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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 200, 210, 229, 230, 232, 239, 240, 249, and 260

Release Nos. 33-11414; 34-105368; 39-2563; IC-36140; File No. S7-2026-15

RIN 3235-AN58

Semiannual Reporting

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

SUMMARY: The Securities and Exchange Commission (“Commission”) is proposing

amendments to allow companies to file semiannual reports on new Form 10-S in lieu of quarterly

reports on Form 10-Q to meet their interim reporting obligations under the Securities Exchange

Act of 1934 (“Exchange Act”). The Commission is also proposing changes to the financial

statement requirements of Regulation S-X to facilitate semiannual reporting and to simplify rules

regarding the age of financial statements.

DATES: Comments should be received on or before July 6, 2026.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic comments:

•

Use the Commission’s Internet comment form

(https://www.sec.gov/rules/submitcomments.htm).

•

Send an email to rule-comments@sec.gov. Please include File Number S7-2026-15 on

the subject line.

Paper comments:

•

Send paper comments to Vanessa A. Countryman, Secretary, Securities and Exchange

Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number S7-2026-15. This file number should be

included on the subject line if email is used. To help the Commission process and review your

comments more efficiently, please use only one method of submission. The Commission will

post all comments on the Commission’s website https://www.sec.gov/rules-regulations/publiccomments/s7-2026-15. Do not include personally identifiable information in submissions; you

should submit only information that you wish to make available publicly. The Commission may

redact in part or withhold entirely from publication submitted material that is obscene or subject

to copyright protection.

Studies, memoranda, or other substantive items may be added by the Commission or staff

to the comment file during this rulemaking. A notification of the inclusion in the comment file of

any such materials will be made available on the Commission’s website. To ensure direct

electronic receipt of such notifications, sign up through the “Stay Connected” option at

www.sec.gov to receive notifications by email.

A summary of the proposal of not more than 100 words is posted on the Commission’s

website https://www.sec.gov/rules-regulations/2026/05/s7-2026-15.

FOR FURTHER INFORMATION CONTACT: Mark Saltzburg, Senior Special Counsel,

Office of Rulemaking, Division of Corporation Finance, at (202) 551-3430, or Ryan Milne,

Associate Chief Accountant, Office of Chief Accountant, Division of Corporation Finance, at

(202) 551-3400, U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC

20549.

SUPPLEMENTARY INFORMATION: The Commission is proposing to amend or add the

following rules and forms:

Commission Reference

Name

17 CFR Citation

Securities Act of 1933 1

Rule 138

§ 230.138

Rule 139

§ 230.139

Rule 139b

§ 230.139b

Rule 144

§ 230.144

Rule 158

§ 230.158

Rule 175

§ 230.175

Rule 405

§ 230.405

Rule 485

§ 230.485

Form S-1

§ 239.11

Form S-3

§ 239.13

Form S-11

§ 239.18

Form S-4

§ 239.25

Form F-1

§ 239.31

Form F-3

§ 239.33

Form F-4

§ 239.34

Form F-10

§ 239.40

Rule 3a55-1

§ 240.3a55-1

Rule 3b-6

§ 240.3b-6

Rule 10b5-1

§ 240.10b5-1

Rule 12b-2

§ 240.12b-2

Rule 12b-25

§ 240.12b-25

Rule 13a-10

§ 240.13a-10

Rule 13a-13

§ 240.13a-13

Rule 13a-14

§ 240.13a-14

Rule 13a-16

§ 240.13a-16

Rule 13d-1

§ 240.13d-1

Rule 14a-5

§ 240.14a-5

Rule 14a-8

§ 240.14a-8

Securities Exchange Act of 1934 2

15 U.S.C. 77a et seq.

15 U.S.C. 78a et seq.

Commission Reference

Regulation S-K

(17 CFR 229.10 through 229.1610)

Regulation S-X

(17 CFR 210.1-01 through 210.15-01)

Regulation M-A

(17 CFR 229.1000 through 229.1016)

Name

17 CFR Citation

Schedule 14A

§ 240.14a-101

Rule 15c2-11

§ 240.15c2-11

Rule 15d-10

§ 240.15d-10

Rule 15d-13

§ 240.15d-13

Rule 15d-14

§ 240.15d-14

Form 10

§ 249.210

Form 6-K

§ 249.306

Form 8-K

§ 249.308

Form 10-S

§ 249.308b

Form 10-K

§ 249.310

Form 12b-25

§ 249.322

Item 10

§ 229.10

Item 101

§ 229.101

Item 103

§ 229.103

Item 201

§ 229.201

Item 302

§ 229.302

Item 303

§ 229.303

Item 308

§ 229.308

Item 402

§ 229.402

Item 407

§ 229.407

Item 408

§ 229.408

Item 601

§ 229.601

Item 701

§ 229.701

Item 1100

§ 229.1100

Rule 3-01

§ 210.3-01

Rule 3-12

§ 210.3-12

Rule 8-03

§ 210.8-03

Rule 8-08

§ 210.8-08

Rule 10-01

§ 210.10-01

Rule 11-02

§ 210.11-02

Rule 15-01

§ 210.15-01

Item 1010

§ 229.1010

Commission Reference

Name

17 CFR Citation

Regulation S-T

(17 CFR 232.10 through 232.501)

Rule 11

§ 232.11

Rule 303

§ 232.303

Rule 405

§ 232.405

Rule 406

§ 232.406

Trust Indenture Act of 1939 3

Rule 0-11

§ 260.0-11

OMB Control Numbers Assigned Pursuant to the

Paperwork Reduction Act (17 CFR 200.800)

Rule 800

§ 200.800

15 U.S.C. 77aaa et seq.

TABLE OF CONTENTS

II.

III.

INTRODUCTION............................................................................................................. 7

BACKGROUND ............................................................................................................... 8

DISCUSSION OF PROPOSED

AMENDMENTS ............................................................................................................. 16

Proposed Amendments for Semiannual Reporting ............................................................25

Proposed Amendments to Regulation S-X ........................................................................44

Proposed Amendments Regarding Transition Reports ......................................................61

Proposed Technical Amendments......................................................................................62

General Request for Comment...........................................................................................64

IV.

OTHER MATTERS ....................................................................................................... 64

ECONOMIC ANALYSIS .............................................................................................. 65

Introduction ........................................................................................................................65

Broad Economic Considerations........................................................................................68

Baseline ..............................................................................................................................78

Costs and Benefits..............................................................................................................98

Anticipated Effects on Efficiency, Competition, and Capital Formation ........................130

Reasonable Alternatives...................................................................................................134

Request for Comment ......................................................................................................140

VI.

PAPERWORK REDUCTION ACT

ANALYSIS .................................................................................................................... 143

Summary of the Collections of Information ....................................................................143

Estimated Paperwork Burden Effects of the Proposed Amendments ..............................145

Incremental and Aggregate Burden and Cost Estimates..................................................145

Request for Comment ......................................................................................................150

VII. CONGRESSIONAL REVIEW ACT .......................................................................... 151

VIII. INITIAL REGULATORY FLEXIBILITY

ACT ANALYSIS ........................................................................................................... 152

Reasons for, and Objectives of, the Proposed Action......................................................152

Legal Basis .......................................................................................................................154

Small Entities Subject to the Proposed Rules and Amendments .....................................154

Reporting, Recordkeeping, and Other Compliance Requirements ..................................157

Duplicative, Overlapping or Conflicting Federal Rules ..................................................159

Significant Alternatives ...................................................................................................159

Request for Comment ......................................................................................................162

STATUTORY AUTHORITY .................................................................................................. 163

INTRODUCTION

We are proposing amendments to provide all companies subject to reporting obligations

under Exchange Act Section 13(a) or 15(d) (“Exchange Act reporting companies”) 4 that file

quarterly reports the option of filing interim reports on a semiannual basis. Currently, Exchange

Act reporting companies must file quarterly reports on Form 10-Q pursuant to 17 CFR 240.13a13 (“Exchange Act Rule 13a-13”) or 17 CFR 240.15d-13 (“Exchange Act Rule 15d-13”), with

certain exceptions. 5 Pursuant to these rules, Exchange Act reporting companies file with the

Commission three quarterly reports on Form 10-Q each fiscal year, with the fourth fiscal quarter

subsumed within the reporting company’s annual report on Form 10-K. The proposed

amendments to Exchange Act Rules 13a-13 and 15d-13, if adopted, would allow Exchange Act

reporting companies electing to do so to file semiannual reports on new Form 10-S in lieu of

quarterly reports on Form 10-Q. Our proposal would provide an Exchange Act reporting

company with the flexibility to determine the frequency of interim reporting that best suits its

particular circumstances, such as its ability to bear the costs of preparing the quarterly reports,

the stage of its business development, and the expectations of its investors, without undermining

fundamental investor protections. Providing such regulatory flexibility could reduce the

For purposes of this release, with respect to the terms “Exchange Act reporting company” or “Exchange Act

reporting companies” (or, where the context is clear, abbreviated terms “reporting company” and “reporting

companies”): (A) unless otherwise noted, we use these terms interchangeably with the terms “registrant” or

“registrants” in the context of registrants with a reporting obligation under Exchange Act Section 13(a) or 15(d)

but, in the context of companies that are “in registration” (i.e., have filed a registration statement that has not yet

become effective), we use the term “registrant” to include these companies as well, and (B) we generally limit

the use of these terms in this release to those companies that are subject to a requirement to file Form 10-Q

quarterly reports, unless the context clearly indicates all Exchange Act reporting companies are referred to. See

infra note 5 for discussion of Exchange Act reporting companies that are excluded from Form 10-Q reporting

requirements.

Exchange Act Rules 13a-13 and 15d-13 exempt investment companies that are required to file reports pursuant

to 17 CFR 270.30a-1 (which includes open-end management investment companies, closed-end management

investment companies other than business development companies, and unit investment trusts), foreign private

issuers, and asset-backed issuers (as defined in Item 1101 of Regulation AB) from the quarterly reporting

obligations imposed by these rules.

regulatory burden of being a reporting company, which could potentially influence a company’s

decision to become or remain a reporting company and encourage more companies to go or

remain public. These proposed amendments would not substantively affect investment

companies except for business development companies and face-amount certificate companies. 6

We are also proposing amendments to the financial statement requirements of 17 CFR

Part 210 (“Regulation S-X”)—including to 17 CFR 210.3-01 (“Rule 3-01”), 17 CFR 210.3-12

(“Rule 3-12”), and 17 CFR 210.8-08 (“Rule 8-08”)—to facilitate semiannual reporting and to

simplify rules regarding the age of financial statements in registration statements and other

Commission filings.

II.

BACKGROUND

Companies subject to Exchange Act Sections 13(a) and 15(d) must file periodic and other

reports as prescribed in Commission rules. Exchange Act reporting companies have been

required to file annual reports on Form 10-K since 1935 7 as well as current reports on Form 8-K

for certain material events since 1936. 8 In 1946, the Commission required certain reporting

companies to file quarterly reports on Form 8-K to disclose, among other things, the dollar

See 17 CFR 240.13a-13(b)(3) and 17 CFR 270.30a-1 (together exempting registered investment companies that

file Investment Company Act annual reports from the requirement to file a quarterly Form 10-Q). Business

development companies currently file Form 10-Q quarterly reports and Form 10-K annual reports. See 17 CFR

240.13a-1 (requiring Exchange Act Section 12 registrants to file annual reports); 15 U.S.C. 80a-2(a)(48)

(defining business development company); 15 U.S.C. 80a-53 (making the election to be subject to certain

provisions of the Investment Company Act conditional on registration under Exchange Act Section 12). Faceamount certificate companies are a type of registered investment company that is not required to file reports

pursuant to 17 CFR 270.30a-1 and thus is required to file periodic reports pursuant to Exchange Act Section 13.

See Investment Company Reporting Modernization, Investment Company Act Release No. 32314 (Oct. 13,

2016) [81 FR 81870 (Nov. 18, 2016)], at n.757.

Rule Adopting Form 10-K, Release No. 34-445 (Dec. 20, 1935) [not published in the Federal Register]. An

annual report requirement for Section 12 registrants remains in place today pursuant to 17 CFR 240.13a-1. See

also 17 CFR 240.15d-1 (annual report requirement for Securities Act registrants).

Rule Adopting Form 8–K, Release No. 34-925 (Nov. 11, 1936) [not published in the Federal Register].

amount of gross sales (less discounts, returns, and allowances) and operating revenue. 9 In 1953,

the Commission ended this quarterly reporting requirement, 10 and, in 1955, it adopted rules

requiring semiannual interim reports pursuant to Rules X-13A-13 and X-15D-13. 11 These rules

required one semiannual report to be filed each fiscal year by Exchange Act reporting companies

on a new Form 9-K. 12 Semiannual reports on Form 9-K, which were due 45 days after the end of

the reporting period, did not require the narrative disclosures mandated by Form 10-Q and

provided only limited disclosures typically associated with an income statement. 13

After 15 years of this semiannual reporting system, the Commission rescinded

semiannual reports on Form 9-K in 1970 and instead required quarterly reporting pursuant to

amended Rules 13a-13 and 15d-13. 14 The rules required Exchange Act reporting companies to

See, e.g., Current Reports to be Filed and Requirements of Quarterly Reports by Certain Companies, 11 FR

3393 (Apr. 2, 1946) and Current Reports and Instructions for Use Thereof, 11 FR 3394 (Apr. 2, 1946) (together

requiring quarterly reports pursuant to Item 11 of Form 8-K to be filed not more than 45 days after the close of a

quarter by certain issuers, including those that file annual reports on Form 10-K, but exempting insurance

companies, investment companies, common-carriers, and public utility companies). See also Adoption of New

and Revised Forms, Release No. 34-4340 (Nov. 2, 1949), 1949 SEC LEXIS 71 (adopting new quarterly report

form, Form 9-K, to replace Item 11 of Form 8-K but not making any substantial change in the quarterly

reporting requirements).

See Rescission of Form 9-K and Rules X-13A-13 and X-15D-13, Release No. 34-4949 (Oct. 9, 1953), 1953 SEC

LEXIS 30 (rescinding the quarterly reporting requirements and Form 9-K); Notice of Proposed Adoption of

Form 9-K and Rules X-13A-13 and X-15D-13, Release No. 34-5129 (Jan. 27, 1955) [20 FR 771 (Feb. 4, 1955)]

(“In October 1952, the Commission proposed revised rules calling for quarterly statements of profit and loss

and earned surplus. These rules were not adopted and about a year later the requirement of quarterly reports of

sales and revenues was discontinued.”).

Adoption of Form 9-K and Rules X-13A-13 and X-15D-13, Release No. 33-3553 (June 23, 1955) [20 FR 4816

(July 7, 1955)].

Certain issuers were excepted from these requirements. The rules provided exemptions from required

semiannual reporting for: (1) banks and bank holding companies, (2) investment companies, (3) certain

insurance companies, (4) certain public utilities and common carriers filing reports with certain Federal

agencies, (5) certain single-crop agricultural commodity producers, (6) certain promotional or development

stage companies, and (7) foreign issuers other than private issuers domiciled in a North American country or

Cuba.

