SEC Adopts Amendments to MD&A

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The Securities and Exchange Commission continues to move forward with its rulemaking agenda. Yesterday, the SEC announced that it voted to adopt amendments to the MD&A disclosure requirements.  These had been proposed at the beginning of the year.  The amendments are part of the SEC’s continuing disclosure effectiveness initiative and are intended to modernize and simplify the disclosure requirements while increasing the utility of disclosures for investors.  In its fact sheet, the SEC highlights key changes to Items 301, 302, and 303 of Regulation S-K.  Among other things, the amendments eliminate the requirement for Selected Financial Data, simplify the requirements for Supplementary Financial Information (Item 302), make changes to the requirements relating to liquidity and capital resources, eliminate the requirement for a separate off-balance sheet arrangements discussion, eliminate the requirement for the tabular contractual obligations disclosure, and provide registrants with more flexibility with respect to the presentation of results of operations for interim periods.

Amendments also were adopted to make parallel changes to the Form 20-F and Form 40-F disclosure requirements.  The amendments will become effective 30 days after they are published in the Federal Register. Registrants are required to comply with the rule beginning with the first fiscal year ending on or after the date that is 210 days after publication in the Federal Register (the “mandatory compliance date”).  Registrants will be required to apply the amended rules in a registration statement and prospectus that on its initial filing date is required to contain financial statements for a period on or after the mandatory compliance date. Although registrants will not be required to apply the amended rules until their mandatory compliance date, they may comply with the final amendments any time after the effective date, so long as they provide disclosure responsive to an amended item in its entirety.

A client alert will follow.  See the press release and fact sheet here, and the adopting release here.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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