SEC Adopts Amendments to Modernize Share Repurchase Disclosure

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The SEC today adopted amendments to modernize the disclosure requirements relating to repurchases of an issuer’s equity securities, including:

  • requiring issuers to provide daily repurchase activity on a quarterly or semi-annual basis, depending on the type of issuer (note the proposed rules would have required next day disclosure so the final rules provide significantly more time for reporting the data). The required disclosures include, for each day on which a repurchase was conducted, the number of shares repurchased that day (including whether they were intended to qualify for the safe harbor in Rule 10b-18) and the average price paid, among other things. The information will be filed, as the case may be (1) as an exhibit to Forms 10-Q and 10-K for domestic issuers, (2) in annual and semi-annual reports on Form N-CSR for listed closed-end funds and (3) quarterly on a new Form F-SR for foreign private issuers due within 45 days after each quarter end. The new disclosures will replace existing requirements regarding monthly repurchase data in Regulation S-K, Form 20-F and Form N-CSR.
  • issuers will be required to include a checkbox indicating whether certain officers and directors traded in the relevant securities in the four business days before or after the announcement of the repurchase plan or program.
  • the amendments will revise and expand narrative repurchase disclosure requirements to require that an issuer disclose: (1) the objectives or rationales for its share repurchases and the process or criteria used to determine the amount of repurchases; and (2) any policies and procedures relating to purchases and sales of the issuer’s securities during a repurchase program by its officers and directors, including any restriction on such transactions.
  • the amendments will add a new item 408(d) to Regulation S-K to require quarterly disclosure in periodic reports on Forms 10-Q and 10-K about an issuer’s adoption and termination of Rule 10b5-1 trading arrangements.

Foreign private issuers will disclose the quantitative data in new Form F-SR beginning with the Form F-SR that covers the first full fiscal quarter that begins on or after April 1, 2024, and provide the narrative disclosure starting in the first Form 20-F filed after their first Form F-SR has been filed. Registered closed-end management investment companies that are exchange traded will disclose the quantitative data and provide the narrative disclosure on Form N-CSR beginning with the Form N-CSR that covers the first six-month period that begins on or after January 1, 2024. All other issuers will be required to include the quantitative data as an exhibit to their Forms 10-Q and 10-K  and provide the narrative disclosure in their Forms 10-Q and 10-K beginning with the first filing that covers the first full fiscal quarter that begins on or after October 1, 2023.

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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