Specifically, semiannual Form 9-K required items including: (i) gross sales (less discounts, returns, and

allowances), (ii) operating revenues, (iii) extraordinary items and special items, (iv) net income before tax, (v)

provision for tax, (vi) net income, and (vii) earned surplus. Semiannual Form 9-K did not require a detailed

balance sheet, statement of stockholders’ equity, or statement of cash flows.

Adoption of Form 10-Q, Rescission of Form 9-K and Amendment of Rules 13a-13 and 15d-13, Release No. 349004 (Oct. 28, 1970) [35 FR 17537 (Nov. 14, 1970)].

file three quarterly reports on Form 10-Q each fiscal year. 15 When it proposed the quarterly

report on Form 10-Q, the Commission explained that the new report would “provide detailed

information as a back-up to information released pursuant to timely disclosure policies” and

would provide “uniform standards” for all Exchange Act reporting companies. 16 The

Commission’s move towards a quarterly reporting requirement was also consistent with the

recommendation of the 1969 Wheat Report, which concluded “that a regular, quarterly report

would be more useful than the present, irregular 8-K report.” 17 Although the Commission has

amended Form 10-Q and requirements in connection with quarterly reporting over time, 18 the

Commission has not changed this cadence of quarterly interim reporting since it was adopted in

1970.

Form 10-Q today requires more detailed information than the rescinded semiannual

report on Form 9-K. Form 10-Q requires financial statements (inclusive of footnote disclosures)

for the covered quarterly period that are prepared in accordance with United States (“U.S.”)

generally accepted accounting principles (“U.S. GAAP”), 19 have been reviewed by an

Certain exemptions were provided for: (1) certain investment companies, (2) certain real estate companies, (3)

certain foreign private issuers, (4) certain life insurance companies, (5) certain public utilities, common carriers,

and pipeline carriers filing reports with certain Federal agencies, and (6) certain promotional or development

stage companies.

Proposal to Adopt Form 10-Q Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

and to Rescind Forms 8-K and 9-K Under That Act, Release No. 34-8683 (Sept. 15, 1969) [34 FR 14239, 14239

(Sept. 10, 1969)].

Disclosure to Investors—A Reappraisal of Federal Administrative Policies Under the ’33 and ’34 Acts (The

Wheat Report) 332 (1969). The Wheat Report was a product of a review of the periodic reporting system from

1967 to 1969 conducted by Commissioner Francis Wheat and staff members of the Commission.

See, e.g., Audit Committee Disclosure, Release No. 34-42266 (Dec. 22, 1999) [64 FR 73389 (Dec. 30, 1999)]

(requiring interim financial statements included in Form 10-Q to be reviewed by an independent public

accountant).

Foreign private issuers may voluntarily file on domestic forms, including Form 10-Q, and include financial

statements for the covered quarterly period that are prepared in accordance with: (a) International Financial

Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) without

reconciliation to U.S. GAAP or (b) home-country GAAP with reconciliation to U.S. GAAP.

independent public accountant (but are not required to be audited), 20 and are data tagged using

inline XBRL. 21 It also requires narrative disclosures regarding:

•

Management’s discussion and analysis of financial condition and results of operations

(“MD&A”); 22

•

Market risk; 23

•

Effectiveness of disclosure controls and procedures and material changes in internal

control over financial reporting; 24

•

Legal proceedings; 25

•

Material changes in risk factors; 26

•

Unregistered equity security sales and use of proceeds; 27

The regulation at 17 CFR 210.10-01(d) (Rule 10-01(d) of Regulation S-X) requires that, prior to filing, interim

financial statements included in quarterly reports on Form 10-Q “must be reviewed by an independent public

accountant using applicable professional standards and procedures for conducting such reviews, as may be

modified or supplemented by the Commission.” See also 17 CFR 210.8-03. Public Company Accounting

Oversight Board (“PCAOB”) Auditing Standard 4105 sets forth the auditing standard that currently applies to

an independent public accountant conducting a review of interim financial statements and explains that “the

objective of a review of interim financial information pursuant to this section is to provide the accountant with a

basis for communicating whether he or she is aware of any material modifications that should be made to the

interim financial information for it to conform with generally accepted accounting principles.” See PCAOB

Auditing Standard 4105, Reviews of Interim Financial Information, ¶ .07. That standard further explains that the

objective of such review “differs significantly from that of an audit conducted in accordance with the standards

of the PCAOB” because “[a] review of interim financial information does not provide a basis for expressing an

opinion about whether the financial statements are presented fairly, in all material respects, in conformity with

generally accepted accounting principles” as an auditor would do when expressing an unqualified opinion in an

audit of the financial statements. Id. See also PCAOB Auditing Standard 1000, General Responsibilities of the

Auditor in Conducting an Audit, ¶ .18 (setting forth the standard for an auditor to express an unqualified opinion

in an audit of the financial statements).

See Form 10-Q, Part I, Item 1; 17 CFR 210.10-01 (Regulation S-X Rule 10-01); 17 CFR 210.8-03 (Regulation

S-X Rule 8-03); Form 10-Q, Part II, Item 6; 17 CFR 229.601(b)(101)(i)(A).

See Form 10-Q, Part I, Item 2; 17 CFR 229.303 (17 CFR Part 229 (“Regulation S-K”) Item 303).

See Form 10-Q, Part I, Item 3; 17 CFR 229.305 (Regulation S-K Item 305).

See Form 10-Q, Part I, Item 4; 17 CFR 229.307 (Regulation S-K Item 307); 17 CFR 229.308(c) (Regulation SK Item 308(c)).

See Form 10-Q, Part II, Item 1; 17 CFR 229.103 (Regulation S-K Item 103).

See Form 10-Q, Part II, Item 1A; 17 CFR 229.105 (Regulation S-K Item 105).

See Form 10-Q, Part II, Item 2; 17 CFR 229.701 (Regulation S-K Item 701).

•

Defaults on senior securities; 28

•

Material changes to the procedures by which security holders may recommend

nominees to the registrant’s board of directors; 29

•

Disclosure of director or officer adoptions or terminations of certain plans for the

purchase or sale of registrant securities; 30

•

Exhibits required under Item 601 of Regulation S-K; 31 and

•

Certifications by the principal executive and financial officers as exhibits. 32

Form 10-Q reports are filed electronically with the Commission through its EDGAR

system. The deadline for filing Form 10-Q with the Commission is 40 or 45 days after the end of

a fiscal quarter, depending on the filer status of the reporting company. 33

Finally, securities exchange listing standards generally do not mandate a particular

frequency of interim reporting. Instead, they refer generally to compliance with Commission

rules requiring interim reports (with at least one exchange making specific reference to quarterly

See Form 10-Q, Part II, Item 3.

See Form 10-Q, Part II, Item 5(b); 17 CFR 229.407(c)(3) (Regulation S-K Item 407(c)(3)).

See Form 10-Q, Part II, Item 5(c); 17 CFR 229.408(a) (Regulation S-K Item 408(a)).

See Form 10-Q, Part II, Item 6; 17 CFR 229.601 (Regulation S-K Item 601).

See Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, § 302, 116 Stat. 745, 777 (2002); 17 CFR 240.13a-14;

17 CFR 240.15d-14; 17 CFR 229.601(b)(31) (Regulation S-K Item 601(b)(31)) (exhibits regarding

certifications that include those related to internal controls, untrue statements of material facts, and material

omissions); Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, § 906, 116 Stat. 745, 806 (2002), 17 CFR

229.601(b)(32) (Regulation S-K Item 601(b)(32)) (exhibits regarding certifications related to financial condition

and results of operations).

Large accelerated filers and accelerated filers, as defined in 17 CFR 240.12b-2 (“Exchange Act Rule 12b-2”),

must file Form 10-Q within 40 days after the end of a fiscal quarter and all other Exchange Act reporting

companies must file Form 10-Q within 45 days after the end of a fiscal quarter. See Form 10-Q, General

Instruction A.

reports on Form 10-Q), 34 require availability of interim reports, 35 or require quick dissemination

of quarterly earnings information to the market. 36

Certain companies that are not subject to Section 13(a) or Section 15(d) already report on

a semiannual basis under the Commission’s rules, 37 and certain other companies are exempt

from quarterly reporting but furnish semiannual information pursuant to other requirements such

See, e.g., Nasdaq Stock Market Rule 5250(c)(1) (providing that a company shall timely file all required periodic

financial reports with the Commission through the EDGAR system); NYSE Listed Company Manual §

802.01ESEC (providing that, for purposes of remaining listed on the exchange, a company will incur a late

filing delinquency and be subject to the procedures set forth in Section 802.01E on the date on which any of

several events occurs, including where the company fails to file its annual report (Forms 10-K, 20-F, 40-F or NCSR) or its quarterly report on Form 10-Q with the SEC by the date such report was required to be filed by the

applicable form).

See, e.g., Nasdaq Stock Market Rule 5250(d)(3)(A) (providing that each company that is not a limited

partnership and is subject to Rule 13a-13 under the Exchange Act shall make available copies of quarterly

reports including statements of operating results to shareholders either prior to or as soon as practicable

following the company’s filing of its Form 10-Q with the Commission).

See, e.g., NYSE Listed Company Manual § 202.05 (providing that a listed company is expected to release

quickly to the public any news or information which might reasonably be expected to materially affect the

market for its securities); NYSE Listed Company Manual § 203.02 (providing that any company with voting or

non-voting common securities listed on the exchange that is required to file interim financial statements with

the Commission is required to disseminate in a manner consistent with the exchange’s immediate release policy

an interim earnings release as soon as its interim financial statements are available and citing Section 202.06 for

the exchange’s immediate release policy); NYSE Listed Company Manual § 202.06 (providing that annual and

quarterly earnings are examples of news items that should be handled on an immediate release basis).

For example, issuers that sell up to $75 million of securities within a 12-month period under the Regulation A

exemption (“Tier 2 issuers”) are required to file a Form 1-SA semiannual report with the Commission within 90

days after the end of the first semiannual period of the issuer’s fiscal year and an annual report on Form 1-K

within 120 days after fiscal year end. 17 CFR 230.257(b)(3). Semiannual reports on Form 1-SA require interim

financial statements and MD&A disclosures. The financial statements are not required to be reviewed (which

differs from the requirement that Form 10-Q financial statements be reviewed by an independent public

accountant). In adopting the semiannual reporting requirement for Tier 2 issuers, the Commission found that a

semiannual, rather than a quarterly, reporting requirement strikes an appropriate balance between the need to

provide information to the market and the cost of compliance for smaller issuers. Amendments for Small and

Additional Issues Exemption under the Securities Act, Release No. 33-9741 (Mar. 25, 2015) [80 FR 21806,

21847 (Apr. 20, 2015)]. Based on our analysis of Tier 2 issuer filings on Form 1-SA and amendments thereto on

the Commission’s EDGAR system, we estimate that there were 470 unique filers of such forms in calendar year

2024 and 448 unique filers of such forms in calendar year 2025.

as exchange listing standards. 38 Several foreign jurisdictions also require semiannual reporting of

financial information (but not quarterly reporting). 39

Over the years, the Commission at times has reassessed the current periodic reporting

system, its impact on Exchange Act reporting companies, and potential alternatives including

semiannual reporting. Most recently, as part of the Commission’s disclosure effectiveness

review, the Commission issued two releases that addressed and requested public comment on the

frequency of interim reporting. 40 In July 2019, the Commission also held a roundtable that

Foreign private issuers, as defined in 17 CFR 230.405 (“Securities Act Rule 405”) and 17 CFR 240.3b-4(c), are

effectively required by a combination of Commission and securities exchange rules to file with the Commission

one semiannual report on Form 6-K (due no later than six months following second fiscal quarter end) for each

fiscal year. See 17 CFR 240.13a-16 (requiring every foreign private issuer which is subject to 17 CFR 240.13a1 to make reports on Form 6-K, with certain exceptions); 17 CFR 15d-16 (requiring every foreign private issuer

which is subject to 17 CFR 240.15d-1 to make reports on Form 6-K, with certain exceptions); General

Instruction B of Form 6-K (requiring foreign private issuers to furnish to the Commission whatever reports that:

they make public pursuant to the law of their jurisdiction of domicile or organization; they file or are required to

file with a stock exchange on which their securities are traded and that are made public by that exchange; or

they distribute or are required to distribute to security holders); NYSE Listed Company Manual § 203.03

(requiring that an NYSE-listed foreign private issuer file with the Commission a Form 6-K that includes (i) an

interim balance sheet as of the end of its second fiscal quarter and (ii) a semiannual income statement that

covers its first two fiscal quarters); Notice of Filing and Immediate Effectiveness of Proposed Rule Change

Amending the NYSE Listed Company Manual to Adopt a Requirement that Listed Foreign Private Issuers Must,

at a Minimum, Submit a Form 6-K to the Securities and Exchange Commission Containing Semi-Annual

Unaudited Financial Information, Release No. 34-77198 (Feb. 19, 2016) [81 FR 9563 (Feb. 25, 2016)]; Nasdaq

Stock Market Rule 5250(c)(2) (providing for similar semiannual report requirements for foreign private issuers

as in NYSE Listed Company Manual § 203.03); Self-Regulatory Organizations; National Association of

Securities Dealers, Inc.; Order Approving Proposed Rule Change and Amendments Nos. 1 and 2 Thereto to

Require Semi-annual Financial Reporting by Foreign Private Issuers, Release No. 34-52192 (Aug. 2, 2005) [70

FR 46241 (Aug. 9, 2005)].

For example, the securities regulations in the European Union (“EU”), the United Kingdom (“UK”), Hong

Kong, and Japan provide for such semiannual reporting. Both the EU and the UK transitioned from quarterly to

semiannual reporting in the 2010s. See, e.g., Directive 2013/50/EU Amending Directive 2004/109/EC on the

Harmonisation of Transparency Requirements in Relation to Information About Issuers Whose Securities are

Admitted to Trading on a Regulated Market (Oct. 22, 2013), available at https://eurlex.europa.eu/eli/dir/2013/50/oj/eng; Removing the Transparency Directive’s Requirement to Publish Interim

Management Statements, Financial Conduct Authority (Nov. 2014), available at

https://www.fca.org.uk/publication/policy/ps14-15.pdf. See also Section 13.46 to 13.50B of the Listing Rules

and Guidance of the Hong Kong Exchange Main Board, available at https://enrules.hkex.com.hk/rulebook/main-board-listing-rules and Article 24-5 and the changes to the Japanese securities

regulations in the Financial Instruments and Exchange Act (Act No. 25 of 1948), available at

https://www.japaneselawtranslation.go.jp/en/laws/view/4633#je_ch2at48 (the revision from quarterly to

semiannual reporting was enacted in 2024).

