Securities and Exchange Commission.
Proposed rules.
We are proposing to accelerate the filing of quarterly reports and annual reports under the Securities Exchange Act of 1934 by domestic reporting companies that have a public float of at least $75 million, that have been subject to the Exchange Act reporting requirements for at least 12 calendar months, and that previously have filed at least one annual report. We propose to shorten the filing deadlines for these companies from 45 to 30 calendar days after period end for quarterly reports and from 90 to 60 calendar days after fiscal year end for annual reports. We also are proposing to require companies subject to the accelerated filing deadlines to disclose in their annual reports where investors can obtain access to company filings, including whether the company provides access to its reports on Forms 10–K, 10–Q and 8–K on its Internet website, free of charge, as soon as reasonably practicable, and in any event on the same day as, those reports are electronically filed with or furnished to the Commission.
Comments should be received on or before May 23, 2002.
Comments should be submitted in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549. Comments also may be submitted electronically at the following electronic mail address:
Jeffrey J. Minton, Special Counsel, or Elizabeth M. Murphy, Chief, Office of Rulemaking, at (202) 942–2910, Division of Corporation Finance, U.S. Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549–0312.
We are proposing amendments to Item 101
The U.S. system of federal securities regulation is based on full and fair disclosure. Congress, in enacting the federal securities laws, embraced full disclosure as the best way to permit the financial markets to allocate capital. For this system to function most effectively, the markets must have access to information that is clear, accurate, and timely.
The Exchange Act requires companies to make information publicly available to investors on an ongoing basis to aid in their investment and voting decisions.
A company that has registered a class of equity or debt securities under Section 12(b) of the Exchange Act [15 U.S.C. 78
A company that has registered a class of equity securities under Section 12(g)(1) of the Exchange Act [15 U.S.C. 78
A company that has voluntarily registered a class of equity securities under Section 12(g) of the Exchange Act;
Under Section 15(d) of the Exchange Act [15 U.S.C. 78o(d)], a company that filed registration statement under the Securities Act that became effective and has not met the thresholds for suspension of the reporting requirement; and
Under Exchange Act Rules 12g–3 and 15d–5 [17 CFR 240.12g–3 and 240.15d–5], a company that has succeeded to the obligation of another reporting company.
Generally, the rules adopted by the Commission under the Exchange Act require disclosure at quarterly and annual intervals, with specified significant events reported on a more current basis.
• Annual reports on Form 10–K (or Form 10–KSB in the case of small business issuers
• Quarterly reports on Form 10–Q (or Form 10–QSB in the case of small business issuers) for the first three quarters of its fiscal year;
• Current reports on Form 8–K for a number of specified events.
A domestic reporting company must file a quarterly report no later than 45 calendar days after the end of each of its first three fiscal quarters, and an annual report no later than 90 calendar days after the end of its fiscal year. In addition, a company may be required to file transition reports on Form 10–K or 10–KSB or Form 10–Q or 10–QSB when it changes its fiscal year.
Over 30 years have passed since we last changed these deadlines. In the interim, advances in communications and information technology have made it easier for companies to process and disseminate information swiftly. Many large seasoned reporting companies capture and evaluate information and announce their quarterly and annual financial results well before they file their formal reports with the Commission. These earnings announcements are generally less complete in their disclosure than quarterly or annual reports and can emphasize information that is less prominent in quarterly or annual reports.
Investors also need ready access to corporate information to make their investment and voting decisions. An effective and economical method for companies to make information available about themselves is through their Internet websites. We therefore strongly encourage companies to provide investors with website access to their Exchange Act reports. We believe company disclosure should be more readily available to investors on a timely basis in a variety of locations to facilitate investor access to that information. We believe it is important for companies to make investors aware of the different sources that provide access to company information.
As a step in modernizing the periodic reporting system and improving the usefulness of quarterly and annual reports to investors, we are proposing to shorten the filing due dates for these reports for many companies. We also are proposing to require a company subject to these accelerated filing deadlines to disclose in its annual report on Form 10–K where investors can obtain timely access to company filings, including whether the company provides access to its reports on Forms 10–K, 10–Q and 8–K on its Internet website, free of charge, as soon as reasonably practicable, and in any event on the same day as, these reports are electronically filed with or furnished to the Commission.
While the specific disclosure required in quarterly reports and annual reports has evolved over the past 30 years, and the integrated disclosure system has placed added emphasis on Exchange Act reporting, the basic structure and timeframes that were established in 1970 remain in place today. Since that time, annual reports for domestic companies have been due 90 calendar days after a reporting company's fiscal year end.
The “Report of the Advisory Committee on Corporate Disclosure to the Securities and Exchange Commission” in 1977 led to the establishment of the current integrated disclosure system.
We believe that periodic reports contain valuable information for investors. Commentators have long remarked, however, that because the due dates for periodic reports are so lengthy, the information included in the reports often is stale by the time the reports are filed.
In our 1998 release proposing reform of the Securities Act registration process,
These earnings announcements also reflect the importance of the financial information and investors' demand for it at the earliest possible time. While we applaud companies' practices of issuing press releases to keep investors promptly informed of important corporate developments, the amount of information and the manner of its presentation in press releases varies from company to company. Investors often must wait for the periodic reports to receive financial statements and the accompanying notes prepared in accordance with generally accepted accounting principles, management's discussion and analysis, and other vitally important financial disclosures. Shortening the due date of quarterly and annual reports would provide more timely disclosure to investors and the market.
In establishing the appropriate timeframes for filing periodic reports, however, we must balance the market's need for information with the time companies need to prepare that information without undue burden. We recognize that it may be necessary for a new public company to develop experience with the preparation and filing of periodic reports. Similarly, smaller issuers may not have the resources or infrastructure to prepare their reports on a shorter timeframe without undue burden or expense.
In our 1998 release, we requested comment as to whether we should shorten the due dates for quarterly and annual reports.
A larger number of commenters, however, thought that a shortening of due dates would be overly burdensome,
Some of the commenters who objected to an acceleration of filing deadlines and several other commenters offered alternative suggestions that might help mitigate the impact of such a change if the Commission was committed to an acceleration proposal. One suggestion was a more gradual acceleration of due dates, where large or seasoned issuers would be the first group subject to shortened filing dates or the filing deadline would be shortened in incremental steps (for example, initially to 40 days for quarterly reports and 75 days for annual reports).
On February 13, 2002, we announced our intention to propose shortened filing deadlines as part of a series of initial steps to modernize and improve the corporate disclosure system.
After evaluating the discussions at the roundtables, the comments from our 1998 release, and technological and other market developments since the 1998 release, we propose to accelerate the due dates of quarterly and annual reports only for companies:
• With a public float
• That have been subject to the reporting requirements of Section 13(a)
• That have filed at least one annual report pursuant to Section 13(a) or 15(d) of the Exchange Act.
For a company meeting these requirements, which we define as an “accelerated filer,” we propose to shorten the due date for annual reports on Form 10–K to 60 calendar days after the company's fiscal year end. We propose to shorten the due date for quarterly reports on Form 10–Q to 30 calendar days after the end of each of the first three quarters of the company's fiscal year. We propose similar changes to the transition reports that an accelerated filer must make when it changes its fiscal year. Specifically, we propose to accelerate the due date of transition reports to 60 calendar days for transition reports filed on Form 10–K and 30 calendar days for transition reports filed on Form 10–Q.
