On November 22, the Securities and Exchange Commission (SEC) stayed the recently enacted Share Repurchase Disclosure Modernization Rule (Repurchase Disclosure Rule) pursuant to section 705 of the Administrative Procedure Act and the U.S. Court of Appeals for the Firth Circuit’s (Fifth Circuit) October 31, 2023 opinion providing the SEC 30 days to correct defects in the Repurchase Disclosure Rule.  For an overview of the Fifth Circuit’s October 31 opinion, please refer to our earlier blog post: Fifth Circuit Requires SEC to Revisit Share Repurchase Disclosure Rules.

The stay order issued by the SEC delays the effective date of the Repurchase Disclosure Rule pending any further action by the SEC.  In connection with the stay order issued by the SEC, the SEC also filed a motion with the Fifth Circuit requesting an extension of expiration of the Fifth Circuit’s 30-day period granted to remediate the deficiencies identified in the Fifth Circuit’s opinion issued on October 31, 2023, which is scheduled to expire at the end of the day this Thursday, November 30 (the Scheduled Remand Period).

On November 26, the Fifth Circuit denied the SEC’s motion seeking to extend the Scheduled Remand Period.  As such, the future of the Repurchase Disclosure Rule remains highly uncertain, taking into account the limited remaining time that the SEC has to file a response attempting to remedy the defects identified in the earlier Fifth Circuit opinion.  At a minimum, it appears highly unlikely that the Repurchase Disclosure Rule will be in effect for upcoming Form 10-Ks to be filed by calendar-year end filers for the fiscal year ending December 31, 2023 (as had been contemplated by the Repurchase Disclosure Rule, when adopted).  We will provide additional information when it becomes available.