October 13, 2020

More on “Reg S-K ‘Modernization’ Amendments Published in Federal Register!”

Lynn blogged last week that the SEC’s amendments to modernize Items 101, 103 and 105 of Regulation S-K have now been published in the Federal Register. The effective date of the rules is Monday, November 9th – and in practice, that probably means that you need to comply for any filings made after 5:30 pm ET on Friday, November 6th, since those filings will have a Monday filing date. If you haven’t done so already, take a look at last year’s filing dates for your clients/your company to get a handle on exactly when you’ll need to incorporate these new requirements.

There’s been more back & forth in our Q&A Forum about the new rules (see Topic #10,435) – thanks to Bass Berry’s Jay Knight and Goodwin’s John Newell for keeping the conversation going. Jay noted that the Staff has informally said that early compliance with the modernization rules is not permitted, and shared that for Form 10-Ks filed after the effective date that contain more than 15 pages of risk factors, it may be acceptable to have the “forward-looking statement” section also serve as a risk factor summary, if it otherwise satisfies the requirements of Item 105. Many companies will try to keep their risk factors below 15 pages, in order to avoid that requirement altogether. Remember that our Q&A Forum is a good place to exchange ideas and ask questions about topics like this.

The SEC’s amendments to the definitions of “accredited investor” and “QIB” were also published in the Federal Register last week – those rules will go effective on December 8th.

Insider Trading: Pre-Clearance Duration

We recently received the following question from a member on our Q&A Forum (Topic #10,422):

How long does your pre-clearance last for execs?

A couple of members responded:

– At our company, it’s 2-3 days usually, they can request longer and we’ll revisit and extend after the first one expires.

– Our company is pretty conservative on compliance issues like this – but our pre-clearance just lasts for 24 hours.

I noted that our model insider trading policy – which is included in our “Insider Trading Policies” Handbook – suggests 5 business days as the amount of time that pre-clearance lasts, but it varies based on the company’s compliance culture and how common it is for there to be material non-public information that would affect the company’s stock. Periods of 24 hours or 2-3 days are both reasonable as well.

Pre-Clearance Duration: What’s Your Policy?

Please participate in this anonymous poll:


Liz Dunshee