Ten Things to Know About the SEC’s Rules on the Form 10-K Summary
- New Item 16 in the Form 10-K would expressly allow issuers to do something that is already permissible – provide a summary in the Form 10-K.
- Each summary topic must be hyperlinked (a footnote or cross-reference is not sufficient) to the related detailed disclosure in the Form 10-K.
- The only specific requirements are that the summary must be brief and must present the information fairly and accurately.
- There is no prescribed length to the summary, no requirement as to what should be covered (issuers can decide which 10-K items to include) or even where the summary must appear in the Form 10-K.
- The detailed disclosure that is hyperlinked in the summary can be in the Form 10-K itself or from an exhibit, so long as the disclosure is in the Form 10-K at the time of filing.
- If the hyperlink refers to an exhibit, the link must be to the discussion in the exhibit.
- The rule was promulgated in response to a specific requirement under the FAST Act.
- The rule is effective as of yesterday, when it was published in the Federal Register.
- The SEC is accepting comments on the rule for the next 30 days, including whether a summary should be mandatory and whether there should be specific requirements.
- The SEC indicates that since few issuers currently provide a summary, this rule is unlikely to have much of an impact. The economic analysis is based on an assumption that 10% of issuers will provide a summary.
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