SEC Proposes to Revise Share Repurchase Disclosures

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The SEC has proposed amendments to disclosure requirements regarding repurchases of an issuer’s equity securities that are registered under Section 12 of the Securities Exchange Act of 1934. Specifically, the proposed amendments would require an issuer to provide more timely disclosure on a new Form SR regarding purchases of its equity securities for each day that it, or an affiliated purchaser, makes a share repurchase.

Proposed Form SR

The SEC is proposing new Exchange Act Rule 13a-21 and Form SR that would require an issuer, including a foreign private issuer, to report any purchase made by or on behalf of the issuer or any affiliated purchaser of shares or other units of any class of the issuer’s equity securities that is registered by the issuer pursuant to Exchange Act Section 12. The issuer would have to furnish a new Form SR before the end of the first business day following the day on which the issuer executes a share repurchase.

The Form SR would require the following disclosure in tabular format, by date, for each class or series of securities:

  • Identification of the class of securities purchased;
  • The total number of shares (or units) purchased, including all issuer repurchases whether or not made pursuant to publicly announced plans or programs;
  • The average price paid per share (or unit);
  • The aggregate total number of shares (or units) purchased on the open market;
  • The aggregate total number of shares (or units) purchased in reliance on the safe harbor in 17 CFR 240.10b-18 (“Rule 10b-18”); and
  • The aggregate total number of shares (or units) purchased pursuant to a plan that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c).

Proposed Revisions to Item 703 and Form 20-F

The SEC is proposing to revise Item 703, with corresponding changes to Form 20-F, to require additional disclosure about an issuer’s share repurchases. Specifically, the SEC proposes to require an issuer to disclose:

  • The objective or rationale for its share repurchases and process or criteria used to determine the amount of repurchases;
  • Any policies and procedures relating to purchases and sales of the issuer’s securities by its officers and directors during a repurchase program, including any restriction on such transactions;
  • Whether it made its repurchases pursuant to a plan that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), and if so, the date that the plan was adopted or terminated; and
  • Whether purchases were made in reliance on the Rule 10b-18 non-exclusive safe harbor.

The SEC is additionally proposing to require that issuers disclose if any of their officers or directors subject to the reporting requirements under Section 16(a) of the Exchange Act purchased or sold shares or other units of the class of the issuer’s equity securities that is the subject of an issuer share repurchase plan or program within 10 business days before or after the announcement of an issuer purchase plan or program by checking a box before the tabular disclosure of issuer purchases of equity securities.

Structured Data Requirement

The SEC is proposing to require issuers to tag information disclosed pursuant to Item 703 of Regulation S-K, Item 16E of Form 20-F, and Form SR in a structured, machine-readable data language. Specifically, the SEC is proposing to require issuers to tag the disclosures in Inline XBRL in accordance with Rule 405 of Regulation S-T and the EDGAR Filer Manual. The proposed requirements would include detail tagging of quantitative amounts disclosed within the tabular disclosures in each of the aforementioned forms, as well as block text tagging and detail tagging of narrative and quantitative information disclosed in the footnotes to the tables required by Item 703 of Regulation S-K and Item 16E of Form 20-F.

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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