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 "I have directed the staff to develop specific recommendations for
updating the rules that dictate what a company must disclose in its
filings," SEC Chair Mary Jo White said in a statement.
"We will seek input from companies about how we can make our
disclosure rules work better for them and will solicit the views of
investors about what type of information they want and how it can be
best presented."
White announced her plans at the same time that SEC staff on Friday
released a 106-page study that reviewed "Regulation S-K" which are
the rules that set forth disclosure requirements other than
financial statements for companies.
That study was required by the Jumpstart Our Business Startups
(JOBS) Act, a 2012 law that relaxes securities regulations to help
small businesses raise capital and go public.
One major provision of the law, for example, creates a new category
of public company known as an "emerging growth company."
If a company meets the criteria to be an emerging growth company, it
can file draft initial public offering documents with the SEC and
faces less stringent disclosure requirements.
The new study released Friday presents two possible avenues for the
SEC to explore: a broad comprehensive review of disclosures or a
more targeted review looking topic by topic.
If the SEC opts for the broader review, however, the staff said it
would "likely be a longer-term project involving significant staff
resources."
The SEC said that in proceeding with a review, staff should be
mindful about how new changes to disclosure rules would apply to
large companies, as opposed to small companies and emerging growth
companies.
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Among some of the areas the study said should be reviewed include
whether risk-related disclosures such as legal proceedings should
all be consolidated into a single requirement.
Other possible changes could be made to the current requirements for
companies to provide a description of their properties, the SEC
said.
"Information about principal properties, mines and plants was
relevant when all businesses needed a physical presence, but is no
longer as relevant for businesses that do not require physical
locations to operate," the study said.
The study also points to possible updates on corporate governance
disclosures to ensure they are "material to investors" and executive
compensation, an area that the SEC said many experts often complain
is too "lengthy" and "technical."
A copy of the new study can be found here:
http://www.sec.gov/news/studies/2013/
reg-sk-disclosure-requirements-review.pdf.
(Reporting by Sarah N. Lynch)
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