Modernization of Regulation S-K Items 101, 103, and 105: A Small Entity Compliance Guide
Introduction[1]
On August 26, 2020, the Securities and Exchange Commission (the “Commission”) adopted amendments to modernize the description of business (Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants are required to make pursuant to Regulation S-K. These disclosure requirements have not undergone significant revisions in over 30 years. The amendments the Commission adopted update these items to reflect the many changes in our capital markets and the domestic and global economy in recent decades.
The amendments to Regulation S-K Items 101, 103, and 105 are intended to elicit improved disclosures for investors and add efficiencies to the compliance efforts of registrants. The amendments are also intended to improve the readability of disclosure documents, as well as discourage repetition and reduce the disclosure of unnecessary information.
Who is affected by the amendments?
The amendments affect both domestic registrants and foreign private issuers that file registration statements, periodic reports, proxy statements, and other documents that require disclosure under Items 101, 103, and 105. However, registrants that are smaller reporting companies are not required to provide risk factor disclosure under Item 105 in registration statements on Form 10 and annual reports on Form 10-K. Furthermore, in quarterly reports on Form 10-Q, smaller reporting companies are not required to disclose material changes from risk factors previously disclosed on Form 10-K.
What are the changes under the amendments?
The table below summarizes the amendments to Items 101, 103, and 105.
Regulation S-K Item | Summary of the Amendments |
---|---|
Item 101(a) |
Revises Item 101(a) to:
|
Item 101(c) |
Revises Item 101(c) to:
|
Item 101(h) |
Revises Item 101(h) to:
|
Item 103 |
Revises Item 103 to:
In addition, amended Item 103 allows registrants to select a different threshold that the registrant determines is reasonably designed to result in disclosure of material environmental proceedings, provided that the threshold does not exceed the lesser of $1 million or one percent of the current assets of the registrant and its subsidiaries on a consolidated basis. The different threshold must be disclosed (including any change to it) in each annual and quarterly report. |
Item 105 |
Revises Item 105 to:
|
Please refer to the release for a complete description of all amendments.
What is the compliance date of the new rule for small entities?
The amendments are effective November 9, 2020, and will apply to filings made on or after the effective date.
Other Resources
The adopting release for the amendments can be found on the SEC’s website at https://www.sec.gov/rules/final/2020/33-10825.pdf.
The SEC’s disclosure forms are available on the SEC’s website at https://www.sec.gov/forms.
Contacting the SEC Staff
The SEC’s Division of Corporation Finance is happy to assist small companies and others with questions regarding the amendments. You may contact the Division for this purpose at (202) 551-3500 or at https://www.sec.gov/forms/corp_fin_interpretive.
Questions on other SEC regulatory matters concerning smaller reporting companies or offerings made pursuant to Regulation A may be directed to the Division’s Office of Small Business Policy at (202) 551-3460.
[1] This guide was prepared by the staff of the U.S. Securities and Exchange Commission as a “small entity compliance guide” under Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996, as amended. The guide summarizes and explains rules and form amendments adopted by the Commission, but is not a substitute for any rule or form itself. Only the rule or form itself can provide complete and definitive information regarding its requirements.
Last Reviewed or Updated: Dec. 7, 2022