Business and Financial Disclosure Required by Regulation S-K, Release No. 33-10064 (Apr. 13, 2016) [81 FR

23916 (Apr. 22, 2016)] (“2016 Regulation S-K Concept Release”); Request for Comment on Earnings Releases

discussed issues including the frequency of periodic reporting. 41 The Commission received

significant public feedback as a result of these recent efforts, including from companies and their

representative organizations, asset managers and institutional investors, investor groups and

individual investors, accounting firms, law firms, and other market participants. 42 Commenters

expressed a wide variety of views about the frequency of interim reporting requirements, 43 with

some supporting the current frequency but others recommending less-frequent interim reporting,

such as semiannual reports, due to concerns about compliance costs and short-termism. 44 Finally,

and Quarterly Reports, Release No. 33-10588 (Dec. 18, 2018) [83 FR 65601 (Dec. 21, 2018)] (“2018 Request

for Comment on Quarterly Earnings and Reporting”).

Roundtable on Short-Term/Long-Term Management of Public Companies, Our Periodic Reporting System and

Regulatory Requirements, U.S. Sec. & Exch. Comm’n (July 18, 2019) (“2019 Periodic Reporting Roundtable”),

available at https://www.sec.gov/newsroom/meetings-events/071819-roundtable-short-term-long-termmanagement-public-companies.

Additionally, separate from public comments on these releases and the roundtable, the Commission received a

petition for rulemaking in 2025 that requested the Commission provide public companies the option to file

interim reports semiannually instead of quarterly and that the Commission: issue a notice of proposed

rulemaking to amend Rule 13a-13, Rule 15d-13, and Form 10-Q; consider additional conforming amendments

to related rules as necessary; and “take such other action as the Commission deems appropriate to address the

harmful effects of mandatory quarterly reporting on long-term value creation.” See Long Term Stock Exchange,

Inc., Petition for Rulemaking to Amend Quarterly Reporting Requirements Under the Securities Exchange Act

of 1934, File No. 4-872 (Sept. 30, 2025), available at https://www.sec.gov/files/rules/petitions/2025/petn4872.pdf.

See comments on 2016 Regulation S-K Concept Release, available at https://www.sec.gov/comments/s7-0616/s70616.htm; comments on 2018 Request for Comment on Quarterly Earnings and Reporting, available at

https://www.sec.gov/comments/s7-26-18/s72618.htm. One commenter provided survey data from 183 listed

public companies that indicated 75% of those companies supported a move to semiannual reporting. Letter from

Nasdaq, Inc. (Mar. 21, 2019) (“Nasdaq 2019”) (responses by 183 listed companies to the question “Do you

believe that your company and/or your investors would benefit from moving to a semi-annual reporting

model?” indicated: Yes: 75%; No: 25%). In this release, generally comment letters cited that are dated 2018 or

2019 are comments received in response to the 2018 Request for Comment on Quarterly Earnings and

Reporting and comment letters cited that are dated 2016 are comments received in response to the 2016

Regulation S-K Concept Release; we generally do not provide individual hypertext links for each comment but

the comment letters can be found at the links provided above. Comment letters in response to the 2019 Periodic

Reporting Roundtable are found at the same link above as the comments in response to the 2018 Request for

Comment on Quarterly Earnings and Reporting.

Short-termism is an expression commonly used to refer generally to a focus on short-term results instead of

long-term business strategies and short-term actions by a company that can have a negative long-term impact on

the company; such actions can include: reducing capital expenditure (including investment in intangible assets

and research and development); deferring needed maintenance; forgoing opportunities with long-term net

present value; reducing advertising; delaying new hires; and earnings management. For examples of comments

regarding short-termism, see generally comments on the 2018 Request for Comment on Quarterly Earnings and

Reporting, supra note 43.

the concept of semiannual reporting was recently discussed at: a meeting of the Commission’s

Investor Advisory Committee; 45 the Commission’s 45th Annual Small Business Forum (and the

prior year’s forum); 46 and the Commission’s 2025 Small Cap Policy Roundtable. 47

III.

DISCUSSION OF PROPOSED AMENDMENTS

Interim reports provide investors with material information about the financial

performance of their companies during a fiscal year. Yet quarterly reporting may not be the ideal

interim reporting frequency for every Exchange Act reporting company, given the varied

circumstances each company faces. We are proposing rule and form amendments to provide all

Exchange Act reporting companies with the option of filing semiannual reports on new Form 10S in lieu of quarterly reports on Form 10-Q. The flexibility provided under our proposed

amendments would enable all Exchange Act reporting companies to choose the reporting

frequency that would best serve the company and its investors. Companies that elect semiannual

interim reporting may see a reduction in compliance costs of time and money, as they would

incur these interim reporting costs only one time in connection with each fiscal year instead of

three times in connection with each fiscal year pursuant to quarterly reporting. 48 These

companies could then choose to dedicate any compliance cost and resource savings to their

business growth. Other potential benefits of semiannual reporting include: less distraction from

running the day-to-day business; reallocation of attention from interim reporting to company

U.S. Sec. & Exch. Comm’n, Panel Discussion: Public Company Disclosure Reform, in Meeting of the Inv.

Advisory Comm., 2026 03 12 Investor Advisory Committee Part 01, YouTube (Mar. 12, 2026), available at

https://www.youtube.com/watch?v=y0ZrTZ-uUg0.

45th Annual Small Business Forum, U.S. Sec. & Exch. Comm’n (Mar. 9, 2026), available at

https://www.sec.gov/files/transcript-45th-sb-forum.pdf; 44th Annual Small Business Forum, U.S. Sec. & Exch.

Comm’n (Apr. 10, 2025), available at https://www.sec.gov/files/2025-SBF-508-Transcript.pdf.

Small Cap Policy Roundtable: Reassessing the Framework for Small Public Companies, U.S. Sec. & Exch.

Comm’n (July 22, 2025), available at https://www.sec.gov/files/small-cap-policy-roundtable-transcript.pdf;

See infra economic analysis discussion in Section V.E.

strategy; additional time spent on new product development; and ability to engage in transactions

that might not be possible when management is focused on preparing interim reports. 49 To the

extent that companies could not previously do so due to quarterly reporting, companies electing

semiannual reporting may employ business strategies that may help ensure these companies’

long-term viability. In particular, emerging growth companies 50 and smaller reporting

companies 51 may value having the flexibility to select the interim reporting requirement that is

most appropriate for them and their investors. 52 Additionally, reducing the compliance costs

associated with quarterly reporting may contribute to more private companies deciding to enter

the public markets and more companies deciding to remain public. Further, the flexibility

provided in the proposal may appeal to companies in certain industries where investors may

The economic analysis discussion in Section V.E further discusses opportunity costs. See infra note 229 and

accompanying text.

In 2012, the Jumpstart Our Business Startups Act (Pub. L. No. 112-106, 126 Stat. 306 (2012)) amended the

Securities Act and Exchange Act to add provisions regarding and to define an “emerging growth company.”

Commission rules also define an “emerging growth company.” Pursuant to Securities Act Rule 405 and

Exchange Act Rule 12b-2, the term “emerging growth company” means an issuer that had total annual gross

revenues of less than $1.235 billion during its most recently completed fiscal year. Pursuant to these rules, if an

issuer qualifies as an “emerging growth company” on the first day of its fiscal year, it maintains that status until

the earliest of: (i) the last day of the fiscal year of the issuer during which it had total annual gross revenues of

$1.235 billion or more; (ii) the last day of its fiscal year following the fifth anniversary of the first sale of its

common equity securities pursuant to an effective registration statement under the Securities Act; (iii) the date

on which the issuer has, during the previous three-year period, issued more than $1 billion in nonconvertible

debt; or (iv) the date on which the issuer is deemed to be a “large accelerated filer” (as defined in Exchange Act

Rule 12b-2).

For the definition of smaller reporting company, see 17 CFR 229.10(f)(1); 17 CFR 230.405; and 17 CFR

240.12b-2. Under these rules, “smaller reporting company” is defined as an issuer that is not an investment

company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting

company and that: (1) had a public float of less than $250 million; or (2) had annual revenues of less than $100

million and either: (i) no public float; or (ii) a public float of less than $700 million.

Letter from Society for Corporate Governance (Apr. 19, 2019) (survey of 130 public companies who responded

to the question “Regardless of any other proposed changes to the reporting scheme, do you think that emerging

growth companies or smaller reporting companies should be permitted to elect a semi-annual reporting

frequency?” indicated the following results: Yes: 45%; No: 22%; Unsure: 34%).

focus more on certain business, product, or regulatory developments than interim financial

results. 53

Under the proposal, companies would have the option to elect on an annual basis to

comply with the semiannual reporting requirements. Exchange Act reporting companies could

continue to file quarterly reports on Form 10-Q under the proposal. Companies might continue to

report quarterly, for example, where they determine that quarterly frequency is best for the

company and its investors or due to factors such as expectations of investors and securities

analysts, disclosure practices in a particular industry, contractual obligations, or other regulatory

requirements. 54 It is also possible some companies may view semiannual reporting as increasing

the length of time that the company’s directors or employees possess non-public information that

may be subject to the company’s closed trading windows and see quarterly reporting as a better

approach for the company, because it may provide more frequent open trading windows for the

company’s directors and employees.

Although one result of the proposal will be a reduction in the frequency of interim reports

for some Exchange Act reporting companies, we expect certain material information about these

companies between interim semiannual reports and annual reports will continue to be disclosed

For example, a pre-revenue biotechnology company could find semiannual reporting best serves the company

and its investors where investors’ primary focus is on progress in product development and applicable

regulatory approvals and where investors find semiannual reports to be sufficient. See, e.g., Remarks of Charles

Baltic, Member, Advisory Comm. on Small & Emerging Cos., in Meeting of the Advisory Comm. on Small and

Emerging Cos., U.S. Sec. & Exch. Comm’n 64-65 (Sept. 23, 2015), available at

https://www.sec.gov/info/smallbus/acsec/acsec-transcript-092315.pdf (remarking that emerging-growth, small

capitalization biotechnology companies do not trade on their financial quarterly reporting but trade on their

fundamental clinical development events and regulatory events, that these events follow their own non-quarterly

cycle and are captured in Form 8-K filings, and that most capital-intensive companies (in technology generally

as well as biotechnology) trade most significantly on basic business developments such as new products as

opposed to incremental revenues or earnings on a quarterly basis). See also infra note 141 and accompanying

text.

For additional discussion of factors that may provide incentives for companies to elect to continue to file

quarterly reports, see the economic analysis in this release, infra Section V.D.

either voluntarily or as a result of other requirements. Significant regulatory enhancements have

occurred since 1970 with regard to disclosure of certain material events during interim periods.

Investors currently have access to information through the current reporting system on Form 8-K

regarding certain material events that is far more robust and timely than in 1970 when

semiannual reports on Form 9-K were last required. Since that time, the Commission

significantly accelerated that era’s Form 8-K filing deadline of 10 days after the end of the month

in which the applicable event occurred to the current general deadline of within four business

days of the event. 55

In addition to shortening the filing deadlines, the Commission over time significantly

expanded the list of events that would trigger a filing obligation under Form 8-K and prescribed

standardized disclosures that must be provided upon the occurrence of the material event,

including through amendments in 2003 and 2004. 56 In fact, several of the Form 10-Q disclosure

requirements largely duplicate the Form 8-K requirements. 57 Importantly, in 2003, the

Commission added Item 2.02 as a Form 8-K filing trigger event for the furnishing of earnings

releases and other material information about companies’ results of operations and financial

condition for a completed interim period. 58 Current Item 2.02 requires reporting companies

generally to furnish their quarterly earnings releases as an exhibit to Form 8-K on the

Release No. 34-13156 (Jan. 13, 1977) [43 FR 4424 (Jan. 25, 1977)] (adopting the general Form 8-K filing

deadline of 15 calendar days after the event); Additional Form 8-K Disclosure Requirements and Acceleration

of Filing Date, Exchange Act Release No. 49424 (Mar. 16, 2004) [69 FR 15594 (Mar. 30, 2004)] (“2004

Amended Form 8-K Adopting Release”) (adopting the general Form 8-K filing deadline of four business days

after the event).

See Conditions for Use of Non-GAAP Financial Measures, Release No 34-47226 (Jan. 22, 2003) [68 FR 4820

(Jan. 30, 2003)] (“2003 Amended Form 8-K Adopting Release”); 2004 Amended Form 8-K Adopting Release.

For example, both Form 8-K and Form 10-Q require disclosures of recent sales of unregistered securities, mine

safety, and defaults on debt securities.

2003 Amended Form 8-K Adopting Release.

Commission’s EDGAR system. 59 Many Exchange Act reporting companies hold a conference

call in connection with their earnings releases. Item 2.02 provides the conference call does not

need to be furnished with Form 8-K subject to certain conditions, including that the call occur

within 48 hours of the earnings release, the call be accessible to the public, and the call and dialin information be announced in advance to the public. 60 In practice, many public companies

make recordings of the call freely available on their website. Recordings of the calls are also

commonly freely available on third-party platforms.

We believe that the requirements of Form 8-K elicit important disclosures about material

events on a more timely basis than quarterly reports on Form 10-Q. We acknowledge, however,

that quarterly earnings releases furnished with an Item 2.02 Form 8-K differ from Form 10-Q

financial information because they are not required to be reviewed by an independent public

accountant or to comply with the Commission’s interim financial statement requirements or

certain other requirements in Form 10-Q. 61 We also acknowledge that, if a company elects to

take advantage of semiannual reporting and stops reporting quarterly earnings or having

quarterly earnings release conference calls, then the disclosures elicited by Item 2.02 of Form 8K would not be available. We expect that a company’s individual characteristics, facts, and

The term “earnings release” as used in this release means a public announcement or release by a company, or

person acting on its behalf, of material non-public information regarding a company’s results of operations or

financial condition for a completed fiscal year or interim period. The requirements of Item 2.02 of Form 8-K are

triggered by the disclosure of this information, with the earnings releases furnished under the cover of Form 8K. Forward-looking information provided by a company to its investors on a quarterly basis in a method other

than Form 8-K or Form 10-Q is referred to as “forward-looking earnings guidance” or “earnings guidance.” The

non-GAAP financial measure rules in 17 CFR 244.100 through 17 CFR 244.102 (“Regulation G”) and 17 CFR

229.10, along with the antifraud provisions of the Federal securities laws (such as Exchange Act Section 10(b)

and 17 CFR 240.10b-5 (Exchange Act Rule 10b-5)), apply to earnings releases and earnings guidance.

Form 8-K, Item 2.02(b).

