As previously reported, the Securities and Exchange Commission (SEC) adopted amendments earlier this year to modernize existing disclosure requirements relating to companies’ repurchases of their equity securities. For calendar year-end companies, these new disclosures are set to appear in their 2023 Form 10-K (filed in 2024).

While companies have been preparing to comply with the new rules, a lawsuit has been working its way through the U.S. Court of Appeals for the Fifth Circuit. The suit was brought by the U.S. Chamber of Commerce and alleges that the rules violate the Administrative Procedure Act. On October 31, 2023, the Fifth Circuit issued an opinion in which it concluded that the process used by the SEC in adopting the new rules violated the Administrative Procedure Act. Rather than overturning the new rules, the court sent them back to the SEC, which has 30 days to attempt to repair the procedural defects noted by the court.

Public companies should not breathe a sigh of relief just yet. The SEC may successfully address the court’s concerns, in which case the new rules will continue to be effective and companies will be required to include the new disclosures in their 2023 Form 10-K. Companies should continue to prepare to make the required disclosures by tracking daily share repurchase activity throughout the fourth quarter of 2023 and beyond.