SEC adopts amendments to share repurchase disclosure rules

The rules require an issuer to provide new and expanded periodic disclosure of share repurchases in periodic reports filed with the SEC (Forms 10-K, 10-Q, 20-F or N-CSR). Foreign private issuers that file on FPI forms are required to file quarterly share repurchase disclosures in a new Form F-SR.

The amendments also eliminate the current requirements in Regulation S-K, Form 20-F and Form N-CSR to disclose monthly repurchase data in periodic reports.

Applicability

• Public companies: Domestic issuers, foreign private issuers, and registered closed-end management investment companies that are exchange traded.

Relevant dates

• On April 1, 2022, the original proposal comment period ended.
• In October 2022, the SEC reopened the comment period for this proposal due to a technical error. This comment period ended on November 1, 2022.
• On December 7, 2022, the SEC again reopened the comment period, which ended 30 days after publication in the Federal Register.
• On May 3, 2023, the SEC adopted the proposed amendments to the rules as final.

Summary of the rule

The SEC issued a Fact Sheet summarizing the key provisions of the final rules.

The amendments require tabular disclosure of an issuer’s repurchase activity aggregated on a daily basis and disclosed either quarterly or semi-annually, depending on filer type.

The table must include, for each day:

• class of shares
• average price paid per share
• number of shares purchased, including number of shares purchased pursuant to a publicly announced plan or on the open market
• maximum number of shares (or approximate dollar value) that may yet be purchased under a publicly announced plan
• number of shares purchased that are intended to qualify for the safe harbor in Rule 10b-18
• number of shares purchased under a plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c).
  

The final rules require issuers that file on domestic forms to file on a quarterly basis the daily repurchase data in an exhibit to their Form 10-Q and Form 10-K (for the fourth fiscal quarter). Listed Closed-End Funds must include the data in their annual and semi-annual reports on Form N-CSR. FPIs reporting on FPI forms must disclose the data in a new Form F-SR, which must be filed within 45 days after the end of an FPI’s fiscal quarter.

Issuers are also required to include a checkbox preceding their tabular disclosures indicating whether certain officers and directors purchased or sold shares that are the subject of an issuer share repurchase plan or program within four business days before or after the announcement of that plan or program.

The final amendments revise Item 703 of Regulation S-K (with corresponding changes to Form 20-F and Form N-CSR) by:

• eliminating disclosure of monthly repurchase data in periodic reporting; and
• enhancing and expanding disclosure requirements related to an issuer’s share repurchases in its periodic filings (e.g. Forms 10-K and 10-Q, Form 20-F and N-CSR). 

Specifically, the following narrative disclosures are required in an issuer’s periodic filings:

• The objective or rationale for the issuer’s share repurchases and process or criteria used to determine the amount of repurchases.
• Any policies and procedures relating to purchases and sales of the issuer’s securities by its officers and directors during a repurchase program, including any restriction on such transactions.

Issuers filing on Forms 10-K and 10-Q are also required to disclose whether any Rule 10b5-1 trading arrangements were adopted or terminated and the material terms of such 10b5-1 trading arrangements.

All disclosures must be tagged using Inline XBRL, including those in new Form F-SR.

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