Principles matter: SEC amends disclosure rules for business, legal proceedings, and risk factors

On August 26 the SEC adopted far-reaching amendments to Regulation S-K items that govern disclosures on business, legal proceedings, and risk factors in filings under the Securities Act of 1933 and the Securities Exchange Act of 1934. The amendments represent the most significant changes to these items in over 30 years.

The amendments represent a shift by the SEC towards a more principles-based approach to disclosure and away from prescriptive requirements that specify the content and manner of disclosure. The amended rules afford registrants greater flexibility to determine which information is material to an understanding of their business and how to present the information. In many cases, registrants will have to consider how to recast the current description of their business, based largely on line-item disclosure requirements, into a presentation more closely tailored to their particular business and financial circumstances.

The SEC’s adopting release describing the amendments (Nos. 33-10825 and 34-89670) may be accessed here

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