Although our proposed changes would not eliminate entirely the information gap between a company's announcement of earnings and the filing of more extensive information in its periodic reports, they would lessen the gap. We seek to minimize this gap while still giving companies enough time to prepare their reports. We are aware that it takes companies time to prepare and verify the more extensive disclosures that must be included in the reports, and we appreciate the importance of allowing sufficient preparation time to ensure accurate presentation of results, as well as to permit the mandated audit or review of financial information by independent auditors and consideration by audit committees and boards of directors. We acknowledge that, while the deadlines for filing quarterly and annual reports have not changed in over 30 years, the disclosure requirements have changed and some companies, particularly those with widespread operations, face additional complexities in today's environment. However, for the reasons discussed above, we anticipate that these changes have not outweighed fully the ability of companies to report in shorter timeframes, particularly with respect to companies that would meet our proposed public float and reporting history requirements. We believe that these companies may be able to disclose information within the shortened timeframes without sacrificing accuracy or completeness, although we request comment on these preliminary beliefs. Accordingly, we propose a 30 day period for quarterly reports and a 60 day period for annual reports. A 30 and 60 day period also represents common and easily measurable periods for investors and companies to calculate filing deadlines. We propose conforming deadlines for transition reports so that they remain similar to the deadlines for periodic reports.
• To what extent would shortening the due dates for quarterly, annual and transition reports improve the flow of information to investors and the markets?
• Should the proposed filing periods be longer or shorter than proposed? What factors should we consider in making these filing periods longer or shorter?
• Should we only accelerate the annual report due date, or only the quarterly report due date?
• Should we require companies to file their reports by the earlier of the existing deadlines or some earlier time after their first release of earnings information for that period? What timeframe would be appropriate? For example, would a 15 or 30 day period after the earnings announcement provide enough time for a company to finalize the corresponding periodic report? Would such a requirement delay earnings announcements?
• Are there ways other than our proposal to get important information out to investors sooner? Would our proposals cause a delay in the release of earnings announcements? Should we only require that certain information, such as the audited or reviewed financial statements and management's discussion and analysis, be filed on an accelerated basis?
• Do the proposed Form 10–Q and 10–K due dates provide affected companies with enough time to prepare their reports? Do affected companies anticipate any significant problems in complying with the accelerated deadlines?
• Would the proposal impose any significant costs on these companies? If so, what type and amount of costs? Are these short-term or one-time costs to
• Would auditors, audit committees and boards of directors have sufficient time to perform their review functions?
• It is our understanding that a company's audit (or review in the case of interim financial statements) is complete or substantially complete by the time the company issues its earnings announcement. Is our understanding accurate? How often do these earnings numbers change between their announcement and the filing of the corresponding periodic report? What steps are involved, and how much time does it take, to prepare the necessary disclosures for the corresponding periodic report after the earnings announcement or the completion of the audit (or review)?
• Would the reliability and accuracy of the reports suffer as a result of shortened due dates?
• As part of our proposal, we also propose to make a conforming change to the date by which all schedules required by Article 12
• We do not propose to make a conforming change to the 120-day period companies have to file their definitive proxy or information statements involving the election of directors to allow the incorporation by reference of the information required by Part III of Form 10–K.
• We also are strongly considering making conforming revisions to accelerate the timeliness requirements in Regulation S–X (for example, Rules 3–01, 3–05 and 3–12 of Regulation S–X)
The public float and reporting history requirements that we propose to use to identify the companies that would be subject to accelerated filing are intended to include the companies that are least likely to find such a change overly burdensome. We are not proposing to change the due dates for annual, quarterly or transition reports for other companies, including small business issuers that file on Forms 10–KSB and 10–QSB, at this time.
If a company was not already an accelerated filer, a company would determine its public float for purposes of determining whether it will become an accelerated filer as of a date no more than 60 and no less than 30 days before the end of its fiscal year. Hence, a company that meets the float requirement on this determination date would be subject to shortened deadlines for that year's Form 10–K and the reports on Form 10–Q filed in the company's next fiscal year, if it also meets the reporting history requirements on the date the reports are due. If a company meets the public float requirement on the determination date but does not yet meet the reporting history requirements, it would not become an accelerated filer until it does meet the reporting requirements, which could occur at any time during the next fiscal year.
Once a company became an accelerated filer, it would remain an accelerated filer subject to shortened deadlines unless it became eligible to use Forms 10–KSB and 10–QSB for its annual and quarterly reports.
For example, if in December, 2002, a company with a December 31st fiscal year end determines that it meets the public float requirement but has not filed its first annual report, its annual report for fiscal year 2002, due in 2003, would be subject to a 90 day deadline. However, once it filed its 2002 annual report, and assuming by that time it had also been subject to the Exchange Act reporting requirements for 12 months, the company would now be subject to accelerated deadlines for subsequent Form 10–Q reports filed during the 2003 fiscal year and all annual and quarterly reports filed thereafter. If, in subsequent years, the company's public float fell to the point that it became eligible to use Forms 10–KSB and 10–QSB for its annual and quarterly reports, it would no longer be an accelerated filer subject to accelerated deadlines. If the company subsequently became ineligible to use Forms 10–KSB and 10–QSB and once
Currently, companies are required to disclose on the cover page of their annual reports on Form 10–K the company's public float as of a specified date within 60 days before filing. To assist the Commission and investors in evaluating whether a company is subject to accelerated deadlines, we propose to revise this requirement. For a company that was not previously an accelerated filer, we would require disclosure of the public float computed as of a date no more than 60 and no less than 30 days before the last day of the company's most recently completed fiscal year to determine whether the company was an accelerated filer, and the date used for purposes of that computation. If a company was previously an accelerated filer, we would require disclosure of the public float as of a specified date no more than 60 and no less than 30 days before the last day of the company's most recently completed fiscal year.
• Would the proposed public float and reporting history requirements exclude the companies that are the least able to comply with shortened deadlines?
• Would different filing deadlines for different companies confuse companies and/or investors?
• Should all reporting companies be subject to shortened filing deadlines?
• Should non-accelerated filers be subject to deadlines shorter than the current deadlines, but not as short as those proposed for accelerated filers (
• Would our proposed changes affect some companies or industries more than others (such as those with complex transactions or accounting or those that regularly access the debt markets instead of equity markets, and therefore may not have a public float)? Should we make exceptions to the proposed due dates for certain companies or industries? If so, which ones and why?
• Currently, foreign private issuers must file their annual reports on Form 20–F within six months after the end of their fiscal years.
• Should the public float requirement be higher or lower than that currently proposed? If higher, how would that level be consistent with the level currently required for short-form registration on Form S–3 (or should that level also be raised)? If a different level is appropriate, what levels should be considered, and why?
• Is the method for determining the measurement date for the public float test clear? Is the delineation of which reports would be subject to accelerated deadlines appropriate? Should the determination of which reports would be subject to accelerated deadlines be made at a point other than a date no more than 60 and no less than 30 days before the last date of the issuer's fiscal year?
