(Article from Registered Funds Regulatory Update, July 2023
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On May 3, 2023, the SEC adopted amendments to its issuer share repurchase disclosure rules in an effort to modernize and improve disclosure and provide investors with enhanced information to assess the purposes and effects of share repurchases. Both U.S. and foreign reporting companies, as well as registered closed-end management investment companies that are exchange traded (“listed closed-end funds”) and business development companies (listed or non-listed), will now be required to provide more public disclosure regarding their share repurchases.
The new rule requires issuers to file daily quantitative share repurchase data on a quarterly basis (semi-annually for listed closed-end funds). The required disclosures include, for each day on which a repurchase was conducted, the number of shares repurchased that day and the average price paid, among other things. Issuers must also disclose with this quarterly reporting whether any director or officer made trades in the issuer’s shares within four business days before or after the announcement of a new or amended share repurchase plan. The new disclosure requirements may allow the market to estimate the specifics of an issuer’s 10b5-1 repurchase plan, including maximum/minimum purchase prices and quantities on any given day.
The SEC will also now require issuers to disclose narratively in their periodic reports their objectives for share repurchases, criteria for determining repurchase amounts and policies for director and officer trades during a repurchase program.
Finally, domestic issuers will be required to disclose quarterly whether they adopted or terminated any
Rule 10b5-1 repurchase plans.
Domestic corporate issuers, including business development companies, will be required to comply with the new disclosure requirements in their first Form 10-Q or Form 10-K covering the quarter beginning on or after
October 1, 2023.
Listed closed-end funds will be required to comply with the new disclosure requirements in their first Form N-CSR covering the six-month period beginning on or after January 1, 2024.
Share Repurchase Disclosure Modernization, SEC Release No. IC-34906 (May 3, 2023), available at: https://www.sec.gov/rules/final/2023/34-97424.pdf.