By George Wilson


As you have likely heard, on August 26, 2020, the SEC adopted a Final Rule updating and modernizing three disclosure areas in Regulation S-K:


Item 101 – Description of business

Item 103 – Legal proceedings

Item 105 – Risk Factors


The Final Rule was published in the Federal Register on October 8, 2020 and is effective for filings made on or after November 9, 2020, regardless of the accounting period-end of the financial statements included in a filing.


Accordingly, these changes are effective for calendar third-quarter 10-Qs filed after November 9, 2020


The changes that may affect companies filing Form 10-Q for the third quarter of 2020 are the new legal proceedings and risk factor disclosure requirements.


There are two changes to the legal proceedings disclosures:


First, the following language was added to the overall requirement to provide that information may be in other parts of a filing and hyperlinked or cross-referenced to the legal proceedings disclosure:

Information may be provided by hyperlink or cross-reference to legal proceedings disclosure elsewhere in the document, such as in Management’s Discussion & Analysis (MD&A), Risk Factors and notes to the financial statements.

Second, in paragraph (c)(3), the threshold for disclosure of monetary sanctions where a governmental authority is a party to an environmental proceeding has been increased from $100,000 to $300,000.


The main change to the risk factor disclosures is this new requirement:


If the discussion is longer than 15 pages, include in the forepart of the prospectus or annual report, as applicable, a series of concise, bulleted or numbered statements that is no more than two pages summarizing the principal factors that make an investment in the registrant or offering speculative or risky.


Starting on November 5, we will be posting a series of deep-dive discussions into all the changes in the Final Rule.


As always, your thoughts and comments are welcome!

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