• While we have proposed to use the public float test, we are seriously considering alternative thresholds and request comment on such alternatives. For example, should all reporting companies be subject to shortened filing deadlines, except for companies below a certain revenue or asset threshold (for example, $5 million)? Should we accelerate the filing dates only for companies whose equity securities are listed or actively traded on an exchange or Nasdaq? How would we define “actively traded?” Are there other alternatives that will balance the need for timely, high quality disclosure with the ability of companies to prepare the disclosure without undue burden?
• Should the reporting history requirement be shorter or longer than proposed? Is a history of preparing reports relevant to the ability of a company to report on an accelerated timeframe? Is less or more experience needed than that proposed?
• We are proposing the requirement that a company file at least one annual report to provide reasonable opportunity for a company to gain enough filing experience before it is subject to shortened deadlines. Is such experience relevant to prepare information in a shorter timeframe?
• Is the proposed method for entering and exiting accelerated filing status that relies on the small business issuer reporting system clear? Is it appropriate? In the alternative, should there be some other mechanism for companies to enter and exit accelerated filer status? For example, should a company be permitted to exit accelerated filer status if its public float has fallen below some specified threshold (
• Should we require a company to provide notice that it is entering or exiting accelerated filer status? Should such a notice be through a filing on Form 8–K and/or through some other method or combination of methods to ensure broad dissemination of this announcement? Would the lack of an affirmative requirement to announce a change in a company's filing status disadvantage investors or the markets?
The proposed shortening of the due dates for quarterly and annual reports could create the risk that more companies would file their reports late or would need a filing extension.
• Are there ways we can minimize these negative effects aside from continuing to permit companies to rely on Exchange Act Rule 12b–25 for extensions of the annual report and quarterly report deadlines?
• Would the current filing extension periods remain sufficient under accelerated deadlines? Should these periods be shortened (for example, to 10 days for an annual report or three days for a quarterly report) to conform to the accelerated filing due dates of these reports and to ensure timely filings? Would shorter periods provide companies with enough time to make Exchange Act Rule 12b–25 useful? Instead, should these periods be lengthened (for example, to 20 days for an annual report or 10 days for a quarterly report) to provide companies more time to file their reports because of the effect of accelerated filing due dates? What factors should we consider in determining whether and by how much these periods should be changed?
• Would companies not subject to the accelerated deadlines find it more difficult to retain the necessary outside advisors to prepare their reports in the appropriate timeframe? Would the quality of their reports suffer?
• Would companies that currently integrate their annual or quarterly reports to security holders with their Form 10–K or Form 10–Q reports, or publish and mail both in a single document, encounter difficulty in meeting the accelerated due dates?
• Are there special circumstances associated with the preparation of transition reports that weigh against reducing the filing periods for those reports?
We expect that, if adopted, the proposal would have a delayed effectiveness date to provide affected companies with time to prepare for the transition to shortened due dates. Companies could, of course, voluntarily file their reports sooner during this transition period, just as they may today. If we adopt the proposal, we expect to make the proposal effective for companies that meet the public float and reporting history requirements as of the end of their first fiscal year ending after October 31, 2002. We request comment on the factors we should consider in selecting an appropriate transition period.
Widespread access to timely corporate information promotes the efficient functioning of the secondary markets by enabling investors to make informed investment and voting decisions. Further, ready access to Exchange Act information is critical to short-form registration of securities offerings by seasoned issuers under the Securities Act. Our system of short-form registration, which is available in varying degrees for domestic issuers on Forms S–2,
The development of the Internet has revolutionized information production, availability, and dissemination.
We have taken a number of steps to encourage companies and market intermediaries to take advantage of electronic media to communicate with, and deliver information to, investors.
An efficient and economical method for companies to make information available about themselves to many investors is through an Internet website. In addition to other existing sources of company information, such as our website, a company's website is often an obvious place for investors to find information about a company. Investors following particular companies can use electronic devices to alert them to the posting of new information about the companies on a website. Many companies, realizing the benefits of this technology for information dissemination, have established websites to furnish company and industry information. As discussed
Modernizing the disclosure system under the federal securities laws involves recognizing the importance of the Internet in fostering prompt and more widespread dissemination of information. We believe company disclosure should be more readily available to investors on a timely basis in a variety of locations to facilitate investor access to that information. We believe it is important for companies to make investors aware of the different sources that provide access to company information.
We encourage companies to make their Commission filings as broadly available to the public as possible. In particular, we encourage every reporting company to make its filings available to investors free of charge on its Internet website, if it has one, as soon as reasonably practicable after, and in any event on the same day as, such material is electronically filed with or furnished to the Commission. We applaud the efforts already being made by many reporting companies to provide access to their Commission filings through their websites. We would like more companies to make similar efforts. We also would like to encourage companies to disseminate their Exchange Act reports via their websites to promote consistent and relative uniform access to these reports in the place where investors may most likely look for them. Website access to Exchange Act reports helps to promote consistent, direct, timely, and more widespread access of information to investors and the financial markets. It also furthers the proper functioning of the integrated disclosure and short-form registration systems. However, we do not want to impose undue burdens and expenses on companies that may not have the resources to provide such access.
Accordingly, we propose to require companies that would be subject to our proposed accelerated filing deadlines (that is, companies with at least a $75 million public float, that have been subject to the Exchange Act reporting requirements for at least 12 calendar months, and that have filed at least one annual report) to disclose in their annual reports on Form 10–K the following:
• That the public may read and copy the company's filings at our Public Reference Room, and can access information electronically filed on our website;
• The company's website address, if it has one;
• Whether the company makes available free of charge on its website, if it has one, its annual report on Form 10–K, quarterly reports on Form 10–Q, current reports on Form 8–K, and all amendments to those reports as soon as reasonably practicable after, and in any event on the same day as, such material is electronically filed with or furnished to the Commission;
• If the company does not make its filings available in this manner, the reasons why it does not do so (including, where applicable, that it does not have an Internet website);
• If the company does not make its filings available in this manner, one or more locations where the public can access these filings electronically immediately upon filing, if any, and whether there is a fee for such access; and
• Whether the company voluntarily will provide electronic or paper copies of its filings free of charge upon request.
We understand that companies currently provide website access to their Exchange Act reports in a variety of ways, including by establishing a hyperlink to its Exchange Act reports via a third-party service in lieu of maintaining the reports itself.
Whether a company provides access to its Exchange Act reports either directly or through a third-party service, we recognize that some companies display the reports in electronic formats (for example, PDF) other than the official electronic format used to transmit the filing to our EDGAR system. In fact, we encourage companies to do so if alternative formats enhance readability and accessibility of the reports, so long as all of the information in the reports remains retrievable. However, the use of a particular medium to access the reports should not be so burdensome that the intended recipients cannot effectively access the information provided.
We also encourage companies at a minimum to provide website access to their previous reports for at least a twelve month period. Of course, we encourage companies to provide access to their previous reports on an appropriately archived portion of their website over an even longer timeframe. We also encourage companies to provide website access to all of their filings with the Commission, including their filings under the proxy rules and their Securities Act filings.
