With regard to any comments, we note that such comments are of greatest assistance to our rulemaking initiative if accompanied by supporting data and analysis of the issues addressed in those comments.

III. Paperwork Reduction Act

Exchange Act Form 8-K, Form 12b-25, Form 10-K, Form 10-KSB, Form 10-Q, Form 10-QSB and Regulations S-K and Regulation S-B contain "collection of information" requirements within the meaning of the Paperwork Reduction Act of 1995.¹¹⁵ We are submitting a request for approval of the proposed revisions to these requirements to the Office of Management and Budget ("OMB") for review in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number.

Form 8-K.

Form 8-K (OMB Control No. 3235-0060) prescribes information, such as material events or corporate changes, that a registrant must disclose. Form 8-K also may be used, at a registrant's option, to report any events that the registrant deems to be of importance to shareholders. Companies also may use the form to disclose the nonpublic information required to be disclosed by Regulation FD.¹¹⁶

We currently estimate that Form 8-K results in a total annual compliance burden of 528,300 hours and an annual cost of $71,477,000. We estimate the number of Form 8-K filers to be 13,200, based on the actual number of Form 10-K and 10-KSB filers during the 2001 fiscal year. For purposes of this analysis, we estimate that the number of reports on Form 8-K filed is 250,600.¹¹⁷ We estimate that each entity spends, on average, approximately 5 hours completing the form. We estimate that 75% of the burden is prepared by the company and that 25% of the burden is prepared by outside counsel retained by the company at an average cost of $300 per hour. The staff estimated the average number of hours each entity spends completing the form, and the average hourly rate for outside securities counsel, by contacting a number of law firms and other persons regularly involved in completing the forms.

Under the proposals, 11 new disclosure items would be added to Form 8-K, two disclosure items would be moved from annual and quarterly reports to Form 8-K, two existing disclosure items would be substantially expanded, and all Form 8-K reports would be due no later than the second business day following the occurrence of events requiring disclosure. We believe that the proposed revisions are necessary to provide "real time" disclosure of significant corporate events to participants in the secondary trading markets and to bolster investor confidence in the securities markets.

We estimate that, on average, completing and filing a Form 8-K if the proposed new disclosure items are adopted would require the same amount of time currently spent by entities completing the form-approximately 5 hours. To determine the expected increase in the number of current reports on Form 8-K if the proposals are adopted, we reviewed two of the new proposed items: (1) unregistered sales of equity securities and (2) movement or delisting of a company's securities. These were the only two proposed items for which we were able to obtain reliable data regarding both the number of events reported on Form 8-K as well as the number of events that actually occurred.

First, we obtained a sample of 85 unregistered sales of equity securities by publicly traded companies. Fifty-three, or 62%, of these were reported voluntarily on Form 8-K. Next, we obtained a sample of 333 companies that changed their primary trading markets or were delisted from an exchange or quotation system.¹¹⁸ Ninety, or 27%, of these reported the event voluntarily on Form 8-K.

Then, we examined the extent to which the proposed events already are being filed under Item 5 of Form 8-K. In fiscal year 2001, companies filed 22,332 current reports on Form 8-K under Item 5, Other Events. We surveyed 220 of these reports and determined that 96 of them, or 43.6%, would be required, rather than voluntary, disclosures if the proposals are adopted. Based on this survey, we estimate that 43.6%, or 9737, of the voluntary Form 8-Ks filed in 2001 would become mandatory filings under the proposals.

Using the percentages of voluntarily reported unregistered sales of equity securities and movements or delisting from exchanges and quotation systems, we assume that between 27% and 62% of events covered by the proposed disclosure items already are being voluntarily disclosed.

To obtain the total expected increase in filings, we first divide the number of reports on Form 8-K currently being filed voluntarily that would be required reporting events under our proposal by the rate at which companies currently are reporting these events on a voluntary basis.

Based on unregistered sales: 9,737 / 0.62 = 15,705

Based on movements/delistings: 9,737 / 0.27 = 36,063

We then subtract the number of events under the proposal that currently are being reported voluntarily from the total number filings expected to be required under the proposal.

Based on unregistered sales: 15,705 - 9,737 = 5,968

Based on movements/delistings: 36,063 - 9,737 = 26,326

This is the number of additional filings that we expect as a result of the proposed items. Choosing the higher estimate of roughly 26,400 additional filings per year, we estimate that, on average, we expect a company to file two additional reports on Form 8-K per year. Based on 26,400 additional filings per year, we estimate that the total number of annual Form 8-K filings would be 277,000. The additional filings would result in an added annual burden of 99,000 hours (26,400 x 5 x .75 =99,000) and a total annual burden of 627,300 hours (528,300 + 99,000 = 627,300). We estimate that, if the proposals are adopted, the additional filings would result in an added annual cost of $9,900,000 (26,400 x 5 x .25 x $300 = $9,90