In addition, the information furnished under Item 2.02 of Form 8-K is not required to be prepared in accordance

with GAAP (although it is subject to requirements concerning non-GAAP financial measures in Regulation G

and 17 CFR 229.10(e)(i)), is not required to be data tagged, and is not required to include disclosures or

certifications related to disclosure controls and procedures or internal control over financial reporting.

circumstances will determine whether it would make quarterly earnings releases or

announcements after electing to report semiannually. 62

Regulation FD, adopted in 2000, was another significant development in the evolution of

disclosure requirements for Exchange Act reporting companies. Regulation FD requires that any

material non-public information selectively shared with certain enumerated persons be promptly

(in the case of unintentional disclosure) or simultaneously (in the case of intentional disclosure)

disclosed to the market by either furnishing or filing a Form 8-K report or disseminating the

information through another method that is reasonably designed to provide broad, nonexclusionary distribution. 63 In connection with Regulation FD, Exchange Act reporting

companies may disclose material information during a fiscal year through Item 7.01 of Form 8K. 64 Regulation FD seeks to promote full and fair disclosure and may cause a company to

disclose material information—whether on Form 8-K or through other means—at various points

While specific registrants may base decisions on their specific circumstances, the experience in foreign

jurisdictions may be broadly illustrative. A 2017 CFA Research Institute study said, “When quarterly reporting

was no longer required of UK companies in 2014, less than 10% stopped issuing quarterly reports (as of the end

of 2015).” Robert Pozen, Suresh Nallareddy & Shivaram Rajgopal, The Impact on Reporting Frequency on UK

Public Companies (Mar. 2017) (“2017 CFA Study of UK”), available at

https://rpc.cfainstitute.org/sites/default/files/-/media/documents/article/rf-brief/rfbr-v3-n1-1-pdf.pdf. Our

interpretation of the 2017 CFA Study of UK is that where the study refers to “issuing quarterly reports,” the

study is referring to voluntary earnings releases, because companies no longer file quarterly reports with the UK

Financial Conduct Authority. See 2018 Request for Comment on Quarterly Earnings and Reporting, at 65602–

65603 (discussing required UK semiannual reporting and the elimination of quarterly reporting). For additional

discussion of semiannual filers that may voluntarily release quarterly earnings if the proposal is adopted, see the

economic analysis in this release, infra Section V.D.

17 CFR 243.100(b)(1); 17 CFR 243.101(e). Regulation FD restricts selective disclosure of material, non-public

information to persons including: broker-dealers; investment advisers; investment companies; and

securityholders if it is reasonably foreseeable they will trade on the information. If a company or person covered

by the rule intentionally discloses material nonpublic information to a covered recipient, then the company must

make simultaneous public disclosure and, if the disclosure to a covered recipient is unintentional, then public

disclosure must be prompt. See also Selective Disclosure and Insider Trading, Release No. 34-43154 (Aug. 15,

2000) [65 FR 51715 (Aug. 24, 2000)].

A study in 2021 that took a sample of 2,108 public companies found that a public company, on average, files

six to eight Form 8-K reports per year, and, among those filings, files one Item 7.01 (Regulation FD disclosure)

Form 8-K filing per year. Azi Ben-Rephael et al., Who Pays Attention to SEC Form 8-K?, at 14 (Aug. 20,

2021), available at https://academicweb.nd.edu/~zda/8k.pdf.

during a fiscal year, depending on the company and its circumstances (such as whether the

company seeks to communicate previously material non-public information to analysts or other

persons covered by Regulation FD). Such disclosure results in greater investor access to material

information disclosed outside quarterly reports on Form 10-Q. Regulation FD and current Form

8-K disclosure requirements were either not present or less robust when the Commission last

required the limited form of semiannual reporting during the period from 1955 to 1970.

Although we are proposing to amend our rules regarding frequency of interim reporting,

our proposal does not include any general changes to the current regulatory requirements

governing: (1) earnings releases, other than proposed technical amendments to Item 2.02 of

Form 8-K to include references to semiannual periods, or (2) earnings guidance practices.

Federal securities laws do not impose general duties upon Exchange Act reporting companies to

announce or publish earnings, conduct earnings calls, or issue earnings guidance. 65 We received

public feedback on earnings releases and earnings guidance practice in connection with the

Commission’s 2016 Regulation S-K Concept Release and 2018 Request for Comment on

Quarterly Earnings and Reporting, with commenters expressing a variety of views on these

practices and on a wide range of related topics. Our proposal is focused on the more specific

issue of the frequency of interim reporting as mandated by the Federal securities laws, with the

goal of providing more flexibility with respect to this mandated disclosure. Although the

proposal is not intended to change the regulatory framework for voluntary practices regarding

earnings releases and guidance, we welcome comments on the impact of our proposal on these

voluntary practices.

Certain regulatory requirements that apply to Form 10-Q, however, do not apply to earnings releases. See supra

note 61 and accompanying text. When earnings information is selectively disclosed to certain covered persons,

however, Regulation FD requires disclosure in a Form 8-K filing or another method that is reasonably designed

to provide broad, non-exclusionary distribution.

We believe our proposal represents a balanced approach of maintaining a reporting

system that elicits material, timely, and regular disclosures in a manner that best suits the needs

of both the company and its investors, promoting efficiency by reducing compliance costs, and

maintaining robust investor protections. The proposal is one step in a broader Commission effort

to encourage more companies to go and remain public by reducing the costs and burdens

associated with Exchange Act reporting. A robust public capital market—with more emerging

companies and small businesses choosing to become public companies through initial public

offerings or other paths—benefits companies and investors alike. Becoming a public company

provides companies with access to the public markets that allows them to raise capital to grow

their businesses, a broader set of potential investors who may purchase their securities in the

secondary trading market, and the benefits of transparent valuations by public markets and of a

market following. For investors, public companies represent opportunities to participate in the

future growth of promising companies. Initial public offerings represent liquidity opportunities

for early-stage investors. Investors in public companies are protected by mandated disclosures

and by liability provisions of the Federal securities laws that apply to public companies’

disclosures, such as Securities Act Section 11 and Exchange Act Section 18. 66

We are also proposing amendments to Regulation S-X. Our proposed amendments would

incorporate provisions applicable to registrants that elect semiannual reporting frequency into the

Securities Act Section 11 provides for liability for an untrue statement of a material fact in a Securities Act

registration statement and for an omission to state a material fact required to be stated therein or necessary to

make the statements therein not misleading. Many public companies commonly make registered offerings of

securities and thus are subject to potential Section 11 liability. Exchange Act Section 18 provides for liability

for a false or misleading statement with respect to a material fact in an Exchange Act report. Interim reports on

Form 10-Q are not subject to Section 18 liability with respect to Items 1, 2, and 3 of Part I of Form 10-Q

(respectively relating to financial statements, management’s discussion and analysis of financial condition and

results of operations, and quantitative and qualitative disclosures about market risk). See Form 10-Q, General

Instruction F.1. Proposed semiannual reporting Form 10-S would similarly provide that Items 1, 2, and 3 of Part

I of the form are not subject to Section 18 liability. See proposed Form 10-S, General Instruction F.1.

financial statement requirements for periodic reports. We are also proposing changes to the age

of financial statement requirements in Regulation S-X to ensure that financial statements in

registration statements filed by semiannual filers would not be considered “stale” under existing

rules, which were built along a quarterly reporting framework, and to revise those age

requirements for semiannual filers to fit with their reporting schedule. The proposed changes to

the age of financial statement rules would also simplify existing rules, including by consolidating

the age requirements into a single rule.

Finally, we recognize that, if the proposal is adopted, in order to comport with

semiannual reporting by public companies, it is possible that changes may be necessary or

appropriate to the rules of securities exchanges 67 or to various accounting or auditing

standards. 68 If the proposal is adopted, to facilitate any such changes, we expect the Commission

staff would coordinate with accounting and auditing standard-setters, securities exchanges, and

other market participants. To help inform those efforts, we are soliciting comment in this release

on what changes to accounting or auditing standards or rules of securities exchanges should be

made to comport with semiannual reporting. 69

See, e.g., letter from NYSE Group, Inc. (Mar. 21, 2019) (“If the Commission elected to make reporting

requirements less frequent, giving public issuers the option to report two or three times a year, the NYSE

Exchanges believe we could comply with our regulatory duties by adapting our rules and practices

accordingly.”).

See supra note 20 and infra notes 92, 93, 188, 191, 214 and accompanying text for discussion of certain

auditing standards relevant to quarterly and proposed optional semiannual reporting.

We are also aware that the regulations of some Federal agencies contain references to quarterly reports filed

with the Commission. These agencies may wish to consider whether they should revise their law to reflect

semiannual reporting if the proposal is adopted. See, e.g., 12 CFR 16.6 (providing the Comptroller of the

Currency will deem offers or sales of national bank or Federal savings association issued nonconvertible debt to

be in compliance with certain regulations if a number of requirements are met, including that each purchaser

receives an offering document that contains, among other things, the national bank’s, Federal savings

association’s, or the holding company’s (where the national bank or Federal savings association is a subsidiary

of a holding company with securities registered under the Exchange Act) Forms 10-K, 10-Q, and 8-K filed

under the Exchange Act); 13 CFR 315.7 (requiring companies petitioning the Economic Development

Administration, which is part of the U.S. Department of Commerce, for eligibility for trade adjustment

Our proposal is discussed in greater detail below. We welcome interested parties to

submit comments on any aspects of the proposed rule and form amendments. When

commenting, please include the reasoning in support of your position or recommendation and

provide any supporting documentation or data.

A. Proposed Amendments for Semiannual Reporting

We are proposing amendments to Exchange Act Rules 13a-13 and 15d-13 (and other

relevant rules and forms that we discuss below) to change the current quarterly reporting

requirements for Exchange Act reporting companies to a more flexible system that permits

Exchange Act reporting companies to elect to file semiannual reports instead of quarterly

reports. 70 Under the proposal, an Exchange Act reporting company that elects semiannual

reporting would be required to file one semiannual report and one annual report for each fiscal

year. Semiannual filers would file their interim report on new Form 10-S. This form would

require the same narrative disclosures and financial information as existing Form 10-Q but

would cover a six-month period (rather than a fiscal quarter). The deadline for filing Form 10-S

would be 40 or 45 days (depending on the company’s filer status) after the fiscal year’s first

semiannual period end—the same as with current Form 10-Q’s fiscal quarter end deadline, which

would not change—while the second semiannual period would be subsumed in the annual period

presented in the annual report on Form 10-K. 71 Reporting companies that do not elect to report

assistance to provide information, including the most recent Form 10–K annual reports (or Form 10–Q quarterly

reports, as appropriate) filed with the Commission for the entire period covered by the petition); 10 CFR 50.71

(creating an exemption for companies licensed by the U.S. Nuclear Regulatory Commission from providing an

annual financial report if they submit a Form 10-Q filed with the Commission). See also Section VI.C

(discussing Federal agency regulations and discussing State law that refers to quarterly filings with the

Commission).

Proposed Rule 13a-13(b) and Rule 15d-13(b).

We are not proposing to require that semiannual filers present separately the second semiannual period interim

financial information in Form 10-K but request comment on whether we should require semiannual filers to

on a semiannual basis—thereby effectively opting to report on a quarterly basis under the default

rules that would apply—would continue to be required to file three quarterly reports on Form 10Q and one annual report on Form 10-K for each fiscal year as under the current system for

reporting companies. We are proposing to add a check box to the cover page of Form 10-K as

the sole means by which a reporting company would indicate annually whether it is selecting a

semiannual interim reporting frequency (by checking the semiannual box) or quarterly reporting

(by not checking the semiannual box) and by which the reporting company would disclose the

selected frequency to investors and other market participants.

We are also proposing amendments to add a similar check box concerning the

semiannual reporting election to the cover page of Securities Act registration statements on

Forms S-1, S-3, S-4, and S-11 and Exchange Act registration statements on Form 10. Companies

that have yet to file Exchange Act reports, such as private companies conducting initial public

offerings, would make initial elections to use semiannual reporting by checking the box on the

cover page of the registration statement filed. 72 This election would determine what financial

statements are required in the registration statement 73 and indicate the company’s planned

break out the second semiannual period in their annual reports on Form 10-K and similarly require quarterly

filers to break out their fourth fiscal quarter in their annual report on Form 10-K.

While the check box on the registration statement forms would be the method by which private companies in

registration indicate their planned reporting frequency, there may be other situations where registration

statement forms that would contain the new check box are filed by a reporting company. In those other

situations, the reporting company would check or leave unchecked the box consistent with the reporting

company’s prior election on its most recent Form 10-K or, in the case of a newly public reporting company that

has not yet filed a Form 10-K, on its registration statement form where it made its election in connection with

becoming a public company. A reporting company filing a registration statement form would not be able to

respond differently to this check box than it has indicated in such most recent Form 10-K or, for a newly public

company, such registration statement, because, as we discuss below, mid-fiscal-year changes in reporting

frequency would not be permitted.

An election to use semiannual reporting made in an initial registration statement would not preclude a registrant

from providing financial statements more current than otherwise required.

interim reporting frequency to investors and other market participants. 74 Similar to current

requirements for the first quarterly report for companies that have newly become Exchange Act

reporting companies, 75 the first semiannual report on Form 10-S would be due the later of 45

days after the effective date of the registration statement or the date that Form 10-S would

otherwise have been due had the company been an Exchange Act reporting company. 76

In connection with our proposed optional semiannual reporting approach, we are

proposing to add two new definitions—“quarterly filer” and “semiannual filer”— to 17 CFR

240.12b-2 (and to add two identical definitions to 17 CFR 230.405) to facilitate a number of

amendments we are proposing, including a number of technical amendments to insert references

to semiannual reporting in rules that currently refer to quarterly-reporting-related concepts. A

“quarterly filer” would be defined as a registrant that is required to file quarterly reports on Form

10-Q, pursuant to 17 CFR 240.13a-13(a). A “semiannual filer” would be defined as a registrant

that is required to file semiannual reports on Form 10-S, pursuant to 17 CFR 240.13a-13(b).

Under our proposed optional semiannual reporting approach, we are proposing to permit

a change in interim reporting frequency—either from quarterly to semiannually or vice versa—to

be indicated on a Form 10-K by checking the box on the cover page to file semiannually or

leaving the box unchecked to file quarterly. As proposed, the determination to report

semiannually or quarterly would therefore be made on an annual basis and may not be changed

A company that is not a reporting company and that is in registration in connection with an initial registration

statement may change its check box answer with respect to semiannual reporting until the initial registration

statement becomes effective. Once the initial registration statement becomes effective, the company becomes a

reporting company and, as with existing reporting companies, can change its interim reporting frequency in

accordance with the proposed amendments to Rules 13a-13 and 15d-13.

17 CFR 240.13a-13(a); 17 CFR 240.15d-13(a).

Proposed Rules 13a-13(b)(1) and 15d-13(b)(1).

until the next Form 10-K annual report is filed. 77 Companies would then be required to file

interim reports based on the chosen frequency, beginning with the report for the first interim

period (semiannual or quarterly) of the fiscal year in which the Form 10-K with the election was

filed. 78

•

For example, an Exchange Act reporting company reporting quarterly with a December

31 fiscal year-end wants to file semiannual reports on Form 10-S for the next fiscal year.

The company would file its Form 10-K for fiscal year 2026 in March 2027. Under the

proposal, the company would have to make its election to switch to semiannual reporting

for fiscal year 2027 by checking the box for semiannual reporting on the cover page of its

Form 10-K for fiscal year 2026. With this election made in fiscal year 2027 (i.e., when

the Form 10-K for fiscal year 2026 was filed), the company would be required to report

semiannually and would begin semiannual reporting by filing in August 2027 its Form

10-S for the first six-month period (ended June 30, 2027) of fiscal year 2027. 79

Companies that leave an unmarked box on Form 10-K would be deemed to have opted for quarterly reporting

and therefore be required to file quarterly reports on Form 10-Q for the next fiscal year (i.e., the fiscal year for

which the election is being made which, for the avoidance of doubt, is the fiscal year that follows the fiscal year

covered by that Form 10-K). This means that semiannual filers that wish to continue to file on a semiannual

basis in future fiscal years must make the election again each year on their Form 10-K. Otherwise, if these

companies do not make the election on Form 10-K, they would be required to resume filing quarterly reports

beginning with the first quarter of the fiscal year in which the Form 10-K with the election is filed.