• Would our proposal aid in encouraging companies to make information available in a variety of locations and hence make corporate information more widely accessible and disseminated? Would investors find this information useful? Would the proposed disclosure requirement provide sufficient notice to investors of the available sources of corporate information?
• The proposed new disclosure requirement only would apply to companies subject to the accelerated filing deadlines. Is excluding small issuers appropriate? Is the need for timely information about these issuers greater than the additional burden or expense these issuers would incur due
• The proposal only would apply to companies that file on Form 10–K. Should we also include foreign private issuers that file on Form 20–F? Would expanding this requirement be overly burdensome?
• What are the expected additional costs of posting Exchange Act reports on company websites, either directly or by hyperlinking to a third-party service? Please specify the types of costs that would be incurred and quantify them, if possible.
• Would the proposed new disclosure be overly burdensome? Should additional disclosure be required? Is some of the proposed disclosure not necessary or appropriate?
• Is additional guidance necessary in how to comply with the proposal? If so, in what areas would guidance be helpful?
• Should the disclosure appear in other company filings, such as quarterly reports? We encourage companies also to put this disclosure in their annual report to shareholders.
• Our proposal would require disclosure of a company's Internet address. Is this requirement helpful to investors? What are the ramifications of requiring disclosure of a company's website address? Are there reasons why a company would not want to provide disclosure of its website address?
• We have not proposed a conforming change to require disclosure of a company's website address in Securities Act registration statements. Currently, companies are only encouraged to provide their website address in these documents. We request comment on whether we should make this conforming change. Would there be any negative impacts from this change?
• Should a company be required to disclose whether it provides access to all of its Exchange Act filings (and not just its periodic and current reports)? Should access to exhibits or supplemental schedules be excluded? Should Securities Act filings be included? Should information under the proxy rules be included, or at least the information required by Part III of Form 10–K incorporated by reference from a company's definitive proxy or information statement?
• We recognize that not all investors may have ready access to the Internet. Are there additional ways to facilitate access to Commission information for those without Internet access?
The participants at the financial disclosure and auditor oversight roundtables noted that many companies already provide website access to their Exchange Act reports as a matter of good corporate practice.
While we believe that this proposal would benefit investors of all companies, we seek to minimize any new costs or burdens that affected companies may incur. Therefore, we are only proposing this new requirement for companies subject to the accelerated filing deadlines. According to available data, most of these companies already provide some form of Internet access to corporate information. As with our proposal to accelerate filing deadlines, disclosure of real-time access to the filings of these companies may be particularly appropriate given their ability to rely on short-form registration.
As with the proposal to shorten the deadlines for quarterly and annual reports, we anticipate that a transition period would be necessary for this proposal, if adopted. This transition period would give affected companies sufficient time to modify their websites or make other arrangements as necessary to provide the new disclosure. Accordingly, we propose to make the new disclosure requirement effective three months after the date of adoption. We request comment on the appropriate length of this transition period.
We invite any interested person wishing to submit written comments on the proposed amendments, and any other matters that might have an impact on the proposed amendments, to do so. We specifically request comment from companies that would be subject to the accelerated filing deadlines and new website disclosure requirements, investors, and other users of Exchange Act information, as well as facilitators of capital formation, such as underwriters. We also specifically request comment on any conforming changes that should be made to rules and regulations under the Securities Act or Exchange Act for other Commission filings.
The proposed amendments contain “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).
Form 10–K (OMB Control No. 3235–0063) was adopted pursuant to Sections 13 and 15(d) of the Exchange Act and prescribes information that a registrant must disclose annually to the market about its business. Preparing and filing an annual report on Form 10–K is a collection of information.
Form 10–Q (OMB Control No. 3235–0070) was adopted pursuant to Sections 13 and 15(d) of the Exchange Act and prescribes information that a registrant must disclose quarterly to the market about its business. Preparing and filing a quarterly report on Form 10–Q is a collection of information.
We currently estimate that Form 10–K results in a total annual compliance burden of 4,035,120 hours and an annual cost of $3,631,608,000. The burden was calculated by multiplying the estimated number of respondents filing Form 10–K annually (9,384) by the estimated average number of hours each entity spends completing the form (1,720 hours). We estimate that 25% of the burden is prepared by the respondent (9,384 × 1,720 × 0.25 = 4,035,120). We estimate that 75% of the burden is prepared by outside advisors retained by the respondent at an average
We currently estimate that Form 10–Q results in a total annual compliance burden of 909,364 hours and an annual cost of $818,427,600. The burden was calculated by multiplying the estimated number of reports on Form 10–Q filed annually (26,746) by the estimated average number of hours each entity spends completing the form (136 hours). We estimate that 25% of the burden is prepared by the respondent (26,746 × 136 × 0.25 = 909,364). We estimate that 75% of the burden is prepared by outside advisors retained by the respondent at an average cost of $300 per hour (26,746 × 136 × 0.75 × $300 = $818,427,600). This portion of the burden is reflected as a cost.
The proposed amendments, if adopted, would accelerate the filing deadlines of quarterly reports on Form 10–Q and annual reports on Form 10–K by companies subject to our proposed public float and reporting history requirements. The proposed amendments, if adopted, also would require those companies to disclose in their annual reports on Form 10–K where investors can obtain access to company filings, including whether the company provides access to its Exchange Act reports free of charge on its Internet website, as soon as reasonably practicable, and in any event on the same day as, those reports are electronically filed with or furnished to the Commission. If a company does not provide website access in this manner, it must also disclose the reasons why it does not do so, and where else investors can access its Exchange Act reports. We also propose to require companies to disclose their website address if they have one. We believe that the proposed revisions would promote direct, uniform and more widespread dissemination of timely information to investors and the markets and further the purposes of short-form registration under the Securities Act.
We estimate that approximately 59% of Form 10–K and Form 10–Q respondents, or 5,494 respondents, would satisfy our proposed definition of accelerated filers, and thus would be subject to accelerated deadlines and the requirement to make the enhanced disclosure in their Form 10–K regarding website access to their Exchange Act reports.
For our proposal regarding filing deadlines, the amount of information required to be included in Exchange Act reports would remain the same. Accordingly, for purposes of the Paperwork Reduction Act, our preliminary estimate is that the amount of time necessary to prepare the reports, and hence, the total amount of burden hours, would not change. However, there is the possibility that preparing these reports on a shorter timeframe may result in the respondent investing more resources in technology, relying to a greater extent on outside advisors, or that the average cost associated with the portion of the burden prepared by outside advisors may increase. Accelerating the filing deadline may, on the other hand, increase efficiencies in preparing these reports and decrease the burden over time. We request comment on whether, for purposes of the Paperwork Reduction Act, the burden will increase or decrease. If so, by what amount? Would the proposal have any other effect on the total compliance burden?
We estimate that the preparation of the required disclosure regarding information access in a respondent's Form 10–K would add 0.50 burden hours to each annual report on Form 10–K. Thus, we estimate this aspect of the proposal will add an additional 2,747 burden hours to the current Form 10–K (0.50 hours × 5,494 respondents). We estimate that 25% of the burden is prepared by the respondent (0.50 × 5,494 × 0.25 = 687). We estimate that 75% of the burden is prepared by outside advisors retained by the respondent at an average cost of $300 per hour (0.50 × 5,494 × 0.75 × $300 = $618,075). This portion of the burden is reflected as a cost.
