May 1, 2019

More on “10-K/10-Q/8-K ‘Cover Page’ Changes: Courtesy of the Fast Act”

The SEC’s “Fast Act” rules go effective tomorrow – which means you need to start using new cover pages for Form 10-K, Form 10-Q and Form 8-K. I blogged last month about our Word versions – and we’ve updated those to match the format that the SEC has now posted.

You can find the Word version of the Form 10-Q cover page in our “Form 10-Q Practice” Area, and the Word version of the Form 8-K cover page in our “Form 8-K” Practice Area. We’ve also updated our Word version of the Form 10-K cover page in our “Form 10-K” Practice Area. But as provided by page 43 of the adopting release, our version eliminates the checkbox that was previously required for delinquent Section 16(a) reports. The SEC’s Form 10-K still has that right now.

Also note that the way the trading symbol disclosure is set up for Form 10-K, companies will now need to identify the title(s) & class(es) of Section 12(b) securities twice on the cover page. That seems a little odd since page 82 of the adopting release acknowledged that the Form 10-K cover page already required that info and implied that the new rules would just add the trading symbol. Some of our members are speculating that this was done to facilitate tagging requirements and others think it was an oversight. Drop me a line if you know!

Fast Act: More FAQs on Expanded Hyperlinking Requirement

With the effective date looming for the Fast Act changes, we’ve been fielding tons of questions in our “Q&A Forum” about the new exhibit and hyperlink requirements. Here’s one (#9868):

Do the recently-adopted FAST Act disclosure simplification rules require registrants to include hyperlinks for the reports that are incorporated by reference into Part II, Item 3 of Form S-8? The adopting release does not mention Form S-8, but the amendments to Rule 411 could impact Form S-8 through general application of Regulation C (per Instruction B.1). Arguably, Item 3 should not be subject to the hyperlinking requirement, because the incorporation by reference required by Item 3 serves a different purpose than the incorporation by reference permitted under Rule 411, and because Item 3 also contemplates forward incorporation by reference (as to which hyperlinking is, obviously, impossible), but I haven’t seen any guidance on this.

John answered:

I think in the absence of guidance from the Corp Fin Staff to the contrary, people should assume that the hyperlink requirement does apply to S-8s, for the reasons you suggest. People raised the issue about forward incorporation by reference for other registration statements during the comment process, but the SEC wasn’t persuaded. See the discussion on pg. 77 of the adopting release.

In addition, John blogged last week about informal Staff guidance that suggests a link isn’t required if you’re incorporating by reference from one item to another within the same filing. Now, Bass Berry’s Jay Knight has followed up with thoughts on another common situation:

Question: How does this new hyperlinking requirement apply when the registrant cross-references the reader to other information that is contained either within the same filing or in a prior filing, without explicitly incorporating the information by reference?

For example, is a hyperlink required if the registrant in the legal proceedings item in Form 10-Q says that no material updates have occurred since the last Form 10-K and cross-references the reader to such prior disclosure, without explicitly incorporating the information by reference?

Here’s Jay’s answer:

Answer: Based on a review of the rules as well as the SEC’s adopting release, we believe it is reasonable to conclude that a “cross-reference” to other information, whether in the same or prior filing, should not be treated the same as the disclosure by a registrant that such other information is “incorporated by reference.” We believe this view is supported by the language in the new rules where incorporation by reference and cross-referencing are mentioned separately.

For example, new Rule 12b-23(b) states, “In the financial statements, incorporating by reference, or cross-referencing to, information outside of the financial statements is not permitted unless otherwise specifically permitted or required by the Commission’s rules or by U.S. Generally Accepted Accounting Principles or International Financial Reporting Standards as issued by the International Accounting Standards Board, whichever is applicable.” (emphasis added) We believe the phrase “or cross-referencing to” demonstrates that the SEC views incorporating by reference and cross-referencing differently.

In contrast, Rule 12b-23(d), which is the operative rule related to hyperlinking in the Form 10-Q context, omits any reference to cross-referencing. Rule 12b-23(d) states, “You must include an active hyperlink to information incorporated into a registration statement or report by reference if such information is publicly available on the Commission’s Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”) at the time the registration statement or form is filed.”

Therefore, unless the registrant specifically incorporates by reference the information (perhaps even using that language explicitly), we believe it is reasonable to conclude that a hyperlink is not required by the new rules.

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Liz Dunshee