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Looking ahead to expanded share repurchase disclosure
SEC Update
13 June 2023
In May the SEC adopted rule amendments that require reporting companies to disclose in their periodic reports more detailed information about their repurchases of equity securities registered under Section 12 of the Exchange Act. The SEC expects that the additional disclosures will provide investors with “clearer insights” into why and how issuers undertake share repurchases. The disclosures will draw increased investor scrutiny of repurchase programs as well as stock sales by officers and directors during a repurchase program.
The share repurchase disclosure requirements apply to all corporate issuers, including foreign private issuers, with a registered class of equity securities. The amended rules require issuers to disclose each quarter, in a tabular format, quantitative data regarding repurchases during the quarter, aggregated on a daily basis. The new disclosure will replace the current quarterly reporting of aggregated monthly repurchase data.
The amendments further require issuers to provide narrative disclosures about the purpose and operation of their repurchase plans or programs in relation to buyback activity disclosed in the table. As part of this information, the issuer must disclose whether any of its directors or senior officers purchased or sold any of the issuer’s registered equity securities within four business days before or after the public announcement of the adoption of a repurchase plan or program. Domestic issuers also are required to report information regarding their adoption and termination of Rule 10b5-1 trading arrangements in the prior quarter.
Domestic issuers with a December 31 year-end are first required to provide the new disclosure in Form 10-K reports filed in 2024 regarding share repurchases and other reportable matters during the fourth quarter of 2023. Foreign private issuers must provide the quantitative disclosure in a new Form F-SR filed for each quarter after a transition period ending in 2024, and the narrative disclosures in Form 20-F beginning with the Form 20-F filed after the first Form F-SR filing.
The rule amendments will be effective on July 31, 2023. The SEC’s adopting release (Release No. 34-97424) can be viewed here.
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Authored by Alan Dye (co-editor), Richard Parrino (co-editor), and Kevin Greenslade
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