As a result, we estimate the total annual compliance burden for Form 10–K after our proposed revisions to be 4,035,807 hours and an annual cost of $3,632,226,075, an increase of 687 hours and $618,075 in cost. Compliance with the disclosure requirement would be mandatory. There would be no mandatory retention period for the information disclosed, and responses to the disclosure requirements will not be kept confidential. We do not believe that the imposition of this requirement would alter significantly the number of respondents that file on Form 10–K.
We request comment in order to (a) evaluate whether the proposed collections of information are necessary for the proper performance of the functions of the Commission, including whether the information will have practical utility; (b) evaluate the accuracy of our estimates of the burden of the proposed collections of information; (c) determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected; (d) evaluate whether there are ways to minimize the burden of the collections of information on those who respond, including through the use of automated collection techniques or other forms of information technology; and (e) evaluate whether the proposed amendments will have any effects on any other collections of information not previously identified in this section.
Any member of the public may direct to us any comments concerning the accuracy of these burden estimates and any suggestions for reducing the burdens. Persons who desire to submit comments on the collection of information requirements should direct their comments to the OMB, Attention: Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Washington, DC 20503, and send a copy of the comments to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549, with reference to File No. S7–08–02. Requests for materials submitted to the OMB by us with regard to these collections of information should be in writing, refer to File No. S7–08–02, and be submitted to the Securities and Exchange Commission, Records Management, Office of Filings and Information Services, 450 Fifth Street NW., Washington DC 20549. Because the OMB is required to make a decision concerning the collections of information between 30 and 60 days after publication, your comments are best assured of having their full effect if the OMB receives them within 30 days of publication.
The proposed amendments are part of our initiative to modernize and improve the regulatory system for periodic disclosure under the Exchange Act. We are sensitive to the costs and benefits that result from our rules. In this section, we examine the benefits and costs of our proposed amendments. We request that commenters provide views and supporting information as to the benefits and costs associated with the proposals. We seek estimates of these costs and benefits, as well as any costs and benefits not already identified.
The proposed rule and form changes would enhance the timeliness and availability of disclosure in Exchange Act reports in two ways:
• Shortening the due dates of quarterly and annual reports (and transition reports) for domestic reporting companies that meet certain public float and reporting history requirements; and
• Requiring companies to disclose in their annual reports on Form 10–K where investors can obtain access to company filings, including whether companies provide access to their Exchange Act reports on their Internet websites.
The due dates for quarterly and annual reports by domestic issuers have not changed in over 30 years, despite enormous advances in information technology and productivity. Many companies now routinely release quarterly and annual results well before they file their formal reports with us. However, the presentation of these results vary and may not contain all of the information found in a company's Exchange Act reports. Delayed filing of reports means investors often make decisions without the more extensive information in the company's Exchange Act reports.
Shortening the due dates for quarterly, annual and transition reports would provide many benefits. Most importantly, it would accelerate the delivery of information to investors and the capital markets, enabling them to make more informed investment and valuation decisions.
Also, the accelerated filing of reports could serve to make them more relevant to investors, thereby increasing the use of such reports and investor scrutiny of them. Increased focus on and scrutiny of the reports may in turn cause an increase in their quality. Moreover, seasoned issuers incorporate information from their Exchange Act reports in their Securities Act registration statements. Hence, investors buying in these public offerings, particularly in on-going shelf offerings, would also benefit from more timely disclosure. All of these benefits are difficult to quantify.
The proposed amendments may increase the costs to the affected reporting companies, although companies may, and some already do, report within the proposed deadlines voluntarily. Specifically, the amendments may increase the costs in preparing quarterly and annual reports because although companies already must prepare their quarterly and annual reports, they may have to delay other projects or use additional resources, including in-house personnel, outside legal counsel and outside auditors to prepare the information in a shorter timeframe. These costs may vary by company given their individual circumstances, such as the complexity of their business or industry. Some companies also may need to make additional capital investments, such as in additional information systems, to prepare their reports in a shorter timeframe.
We anticipate that some, and perhaps most, of these costs may be short-term or one-time costs to adjust a company's reporting procedures to a shorter timeframe. Our proposed requirements that limit the application of shortened due dates only to companies with a minimum public float and reporting history also may help to minimize the impact on companies that may find it more difficult to bear these costs. In addition, it is our understanding that a company's audit (or review in the case of interim financial statements) is complete or substantially complete by the time it issues its earnings announcement, which often occurs today well before the proposed filing due dates. We request comment on the type, amount and duration of these costs.
The proposed amendments may have indirect effects as well. Preparing the information on a 33% shorter timeframe could create a risk that the quality or accuracy of the information would diminish. We do not propose to change the liability standards for these reports, nor do we propose to decrease the amount of information required in these reports. Investors and the capital markets may suffer if quality or accuracy diminished, causing the markets to function less efficiently and investment decisions to be impaired. Another possible effect is that more affected companies may be late in filing their periodic reports, or more companies may request additional time to file their reports under Exchange Act Rule 12b–25. Either result could delay the delivery of information to investors and the market. Moreover, if a company was late in filing its reports, it would lose eligibility for short-form registration for at least one year, and Securities Act Rule 144 and Form S–8 would be temporarily unavailable during the period of noncompliance. This could negatively affect shareholders reselling or attempting to resell securities or employees whose securities are subject to Form S–8.
Smaller companies are likely to be more sensitive to any increased costs in preparing their reports. These entities may not have the infrastructure and resources available or necessary to prepare their reports on a shorter timeframe. As a result, shorter timeframes could discourage companies near the accelerated filer threshold from becoming public companies or accessing the public securities markets. This may adversely impact their ability to raise capital, the ability of their investors to obtain adequate information and the liquidity of their securities. Our proposal limits the application of
We considered several regulatory alternatives in formulating our proposals. In our 1998 release proposing Securities Act reform, we proposed requiring companies to report selected financial information on Form 8–K on the earlier of the date they issue a press release containing earnings information or either the date that is 30 days after the end of each of the first three quarters of their fiscal year or 60 days after the end of their fiscal year. However, this information would not contain the more extensive information found in the quarterly and annual periodic reports, and in many instances only would repeat the information in the earnings press release. Moreover, we have subsequently adopted Regulation FD to address some of the concerns over selective disclosure of information.
We have been considering shortening filing deadlines for all reporting companies, although we do not propose to do so at this time. Although we believe investors in less large or unseasoned companies may want and benefit from more timely disclosures just as much as investors in larger, listed companies, we are concerned that this may impose undue burden and expense on these companies. Accordingly, we propose shortening the filing deadlines only for companies with a minimum public float or reporting history. Of course, smaller companies may file their reports earlier voluntarily. We have been considering several different conditions for shortening deadlines, but based on our research and past experience, we believe the public float test currently used in Form S–3 is consistent with our purposes. We request comment regarding the relative costs and benefits of pursuing alternative regulatory approaches.
Widespread access to timely company information promotes the efficient functioning of the capital markets. Also, ready access to Exchange Act information is critical to short-form registration of securities offerings by seasoned issuers. One rationale for short-form registration is that the information in a company's Exchange Act reports already has been adequately disseminated and absorbed by the market place.