Proposed Rules 13a-13(b)(2) and (3); proposed Rules 15d-13(b)(2) and (3).

In this example, in its Form 10-S for fiscal year 2027, the reporting company would be required to present

statements of comprehensive income, cash flows, and changes in stockholders’ equity for the first six months of

the preceding fiscal year (2026)—in addition to these statements for the first six months of 2027. The company

would have previously filed a first quarter Form 10-Q covering January to March 2026 and a second quarter

Form 10-Q covering April to June 2026. In the second quarter 2026 Form 10-Q, the company would have been

required to file year-to-date (i.e., January to June 2026) statements of comprehensive income, cash flows, and

changes in stockholders’ equity. Therefore, a reporting company would not need to take extra steps to prepare

those preceding year financial statements (covering January to June 2026) when changing its reporting

frequency from quarterly reporting to semiannual reporting (in contrast to the situation discussed below where a

company changes from semiannual reporting to quarterly reporting, where extra steps may be required).

•

Similarly, for example, an Exchange Act reporting company with a December 31 fiscal

year-end that previously chose to file semiannual reports on Form 10-S as indicated in its

Form 10-K for the fiscal year ended December 31, 2026 wishes to switch to quarterly

reporting. The company will file its Form 10-K for fiscal year 2027 in March 2028. The

reporting company would change its interim reporting frequency by leaving the box

unchecked for semiannual reporting on the cover page of its Form 10-K for fiscal year

2027. With this election made in fiscal year 2028 (i.e., when the Form 10-K for 2027 was

filed), the company would be required to report quarterly and would begin quarterly

reporting by filing in May 2028 its Form 10-Q for the first quarter (ended March 31,

2028) of fiscal year 2028. In its Form 10-Q for the first quarter of fiscal year 2028, the

company would be required to present statements of comprehensive income, cash flows,

and changes in stockholders’ equity for the first quarter of the preceding fiscal year

(2027). 80 These first quarter 2027 financial statements would have been subsumed within

(but would not have been required to be separately presented in) the semiannual financial

statements included in the previously filed Form 10-S covering January to June 2027.

Therefore, in changing the election by leaving the box unchecked (thereby choosing to

file quarterly reports on Form 10-Q for fiscal year 2028), the reporting company may

need to take additional steps to prepare the financial statements for the comparable 2027

quarterly periods, including ensuring that an independent public accountant has reviewed

the comparable quarterly periods for fiscal year 2027. 81

Proposed Rules 8-03(a)(2), 8-03(a)(5),10-01(a)(7), and 10-01(c) of Regulation S-X.

Registrants must provide MD&A disclosure pursuant to Part I, Item 2 of Form 10-Q. With respect to results of

operations, 17 CFR 229.303(c)(2)(ii) requires registrants to compare the most recent quarter to either: (1) the

corresponding quarter for the preceding fiscal year or (2) the immediately preceding sequential quarter. That

regulation also requires, where the comparison is made to the preceding sequential quarter, that financial

Once an Exchange Act reporting company has elected its interim reporting frequency, it

would be committed to that reporting frequency for the remainder of that fiscal year. This

proposed approach would avoid potential investor confusion that could result if Exchange Act

reporting companies were permitted to switch interim reporting frequency in the midst of a fiscal

year, such as confusion over when the companies would file interim reports.

We recognize the possibility that a company may mistakenly leave the check box

unmarked or incorrectly mark the check box (for example, a company mistakenly checking the

box for semiannual reporting when it intended to be a quarterly filer or a company mistakenly

leaving the check box unmarked when it intended to be a semiannual filer). We therefore

propose to amend Rule 13a-13(b) and Rule 15d-13(b) to permit companies to amend their Form

10-K to correct any such inadvertent mistakes. Such corrective amendments would be required to

be filed as soon as practicable after discovery of the mistake but no later than the due date by

which the company’s first Form 10-Q report would be required to be filed for the fiscal year in

which the initial Form 10-K with the erroneous election was filed. 82 For example, a quarterly

filer with a December 31 fiscal year-end wants to continue filing quarterly reports on Form 10-Q.

The company filed its Form 10-K for fiscal year 2026 in March 2027. It mistakenly marked the

check box on the cover page of its Form 10-K for fiscal year 2026, thereby electing to switch to

information for such sequential quarter be presented in summary form or identified in prior EDGAR filings. In

this example, if the company chose to compare results of operations for the first quarter of fiscal year 2028 to

the results for the fourth quarter of fiscal year 2027, then the company would need to take further additional

steps to include information for the fourth quarter of fiscal year 2027 in summary form in its Form 10-Q for the

first quarter of fiscal year 2028.

Proposed Rules 13a-13(b)(4) and 15d-13(b)(4). If a company were to amend Form 10-K for the sole purpose of

correcting a check box error under the proposal, we would not expect the company to refile the certifications

required under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 (discussed supra note 32). See also 17

CFR 240.12b-15. Where such an error was made and is being timely corrected, a company would file a Form

10-K/A indicating the number of the amendment and provide the amended cover page, an explanatory note, the

exhibit list, and signatures. Electing to file semiannual reports in compliance with this rule and the filing of this

corrective amendment would not impact the company’s timeliness for the purposes of determining eligibility to

file short form registration statements (e.g. Form S-3).

semiannual reporting for fiscal year 2027. The company would be able to correct this error by

amending its Form 10-K no later than the due date for its Form 10-Q for the first quarter of fiscal

year 2027. 83

Proposed Form 10-S would require the same information as currently required by Form

10-Q but for the covered six-month period instead of a quarter. 84 Required disclosures would

include, among other things, MD&A, legal proceedings, material changes in risk factors,

unregistered equity security sales and use of proceeds, defaults on senior securities, director

nomination procedures, disclosure of director or officer adoptions or terminations of certain

plans for the purchase or sale of registrant securities, and exhibits required under Item 601 of

Regulation S-K. The financial statements for the covered semiannual period would be required to

be prepared in accordance with U.S. GAAP 85 and reviewed by an auditor (but not required to be

audited). 86 They would also be required to be data tagged using Inline XBRL. The current

disclosure and certifications requirements for disclosure controls and procedures, as well as for

internal control over financial reporting, would apply to proposed Form 10-S. 87 Non-GAAP

The filing of Form 12b-25 in accordance with 17 CFR 240.12b-25 to provide notification of an inability to

timely file a Form 10-Q would not affect a company’s error correction deadline, which would remain the

original due date for the company’s Form 10-Q.

Form 10-S is not proposed to be substantively different from Form 10-Q (other than the reporting period

covered). Scaled disclosure would be available to smaller reporting companies on proposed Form 10-S as with

Form 10-Q. See, e.g., proposed Form 10-S, Item 1 (permitting smaller reporting companies to provide financial

information required by 17 CFR 210.8-03); Item 3 (which requires quantitative and qualitative disclosures of

market risk pursuant to 17 CFR 229.305, which provides that smaller reporting companies are not required to

provide the information otherwise required).

But see supra note 19 regarding a foreign private issuer’s election to voluntarily file on domestic forms and

ability to apply accounting standards other than U.S. GAAP in its financial statements.

A semiannual filer would not be precluded from voluntarily providing quarterly financial information in a Form

10-S in addition to the required semiannual financial information. If the quarterly financial information is

presented in the financial statements, the quarterly financial information would be subject to review by an

auditor.

See 17 CFR 229.307 (Regulation S-K Item 307); 17 CFR 229.308(c) (Regulation S-K Item 308(c)).

financial measures presented in proposed Form 10-S would be subject to the current

requirements of Regulation G and Item 10(e) of Regulation S-K.

Request for Comment

The proposed amendments would allow Exchange Act reporting companies to elect to file

interim reports on a semiannual basis in lieu of quarterly reports on Form 10-Q. Should

companies have this option, or should all companies continue to be required to file Form

10-Q? What types of companies are likely to elect the option to file semiannual reports?

Are companies in certain industries more likely than those in other industries to elect to file

semiannual reports?

We are proposing amendments that would permit, but not require, all Exchange Act

reporting companies that file Form 10-Q today to file semiannual reports. Should we

instead require all companies to file semiannual reports? What would be the benefits and

costs of such a mandatory approach? Would mandatory semiannual reporting, with the

option to file quarterly reports, lead to more companies electing to forgo quarterly

reporting?

Our proposal would permit semiannual reports for all Exchange Act reporting companies

that file Form 10-Q today, regardless of filer status, revenues, market capitalization, or

other criteria. Should the option for semiannual reporting be available only for Exchange

Act reporting companies that satisfy certain criteria? If so, what criteria should be imposed

and why? For example, should only emerging growth companies or smaller reporting

companies be allowed to report semiannually? 88 Should only companies below alternative

See definition of “emerging growth company” supra note 50 (containing a total annual gross revenue threshold

of $1.235 billion) and definition of “smaller reporting company” supra note 51 (containing a public float

threshold of less than $250 million under one prong of the definition and a public float threshold of less than

$700 million under the second prong of the definition).

quantitative or monetary thresholds be allowed to report semiannually? Should the

Commission consider a pilot program to permit optional semiannual reporting for a subset

of reporting companies and, if so, what would be the benefits of such a pilot program?

What types of companies should be included in the pilot program?

Under the proposal, reporting companies currently required to file Form 10-Q would have

the option instead to file semiannual reports on Form 10-S. Should any types of companies

that currently file Form 10-Q be excluded from the option of electing semiannual reporting,

such as business development companies?

We are proposing that the filing deadlines for semiannual reports on Form 10-S be the

same as for quarterly reports on Form 10-Q. Should the filing deadline for semiannual

reports on Form 10-S be longer or shorter than proposed? If so, what would be an

appropriate filing deadline? Do companies need more time to prepare semiannual reports

than quarterly reports and if so, why? Should smaller public companies, newly public

companies, or emerging growth companies be afforded a longer filing deadline for Form

10-S to allow for additional time to consult with their accountants and advisers?

If adopted, would semiannual reporting have an impact on investors’ ability to compare

same-company performance over time? Why or why not?

What effect would our proposal have on investors’ ability to compare the relative peer

company financial performance of a quarterly filer to a semiannual filer? For example, can

an investor reasonably compare a quarterly filer to a semiannual filer where the companies

have the same fiscal year and the comparison is sought to be made in the second quarter

(when first quarter information that would be subsumed in the semiannual filer’s

semiannual report on Form 10-S is not yet available) or made in the fourth quarter (when

third quarter information that would be subsumed in the semiannual filer’s annual report on

Form 10-K is not yet available)?

Should the check box that indicates a company has elected semiannual reporting be added

to registration statements on Forms 10, S-1, S-3, S-4, and S-11 and annual reports on Form

10-K as proposed? Should we add a similar check box to any other forms, including Forms

1-A or 8-A? If so, why?

Under our proposal, companies that want to file semiannual reports instead of quarterly

reports would make their election by checking a box on the cover page of their annual

report on Form 10-K for the most recently completed fiscal year. For investors and other

market participants, this would mean that the first indication that a company will file only

semiannual reports going forward will be when the company files its most recent Form 10K. For example, under our proposal, a December 31 fiscal year-end company that files its

Form 10-K for fiscal year 2026 in March 2027 would be able to cease filing quarterly

reports immediately, with its next interim report being its first Form 10-S for the first six

months of fiscal year 2027. Would investors and other market participants benefit from

earlier notice of a company’s intent to file semiannual reports instead of quarterly reports?

If so, how would investors and others benefit and what would be the magnitude of any

benefit? If so, what should the mechanism be for a company to provide earlier notice of

intent to file semiannual reports?

10.

Our proposal would require Exchange Act reporting companies that elect to file semiannual

reports to continue with that interim reporting frequency for the rest of the fiscal year in

which the election was made. Therefore, companies would not be allowed to file a

semiannual report on Form 10-S for the first six months of a fiscal year and then file a

quarterly report for the third quarter for that fiscal year. Likewise, companies would not be

allowed to file a quarterly report on Form 10-Q for the first quarter of a fiscal year, file a

semiannual report on Form 10-S for the first six months for that fiscal year, and not file a

quarterly report on Form 10-Q for the third fiscal quarter. Would this proposed approach

help avoid potential confusion that could be caused by changes in interim reporting

frequency during a fiscal year? Is it necessary to add any language to the proposed rules to

make more explicit the requirement to maintain the selected frequency for the full fiscal

year? Rather than the proposed approach, should we allow: (1) semiannual filers and

quarterly filers to make a change in interim reporting frequency during the fiscal year, or

(2) only semiannual filers to switch to filing quarterly reports during the fiscal year?

Should issuers that elect semiannual reporting be required to commit to that disclosure

frequency for a certain period of time? Why or why not?

11.

Do companies that have newly become a public company (e.g., through an initial public

offering, de-SPAC transaction, or direct listing) need to have greater flexibility for

switching interim reporting frequency within a fiscal year? For example, a private company

that elected semiannual reporting in a Form S-1 for an initial public offering could

subsequently decide that quarterly reporting is preferable (e.g., to promote greater trading

liquidity by increasing the frequency of its interim reporting) and wish to switch to

quarterly reporting for the rest of the fiscal year. Should we allow such newly public

companies to switch the interim reporting frequency within a fiscal year?

12.

Should correction of errors with respect to the Form 10-K check box related to semiannual

reporting be permitted as we propose? Are the proposed time limits on when an error

correction may be made appropriate? In addition to allowing error correction in an

amended Form 10-K—or in lieu thereof—should we allow check box error correction

through a Form 8-K filing?

13.

We are proposing a new Form 10-S for companies that elect to file semiannual reports. Is

the proposed new form needed? Should there be one form for all interim reports, regardless

of whether they are for a fiscal quarter or a semiannual period? If so, why?

14.

Proposed Form 10-S would mandate the same narrative and financial information as Form

10-Q, albeit for semiannual periods rather than quarterly periods. Should Form 10-S

require narrative or financial information that differs from what is required in Form 10-Q?

If so, please specify what information should be different and why this information is or is

not needed in Form 10-S. Are there any disclosure items, such as mine safety violations, in

proposed Form 10-S that should be required instead to be disclosed in other forms, such as

Form 10-K, Form 8-K, or Form SD?

15.

As an alternative to the proposal for optional semiannual reporting, should we instead

revise the disclosure requirements of Form 10-Q to reduce the burden on reporting

companies of filing this form, such as amending the current rules for the required interim

financial statement review by an independent public accountant, XBRL data tagging,

MD&A, information about unregistered sales of registrant securities pursuant to 17 CFR

229.701 (Item 701 of Regulation S-K), or year-to-date comparisons involving financial

statements and MD&A? How should these requirements, or any other requirements of

Form 10-Q, be revised? What aspects of Form 10-Q’s current reporting framework are

most burdensome for reporting companies?

