As Liz shared last week, the agenda for yesterday’s Investor Advisory Committee meeting covered a lot of ground – including regulatory changes in corporate governance, tokenization of equity securities and disclosure of AI’s impact on operations. With respect to AI disclosures, the IAC considered a discussion draft prepared in advance by the IAC’s Disclosure Committee with recommendations to the Commission to issue further AI-related disclosure guidance applicable to issuers.

Here’s an excerpt from that discussion draft:

Specifically, the Committee recommends that the Commission integrate AI disclosure guidance as part of existing disclosure items. Reg S-K items 101, 103, 106, and 303 are flexible enough to accommodate the rise in the use of AI by registrants and it may not be necessary to add a sub-chapter focused solely on AI. Issuers already provide disclosures to the markets concerning capital expenditures, R&D, Risks, Human Capital Management, Governance under existing Reg. S-K items . . .

To that end, the Committee recommends that, with respect to its AI disclosure, the Commission require issuers to:

– Define what they mean when they use the term “Artificial Intelligence”,

– Disclose board oversight mechanisms, if any, for overseeing the deployment of AI at the company, and

– Report separately on how they are deploying AI and, if material, the effects of AI deployment on (a) internal business operations, and (b) consumer facing matters.

The recommendations were informed by a March 2025 IAC panel discussion, and this topic had been on the IAC’s agenda for some time before that — beginning during the Biden Administration. IAC member John Gulliver expressed concern that the recommendations would increase disclosure requirements at a time when the Commission now looks to streamline them. For that reason, these recommendations may not get much traction in the near term. Remarks by Chairman Atkins suggest he believes existing disclosure requirements already sufficiently address AI.

[W]ith every emerging development, the question for the SEC to consider is not necessarily its novelty, but whether our existing disclosure framework sufficiently provides investors with material information about it. And on that point, I believe that investors can rely on our current principles-based rules to inform them of how AI impacts companies.

Indeed, we should resist the temptation to adopt prescriptive disclosure requirements for every “new thing” that affects a business. Our principles-based rules were intentionally designed to allow companies to inform investors of material impacts of any new development, including how AI affects their financial results, how AI can be a material risk factor to an investment, and how AI is a material aspect of their business model.

– Meredith Ervine