Many aspects of our disclosure system were adopted well before the revolutions in information technology brought about by the Internet. In modernizing and improving our disclosure system, we should recognize the benefits of the Internet in promoting the more widespread dissemination of information. An efficient and cost effective method for companies to make information available about themselves is through their Internet website. In addition to other existing sources of company information, such as our website, a company's website is one obvious place for many investors to find information about a company. We encourage companies to provide investors with website access to their Exchange Act reports. We believe company disclosure should be more readily available to investors on a timely basis in a variety of locations to facilitate investor access to that information. We believe it is important for investors to know of additional sources where they can access company information.
Providing this disclosure and encouraging companies to post their Exchange Act reports on their websites would provide many benefits. The proposal protects investors by alerting them to sources where they can obtain direct and easy access to the information they should have to make informed investment and valuation decisions. It would help promote consistent, direct, timely and more widespread access of information to investors and the markets, and further the proper functioning of the integrated disclosure and short-form registration system. An efficiently functioning registration system facilitates capital formation. Not all reporting companies now make their Exchange Act filings available through their websites, and not all the ones that do make information available provide access in real-time. Our proposal would encourage uniform best practices to aid in an investor's search for timely information, thereby potentially reducing the costs to gather such information. For those companies that elect not to provide website access, our proposed disclosure requirement would provide investors with the information necessary to locate this information on an ongoing basis. These potential benefits are difficult to quantify. We request comment on our assessment of these benefits, including information on the ability to quantify these benefits.
The proposed amendments may also increase the costs to affected companies, although we seek to minimize those costs. Companies would be required to include minimal additional disclosure in their annual report on Form 10–K. For purposes of the Paperwork Reduction Act, we estimate this will result in a total additional burden of 687 hours and $618,075 in additional costs for all affected companies. Our proposal would only apply to companies that meet our proposed public float and reporting history requirements, which should help to minimize the impact on companies potentially less able to bear additional costs. Our proposal also would not require a company to provide website access. Of course, we encourage all reporting companies to make their reports widely available through their websites. We request comment on the number of issuers our proposal would impact and the amount of any additional costs they may incur.
We considered several regulatory alternatives in formulating our proposal. Many companies already voluntarily provide at least some access to their filings on their websites, but not all provide access to all of their filings or in real-time. Also, our proposed disclosure requirement for companies that do not provide website access provides investors with information on where else they can obtain access to these filings on an ongoing basis. We considered requiring website access to company reports as an additional eligibility requirement for short-form registration under the Securities Act. However, we were concerned that the potential loss of form eligibility from non-compliance with the requirement would be overly burdensome on companies. We request comment regarding the relative costs and benefits of pursuing alternative regulatory approaches.
For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996, or “SBREFA,”
• an annual effect on the economy of $100 million or more (either in the form of an increase or a decrease);
• a major increase in costs or prices for consumers or individual industries; or
• significant adverse effects on competition, investment or innovation.
We request comment on the potential impact of the proposed amendments on the economy on an annual basis. Commenters are requested to provide empirical data and other factual support for their views if possible.
Section 23(a)(2) of the Exchange Act
The proposed amendments are intended to improve the timeliness and accessibility of Exchange Act reports to investors and the financial markets. We anticipate these proposals would enhance the proper functioning of the capital markets. This increases the competitiveness of companies participating in the U.S. capital markets. The proposals would affect certain companies and not others, so the impacts of the proposal may not be equally distributed. Also, if not all competitors in a given industry are subject to accelerated deadlines, information about some competitors may be disclosed ahead of other competitors (for example, the filing of material contracts).
We request comment on whether the proposed amendments, if adopted, would impose a burden on competition. Commenters are requested to provide empirical data and other factual support for their views if possible.
Section 2(b) of the Securities Act
We request comment on whether the proposed amendments, if adopted, would promote efficiency, competition, and capital formation. Commenters are requested to provide empirical data and other factual support for their views if possible.
This Initial Regulatory Flexibility Analysis, or IRFA, has been prepared in accordance with the Regulatory Flexibility Act.
• Shorten the due dates of quarterly and annual reports (and transition reports) for domestic reporting companies that meet certain public float and reporting history requirements; and
• Requiring companies to disclose in their annual reports on Form 10–K where investors can obtain access to company filings, including whether companies provide access to their Exchange Act reports on their Internet websites.
The proposed amendments have two primary objectives. First, we propose to accelerate disclosure of information to investors and the capital markets by shortening the due dates of quarterly and annual periodic reports and transition reports for domestic reporting companies that meet certain minimum public float and reporting history requirements. These due dates have not changed in over 30 years, despite advances in information technology and productivity and increases in the pace of and need for communications in the capital markets. Accelerating the delivery of information to the capital markets would help enhance the efficient functioning of those markets. Many companies routinely release quarterly and annual financial results before they file their formal reports with us. However, the presentation in these results vary and may not contain all of the more extensive information found in the company's formal reports. Shortening the deadlines would shorten this information gap, thereby increasing the relevancy of those reports. Investors buying in public offerings of issuers that incorporate their Exchange Act reports in their Securities Act registration statements also would benefit from more timely disclosure.
Second, we wish to encourage more direct and widespread accessibility and dissemination of timely information to investors and the capital markets in a variety of locations. Accordingly, we propose to require companies subject to the accelerated filing deadlines to disclose in their annual reports on Form 10–K where investors can obtain access to company filings, including whether the company provides access to its Exchange Act reports free of charge on its Internet website, as soon as reasonably practicable, and in any event on the same day as, those reports are electronically filed with or furnished to the Commission. Our proposal would help promote consistent, direct, timely and more widespread access of information to investors and the markets and further the proper functioning of the integrated disclosure and short-form registration system. Not all public companies currently make their filings available on their websites, and not all provide access to all of their reports or in real-time. Our proposal would thus promote greater access for investors.
We are proposing the amendments to the forms and rules under the authority set forth in Sections 3(b) and 19(a) of the
The proposed amendments would affect certain small entities that are required to file quarterly and annual periodic reports and transition reports under the Exchange Act. For purposes of the Regulatory Flexibility Act, Exchange Act Rule 0–10(a)
We estimate that there are approximately 2,500 companies subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act that have assets of $5 million or less. The proposal to shorten the deadlines for annual and quarterly periodic and transition reports and the proposal regarding website access to Exchange Act reports would apply to these small entities if they have a public float of $75 million or more, have been subject to the Exchange Act's reporting requirements for at least one year, and have filed at least one annual report. We have no way to determine exactly how many small entities meet these requirements, although it is unlikely that many of these entities would meet the public float requirement.
According to the Standard & Poors Research Insight Compustat Database, of the 711 reporting companies listed with assets of $5 million or less, 10, or 1.4%, had a market capitalization greater than $75 million.
For reporting companies that meet our proposed public float and reporting history requirements, we are proposing to shorten the due dates of annual reports on Form 10–K from 90 days to 60 days after a reporting company's fiscal year end and the due dates of quarterly reports on Form 10–Q from 45 days to 30 days after the first three quarters of a company's fiscal year. We propose similar changes to transition reports these companies must file when they change their fiscal year. We do not propose to change the filing deadlines for other companies, including small business issuers eligible to rely on our small business reporting system, at this time.