16.

What impact would the flexibility to file semiannual reports on Form 10-S, instead of

quarterly reports on Form 10-Q, have on a private company’s decision to become an

Exchange Act reporting company? Would more companies choose to go public under the

proposed flexible approach to interim reporting? What impact would the proposed flexible

approach have on existing Exchange Act reporting companies’ desire to remain public

companies?

17.

What impact would the proposed option to file semiannual reports on Form 10-S have on

Exchange Act reporting companies’ ability to focus on: (1) business operations, (2) growth,

or (3) long-term business strategies? Please provide any data on the amount of employee

and director time spent on preparing a quarterly report on Form 10-Q.

18.

What is the likelihood that companies that elect semiannual reporting will continue to issue

quarterly earnings releases (to the extent they did so previously when they reported

quarterly)? Why would semiannual filers still issue earnings releases on a quarterly basis?

Would this practice create any new or heightened investor protection concerns? For

example, would there be any new investor protection concerns if an Exchange Act

reporting company with a December 31 year-end elects to file semiannual reports and

issues an earnings release for the first quarter of the fiscal year, with the semiannual report

for the first six months of the fiscal year (which includes that first quarter) not due until

months later (e.g., in August of that fiscal year)? Would companies that currently issue

quarterly earnings releases but elect to become semiannual filers change their earnings

release practices either: (1) to issue earnings releases semiannually, or (2) to cease issuing

earnings releases? Please provide any data or analysis regarding any experience with

earnings releases in foreign jurisdictions where issuers report semiannually.

19.

Our proposal generally would not change the current Item 2.02 Form 8-K furnishing

requirement for earnings releases (but we are proposing technical amendments to include

references to semiannual periods). Should we change these requirements generally for

semiannual filers? For example, should we amend the Form 8-K requirements so that Item

2.02 Form 8-K submissions are “filed,” not “furnished,” for semiannual filers thereby

subjecting the earnings release to additional liability provisions, such as Exchange Act

Section 18 (and Securities Act Section 11 if incorporated into a Securities Act registration

statement), given that investors could rely more heavily on earnings releases by semiannual

filers due to the less frequent interim reporting by such filers as compared to quarterly

filers? If we require the filing (not furnishing) of earnings releases for semiannual filers,

should we require the incorporation by reference of earnings releases into Securities Act

registration statements of those semiannual filers? Would requirements for semiannual

filers to file (not furnish) earnings releases discourage semiannual filers from issuing

earnings releases? Would requirements for semiannual filers to file (not furnish) earnings

releases have an impact on companies’ decisions about whether to elect quarterly or

semiannual reporting? Are there particular reasons or need for the information provided in

an Item 2.02 Form 8-K submission by a semiannual filer to be treated differently than a

similar Item 2.02 Form 8-K submission by a quarterly filer?

20.

In connection with any adoption of the proposal, should there be a new requirement for

semiannual filers that announce or release earnings for the first or third quarters of their

fiscal year (i.e., the periods that would later be subsumed in Forms 10-S and 10-K but for

which there would be no quarterly report filed with the Commission)—that financial

information in any first or third quarter earnings releases be reviewed by an independent

public accountant? If so, would any changes to current auditing standards (e.g., governing

reviews) be required?

21.

For companies that issue earnings releases, would the proposed flexible approach to interim

reporting have any effect on how quickly these releases would be issued after the end of the

reporting period?

22.

Would the option for semiannual reporting result in an overall reduction in material

information for investors? Or would other regulatory requirements, such as Form 8-K filing

requirements and Regulation FD, elicit sufficient information to offset the less-frequent

interim reports and address any investor protection concerns? Would market forces or

demands on a company’s business—such as contractual obligations, investor expectations,

and potential for shareholder activism—encourage semiannual filers to: (1) voluntarily

disclose more information than required, (2) disclose information more frequently than is

required, or (3) opt not to become semiannual filers at all?

23.

With semiannual reporting, would there be an impact on investors or other market

participants as a result of less frequent certifications by management relating to internal

control over financial reporting and disclosure controls and procedures, as well as less

frequent disclosures of changes in such controls? 89

24.

Would the nature and extent of procedures that an independent public accountant performs

during a review change depending upon whether the independent public accountant is

performing a review over a fiscal semiannual period or a fiscal quarterly period? Would

independent public accountants conducting reviews do the same amount of work for a

fiscal semiannual period as they currently do for two quarterly fiscal periods on a combined

basis? Would an independent public accountant experience any impact on efficiency or

See 17 CFR 229.308(c) (requiring disclosure of any change in the registrant’s internal control over financial

reporting during the period that has materially affected, or is reasonably likely to materially affect, the

registrant’s internal control over financial reporting).

economies of scale when conducting reviews and annual audits under semiannual reporting

versus under quarterly reporting for the same company? Would any changes to independent

public accountants’ review or audit procedures or any impact on efficiency or economies of

scale result in changes in costs to companies? If so, describe the impact and whether the

impact could vary depending upon the size of the registrant subject to the review.

25.

Would companies that elect semiannual reporting retain their independent public

accountant to perform a review of their financial statements at the end of each quarter

either to: (1) support financial information that is used for purposes of a quarterly earnings

release (notwithstanding that, as noted above, there is no Commission requirement for a

quarterly earnings release to be reviewed by an independent public accountant), or (2)

guard against the possible need for a quarterly review to be performed should the company

decide to change back to quarterly reporting in a future period (where that period would

require comparative quarterly data for the prior year)?

26.

For semiannual filers, what impact would a shift to semiannual reporting have on: (1)

companies’ disclosure controls and procedures, (2) companies’ internal control over

financial reporting, and (3) independent public accountants’ strategy and approach for the

annual audit of companies’ internal control over financial reporting or financial statements?

With semiannual reporting, is there a potential for a material increase in the risk that

material misstatements (either due to error or fraud) or control deficiencies are not timely

detected by or communicated to the independent public accountant thereby limiting

potential remediation of these issues by the issuer? Please provide any data related to these

questions.

27.

Would there be reduced securities analyst coverage of Exchange Act reporting companies

that elect the semiannual reporting option as compared to quarterly filers? Would

underwriters’ requests for independent public accountants to provide “comfort letters” 90 in

securities offerings (to support potential due diligence defenses) 91 lead semiannual filers to

continue to retain independent public accountants to conduct quarterly financial statement

reviews? If so, are changes needed to PCAOB Auditing Standards (regarding reviews by

independent public accountants)? 92 For example, to comport with semiannual reporting, are

changes needed to PCAOB Auditing Standard 6101, Letters for Underwriters and Certain

Other Requesting Parties, to permit independent public accountants to provide comfort

letters expressing negative assurance on changes subsequent to the date and period of the

latest financial statements included (or incorporated by reference) in the registration

“Comfort letters” (which provide negative assurance) commonly state that: (1) the auditor’s review of unaudited

financial statements found nothing indicating information is not presented fairly in all material respects in

accordance with U.S. GAAP, (2) certain specified auditor procedures found nothing in the information derived

from the financial statements (e.g., MD&A) indicating the information is not in agreement in all material

respects with the financial statements, and (3) certain auditor procedures found nothing indicating certain

financial items changed (e.g., increases in net sales, increases in long-term debt) from the end of the last audited

or reviewed period to an established cut-off date in a manner that is inconsistent with the disclosure in the

registration statement (i.e., “subsequent change” comfort).

Underwriters may seek to defend against potential registration statement-based Securities Act Section 11

liability claims by: (1) with respect to the unexpertized portions of the registration statement, relying on the

comfort letter to show they conducted a reasonable investigation to form a reasonable belief the unexpertized

portions are not inaccurate or misleading, and (2) with respect to the expertized portions of the registration

statement, that they relied on the expert (e.g., an auditor) and had no reasonable grounds to believe the

expertized portions were inaccurate or misleading. Underwriters may also seek to defend against potential

prospectus-based Securities Act Section 12(a)(2) liability by relying on the comfort letter to show they did not

know and, in the exercise of reasonable care, could not have known of any misstatement or omission. The

degree to which comfort letters help to establish these defenses depends on the particular facts and

circumstances.

See PCAOB Auditing Standard 4105, Reviews of Interim Financial Information; PCAOB Auditing Standard

6101, Letters for Underwriters and Certain Other Requesting Parties, ¶ .37 (providing that, when accountants

have not conducted a review in accordance with AS 4105, they may not comment in the form of negative

assurance and are, therefore, limited to reporting the procedures performed and findings obtained). See also

PCAOB Auditing Standard 4101, Responsibilities Regarding Filings Under Federal Securities Statutes. For

additional discussion of PCAOB Auditing Standards, see the discussion of baseline conditions in the economic

analysis in this release, infra notes 188 through 191 and accompanying text.

statement? 93 If semiannual filers would continue to prepare quarterly financial information

or to retain independent public accountants to conduct quarterly reviews, should the

Commission make any rule changes or take any other steps to address this issue?

28.

Would our proposal have any impact on a semiannual filer’s application of relevant

accounting standards to prepare financial statements in accordance with U.S. GAAP, IFRS,

or home-country GAAP? How? Are any changes to accounting standards, including U.S.

GAAP or IFRS, necessary or appropriate to effectuate semiannual reporting (e.g., changes

to the guidance on annual impairment testing, lag reporting, earnings per share, or other

topics of authoritative guidance)?

29.

Are any changes to rules of securities exchanges necessary or appropriate to effectuate

semiannual reporting?

30.

Should we require the second semiannual period financial information (for semiannual

filers) or the fourth quarter financial information (for quarterly filers) to be included in

Form 10-K so investors do not need to back out this information if companies do not

voluntarily provide it? Would having a longer period (six months for semiannual reports

versus three months for quarterly reports) make it more difficult for investors to back out

this information? Relatedly, should we require semiannual filers to break out financial

statement information for the six-month period covered by Form 10-S into two three-month

periods and provide similarly broken-out three-month information for the fiscal year

covered by Form 10-K?

See PCAOB Auditing Standard 6101, Letters for Underwriters and Certain Other Requesting Parties, ¶ .46

(permitting negative assurance as to subsequent changes in specified financial statement items as of a date less

than 135 days from the end of the most recent period for which the accountants have performed an audit or a

review).

31.

Many public companies have standalone insider trading policies or insider trading policies

that are part of the company’s code of ethics, 94 and these policies may provide for trading

windows. 95 What impact would optional semiannual reporting have on company insider

trading policies, including trading windows? For example, would companies impose longer

trading blackout periods at the beginning of a semiannual period or towards the end of a

semiannual period than they would impose if reporting quarterly? Even if these periods are

longer, would the total number of blackout days be fewer each fiscal year for semiannual

filers compared to quarterly filers given that semiannual filers would report less frequently?

To the extent that there are longer blackout periods or fewer total blackout period days each

year, what effects would these changes have on semiannual filers? Under our proposal,

semiannual filers are allowed to voluntarily issue quarterly earnings releases. How would

this affect current trading windows practices, if at all? Where a company elects to be a

semiannual filer, would this be likely to have an effect on trading plans that may be

adopted by companies or insiders (e.g., company directors, officers, or employees) for

purposes of 17 CFR 240.10b5-1 (Exchange Act Rule 10b5-1)? If so, what are the effects?

The regulations found at 17 CFR 229.406 and 17 CFR 229.408(b) require registrants to disclose whether they

have adopted a code of ethics and whether they have adopted an insider trading policy, respectively, and are

both incorporated into Form 10-K. See Item 10 of Form 10-K. For foreign private issuers, similar requirements

are incorporated into Form 20-F. See Items 16B and 16J of Form 20-F. The rules of securities exchanges require

listed companies to adopt a code of ethics. See, e.g., NYSE Listed Company Manual § 303A.10 (Code of

Business Conduct and Ethics); Nasdaq Stock Market Rule 5610.

Generally, trading windows are periods under company insider trading policies when there are no blackout

periods in effect and covered persons (such as company directors, employees, and consultants) are permitted to

transact in the securities of the company if they do not possess material non-public information. Company

policies often use fixed blackout periods to reduce the risk that covered persons may trade while in possession

of material non-public information at times when it is more likely that a covered person may possess it. Many

company policies impose these fixed blackout periods that prohibit trading around the close of a fiscal quarter

until after earnings for a fiscal quarter or year are released. Collectively, these fixed blackout periods can mean

that at many public companies, trading windows each fiscal quarter are only open for two or three weeks around

the middle of that fiscal quarter. In addition to these fixed blackout periods, companies also may impose eventspecific blackout periods, such as around product developments or major company transactions.

32.

Would there be an increased risk of insider trading at companies that elect to report on a

semiannual basis? If so, please provide the basis for this view, as well as data. Could

companies enhance their insider trading policies or improve their self-enforcement of these

policies to help address this concern? What other actions could companies or the

Commission take to mitigate any increase in the risk of insider trading?

33.

How would the proposed flexible approach to semiannual reporting affect the

competitiveness of U.S. reporting companies vis-a-vis foreign competitors? For Exchange

Act reporting foreign companies that would not be foreign private issuers (which report

semiannually as discussed above) and that would report quarterly under the current system,

would the proposed option to report semiannually make these foreign companies more

likely to list on a U.S. exchange? What would be the competitive implications of the

proposed optional semiannual reporting approach between U.S. reporting companies

(which report quarterly under the current system) and foreign private issuers (which report

semiannually under the current system as a practical matter)? Should there be different

periodic reporting for foreign private issuers compared to domestic issuers? Why or why

not?

34.

If the proposal is adopted, what should be the compliance date for the proposed

amendments? If the proposal is adopted, is there a need for a transition period and, if so,

what should be the length of the period?

B. Proposed Amendments to Regulation S-X

We are proposing amendments to various rules in Regulation S-X that would incorporate

semiannual reporting and simplify the rules with respect to the age of financial statements.

Specifically, the proposed amendments would:

•

simplify Rule 3-01 and Rule 8-08 by reorganizing each and consolidating the

requirements of Rule 3-12 regarding the age of financial statements in a registration

or proxy statement into the balance sheet requirements of Rule 3-01;

•

revise the age requirements to incorporate semiannual reporting through the

introduction of a revised model for determining the age of interim financial

statements; and

•

revise other rules in Regulation S-X to incorporate semiannual reporting.

1. Streamlining Age of Financial Statements Requirements

To simplify our rules and effectuate our proposed optional semiannual reporting

approach, we are proposing amendments to Rules 3-01 and 8-08 of Regulation S-X so that each

amended rule clearly sets forth the requirements for annual financial statements and interim

financial statements. The proposed amendments would consolidate the requirements of Rule 312 into Rule 3-01 and eliminate Rule 3-12.

