Defining Issues | August 2020



SEC modernizes Reg S-K disclosures

SEC amends disclosures of business description, legal proceedings and risk factors under Regulation S-K.

The SEC’s amendments emphasize materiality and a principles-based approach to disclosure, and are intended to bring about improved and tailored disclosures.


SEC Release Nos. 33-10825; 34-89670; File No. S7-11-19

  • Public companies, including registered investment companies and registered investment advisers

Relevant dates

  • Effective 30 days after publication in the Federal Register

Key impacts

The SEC adopted rule amendments to Reg S-K Items 101, 103 and 105 with the intent to elicit tailored and improved disclosures and reduce disclosure burdens.

The amendments revise the description of business (Item 101) and risk factors (Item 105) to emphasize a principles-based approach. This approach primarily focuses on companies providing disclosure only to the extent it is material. The amendments to legal proceedings (Item 103) continue to follow a more prescriptive approach, while modernizing the requirements.

The amended rules are intended to facilitate an understanding of each registrant’s business, financial condition and prospects. The information is to be presented on a basis consistent with the lens that management and the board of directors use to manage and assess the registrant’s performance. The SEC will permit an increased use of referencing and hyperlinks, as well as captioning and ordering requirements. These revisions continue the SEC’s broader review of its disclosure framework as prescribed by the JOBS Act.

Amendments to description of business (Item 101)

  • Require disclosure of information material to an understanding of the general development of the business using a principles-based approach.
  • Permit a registrant, after an initial filing, to provide an update of only material developments since the most recent full discussion of the general development of its business disclosed in a previously filed registration statement or report, which must also be incorporated by reference.
  • Replace the previously prescribed five-year timeframe with a materiality framework.
  • Expand the principles-based approach by including a nonexclusive list of disclosure topics drawn from a subset of the topics currently in Item 101(c).
  • Include human capital resources as a disclosure topic, including any human capital measures or objectives that management focuses on when managing the business.
  • Include all material government regulations (in addition to environmental laws) as a disclosure topic.

Amendments to legal proceedings (Item 103)

  • Permit a registrant to use hyperlinks or cross-references to disclosures about legal proceedings located elsewhere in the document.
  • Increase the threshold for required disclosure of environmental proceedings to which the government is a party to $300,000 (to adjust for inflation) – or permit a registrant to select a different threshold (within stipulated parameters) it determines will result in disclosure of material environmental proceedings.

Amendments to risk factors (Item 105)

  • Require summary risk factor disclosure of no more than two pages if the risk factor section exceeds 15 pages, and require the risk factor summary to be in a prescribed format.
  • Change the disclosure standard from the ‘most significant’ to the ‘material’ factors required to be disclosed.
  • Require risk factors to be organized under relevant headings in addition to the sub-captions currently required.
  • Require any risk factors that may apply generally to an investment in securities to be disclosed at the end of the risk factor section under a separate caption.

Related content

Previous changes and proposals to other Reg S-K disclosure requirements:

SEC amends Reg S-K disclosures

SEC adopts rules to update and simplify disclosure requirements

SEC issues Reg S-K proposal to streamline disclosures

Original SEC Proposal on Reg S-K disclosure requirements considered as part of the amendments: 

SEC proposes to modernize disclosures of business, legal proceedings, and risk factors under Regulation S-K

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