While the amount of information required to be included in Exchange Act reports, and hence the amount of time necessary to prepare them, would remain the same, affected companies may be required to use additional resources, including in-house personnel, in preparing their reports on a shorter timeframe. Small entities that meet the public float and reporting history requirements may incur additional costs in seeking the help of outside experts, particularly outside legal counsel and auditors. We request comment on the ability of affected small entities to meet shortened filing deadlines. If they would incur additional costs, what are the particular types and amounts of costs that may be required, and would small entities be able to bear these costs? Would the proposal disproportionately impact small entities?
Companies that were late in filing their reports would lose eligibility for short-form registration for at least one year, and Securities Act Rule 144 and Form S–8 would be temporarily unavailable during the period of noncompliance.
We also propose to require accelerated filers to disclose in their annual reports on Form 10–K where investors can obtain access to company filings, including whether the company provides access to its Exchange Act reports free of charge on its Internet website, as soon as reasonably practicable, and in any event on the same day as, those reports are electronically filed with or furnished to the Commission. If a company does not provide such access, it must also disclose why it does not do so and where else investors can access these filings electronically immediately upon filing. In formulating our proposal, we have sought to minimize its costs, particularly on small entities. The proposal would apply only to companies that met our proposed public float and reporting history requirements. Companies would not be required to establish an Internet website for purposes of this requirement if they did not otherwise have one. Also, a company could elect not to provide website access to their reports as long as they disclosed that they have elected not to do so, the reasons why they have elected not to do so (which could include cost) and where else the public can access the company's reports. We request comment on whether there are additional alternatives to further our goal that we have not mentioned.
We seek comment on these views. How difficult would it be for affected small entities to comply with the website proposal? Would our proposal disproportionately impact small entities?
We believe that there are no rules that duplicate, overlap or conflict with the proposed amendments.
The Regulatory Flexibility Act directs us to consider significant alternatives that would accomplish our stated objectives, while minimizing any significant adverse impact on small entities. In connection with our proposals, we considered the following alternatives:
• Establishing different compliance or reporting requirements or timetables that take into account the resources available to small entities;
• Clarifying, consolidating or simplifying compliance and reporting requirements under the rules for small entities;
• Using performance rather than design standards; and
• Exempting small entities from all or part of the requirements.
Our proposals to shorten the filing deadlines would apply only to entities that meet minimum public float and reporting history requirements, which should serve to exclude almost all small
In addition, we are not aware of how to further clarify, consolidate or simplify these proposals for small entities. In this regard, we are proposing already to limit the shortened deadlines to entities that meet minimum public float and reporting history requirements. We do not consider using performance rather than design standards to be consistent with our statutory mandate of investor protection in the present context. Because specified information in Exchange Act reports must be reported in a timely manner to be useful, design standards are necessary to achieve the objectives of the proposal. We request comment, however, on these matters.
Our proposals regarding disclosure of website access to company reports are designed to enhance the accessibility and dissemination of information to investors. These proposals also would apply only to entities that met minimum public float and reporting history requirements, which should serve to exclude almost all small entities. We believe our proposals strike a balance between providing investor access to information and giving companies alternatives in providing this access. Different compliance or reporting requirements for affected small entities or exemptions for all affected small entities are not considered warranted at this time because it is just as important that information be adequately disseminated and easily available for affected small entities as it is for large entities, if not more so. The expected low costs of complying with the proposal, as well as the effect of the proposed public float requirement in lessening the impact on small entities, also contributed to our proposal not to exclude small entities in their entirety.
Companies could choose whether to provide website access and therefore the disclosure that would be necessary in their annual report on Form 10–K. This allows companies, including small entities, the flexibility to choose the alternative that bests suits their individual circumstances. We believe this freedom should apply to all entities, large and small. We are not aware of ways to further clarify, consolidate or simplify these proposals for small entities. We request comment, however, on these matters.
We encourage the submission of comments with respect to any aspect of this IRFA. In particular, we request comment on the number of small entities that would be affected by the proposed amendments, the nature of the impact, how to quantify the number of small entities that would be affected, and how to quantify the impact of, the proposed amendments. Commenters are requested to describe the nature of any effect and provide empirical data and other factual support for their views if possible. These comments will be considered in the preparation of the Final Regulatory Flexibility Analysis, if the proposed amendments are adopted, and will be placed in the same public file as comments on the proposed amendments.
The amendments contained in this release are being proposed under the authority set forth in Sections 3(b) and 19(a) of the Securities Act and Sections 12, 13, 15(d) and 23(a) of the Exchange Act.
Reporting and recordkeeping requirements, Securities.
In accordance with the foregoing, Title 17, Chapter II of the Code of Federal Regulations is proposed to be amended as follows.
1. The authority citation for part 229 continues to read, in part, as follows:
15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z–2, 77z–3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj, 77nnn, 77sss, 78c, 78i, 78j, 78
2. Section 229.101 is amended by revising paragraph (e) to read as follows:
(e)
(1) Whether you file reports with the Securities and Exchange Commission. If you are reporting company, identify the reports and other information you file with the SEC.
(2) That the public may read and copy any materials you file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW., Washington, DC 20549. State that the public may obtain information on the operation of the Public Reference Room by calling the SEC at 1–800–SEC–0330. If you are an electronic filer, state that the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC and state the address of that site (
(3)(i)Whether you make available free of charge on your Internet website, if you have one, your annual report on Form 10–K, quarterly reports on Form 10–Q (§ 249.308a of this chapter), current reports on Form 8–K (§ 249.308 of this chapter), and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act (15 U.S.C. 78m(a) or 78o(d)) as soon as reasonably practicable after, and in any event on the same day as, you electronically file such material with, or furnish it to, the SEC;
(ii) If you do not make your filings available in this manner, the reasons why you do not do so (including, where applicable, that you do not have an Internet website);
(iii) If you do not make your filings available in this manner, one or more locations where the public can access
(iv) Whether you voluntarily will provide electronic or paper copies of your filings free of charge upon request.
3. The authority citation for Part 240 continues to read, in part, as follows:
15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j, 78j–1, 78k, 78k–1, 78
4. Section 240.12b–2 is amended by adding the definition of “Accelerated filer” before the definition of “Affiliate” to read as follows:
(i) The aggregate market value of the voting and non-voting common equity held by non-affiliates of the issuer is $75 million or more;
(ii) The issuer has been subject to the requirements of Section 13(a) or 15(d) of the Act for a period of at least twelve calendar months preceding the filing of the report; and
(iii) The issuer has filed at least one annual report pursuant to Section 13(a) or 15(d) of the Act.
The aggregate market value of the issuer's outstanding voting and non-voting common equity shall be computed by use of the price at which the common equity was last sold, or the average of the bid and asked prices of such common equity, in the principal market for such common equity, as of a date no more than 60 and no less than 30 days before the last day of the issuer's most recently completed fiscal year.
(2) Once an issuer becomes an accelerated filer, it will remain an accelerated filer unless the issuer becomes eligible to use Forms 10–KSB and 10–QSB (§ 249.310b and § 249.308b) for its annual and quarterly reports. In that case, the issuer will not become an accelerated filer again unless it subsequently:
(i) Becomes ineligible to use Forms 10–KSB and 10–QSB (§ 249.310b and § 249.308b) for its annual and quarterly reports; and
(ii) Meets the conditions in paragraph (1) of this definition.
5. Section 240.13a–10 is amended by:
a. Removing the phrase “90 days” and adding, in its place, the phrase “the number of days specified in paragraph (j) of this section” in the first sentence of paragraph (b) and the second sentence of paragraph (f);
b. Removing the phrase “45 days” and adding, in its place, the phrase “the number of days specified in paragraph (j) of this section” in the first sentence of paragraph (c), the second sentence of paragraph (e)(2), and the third sentence of paragraph (f); and
c. Adding paragraph (j) before the
(j)(1)For transition reports to be filed on the form appropriate for annual reports of the issuer, the number of days shall be 60 days for accelerated filers (as defined in § 240.12b–2) filing on Form 10–K (§ 249.310 of this chapter) and 90 days for all other issuers; and
(2) For transition reports to be filed on Form 10–Q or Form 10–QSB (§ 249.308a or § 249.308b of this chapter), the number of days shall be 30 days for accelerated filers filing on Form 10–Q and 45 days for all other issuers.
6. Section 240.15d–10 is amended by:
a. Removing the phrase “90 days” and adding, in its place, the phrase “the number of days specified in paragraph (j) of this section” in the first sentence of paragraph (b) and the second sentence of paragraph (f);
b. Removing the phrase “45 days” and adding, in its place, the phrase “the number of days specified in paragraph (j) of this section” in the first sentence of paragraph (c), the second sentence of paragraph (e)(2), and the third sentence of paragraph (f); and
c. Adding paragraph (j) before the
(j)(1) For transition reports to be filed on the form appropriate for annual reports of the issuer, the number of days shall be 60 days for accelerated filers (as defined in § 240.12b–2) filing on Form 10–K (§ 249.310 of this chapter) and 90 days for all other issuers; and
(2) For transition reports to be filed on Form 10–Q or Form 10–QSB (§ 249.308a or § 249.308b of this chapter), the number of days shall be 30 days for accelerated filers filing on Form 10–Q and 45 days for all other issuers.
7. The authority citation for Part 249 continues to read, in part, as follows:
15 U.S.C. 78a,
8. Section 249.308a is revised to read as follows:
(a) Form 10–Q shall be used for quarterly reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)), required to be filed pursuant to § 240.13a–13 or § 240.15d–13 of this chapter. A quarterly report on this form pursuant to § 240.13a–13 or § 240.15d–13 of this chapter shall be filed within the following period after the end of the first three fiscal quarters of each fiscal year, but no quarterly report need be filed for the fourth quarter of any fiscal year:
(1) 30 days after the end of the fiscal quarter for accelerated filers (as defined in § 240.12b–2 of this chapter); or
(2) 45 days after the end of the fiscal quarter for all other registrants.
(b) Form 10–Q also shall be used for transition and quarterly reports filed pursuant to § 240.13a–10 or § 240.15d–10 of this chapter. Such transition or quarterly reports shall be filed in accordance with the requirements set forth in § 240.13a–10 or § 240.15d–10 of this chapter applicable when the registrant changes its fiscal year end.
9. Form 10–Q (referenced in § 249.308a) is amended by revising General Instruction A.1. to read as follows:
The text of Form 10–Q does not, and this amendment will not, appear in the Code of Federal Regulations.
A. Rule as to Use of Form 10–Q.
1. Form 10–Q shall be used for quarterly reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)), filed pursuant to Rule 13a–13 (§ 240.13a–13 of this chapter) or Rule 15d–13 (§ 240.15d–13 of this chapter). A quarterly report on this form pursuant to Rule 13a–13 or Rule 15d–13 shall be filed within the following period after the end of
a. 30 days after the end of the fiscal quarter for accelerated filers (as defined in § 240.12b–2 of this chapter); or
b. 45 days after the end of the fiscal quarter for all other issuers.
10. Section 249.310 is revised to read as follows:
(a) This form shall be used for annual reports pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) for which no other form is prescribed. This form also shall be used for transition reports filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
(b) Annual reports on this form shall be filed within the following period:
(1) 60 days after the end of the fiscal year covered by the report for accelerated filers (as defined in § 240.12b–2 of this chapter); or
(2) 90 days after the end of the fiscal year covered by the report for all other registrants.
(c) Transition reports on this form shall be filed in accordance with the requirements set forth in § 240.13a–10 or § 240.15d–10 of this chapter applicable when the registrant changes its fiscal year end.
(d) Notwithstanding paragraphs (b) and (c) of this section, all schedules required by Article 12 of Regulation S–X (§§ 210.12–01—210.12–29 of this chapter) may, at the option of the registrant, be filed as an amendment to the report not later than the following periods:
(1) In the case of an annual report, not later than:
(i) 90 days after the end of the fiscal year covered by the report for accelerated filers (as defined in § 240.12b–2 of this chapter); or
(ii) 120 days after the end of the fiscal year covered by the report for all other registrants; and
(2) In the case of a transition report, not later than 30 days after the due date of the report.
11. Form 10–K (referenced in § 249.310) is amended by revising General Instruction A. and the paragraph before the “Note” on the cover page to read as follows:
The text of Form 10–K does not, and this amendment will not, appear in the Code of Federal Regulations.
A. Rule as to Use of Form 10–K.
(1) This Form shall be used for annual reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) (the “Act”) for which no other form is prescribed. This Form also shall be used for transition reports filed pursuant to Section 13 or 15(d) of the Act.
(2) Annual reports on this Form shall be filed within the following period:
(a) 60 days after the end of the fiscal year covered by the report for accelerated filers (as defined in § 240.12b–2 of this chapter); or
(b) 90 days after the end of the fiscal year covered by the report for all other registrants.
(3) Transition reports on this Form shall be filed in accordance with the requirements set forth in § 240.13a–10 or § 240.15d–10 of this chapter applicable when the registrant changes its fiscal year end.
(4) Notwithstanding paragraphs (2) and (3) of this General Instruction A., all schedules required by Article 12 of Regulation S–X (§§ 210.12–01—210.12–29 of this chapter) may, at the option of the registrant, be filed as an amendment to the report not later than the following periods:
(a) In the case of an annual report, not later than:
(i) 90 days after the end of the fiscal year covered by the report for accelerated filers (as defined in § 240.12b–2 of this chapter); or
(ii) 120 days after the end of the fiscal year covered by the report for all other registrants; and
(b) In the case of a transition report, not later than 30 days after the due date of the report.
If the registrant is an accelerated filer, state the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of a specified date no more than 60 and no less than 30 days before the end of the registrant's most recently completed fiscal year. If the registrant is not an accelerated filer (as defined in Rule 12b–2 of the Act), state the aggregate market value of the voting and non-voting common equity held by non-affiliates used to determine whether the registrant was an accelerated filer and specify the date used for purposes of this computation.
* * *
By the Commission.