SEC amends guidance on MD&A, other disclosures

By Ken Tysiac

The SEC is adopting amendments designed to modernize, simplify, and enhance management’s discussion and analysis and other financial disclosure requirements in Regulation S-K.

The changes to Regulation S-K are designed to sharpen the focus on material information by eliminating Item 301 (Selected Financial Data) and changing item 302(a) (Supplementary Financial Information) and Item 303 (MD&A).

These amendments:

  • Revise Item 302(a) to replace the current requirement for quarterly tabular disclosure with a principles-based requirement for material retrospective changes;
  • Add a new Item 303(a), Objective, to state the principal objectives of MD&A;
  • Amend current Items 303(a)(1) and 303(a)(2) to clarify, modernize, and streamline disclosure requirements for results of operations. These changes are included in amended Item 303(b)(2);
  • Amend current item 303(a)(3) to clarify, modernize, and streamline disclosure requirements for results of operations. These changes are included in amended Item 303(b)(2).
  • Add a new Item 303(b)(3), Critical accounting estimates;
  • Replace current item 303(a)(4), Off-balance sheet arrangements, with an instruction to discuss such obligations in the broader context of MD&A;
  • Eliminate current Item 303(a)(5), Tabular disclosure of contractual obligations, in light of the amended disclosure requirements for liquidity and capital resources and certain overlap with information required in the financial statements; and
  • Amend current Item 303(b), Interim periods, to modernize, clarify, and streamline the item and allow for flexibility in the interim periods to help registrants provide a more tailored and meaningful analysis relevant to their business cycles. These changes are included in amended Item 303(c).

The SEC also adopted certain parallel amendments to the financial disclosure requirements applicable to foreign private issuers, including to Forms 20-F and 40-F, as well as other conforming amendments to the SEC’s rules and forms.

“Today’s rules will improve the quality and accessibility of the disclosure that companies provide their investors, including importantly giving investors greater insight into the information management uses to monitor and manage the business,” SEC Chairman Jay Clayton said in a news release.

The amendments will take effect 30 days after they are published in the Federal Register. Registrants are required to comply with the rule beginning with the first fiscal year ending on or after the date that is 210 days after publication in the Federal Register.

— Ken Tysiac ( is the JofA’s editorial director.

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