2020 Proxy Season Hot Topics: Part 1 – Ten Tips For Implementing SEC Rule Changes In Your Upcoming Form 10-K And Proxy Statement

In March 2019, the SEC adopted a collection of amendments to its rules and forms intended to modernize and simplify disclosure requirements applicable to US public companies. For companies preparing their Form 10-K and proxy filings, in this alert we discuss 10 practical tips to keep in mind in light of the new SEC rules and recent guidance.

We invite you to call the authors of this alert or your DLA Piper contact if you have any questions or would like to discuss any of the issues reviewed in the series. In addition, for a more detailed discussion of the new SEC hedging rules and changes to the Form 10-K cover pages and exhibit hyperlinks, please refer to our prior alert, 2019 Proxy Season Hot Topics: Part 3 − SEC hedging rules, auditor report, Form 10-K changes.

10 practical tips

  1. Management's Discussion and Analysis

    Consider omitting a discussion of the earliest of the three years of financial statements from MD&A, assuming the information has already been disclosed in other SEC filings and that an appropriate reference to the prior filings is included in the current-year Form 10-K. As amended, Item 303 of Regulation S-K now permits registrants to exclude the earliest comparative period from their MD&A. For example, a registrant with a December 31 fiscal year-end could include only the comparison of 2019 to 2018 in its 2019 Form 10-K MD&A and omit the comparison of 2018 to 2017.

    As companies consider whether to take advantage of this new reduced disclosure obligation, here are a few items to keep in mind:

    Although not all calendar-year filers have filed their Forms 10-K, many companies have elected to omit discussion of their third year of financial statements. In doing so, many of the companies are still including the third year in their financial tables but not including any narrative disclosure regarding that period. Companies will need to make a determination whether the discussion is material. If a company determines that the discussion is necessary to an understanding of its financial condition, changes in financial condition and results of operations, it should either include the discussion or include an express incorporation by reference of the discussion included in the prior year's Form 10-K. Note that a reference to the prior Form 10-K is not sufficient to incorporate that discussion by reference - the incorporation by reference must be explicit. In the absence of determining that a discussion of the earliest year is...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT