December 8, 2022

SEC Reopens Comment Period for Share Repurchase Disclosure Proposal

Yesterday, the SEC announced that it is reopening the comment period (again) for its share repurchase disclosure rulemaking, which was proposed back in December 2021 at the same time that the Rule 10b5-1 changes were proposed. Under proposed amendments, the SEC would: (i) require daily repurchase disclosure on a new Form SR, which would be furnished to the SEC one business day after execution of a company’s share repurchase order; (ii) amend Item 703 of Regulation S-K to require additional detail regarding the structure of a company’s repurchase program and its share repurchases; and (iii) require information disclosed pursuant to Item 703 of Regulation S-K and pursuant to Form SR to be reported using Inline XBRL. The SEC’s announcement of the reopening notes:

The Commission is reopening the comment period because, after the proposed amendments were published for public comment, The Inflation Reduction Act of 2022 was enacted. The law imposes upon certain corporations a non-deductible excise tax equal to one percent of the fair market value of any stock of the corporation repurchased by such corporation during the taxable year. As a result, the Commission staff has prepared a memorandum that discusses potential economic effects of the new excise tax that may be helpful in evaluating the proposed amendments.

The DERA memorandum referenced in the reopening release is posted on the SEC’s website. The public comment period will remain open for 30 days after publication of the reopening release in the Federal Register. The reopening was met with criticism from Commissioner Uyeda, who issued a statement noting that the 30-day comment period “commences shortly before, and will overlap with, major holidays later this month” and recommending that a 45-day comment period would be preferable to receive more thoughtful responses.

– Dave Lynn