FAST Act Modernization and Simplification of Regulation S-K
Summary
SIFMA provided comments to the Securities and Exchange Commission (SEC) on the modernization of certain business and financial disclosure requirements in Regulation S-K as set forth in the Commission’s Proposed Rule Release No. 33-10425, 34-81851.
See also:
FAST Act Modernization and Simplification of Regulation S-K
Excerpt
January 2, 2018
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-1090
Attention: Mr. Brent J. Fields, Secretary
Re: FAST Act Modernization and Simplification of Regulation S-K (File Number S7-08-17)
Dear Secretary Fields:
The Securities Industry and Financial Markets Association (“SIFMA”) is writing to respond to the invitation of the Securities and Exchange Commission (“Commission”) for public comment
on the modernization of certain business and financial disclosure requirements in Regulation S-K as set forth in the Commission’s Proposed Rule Release No. 33-10425, 34-81851 (the “Release”). We appreciate the opportunity to provide comments to the Commission on the Release.
In our comment letter to the Commission’s earlier concept release on Business and Financial Disclosure Required by Regulation S-K1, we suggested the Commission be guided by three overarching considerations when considering how to modernize disclosure requirements — principles-based versus prescriptive disclosure requirements, materiality as the principal factor underlying disclosure requirements, and consideration for the undue risk of liability on registrants and other offering participants of adding or expanding requirements for forwardlooking information. We believe many of the rule proposals in the Release reflect these considerations and we appreciate the Commission’s taking steps both to eliminate information an investor may consider irrelevant and to take into account the burdens imposed on a registrant to comply with disclosure requirements, whether in terms of monetary cost, disclosure of commercially sensitive matters or liability exposure. We hope the Commission will continue to consider other ways in which it can propose changes to the disclosure regime to achieve these goals.
Accordingly, we generally support the proposals in the Release. We respond below to several of the specific questions posed by the Commission in the Release.
Description of Property (Item 102)
Questions 1, 2 and 3:
Question 1. Should we revise Item 102 to clarify that a description of property is required only to the extent that physical properties are material to the registrant and may be provided on a collective basis, if appropriate, as proposed? Under what circumstances is the flexibility to provide property disclosure on a collective basis useful (e.g., information about the percentage of material properties within and outside the United States)?
Question 2. Should we harmonize non-industry-specific disclosure thresholds by replacing them with a materiality threshold as proposed?
We agree with the Commission’s proposal to revise Item 102 to clarify that a description of property is required only to the extent that physical properties are material to the registrant. The
prescriptive elements of the existing requirement to provide the location and general character of a company’s principal plants, mines and other materially important physical properties including those of its subsidiaries often produces unnecessary and immaterial disclosure in response to this requirement. We also agree with the proposal to permit property disclosure to be provided on a collective basis, if appropriate. In particular, the ability to provide collective disclosure could result in meaningful disclosure based on types of properties, geography or age of properties, among other categories.
1 Business and Financial Disclosure Required by Regulation S-K, Release No. 33-10064, 34-77599 (Apr. 13, 2016) (the “2016 Concept Release”).
*SIFMA brings together the shared interest of hundreds of securities firms, banks and asset managers. SIFMA’s mission is to support a strong financial industry, investor opportunity, capital formation, job creation and economic growth, while building trust and confidence in the financial markets. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association. For more information, visit www.sifma.org.