The Securities and Exchange Commission (SEC) announced today that it has issued an order postponing the effective date of its Share Repurchase Disclosure Modernization rule and, as a result, the rule is stayed pending further SEC action.

This announcement follows a decision by the U.S. Court of Appeals for the Fifth Circuit on October 31, 2023, in response to a petition for review filed by the U.S. Chamber of Commerce.^[1] The court found that the SEC had failed to respond to petitioners’ comments and failed to conduct a proper cost-benefit analysis with respect to the Share Repurchase Disclosure Modernization rule in violation of federal law. As a result, the court granted the petition for review and directed the SEC to correct the defects in the rule by November 30, 2023.

As discussed in our prior publication describing the Share Repurchase Disclosure Modernization rule, domestic companies were required to begin reporting share repurchase activity and making other required disclosures in their Annual Report on Form 10-K or Quarterly Report on Form 10-Q that covers the first full fiscal quarter beginning on or after October 1, 2023, which, for calendar year companies, would have been included as part of their Form 10-K filed in early 2024, while foreign private issuers were required to begin reporting repurchase activity for the first full fiscal quarter beginning on or after April 1, 2024 on Form F-SR and include narrative disclosures in their Annual Report on Form 20-F thereafter. Given the timing of the court’s decision and the SEC’s order, we expect that, if the resolution of the judicial process results in the Share Repurchase Disclosure Modernization rule remaining in place, these compliance dates will be delayed.

Footnotes

[1] Chamber of Com. of the USA v. SEC, No. 23-60255 (5th Cir.)