On May 3, 2023, the U.S. Securities and Exchange Commission (SEC) adopted final share repurchase disclosure rules “to modernize and improve disclosure about repurchases of an issuer’s equity securities that are registered under the Securities Exchange Act of 1934.” In a significant shift from the proposed rules, the final rules will require quarterly reporting of daily issuer repurchases in an exhibit to Form 10-Q or 10-K (or in a new Form F-SR for foreign private issuers) rather than next-business day reporting of issuer repurchases. Set forth below is a summary of the final rules; a more detailed client alert will follow.^[1]  

Issuer repurchase disclosure. The final rules add new Item 601(b)(26) of Regulation S-K, which requires an issuer to file an exhibit to its Form 10-Q and Form 10-K disclosing, in tabular format, the total number of shares repurchased by the issuer, on a daily basis, during the applicable quarter to which the filing relates.^[2]

The information required to be disclosed in the table includes, among other things, the execution date, the average price paid per share, the total number of shares purchased as part of a publicly announced plan or program, the total number of shares purchased on the open market, the total number of shares purchased that are intended to qualify for the safe harbor in Rule 10b-18, and the total number of shares purchased under a Rule 10b5-1 trading plan.

In addition, issuers will be required to indicate by checkbox whether any officer or director purchased or sold shares that are the subject of the issuer repurchase plan or program within four business days before or after the issuer’s announcement of the repurchase plan or program (or announcement of an increase to an existing plan or program). The required checkbox and tabular disclosure, as provided in new Item 601(b)(26) of Regulation S-K, are set forth in Appendix A.

In addition to the new tabular disclosure, the SEC amended Item 703 of Regulation S-K to require narrative disclosure of the objectives or rationales for each issuer repurchase plan or program, the process or criteria used to determine the amount of repurchases, and any policies and procedures relating to purchases and sales of the issuer’s securities by its officers and directors during a repurchase program. Of note, under current Item 703(a) of Regulation S-K, issuers are required to provide monthly repurchase information in tabular format in their Forms 10-Q and 10-K; however, due to the new quarterly reporting of daily repurchase disclosure requirements, this monthly repurchase information will no longer be required.^[3]

Issuer trading plan disclosure. The final rules add new Item 408(d) of Regulation S-K, which requires an issuer to disclose any Rule 10b5-1 trading plans that it has adopted or terminated (including most modifications) during the quarterly period to which the filing relates. Similar to the disclosures required for officer and director trading arrangements, these disclosures require a description of the material terms of the issuer Rule 10b5-1 plan (other than the price at which trades may executed) and are required in Forms 10-Q and 10-K, as applicable.

The final rules require that the disclosures be reported in Inline XBRL format.

The final rules are effective 60 days after the adopting release is published in the Federal Register. Issuers (other than foreign private issuers) will be required to comply with the new disclosure and tagging requirements in their Forms 10-Q and 10-K beginning with the first filing that covers the first full fiscal quarter that begins on or after October 1, 2023.^[4] For more information, please see the SEC Fact Sheet, available here.  

^[1] For purposes of this post, the term “issuer” includes “affiliated purchasers” and any persons acting on behalf of the issuer or an affiliated purchaser. In addition, references to “issuer repurchase” includes purchases by an affiliated purchaser and purchases by any person acting on behalf of the issuer or an affiliated purchaser.

^[2] These disclosures will be required in a new Form F-SR for foreign private issuers (FPIs), which must be filed within 45 days after the end of the applicable fiscal quarter. The checkbox and tabular disclosure set forth in the Form F-SR is substantially similar to the disclosure in new Item 601(b)(26) of Regulation S-K.

^[3] Presently, FPIs are required to provide monthly disclosures of issuer repurchases under Item 16E of Form 20-F; however, due to the new quarterly reporting of daily repurchase disclosure requirements on Form F-SR, these monthly disclosures will no longer be required.

^[4] FPIs will be required to comply with the new disclosure and tagging requirements in new Form F-SR beginning with the Form F-SR that covers the first full fiscal quarter that begins on or after April 1, 2024. The Form 20-F narrative disclosure (and related tagging requirements) that relates to the Form F-SR filings, will be required starting in the first Form 20-F filed after their first Form F-SR has been filed.