Regulation S-K Concept Release- Today is the continuation in a Lawcast series discussing SEC disclosure requirements. On April 15, 2016, the SEC issued a 341-page concept release and request for public comment on sweeping changes to certain business and financial disclosure requirements in Regulation S-K. The Reg S-K Concept Release is part of the SEC Disclosure Effectiveness Initiative mandated by the JOBS Act. The Reg S-K Concept Release is not a rulemaking release but rather provides an indepth discussion of the history and reasons behind Reg S-K and its various provisions and then seeks public input and comment both in general and on specific matters. The Release also drills down on parts of the 100, 200, 300, 500 and 700 series of Regulation S-K rules and provides suggested changes, again seeking public input and comment. Over the next few Lawcasts, I will discuss the Concept Release.
The fundamental tenet of the federal securities laws is defined by one word: disclosure. In fact, the SEC neither reviews nor opines on the merits of any company or transaction, but only upon the appropriate disclosure, including risks, made by that company.
Regulation S-K, as amended over the years, was adopted as part of a uniform disclosure initiative to provide a single regulatory source related to non-financial statement disclosures and information required to be included in registration statements and reports filed under the Securities Exchange Act of 1934 and the Securities Act of 1933.
A public company with a class of securities registered under either Section 12 or which is subject to Section 15(d) of the Exchange Act must file reports with the SEC. The underlying basis of these Reporting Requirements is to keep shareholders and the markets informed on a regular basis in a transparent manner. Reports filed with the SEC can be viewed by the public on the SEC EDGAR website. The required reports include an annual Form 10-K, quarterly Form 10Q’s and current periodic Form 8-K, as well as proxy reports and certain shareholder and affiliate reporting requirements.
A Section 12 registration statement, including a Form 10 or Form 8-A, may be filed voluntarily or per statutory requirement if the issuer’s securities are held by either (i) 2,000 persons or (ii) 500 persons who are not accredited investors and where the issuer’s total assets exceed $10 million. In addition, companies that file a registration statement under the Securities Act, such as a Form S-1, become subject to Reporting Requirement; however, such obligation becomes voluntary in any fiscal year at the beginning of which the company has fewer than 300 shareholders and less than $10 Million in asset.
A reporting company also has record-keeping requirements, must implement internal accounting controls and is subject to the Sarbanes-Oxley Act of 2002, including the CEO/CFO certification requirements. Under the CEO/CFO certification requirement, the CEO and CFO must personally certify the content of the reports filed with the SEC and the procedures established by the issuer to report disclosures and prepare financial statements.
Laura Anthony, Esq.
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