With proxy and reporting season preparations in full swing, demands on time are high and resources might be limited, so we focus our reminders on new and changed disclosure items that might otherwise be easy to overlook.
10-K Cover Page Changes and Inline XBRL
Recent SEC rulemaking has resulted in the following changes to the Form 10-K cover page:
|Delinquent Section 16 Reports||The cover page no longer includes the checkbox indicating that late Section 16 filing disclosure will be included in the Form 10-K or proxy statement.|
|Trading Symbol||As has already been the case with Forms 10-Q and 8-K, the cover page must include (i) the ticker symbol for securities registered pursuant to Section 12(b) of the Exchange Act, (ii) the title of each class of securities, and (iii) the name of each exchange where the securities are registered.|
|Cover Page Tagging Requirements||
All cover page data must be tagged in Inline XBRL, subject to the following compliance schedule:
These tagging requirements and phased compliance dates are also applicable to Forms 10-Q and 8-K.
Companies that use Inline XBRL are subject to updated exhibit index requirements, which require special care, as noted in newly released Compliance and Disclosure Interpretations (C&DIs):
- Registrants subject to Inline XBRL requirements should include an Exhibit 101 to identify the required Interactive Data Files.
- The Interactive Data File that is required because the cover page is tagged should be identified as Exhibit 104 in the exhibit index and should cross-reference the files submitted under Exhibit 101.
- When an interactive data file is submitted using Inline XBRL, the exhibit index should include the word “Inline” in the exhibit’s title description.
Fast Act Changes
During 2019, the SEC adopted a number of rule changes to modernize and simplify disclosure requirements pursuant to the Fixing America’s Surface Transportation Act, or FAST Act.
For Form 10-K reports:
|Management’s Discussion and Analysis of Financial Condition and Results of Operation (MD&A)||
|Description of Property||Regulation S-K Item 202 was amended to clarify that disclosure need only be provided about a physical property to the extent that it is material to the company. In addition, companies may describe their properties on a collective basis when appropriate.|
|Executive Officer Disclosure||Regulation S-K Item 404 requires companies to include certain biographical information about their executive officers. Although Form 10-K permits companies to incorporate this information by reference to their proxy statement, companies can choose to include the disclosure in Part I of Form 10-K. For those companies that include officer biographies in Part I, the required caption now takes a “plain English” approach. The required caption is “Information about our Executive Officers” instead of “Executive officers of the registrant.”|
For proxy statements:
|Section 16 Compliance Disclosure||
Item 405 of Regulation S-K was amended to:
A new instruction to Item 405 encourages companies to omit the “Delinquent Section 16(a) Reports” caption when there are no delinquencies to report.
|Audit Committee Report||Item 407(d)(3)(1)(B) was amended to update the audit committee report reference, from “matters required by AU section 380, Communication with Audit Committees” to refer more broadly to “the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the Commission.”|
Many companies will be required to disclose their hedging policies in proxy statements for the first time in 2020, although emerging growth companies and smaller calendar year reporting companies are not required to include this disclosure until the 2021 proxy statement. Newly adopted Regulation S-K Item 407(i) requires proxy statement disclosure of a company’s practices or policies regarding the ability of its employees (including its officers) and directors to engage in certain hedging transactions in the company’s equity securities, including a description of the practices or policies and the categories of persons covered. If a company does not maintain a hedging policy, the company must state that fact or state that hedging transactions by its employees and directors are generally permitted.
*Natalie Kraft, associate in the Corporate and Securities Group, assisted in the preparation of this article.