In September 2020, the Securities and Exchange Commission (SEC) voted 3-2 to adopt amendments to certain disclosure rules for public companies in an effort to modernize information that is presented to investors. The amendments were crafted from a proposed rule issued in August 2019 that was part of a comprehensive SEC review of the disclosure requirements required by the Jumpstart Our Business Startups Act (JOBS Act). The Regulation S-K rules that were amended consisted of description of business (Item 101), legal proceedings (Item 103), and risk factors (Item 105) and the amendments are effective Nov. 9. The SEC’s significant revisions represent the first updates to these disclosure rules in over 30 years.

Chairman Jay Clayton noted in his opening remarks that the amendments were the product of the SEC’s efforts to review and improve the disclosure framework. He stated that the world economy has changed significantly since the 1970s and 1980s when the rules were first created. He stressed that the amendments build upon the SEC’s “materiality-based disclosure framework” and highlighted that the amendments covered a very important topic which received his full support, namely, increased focus on human capital disclosures. Clayton declared, “human capital accounts for and drives long-term business value in many companies much more so than it did 30 years ago.” Commissioners Allison Herren Lee and Caroline Crenshaw submitted dissenting votes, taking the position that in failing to address matters of diversity and climate change risk, the amendments omitted two issues that today’s investors, and investors of the future, consider important in determining a company’s long term sustainability.

The Regulation S-K Amendments

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