On August 1, 2022, the SEC’s structured data reporting rules governing business development companies will become effective. These rules, which were originally adopted in April 2020, require BDCs to tag certain submissions using Inline eXtensible Business Reporting Language (Inline XBRL). This process involves embedding XBRL data directly into a filing, ensuring that the document is both machine and human-readable. The rules direct BDCs to tag certain prospectus items using Inline XBRL. BDCs will also be expected to submit financial statement information using Inline XBRL format, which will impact upcoming 10-Q filings.1
Additionally, on June 3, 2022, the US Securities and Exchange Commission (SEC) announced that it unanimously adopted amendments that will require certain documents to be filed electronically. The amendments also expand the scope of documents that must be tagged using Inline XBRL to include financial statements filed pursuant to Form 11-K.2
The changes will apply to issuers of securities, affiliates of issuers of securities, and national securities exchanges. While the amendments will become effective on July 11, 2022, the SEC has adopted differing transition periods for the various amendments to allow companies adequate time to comply with the new requirements such as applying for and obtaining EDGAR filer codes. However, filers that have already been filing electronically will be expected to use the EDGAR format as soon as the amendments go into effect.
The amendments require the electronic submission of certain documents that could previously be submitted either electronically or in paper format:3
- Documents under Rule 101(b) of Regulation S-T, including:
- Form 6-K, filed by foreign private issuers;
- Form 11-K, annual reports detailing employee stock purchase, savings, and similar plans;
- Form 144, filed to notify the SEC of the sale of restricted securities;
- “glossy” annual reports, provided to shareholders;
- notices of exempt solicitations and exempt preliminary roll-up communications; and
- reports filed by Multilateral Development Banks
- certifications made pursuant to Section 12(d) of the Securities Exchange Act of 1934 (Exchange Act), confirming that a security has been approved by an exchange for listing and registration; and
- certain foreign language documents.
These changes are unlikely to cause a major shift in how most of the covered documents are currently filed, with the exception of “glossy” annual reports and Form 144.
The amendments impose a new filing requirement by directing issuers to file their “glossy” annual reports with the SEC via EDGAR. In the past, issuers were not required to file these reports, but must now ensure that the “glossy” reports are in PDF format so that they can be submitted via EDGAR.
The amendments will also significantly impact Form 144 filings, which are typically filed on paper or as a PDF via email. The SEC plans to facilitate the electronic submission of Form 144 by creating an online, fillable version of the document. The compliance date for Form 144 notices will start six months after the SEC adopts changes to the EDGAR Filer Manual that are necessary to update Form 144 for electronic filing. The SEC has indicated that it expects to consider adoption of the updated version of the manual in September 2022.
In addition to the changes requiring electronic filing of certain additional documents, the amendments also require expanded use of Inline eXtensible Business Reporting Language (Inline XBRL). Issuers will need to use Inline XBRL formatting when filing the financial statements required by Form 11-K, including any accompanying schedules to the financial statements. This tagging rule will mirror the existing requirements for financial information contained in annual reports on Forms 10-K, 20-F, and 40-F. Form 11-K filers will have three years after the effective date due to the technical requirements imposed by the Inline XBRL reporting rules.
1For more detailed guidance on the structured data requirements applicable to BDCs, please see the legal alert attached here.
287 Fed. Reg. 35393 (published June 10, 2022). See Federal Register: Updating EDGAR Filing Requirements and Form 144 Filings.
3See FACT SHEET: Amendments to Electronic Filing Requirements.