The SEC’s proposed filer status reforms could give certain companies more flexibility over what they disclose and how they report it. By extending scaled disclosure accommodations to a new category of non-accelerated filers (NAFs) and simplifying filer status categories, the proposal aims to reduce complexity and modernize the reporting framework. This raises an important strategic question for issuers: If the rules change, should companies immediately take advantage of scaled disclosure accommodations or wait to see how peers respond?
While there is no one-size-fits-all answer, understanding the potential benefits and risks of both approaches can help issuers develop a sound disclosure strategy.
The Case for Preparing Now
Some companies may view the proposal as an opportunity to begin reassessing their disclosure practices and identifying potential efficiencies.
On the surface, the benefits are clear. Scaled disclosure could reduce reporting complexity, streamline preparation processes and give issuers greater flexibility in determining what information is truly material to investors. Companies that begin evaluating their disclosures now may be better prepared if the proposal is ultimately adopted.
Assessing disclosure practices could also help companies establish a more intentional disclosure philosophy. Rather than continuing to disclose information simply because it has been included historically, issuers can evaluate whether each section of their disclosure continues to provide meaningful value to investors. Engaging directly with investors can further inform this process, providing insight into the disclosures they consider most important given the company's specific circumstances, including factors such as industry dynamics, seasonality, growth stage, and volatility.
However, issuers should be careful of changing their disclosure practices too quickly.
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The Case for a Wait-and-See Approach
On the other hand, many companies may be more likely to adopt a wait-and-see approach than make immediate disclosure changes, should the proposed rule become final. This approach allows time to understand how peers respond, how investors react, and how other pending SEC proposals develop, before making any significant adjustments to disclosures.
A wait-and-see approach has several advantages:
- It allows companies to make decisions based on market practice rather than speculation. If most issuers continue providing similar levels of disclosure, companies that significantly scale back disclosures may stand out in ways that are not beneficial. Waiting allows issuers to assess whether a new market standard actually emerges.
- Investors may continue to demand much of the information they currently receive, which means many issuers will retain much of their existing disclosure practices due to investor demand. Effective disclosure often trends toward providing more information rather than less.
- The filer status proposal is unfolding alongside other potential regulatory changes, including anticipated proposals related to executive compensation, Regulation S-K, and semiannual reporting. Companies may evaluate the filer status proposal in conjunction with these broader developments rather than treating it as a standalone change.
Perhaps most importantly, adopting a wait-and-see approach may help companies better manage investor relations and governance risks.
The Investor Perspective
A key consideration is not simply compliance. It is how investors will respond to reduced disclosure.
Investor expectations may not change as quickly as regulatory requirements. Many disclosures potentially eligible for scaling are widely viewed as governance best practices and provide information investors rely on to evaluate executive compensation, governance, and board oversight. Broad reductions in disclosure could limit the information available to investors, making it harder to assess companies and compare them with their peers.
As a result, significant disclosure reductions could signal a lack of commitment to internal controls or weakness in governance. Companies that move quicker than their peers to scale back disclosures could attract additional scrutiny from investors, proxy advisors, and activists.
The issue becomes even more relevant in light of the proposal's executive compensation and say-on-pay provisions. If investors have fewer opportunities to express concerns through traditional channels, they may seek alternative means of accountability, including voting against directors or supporting competing board nominees. Current comment activity reflects this concern, with roughly 60% of comments submitted on the proposal opposing changes related to executive compensation disclosures and say-on-pay requirements for non-accelerated filers. While the final rule remains uncertain, the feedback highlights the importance investors place on governance-related disclosures.
A Practical Middle Ground
Rather than viewing the decision as a choice between immediate action and complete inaction, many companies may be best served by a hybrid approach. Fewer required disclosures do not necessarily mean providing less useful information to investors. Instead, they may create opportunities for companies to tell their story in more relevant, strategic and company-specific ways, focusing on the information investors find most decision-useful. Regardless of how the SEC's filer status proposal evolves, companies will need to balance regulatory flexibility with investor expectations. Issuers can begin preparing now by reviewing current disclosures, identifying areas where flexibility may exist, engaging internal stakeholders and gathering feedback from investors. At the same time, issuers can refrain from making significant disclosure reductions until they better understand investor expectations, peer behavior and the final regulatory landscape
Regardless of how the SEC's filer status proposal evolves, companies will need to balance regulatory flexibility with investor expectations. Issuers can begin preparing now by reviewing current disclosures, identifying areas where flexibility may exist and engaging internal stakeholders. At the same time, issuers can refrain from making significant disclosure reductions until they better understand investor expectations, peer behavior, and the final regulatory landscape.
DFIN's Proxy and Shareholder Communication solutions help issuers make confident disclosure decisions, benchmark governance practices, and create proxy statements and shareholder communications that promote transparency, strengthen accountability, and build investor trust.
Companies may ultimately have greater flexibility under the proposed rules, but how they use that flexibility may depend less on what regulators permit and more on what investors continue to expect.
