SEC Proposes Further Modernization of Regulation S-K
In its newest step towards disclosure modernization, the SEC has proposed amendments to three disclosure areas where it considers the rules to be outdated and/or overly prescriptive. These areas include the description of business, legal proceedings and risk factors. In most respects, the new rules would be more principles-based, giving more flexibility to management to tailor disclosures based on what is material to the business. With respect to legal proceedings disclosure, the SEC has proposed to retain the prescriptive disclosure framework to promote comparability among companies and to make easier to determine when information must be disclosed. The proposed amendments are summarized in this memorandum.