The U.S. Securities and Exchange Commission has recently undertaken a review of its principal regulations for periodic reporting by publicly traded companies, in response to claims that the reporting process has become overly burdensome and that investors are blinded by “disclosure overload” that makes it difficult to discern the important facts within a mass of detail.
The announcement of the project on the SEC’s website under the title, “Disclosure Effectiveness,” indicates that the SEC’s Division of Corporation Finance is reviewing the requirements of Regulation S-K and Regulation S-X with a view to improving the disclosure regime for the benefit of both companies and investors. According to the announcement, the SEC will initially consider the business and financial information required in reports on Forms 10-K, 10-Q and 8-K. A second phase will focus on governance and executive compensation information provided by companies in their proxy statements. The SEC’s website solicits comments from the public on the Disclosure Effectiveness project. Notable among the comments received so far are those of the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness and the Society of Corporate Secretaries and Governance Professionals, but many more can be expected over the coming months, as the topic has drawn attention and interest from a variety of different perspectives.