Currently, Rule 3-01 governs the date of audited and interim balance sheets required to

be included in filings as of the filing date. 96 The requirements for statements of comprehensive

income, cash flows, and changes in stockholders’ equity—set out in current 17 CFR 210.3-02

(Rule 3-02 of Regulation S-X) and 17 CFR 210.3-04 (Rule 3-04 of Regulation S-X)—are

derived from dates of annual and interim balance sheets required by Rule 3-01. 97 While current

Registered management investment companies apply the requirements of Rule 3-18 of Regulation S-X instead

of Rule 3-01. Foreign private issuers are not necessarily subject to Rule 3-01. Rather, they may apply the

requirements in Form 20-F. See current Rules 3-01(g) and (h), which we are proposing to reorder as paragraphs

(h) and (i).

Rule 3-02 requires that the filing include audited statements of comprehensive income and cash flows for two or

three fiscal years preceding the date of the most recent audited balance sheet being filed as well as interim

statements for the period between the latest audited balance sheet and the date of the most recent interim

balance sheet and for the corresponding period of the preceding fiscal year. Rule 3-04 requires that the filing

include an analysis of changes in stockholders’ equity and noncontrolling interests in the form of a

Rule 3-01 addresses the dates of the balance sheets as of the filing date, current Rule 3-12

addresses the age of financial statements as of the effective date of a registration statement or

mailing of a proxy statement. 98 Notwithstanding this difference, application of the two rules

currently results in age requirements that are aligned: if a registrant were to apply current Rule 301’s filing date age requirements to a registration statement at the date of effectiveness (or a

proxy statement at the mailing date), the resulting financial statement requirements would be no

different than if Rule 3-12 were applied. Our proposed consolidation of Rules 3-01 and 3-12

would streamline Regulation S-X, making the age of financial statement requirements easier to

apply. To clarify the dual purpose of Rule 3-01 as proposed to be revised, we are proposing new

Rule 3-01(a), which would provide that the date of the most recent balance sheet included in a

registration or proxy statement must be updated to comply with that section’s requirements as if

the effective date of the registration statement, or proposed mailing date in the case of a proxy

statement, were the filing date.

Further, we are proposing several amendments to streamline and reorganize Rule 3-01 as

well as integrate Rule 3-12 into Rule 3-01.

•

We are proposing to place the rules regarding annual balance sheets in Rule 3-01(b). We

do not propose any substantive amendments to the rules regarding annual balance sheets.

Proposed Rule 3-01(b) would require audited balance sheets as of the end of the two most

recently completed fiscal years, which would be the same as current Rule 3-01(a).

reconciliation of the beginning balance to the ending balance for each period for which a statement of

comprehensive income is required to be filed.

The Commission, in connection with the adoption of Rule 3-12, stated that the rule ensures “that interim data

provided in registration statements under the Securities Act is at least as current as the data already filed under

the Exchange Act.” See Uniform Instructions as to Financial Statements – Regulation S-X, Release No. 33-6234

(Sept. 2, 1980) [45 FR 63682, 63684 (Sept. 25, 1980)] (“1980 Regulation S-X Adopting Release”).

•

The current exceptions to current Rule 3-01(a) applicable to filings other than on Form

10-K would be included in proposed Rules 3-01(b)(1) and (b)(2).

o Proposed Rule 3-01(b)(1), which would be the same as current Rules 3-01(b) and

3-12(b), would permit that if the filing is made no more than 45 days after the end

of the registrant’s fiscal year, the audited balance sheets may be as of the end of

the two fiscal years preceding the most recently completed fiscal year and must

include an additional balance sheet as of an interim date specified in proposed

paragraph (c)(1), as described further below.

o Proposed Rule 3-01(b)(2), which would be the same as current Rules 3-01(c) and

3-12(b), would permit that—if the filing is made more than 45 days but no more

than 59 days (for large accelerated filers, as defined in § 240.12b-2 of this

chapter), 74 days (for accelerated filers, as defined in § 240.12b-2 of this chapter),

or 89 days (for all other registrants) after the end of the registrant’s most recently

completed fiscal year—so long as three conditions are met, the registrant may

apply proposed paragraph (b)(1), which means that, in this situation, the audited

balance sheets may also be as of the end of the two fiscal years preceding the

most recently completed fiscal year and the filing must include an additional

balance sheet as of an interim date specified in proposed paragraph (c)(1). 99 We

do not propose any changes to the three conditions.

The three conditions would be set out in proposed Rules 3-01(b)(2)(i) through (iii) and continue to provide: (i)

the registrant is subject to Exchange Act reporting and has filed all required reports; (ii) for the most recently

completed fiscal year for which audited financial statements are not yet available, the registrant reasonably and

in good faith expects to report income attributable to the registrant after income taxes; and (iii) for at least one

of the two fiscal years immediately preceding the most recently completed fiscal year, the registrant reported

income attributable to the registrant after income taxes.

•

Proposed Rule 3-01(b)(3), which would be similar to the second sentence of current Rule

3-01(a), would require the filing of an audited balance sheet dated as of a date not more

than 134 days before the date of the filing if the registrant was not in existence as of the

end of its fiscal year.

•

Proposed Rule 3-01(b)(4), which would be the same as Rules 3-01(b) and 3-12(c), 100

would require that, notwithstanding the requirements of this section, the filing must be

updated with audited financial statements for the most recently completed fiscal year if

they become available prior to the filing date.

The proposed amendments to Rules 3-01 and 8-08 reflect the replacement of references

to filing dates from the current text of “within” a certain number of days after a milestone (e.g.,

filing date or end of the fiscal year or quarter) to “more than” or “no more than” a certain number

of days. 101 We believe this change will clarify the filing requirements and ensure alignment of

financial statement updating dates with the Forms 10-K, 10-Q, and 10-S filing deadlines. A

registration or proxy statement filed on the same date a periodic report is due would be required

to include the financial statements required in that periodic report. We are making similar

clarifying amendments to Exchange Act Rules 13a-13 and 15d-13.

We are proposing to place the rules regarding an interim balance sheet in Rule 3-01(c).

•

Proposed Rule 3-01(c)(1) would require that, when an audited balance sheet for the most

recently completed fiscal year is not included in the filing, the interim balance sheet must

100

While current Rule 3-01(b) does not explicitly state this requirement as Rule 3-12(c) does and as proposed Rule

3-01(b)(4) would do, this requirement is implicit in current Rule 3-01(b). We believe it is clearer to registrants

to set this requirement out explicitly.

101

See proposed Rule 3-01(b)(1), (2), and (3) and Rule 8-08(a)(1) and (2). For example, current Rule 3-01(c)(1)

references filings “made after 45 days but within the number of days of the end of the registrant's fiscal year

specified in paragraph (i) of this section.” Instead, proposed rule 3-01(b)(2) references filings “made more than

45 days but no more than 59 days (for large accelerated filers, as defined in § 240.12b-2 of this chapter), 74

days (for accelerated filers, as defined in § 240.12b-2 of this chapter), or 89 days (for all other registrants).”

be as of the end of the third fiscal quarter of the most recently completed fiscal year for

quarterly filers or as of the end of the first fiscal semiannual period of the most recently

completed fiscal year for semiannual filers. This proposed rule would be similar to

current Rule 3-01(b) and Rule 3-12(b), except that it would require a semiannual filer to

file an interim balance sheet as of the end of its semiannual period.

•

Proposed Rule 3-01(c)(2) would set forth requirements for an interim balance sheet when

an audited balance sheet for the most recently completed fiscal year is included in the

filing. We discuss proposed Rule 3-01(c)(2)’s requirements for an interim balance sheet

for the current fiscal year in detail in Section III.B.2 below on determining the age of

interim financial statements.

•

Proposed Rule 3-01(c)(3) would be substantively unchanged from current requirements

in Rules 3-01(f) and 3-12(a) and would provide that an interim balance sheet provided in

accordance with proposed Rule 3-01(c) need not be audited and need not be presented in

greater detail than is required by § 210.10-01.

We are proposing to renumber current Rule 3-01(g), regarding registered management

investment companies, as Rule 3-01(d). Likewise, we are proposing to renumber current Rule 301(h), regarding foreign private issuers, as Rule 3-01(e)(1). We are proposing to incorporate

current Rule 3-12(f) regarding financial statements of a foreign business into proposed Rule 301(e)(2).

We are proposing to delete current Rule 3-01(d), which requires—when filings are made

after 45 days but within a number of days of the end of the registrant’s fiscal year based on its

filer status and the three conditions in Rule 3-01(c) are not met—that balance sheets for the two

most recently completed fiscal years must be included. We believe current Rule 3-01(d) is

redundant with current Rule 3-01(a) and is unnecessary to include in Rule 3-01 as proposed to be

revised, because we believe it is clear if the required conditions in current Rule 3-01(c) are not

met, then the registrant must provide the balance sheet for the two most recently completed fiscal

years as required by current Rule 3-01(a) and as would be required by proposed Rule 3-01(b)(2).

We do not propose to integrate current Rule 3-12(d) into Rule 3-01 as proposed to be

revised, as we believe it would be redundant with proposed Rule 3-01(b). Current Rule 3-12(d)

requires the age of the registrant’s most recent audited financial statements included in a

registration statement filed under the Securities Act or filed on Form 10 under the Exchange Act

to be no more than one year and 45 days old at the date the registration statement becomes

effective if the registration statement relates to the security of an issuer that was not subject,

immediately before the time of filing the registration statement, to the reporting requirements of

Exchange Act Section 13 or 15(d). Because a registrant in this situation would not satisfy the

first of the three conditions in proposed Rule 3-01(b)(2), it would be required to file an annual

balance sheet for the most recently completed fiscal year, which would be as of a date more

current than one year and 45 days.

Because proposed Rule 3-01 would integrate current Rule 3-12, as described above, we

are proposing to eliminate Rule 3-12. We are also proposing technical amendments to rules that

currently refer to Rule 3-12 to reflect its integration into Rule 3-01. 102

Smaller reporting companies apply Rule 8-08 to determine the age of financial

statements. We are proposing amendments to Rule 8-08 to conform its organization to proposed

Rule 3-01, as described above.

102

See proposed amendments to replace references to Rule 3-12 with references to Rule 3-01 in: Instruction 1 to 17

CFR 210.11-02(c)(3); 17 CFR 210.15-01(c); and 17 CFR 230.485; proposed amendments to 17 CFR 210.1501(b) to replace reference to Rule 3-12 with reference to 17 CFR 210.3-20 (Rule 3-20 of Regulation S-X).

With respect to annual financial statements, we are proposing to eliminate the

introductory text of Rule 8-08 and revise paragraph (a) to address annual financial statements.

Consistent with proposed Rule 3-01(b), proposed paragraph (a) of Rule 8-08 would require a

registrant to file, in filings other than on Form 10-K, audited annual financial statements for the

registrant and its predecessors, as required by Rule 8-02. We are also proposing to move current

paragraph (a) to paragraph (a)(1) of Rule 8-08 and revise the rule to require that if the effective

date of a registration statement or anticipated mailing date of a proxy statement is no more than

45 days after the end of the most recently completed fiscal year, the filing may include financial

statements as of the end of the two fiscal years preceding the most recently completed fiscal year

and for the years then ended and must include interim financial statements, the requirements for

which we propose to move to a revised paragraph (b). We are proposing to move the

requirements in current paragraph (b) of Rule 8-08, that address the requirements when the

effective date of a registration statement or mailing date of a proxy statement is more than 45

days but not more than 90 days after the end of the most recently completed fiscal year, to a new

proposed paragraph (a)(2) of Rule 8-08. The proposed amendments would not change the age of

annual financial statements requirements for a smaller reporting company.

With respect to interim financial statements, we are proposing to revise paragraph (b) of

Rule 8-08 to include the interim financial statement requirements. Proposed paragraph (b)(1) of

Rule 8-08 would require that, if audited financial statements for the most recently completed

fiscal year are not included in the filing, a quarterly filer must file interim financial statements as

of the end of the third fiscal quarter of the most recently completed fiscal year and for the nine

months then ended and a semiannual filer must file interim financial statements as of the end of

the first fiscal semiannual period of the most recently completed fiscal year and for the

semiannual period then ended. Proposed paragraph (b)(2) of Rule 8-08 would require that, if

audited financial statements for the most recently completed fiscal year are included in a filing,

the registrant must file interim financial statements as of the end of the most recently completed

fiscal quarter (for quarterly filers) or semiannual period (for semiannual filers) and for the yearto-date interim period then ended that has been filed, or is required to be filed on or before the

filing date, in a Form 10-Q or Form 10-S. A registrant that is not subject to Exchange Act

Section 13(a) or 15(d) would apply this rule as if it were required to file Form 10-Q or Form 10S.

These proposed interim requirements in Rule 8-08 would replicate the requirements in

proposed Rules 3-01(c)(1) and (2). Proposed paragraph (b)(3) of Rule 8-08 would require that

interim financial statements must be prepared and presented in accordance with Rule 8-03, which

would replicate proposed Rule 3-01(c)(3).

2. Determining Age of Interim Financial Statements

As noted in Section III.B.1 above, proposed Rule 3-01(c)(2) would address age

requirements for interim financial statements (and proposed Rule 8-08(b)(2) would address age

requirements for smaller reporting companies). These proposed amendments would revise how

the date of an interim balance sheet is determined in registration or proxy statements. Currently,

Rule 3-01(e) requires that, for filings made after 129 days or 134 days (depending on filer status)

after fiscal year end, the filing must include a balance sheet as of an interim date within 130 days

or 135 days of the date of filing (depending on filer status). Rule 3-12 similarly requires that, if

the financial statements in a filing are as of a date 130 days or 135 days (depending on filer

status) or more before the date the filing is expected to become effective, or the proposed mailing

date in the case of a proxy statement, the financial statements must be updated with a balance

sheet as of an interim date within 130 days or 135 days (depending on filer status). Rule 8-08

contains a similar age requirement for the filing of interim financial statements in a registration

or proxy statement.

Under the proposed amendments, a registrant would no longer assess the number of days

from the filing date or from the effective date of the registration statement (or mailing date of a

proxy statement) to the date of the most recent balance sheet to determine if the balance sheet

falls within 130 days or 135 days, as applicable. Rather, under the proposed amendments to

Rules 3-01(c)(2) and 8-08(b)(2), a registrant, in determining if interim financial statements are

required when audited financial statements for the most recently completed fiscal year are

included in the filing, would include the interim financial statements as of the end of the most

recently completed fiscal quarter (for quarterly filers) or semiannual period (for semiannual

filers) that has been filed, or is required to be filed on or before the filing date, in a Form 10-Q or

Form 10-S. 103 A registrant that is not subject to Exchange Act Section 13(a) or 15(d) would

apply this rule as if it were required to file Form 10-Q or Form 10-S. In this regard, for a nonreporting company that filed a registration statement that has not yet become effective, these

provisions of proposed Rules 3-01(c)(2) and 8-08(b)(2) (regarding the interim financial

statements that would have been required in a Form 10-Q or Form 10-S) would mean that the

non-reporting company must file in a registration statement the interim financial statements that

would have been required in periodic reports if that non-reporting company were an Exchange

Act reporting company. 104 For example, the Form 10-Q or proposed Form 10-S for a company

103

The filing of Form 12b-25 in accordance with 17 CFR 240.12b-25 to provide notification of an inability to

timely file a Form 10-K, 10-S, or 10-Q would not impact when financial statements are required to be updated

in a registration or proxy statement.

