FAST Act Modernization and Simplification of Regulation S-K
April 22, 2019
A Small Entity Compliance Guide[*]
On March 20, 2019, the Securities and Exchange Commission voted to adopt amendments to modernize and simplify certain disclosure requirements in Regulation S-K, and related rules and forms, in a manner that reduces the costs and burdens on registrants while continuing to provide all material information to investors. The amendments are also intended to improve the readability and navigability of disclosure documents and discourage repetition and disclosure of immaterial information.
Who is affected by the revised rules?
The amendments affect a variety of entities, including the following:
- domestic and foreign registrants with offerings registered under the Securities Act of 1933 and classes of securities registered under the Securities Exchange Act of 1934;
- issuers regulated under the Investment Company Act of 1940; and
- investment advisers.
What changes were made to the rules?
Among other things, the amendments eliminate duplicative and unnecessary disclosure requirements, as well as clarify and simplify other disclosure requirements. The amendments also incorporate technology to improve access to information by requiring data tagging for items on the cover page of certain filings and the use of hyperlinks for information that is incorporated by reference and available on EDGAR. Specifically:
- Historical Periods in Management’s Discussion and Analysis:
Registrants providing financial statements covering three years in a filing will generally be able to exclude discussion of the earliest of the three years in the Management’s Discussion and Analysis section pursuant to Item 303 of Regulation S-K and Form 20-F, as applicable, if they have already included the discussion in a prior filing.
- Omission of Certain Non-Material Information in Exhibits: Registrants are now able to omit confidential information in material contracts and certain other exhibits pursuant to Items 601(b)(2) and 601(b)(10) of Regulation S-K, Item 1.01 of Form 8-K, Form 20-F, and investment company registration forms, as applicable, without submitting a confidential treatment request to the Commission, so long as the information is (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed. The amendments also make clear that registrants do not need to submit a confidential treatment request in order to exclude personally identifiable information (such as bank account numbers, social security numbers, home addresses, and similar information) from any of their exhibit filings.
- Filing of Material Contracts: Only newly reporting registrants, rather than all registrants, will be required to file material contracts pursuant to Item 601(b)(10) of Regulation S-K or to Form 20-F that were entered within two years of the applicable registration statement or report. (All registrants will continue to be required to file material contracts that have not been fully performed prior to the filing date or, specifically, those contracts that will be performed in whole or in part at or after the filing of the registration statement or report.)
- Attachments to Certain Material Agreements: Under new Item 601(a)(5) of Regulation S-K and in Form 20-F and certain investment company forms, registrants will not be required to file schedules or similar attachments to their exhibit filings if such attachments do not contain material information or were not otherwise disclosed.
- Description of a Registrant’s Securities: Registrants will be required to provide a description of their securities (as described in the requirements of Item 202 of Regulation S-K) as an exhibit to Form 10-K. If a registrant has previously filed such an exhibit and the information remains unchanged, it can incorporate that exhibit by reference and provide a hyperlink to the previously filed exhibit.
- Disclosure of Physical Properties: Registrants will need to provide disclosure under Item 102 of Regulation S-K about a physical property only to the extent that it is material to the registrant.
- Compliance with Exchange Act Section 16(a): Directors, officers, and ten percent shareholders are no longer required to deliver their filed Section 16 reports to registrants. In addition, registrants are permitted, but not required, to rely only on Section 16 reports that have been filed on EDGAR (as well as any written representations from the reporting persons) to assess whether there are any Section 16 delinquencies to disclose.
- Cover Page Disclosure of a Registrant’s Trading Symbol: Registrants will be required to disclose on the cover page of Forms 8-K, 10-Q, 10-K, 20-F and 40-F the national exchange or principal U.S. market for their securities, the trading symbol, and title of each class of securities.
- Hyperlinks to Documents Incorporated by Reference: Registrants will no longer be required to file as an exhibit any document or part of a document that is incorporated by reference in a filing, but instead will be required to hyperlink to information or documents on EDGAR that have been incorporated by reference.
- Data Tagging of Cover Page Information: Registrants will be required to tag all cover page data for Forms 10-K, 10-Q, 8-K, 20-F, and 40-F in Inline eXtensible Business Reporting Language (known as Inline XBRL) format.
- Incorporation by Reference and Cross-Reference of Information in Financial Statements: Registrants will be prohibited from incorporating by reference in their financial statements, or cross-referencing in their financial statements, information outside of the financial statements unless otherwise specifically permitted or required by the Commission’s rules or by U.S. Generally Accepted Accounting Principles or International Financial Reporting Standards as issued by the International Accounting Standards Board, whichever is applicable.
- Exhibit Hyperlinks and HTML Format for Investment Companies: Investment companies will be required to provide hyperlinks to exhibits and other information incorporated by reference, and to file reports on Form N-CSR and registration statements in HyperText Markup Language (HTML) format.
Refer to the release for a complete description of all amendments.
What are the compliance dates of the rules?
The amendments will generally be effective on May 2, 2019, with the following exceptions:
- The amendments relating to the redaction of confidential information in certain exhibits became effective on April 2, 2019.
- The requirements to tag data on the cover pages of certain filings in Inline XBRL are subject to the following three-year phase-in:
Large accelerated filers that prepare their financial statements in accordance with U.S. GAAP
Reports for fiscal periods ending on or after June 15, 2019
Accelerated filers that prepare their financial statements in accordance with U.S. GAAP
Reports for fiscal periods ending on or after June 15, 2020
All other filers
Reports for fiscal periods ending on or after June 15, 2021
- The requirement that certain investment company filings use hyperlinks and be made in HTML will be effective for filings made on or after April 1, 2020.
The adopting release for the new rules can be found on the SEC’s website at https://www.sec.gov/rules/final/2019/33-10618.pdf.
The SEC’s disclosure forms can be accessed on the SEC’s website at https://www.sec.gov/forms.
Contacting the SEC Staff
The SEC’s Division of Corporation Finance is happy to assist small companies and others with questions regarding the amendments. You may contact the Division for this purpose at (202) 551-3400 or at https://www.sec.gov/forms/corp_fin_interpretive.
Questions on other SEC regulatory matters concerning smaller reporting companies may be directed to the Division’s Office of Small Business Policy at (202) 551-3460.
The SEC’s Division of Investment Management’s Chief Counsel’s Office is also available to assist small entities and others with questions regarding the new rules and rule amendments applicable to investment companies. You can contact the Office for this purpose at: 202-551-6825 or IMOCC@sec.gov
[*] This guide, dated as of April 22, 2019, was prepared by the staff of the U.S. Securities and Exchange Commission as a “small entity compliance guide” under Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996, as amended. The guide summarizes and explains rules adopted by the SEC, but is not a substitute for the rule itself. Only the rule itself can provide complete and definitive information regarding its requirements.
 Form 10-Q filers will not become subject to the Inline XBRL requirements with respect to Form 10-K or any other form until after they have been required to comply with the Inline XBRL requirements for their first Form 10-Q for a fiscal period ending on or after the applicable compliance date for the respective category of filers.