Kirkland Alert

SEC Amends Selected & Supplementary Financial and MD&A Disclosure Rules and Adopts New and Amended Rules on Electronic Signatures

Selected & Supplementary Financials and MD&A

On November 19, 2020, the US Securities and Exchange Commission (SEC) issued a final rule release amending its rules on Selected & Supplementary Financials and Management’s Discussion & Analysis (MD&A) disclosure required in 10-Ks and registration statements. The amendments are intended to ease disclosure burdens, including by eliminating entirely selected financials and the contractual obligations table.  

The amendments are part of a greater effort to simplify disclosure and modernize the disclosure regime in light of technological developments. They signal a move towards a principles-based regime (including a newly stated overarching objective of MD&A), an increased focus on materiality, and codify existing guidance.  

Parallel amendments were adopted for 20-Fs (foreign private issuers) and 40-Fs (Canadian companies), and Smaller Reporting Companies.

The rule amendments will become effective 30 days after publication in the Federal Register, which is expected shortly, but compliance with the amended rules won’t be required until a company’s first fiscal year ending on or after the date that is 210 days after publication in the Federal Register. For calendar-year companies, that will mean mandatory compliance will begin with their Form 10-K for the 2021 fiscal year that is filed in 2022

For registration statements, companies will be required to apply the amended rules if the registration statement on its initial filing date is required to contain financial statements for a period on or after the mandatory compliance date.  For calendar-year companies, that will mean mandatory compliance for filings including financials for the fiscal year ended December 31, 2021.

Once effective, early application of the amended rules is permitted so long as companies provide disclosure responsive to an amended item in its entirety.

Electronic Signatures

On November 17, 2020, the SEC issued a final rule release adopting new and amended rules on electronic signatures of SEC filings, following the temporary relief the SEC had provided earlier in 2020 in response to the COVID-19 pandemic.

The electronic signature rules amendments will become effective upon publication in the Federal Register, which is expected shortly.

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