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Opening Statement on Hyperlinks and HTML Adopting Release

Acting Chairman Michael S. Piwowar

March 1, 2017

Next, we will consider and vote on a recommendation from the Division of Corporation Finance to issue an adopting release that will modernize and update our disclosure rules.  Today’s action will bring the Commission further into the 21st Century by harnessing technology to improve the manner in which investors can access public company disclosure.

For any person using the internet, it is nearly unthinkable for a web page to indicate that more information is available and not to include a hyperlink to such information.  But that is precisely how our EDGAR system – designed in the early 1990s with ASCII filings in mind – operates for exhibits accompanying, or incorporated by reference into, registration statements and reports under both the Securities Act of 1933 and the Securities Exchange Act of 1934. 

Last year, the Commission issued a release of the short and sweet variety.  A mere 40 pages, it proposed one thing and one thing only – to require registrants to include hyperlinks to the exhibits in their filings.  Today, we are considering adoption of this simple proposal.  Specifically, the Commission will consider whether to approve rule and form amendments to require registrants that file registration statements or reports subject to the exhibit requirements under Item 601 of Regulation S-K, or that file Forms F-10 or 20-F, to include a hyperlink to each exhibit listed in the exhibit index of these filings.

Because a small number of registrants file their documents in ASCII format – which does not support the use of hyperlinks – the amendments would require registrants to electronically file such registration statements and reports in HTML format.  A review of filings made by registrants during a recent 12-month period indicated that less than 2% of registrants filed their documents in ASCII format.  We will consider delaying the effectiveness of the final rules so that registrants will have ample time to convert to HTML format if necessary.  Since many of the registration statements and reports in ASCII are filed by smaller reporting companies or non-accelerated filers, we will consider an even longer transition period for these registrants.   

The main reason for the hyperlinking requirement is a practical one – it will make it easy for someone trying to find a company’s articles of incorporation, tax opinion, material contract, underwriting agreement or other exhibit.  Currently, an investor or other interested person trying to locate and access an exhibit that the registrant has incorporated by reference from a filing that it may have filed years earlier must check the exhibit index and search through the registrant’s previous filings to find and review the exhibit of interest.  This search process can be cumbersome and time-consuming. 

Adoption of the exhibit hyperlinks requirement solves this problem.  The new requirement will mean that exhibits are always just one click away no matter which registration statement or report they were filed with or how long ago the filing was made.

This modest hyperlinking requirement is a commonsense improvement that will improve investors’ access to information.  And that’s a key part of what our effort to make disclosure more useful is all about.

Before I turn the proceedings over to the staff to discuss the Division’s recommendation, I would like to thank the staff for their work on this release.  Specifically, I would like to thank the Shelley Parratt, Betsy Murphy, Felicia Kung, Sean Harrison, Raquel Fox, Jim Budge, Kathy Hsu, Rolaine Bancroft, Vik Sheth, Bob Trakas and Sylvia Pilkerton in the Division of Corporation Finance; Bryant Morris and Luna Bloom in the Office of the General Counsel; and Scott Bauguess, Hari Phatak, Tanakorn Makaew, Julie Marlowe, Sze Wing Wang and Tristan Chiappetti in the Division of Economic and Risk Analysis.

I also would like to thank Commissioner Stein and our counsels for their careful review and comment on this release.

Now, I will turn the meeting over to Betsy Murphy, Associate Director in the Division of Corporation Finance, for the staff’s recommendation.