By Marcie Clark, Global Director, EDGAR and Filing Services, Donnelley Financial Solutions
The SEC has proposed a new rule that would require companies to provide detailed information on share repurchases, using a new Form SR, one day after the execution of the transaction.
According to the proposal, which is part of the SEC’s modernization program: “Investors and other market participants normally do not become aware of an issuer’s actual share repurchase-related trading activity until they are reported in an issuer’s periodic reports, long after the trades have been executed. The proposed amendments are intended to improve the quality, relevance, and timeliness of information related to issuer share repurchases.”
The proposed rules would require issuers to adopt Inline XBRL tagging of the quantitative and narrative repurchase disclosures. This structured data language is readable by humans and machines, which would modernize the SEC disclosure systems and allow investors and other market participants to more easily extract and compare information on executed repurchases.
The proposal also requires companies submitting Form SR to disclose the following
- Date of the repurchase
- Identification of the class of securities purchased
- The total number of shares (or units) purchased, including all issuer repurchases whether or not made pursuant to publicly announced plans or programs
- The average price paid per share (or unit)
- The aggregate total number of shares (or units) purchased on the open market
- The aggregate total number of shares (or units) purchased in reliance on the safe harbor in Exchange Act Rule 10b-18
- The aggregate total number of shares (or units) purchased pursuant to a plan intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5- 1(c)
The SEC is also proposing amended regulation of S-K Item 703 disclosure. This expands companies' periodic disclosure requirements regarding share repurchases in Forms 10-Q and 10-K and Form 20-F for foreign private issuers and discloses a variety of items.
For our clients, DFIN is here to assist companies in tackling the proposal. Our insights into SEC reporting processes allow us to support companies that want to have a better understanding of the SEC modernization program.
Keep an eye out for updates from the SEC and from DFIN. We are passionate about helping companies stay on top of all new reporting regulations. As the rules are modified and finalized, we’re here to help you navigate the new landscape.
The proposal can be found here.