Making a List and Checking it Twice: Preparing for the Most Wonderful Time of the Year – Annual Report and Proxy Season

All cover page data must be tagged in Inline XBRL, subject to the following compliance schedule:

• Large accelerated filers — tagging of Form 10-K will be required for calendar year issuers
• Accelerated filers that prepare their financial statements in accordance with U.S. GAAP — reports for fiscal periods ending on or after June 15, 2020
• All other filers — reports for fiscal periods ending on or after June 15, 2021

These tagging requirements and phased compliance dates are also applicable to Forms 10-Q and 8-K.

• New “Description of Securities” Exhibit Requirement: Regulation S-K 601(b)(10)(4) adds a new 10-K exhibit, which must include a brief description of securities consistent with Regulation S-K Item 202(a)-(d) and (f). This disclosure requirement had previously been limited to registration statements.
• Elimination of Two-Year Look-Back for Material Contracts Exhibits: Except for “newly reporting registrants,” companies will no longer be subject to the two-year look-back period that requires the inclusion of all material contracts entered into during the two years before the filing. All companies are still required to file all material contracts that are not entered into in the ordinary course of business and that are to be performed in full or in part after the filing of the report. As a result, companies not subject to the look-back can omit contracts that have been fully performed or that are no longer in effect.

• Item 303 of Regulation S-K amendments increase the flexibility in discussing two versus three years of financial results in the MD&A, allowing companies to exclude the earliest of the three years if the MD&A from any prior EDGAR filing includes a discussion of the omitted year.
• Companies eliminating the earliest year must identify the location in the prior filing where the omitted discussion may be found.
• Instruction 1 of Item 303 now (1) eliminates the reference to trends in five-year selected financial data (however, the materiality analysis remains the same), and (2) clarifies that companies may use any appropriate basis of presentation.

Regulation S-K Item 404 requires companies to include certain biographical information about their executive officers. Although Form 10-K permits companies to incorporate this information by reference to their proxy statement, companies can choose to include the disclosure in Part I of Form 10-K. For those companies that include officer biographies in Part I, the required caption now takes a “plain English” approach. The required caption is “Information about our Executive Officers” instead of “Executive officers of the registrant.”

Item 405 of Regulation S-K was amended to:

• Change the caption regarding delinquent disclosure from “Section 16(a) Beneficial Ownership Reporting Compliance” to “Delinquent Section 16(a) Reports.”
• Clarify that the company may rely on filings made via EDGAR. Section 16 filers are no longer required to provide companies with copies of their Section 16 reports.

A new instruction to Item 405 encourages companies to omit the “Delinquent Section 16(a) Reports” caption when there are no delinquencies to report.

Item 407(d)(3)(1)(B) was amended to update the audit committee report reference, from “matters required by AU section 380, Communication with Audit Committees” to refer more broadly to “the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the Commission.”