The Securities and Exchange Commission has adopted the third group of amendments to its disclosure requirements, originally proposed in August 2019 and discussed in an earlier Goodwin client alert. The amendments, which are generally consistent with the original proposals, will incrementally simplify disclosure about a company’s business, emphasizing a principles-based approach. The proposals also allow the disclosure requirements in the legal proceedings section to be satisfied by links to legal proceedings disclosure included elsewhere in the report or registration statement. Finally, the amendments change the disclosure standard for risk factors from the “most significant” to “material,” require a summary of risk factor disclosures if the risk factor section is more than 15 pages, require risk factors to be organized under topical headings, discourage risk factors that could apply generically to any company or any offering, and require that any generic risk factors be presented at the end of the risk factors section under a separate heading. The appendix to this alert includes the text of the final amendments that has been marked to show changes from current requirements.

These amendments are the next step as the SEC continues to update its disclosure requirements, as recommended by the SEC staff in the December 2013 Regulation S-K study prepared under a mandate in the Jumpstart Our Business Startups Act. The SEC previously adopted two rounds of amendments in September 2018 (discussed in a Goodwin alert) and April 2019 (discussed in another Goodwin alert). These amendments revise three of the disclosure topics required by Regulation S-K in SEC reports and registration statements: Business (Item 101(a) and 101(c)), Legal Proceedings (Item 103), and Risk Factors (Item 105). The amendments also make conforming changes in the text of several SEC forms.