104

This simplified approach in the proposed rules is similar to the approach in current Rule 8-08’s introductory

text, which requires that financial statements not be less current than the financial statements that would be

required in Forms 10-K and 10-Q if such reports were required to be filed. In this manner, Rule 8-08 would

continue to use this same approach except, in connection with our proposed revisions of Rule 8-08, the

that is a large accelerated filer or accelerated filer would be due 40 days after the end of the

interim period (or 45 days for all other registrants). For an interim period ending on June 30, the

Form 10-Q or proposed Form 10-S would be due by August 10 for a large accelerated or

accelerated filer (August 14 for all other registrants). Under the proposed amendments, a

registration statement filed by a large accelerated or accelerated filer on August 10 (or August 14

for all other registrants) would be required to include financial statements for the interim period

ended June 30.

We are proposing this change to simplify the updating requirements in current rules and

to align the date upon which the interim financial statements of a quarterly filer’s second quarter

would be required to be updated with that of a semiannual filer’s first semiannual period. In this

regard, with respect to semiannual filers, if we were to simply add 90 days to the existing 135day window, based on the application of current Rule 3-12 of Regulation S-X, the date upon

which a semiannual filer would have to update its interim financial statements for the semiannual

financial statements could differ by one or two days compared to the date upon which a quarterly

filer would have to update its second quarter financial statements. 105 The proposed amendments

to Rule 3-01(c)(2) and 8-08(b)(2) would avoid disparate treatment between semiannual filers and

quarterly filers with respect to the age of the interim financial statements requirements.

introductory text would be eliminated and this requirement would be found in Rule 8-08(b)(2). Current Rule 301 does not use this approach, so the proposed revisions to Rule 3-01 would differ compared to that current rule

and instead employ the approach currently found in Rule 8-08.

105

For example, a quarterly filer with a February 28 fiscal year would be required to update a registration

statement with interim financial statements as of the end of the second quarter of August 31 on October 13 (or

135 days from the end of the first quarter of May 31). If we were to instead add 90 days to the 135-day interval,

then a semiannual filer with the same February 28 fiscal year end would be required to update a registration

statement with semiannual financial statements as of October 11 (or 225 days from the Feb 28 fiscal year end),

two days earlier than October 13 for the quarterly filer.

The 1980 Regulation S-X Adopting Release stated that Rule 3-12 would result in

requirements for the age of financial statements in registration statements that “correspond with

the requirements for quarterly data under the 1934 Act on Form 10-Q.” 106 While the

requirements correspond, they are not identical: Rule 3-12 requires updated financial statements

to be as of a date within 130 days or 135 days of effectiveness (depending on filer status); while

a Form 10-Q is due 40 days or 45 days after the end of the fiscal quarter (depending on filer

status). As a result of this difference, under current rules, the financial statements in a registration

statement or proxy statement may be required to be updated one or two days before those same

financial statements are required to be filed on Form 10-Q. Such a difference results from the

number of days in a quarter that exceeds 90 days. 107 Our proposed rule would align the financial

statement age requirements of registration statements (and proxy statements) with the filing

deadlines of Form 10-Q and Form 10-S, eliminating such one- or two-day differences. Proposed

Rule 3-01(c)(2) results in both quarterly filers and semiannual filers having the same date on

which the financial statements would be required to be updated because both filers would

determine the date from the end of their most recently completed interim period as opposed to,

for example, the quarterly filer’s determination being from the end of the first quarter and the

semiannual filer’s determination being from the end of the fiscal year.

Under the proposed amendments to Rule 3-01(c), the interim financial statement period

required in a registration or proxy statement would be as of the end of a registrant’s fiscal

quarterly or semiannual period, as applicable. This would differ from current Rule 3-12, which

106

1980 Regulation S-X Adopting Release, at 63685.

107

For example, assume a calendar year registrant that is a non-accelerated filer that files a registration statement

on August 13. The second quarter Form 10-Q would be due on August 14. However, a registration statement

filed on August 13 would require updated financial statements, for the quarter ended June 30, in order to

comply with current Rule 3-12. This difference of one day between August 14 and August 13 is due to April,

May, and June containing 91 days instead of the 90-day quarterly period implicit in the 135 days.

permits interim financial statements as of any date so long as they cover a period within the

prescribed number of days from the date of effectiveness or mailing date. We observe that

virtually all registrants file interim financial statements as of the end of a quarter, since those

financial statements would be filed in future Exchange Act reports on Form 10-Q. Further,

registrants who wish to file interim financial statements as of a date that does not align with a

quarterly or semiannual period may request a substitution of financial statements under 17 CFR

210.3-13 (Rule 3-13 of Regulation S-X). As a result, we do not expect that this aspect of the

proposed amendments would result in any change in today’s practice. 108

When interim financial statements for a semiannual filer are required in a registration or

proxy statement, proposed Rule 3-01(c)(2) would require those interim financial statements to be

for a semiannual period. Under the proposed rules, depending on when the registration statement

becomes effective or the proxy statement is mailed, an investor in a registrant that is a

semiannual filer may not receive interim financial statements that are as current as would be

required today. For example, if a non-reporting registrant with a calendar fiscal year that elects

semiannual reporting files a registration statement as late as August 13, proposed Rule 3-01(c)(2)

would not require any interim financial statements to be included in the registration statement. In

contrast, under the current requirements and under the proposal for those registrants that continue

to report quarterly, the filing would include interim financial statements for the first fiscal

quarter. As discussed in Section I, we are proposing these amendments that may result in less

current interim financial statements in a registration statement to reduce regulatory burden and

108

The proposed amendments would not have any effect on the accommodations available for issuers that submit

draft registration statements for nonpublic review.

align the requirements for updating interim financial statements with the requirements for

periodic reporting under the Exchange Act, including the proposed semiannual reporting option.

3. Other Proposed Amendments to Regulation S-X

We are proposing amendments to Rules 10-01 and 8-03 of Regulation S-X to reflect that

registrants would have the option to report semiannually on Form 10-S. Specifically, we are

proposing to amend Rules 10-01(c) and 8-03 to clarify that “interim” for quarterly filers

represents a fiscal quarterly period (except when the rule addresses a year-to-date interim period)

and that “interim” for semiannual filers represents a fiscal semiannual period. To facilitate these

changes, the proposed revisions to Rules 10-01 and 8-03 would refer to the new proposed

definitions of quarterly filer and semiannual filer discussed above.

Under the proposed amendments to Rule 10-01, where required, a semiannual filer would

provide an interim balance sheet as of the end of the first semiannual period and a balance sheet

as of the end of the preceding fiscal year. A balance sheet as of the end of the first semiannual

period from the preceding fiscal year would not be required unless necessary for an

understanding of the impact of seasonal fluctuations on the registrant’s financial condition.

Under the proposed amendments to Rule 10-01, where required, a semiannual filer would

provide interim statements of comprehensive income and cash flows for the first semiannual

period and the corresponding period of the preceding fiscal year; a semiannual filer would also

have the option to present these statements for the cumulative twelve-month period ending as of

the end of the semiannual period. 109

109

We are also proposing technical amendments to Rules 10-01(c)(2) through (4) to change “twelve month period

ended during…” to “twelve-month period ending as of the end of…”

Under the proposed amendments to Rule 8-03, 110 where required, a semiannual filer

would provide in Form 10-S a balance sheet as of the end of the issuer’s first semiannual period,

a balance sheet as of the end of the preceding fiscal year, and statements of comprehensive

income and statements of cash flows for the interim period up to the date of the interim balance

sheet date and the comparable period of the preceding fiscal year.

We are also proposing related technical amendments to Rules 10-01(b)(6), 10-01(d), and

8-03(b)(5) (which as renumbered would become 8-03(c)(5)) to indicate that the rules apply to

Form 10-S, in addition to Form 10-Q. We are proposing amendments to Rules 8-03(a)(5) (which

as renumbered would become Rule 8-03(b)(5)) and 10-01(a)(7) to change “interim” to

“quarterly” and clarify that the requirement to disclose subtotals in the statement of changes in

stockholders’ equity for each quarterly period applies only to quarterly filers. We are proposing

to relocate current Instruction 1 to Rule 8-03, which requires that statements of comprehensive

income for the most recent quarter and the comparable quarter of the preceding fiscal year be

provided when the year-to-date interim period is more than one quarter, to Rule 8-03(a)(2) to

enhance its prominence.

Lastly, we are proposing a technical amendment to reinsert Instruction 2 to Rule 8-03

concerning management adjustments to financial statements that was inadvertently deleted in a

2018 adopting release, except this provision would be reinserted as paragraph (c)(2) of Rule 803. 111

Request for Comment

110

For Rule 8-03, we are proposing to renumber the introductory text as paragraph (a), renumber paragraph (a) as

paragraph (b), and renumber paragraph (b) as paragraph (c).

111

Disclosure Update and Simplification, Release No 34-83875 (Aug. 17, 2018) [83 FR 50148 Oct. 4, 2018)]

(adopting amendments to Rule 8-03, including to Instruction 1, and indicating through the use of five asterisks

at the end of Instruction 1 that Instruction 2 was not amended).

35.

Should the Commission adopt the proposed amendments to Regulation S-X to effectuate

semiannual reporting? Are there any other changes beyond those proposed that the

Commission should make to Regulation S-X to effectuate semiannual reporting?

36.

In connection with registration and proxy statements, are the proposed changes to

Regulation S-X necessary to take into account semiannual reporting? If the proposed

changes to Regulation S-X were not made and the relevant rules remained structured

around quarterly reporting, would this have a negative impact on semiannual filers

seeking to raise capital or solicit proxies?

37.

What impact would the proposal have on the ability of semiannual filers to conduct

public offerings? Would reporting companies that elect to become semiannual filers

nonetheless decide to include quarterly or more recent financial information in Securities

Act registration statements or prospectuses based on market practices or liability

concerns and, if so, would that reduce the cost savings that would otherwise be generated

by less frequent interim reporting? For example, would semiannual filers continue to

retain independent public accountants to review their financial statements on a quarterly

basis to facilitate capital-raising by the company in offerings registered under the

Securities Act?

38.

Should we change how the age of financial statements in a registration statement is

determined in order to precisely align with the deadlines of Exchange Act reporting

requirements as proposed? Would our proposed changes to consolidate Rule 3-12 into

Rule 3-01 help to streamline Regulation S-X’s requirements so that they are easier for

registrants to apply?

39.

Should we have the deadlines that apply at the time of filing and that apply at the time of

effectiveness (for registration statements) or mailing (for proxy statements) centrally

located in the same rule as we propose? Why or why not? With respect to this dual role

the revised Rule 3-01 would serve, does new paragraph (a) make clear to registrants

that—in considering what age requirements apply with respect to effectiveness or

mailing—they should substitute effectiveness or mailing dates for the filing dates

explicitly mentioned in the rule?

40.

Instead of the amendments we propose, should we retain the current 135-day age

requirement for quarterly filers and adopt a 225-day age requirement for semiannual

filers—even if that means semiannual filers may have to update one or two days sooner

than quarterly filers? 112 Why or why not?

41.

As discussed above, the proposed elimination of the 135-day provisions of the current

rules would mean that registrants could no longer provide a mid-period dated financial

statement but would need to provide financial statements that coincide with fiscal interim

period ends or annual fiscal year end. Are there any registrants who employ the 135-day

provision to provide mid-period financial statements today? If so, why and under what

circumstances do registrants do this? Does providing this ability for some registrants

justify the added complexity these provisions may create for other registrants?

42.

Are there any other changes needed to simplify the age of financial statement

requirements? Are there any other changes we should make to reduce the compliance

burdens associated with Regulation S-X’s requirements in connection with proposed

optional semiannual reporting?

112

See supra note 107 and accompanying text (providing an example of a one-day difference).

43.

Should we adopt changes to Rule 10-01 and Rule 8-03 regarding the contents of interim

financial statements as proposed? Do the proposed amendments appropriately incorporate

the reporting of semiannual periods on Form 10-S without changing how the interim

financial statement rules apply to a registrant reporting on Form 10-Q?

44.

When a registrant acquires a significant business, financial statements of that business are

required to be filed on Form 8-K and must comply with the age requirements of Rule 301 at the date the initial Form 8-K reporting the acquisition is filed. Depending on the

timing of the acquisition, pre-acquisition interim financial information for upwards of six

to nine months may never be required to be filed by semiannual filers. Should we require

other financial information (e.g., summarized financial information) to inform investors

of pre-acquisition results of operations, financial condition, and cash flows of the

acquiree beyond the information that would be required under Rule 3-01 as proposed to

be amended?

C. Proposed Amendments Regarding Transition Reports

We are proposing amendments to Exchange Act Rules 13a-10 and 15d-10, which set

forth the Commission’s requirements with respect to transition reports upon a change in fiscal

year, to incorporate the proposed semiannual reporting option. Specifically, we are proposing to

amend Rule 13a-10(e) and Rule 15d-10(e) to place the requirements applicable to quarterly

filers, which are unchanged, in a new subparagraph (1) and place the requirements applicable to

semiannual filers in a new subparagraph (2). New proposed Rule 13a-10(e)(2)) and Rule 15d10(e)(2) for semiannual filers would mirror the rules applicable to quarterly filers.

We do not propose to replicate current Rule 13a-10(e)(4), which addresses the reporting

of a “gap period” by quarterly filers who change their fiscal year closing date. A “gap period” is

the period of one or two months between the latest quarter end under the old fiscal year and the

start of the quarterly reporting period under the new fiscal year. Because such a “gap period”

would not arise due to a change in fiscal year by a semiannual filer, we are not proposing an

analog for semiannual filers.

We are also proposing related technical changes to Rules 13a-10 and 15d-10 to indicate

that the relevant rules apply to Form 10-S in addition to Form 10-Q. 113

Request for Comment

45.

Should the Commission make any other changes to transition reports under Rules 13a-10

and 15d-10 to effectuate semiannual reporting?

D. Proposed Technical Amendments

We are proposing a number of technical amendments to conform existing rules and forms

to the proposed flexible approach to interim reporting by inserting references to semiannual

reporting or new Form 10-S and to make corrective deletions of references to previously

rescinded forms. These proposed amendments include:

•

changes to several items in Regulation S-K, 114 an item in Regulation M-A, 115 and several

proxy rules; 116

113

See proposed amendments to Rule 13a-10(c), Rule 13a-10(d)(2)(ii), Rule 13a-10(d)(2)(iii), Note to Rule 13a10(c) and (e), Rule 13a-10(f), Rule 13a-10(j)(2), Rule 15d-10(c), Rule 15d-10(d)(2)(ii) and (iii), Note to Rule

15d-10(c) and (e), and Rule 15d-10(f).

114

17 CFR 229.10 (General); 17 CFR 229.101 (Description of business); 17 CFR 229.103 (Legal proceedings); 17

CFR 229.201 (Market price of and dividends on the registrant’s common equity and related stockholder

matters); 17 CFR 229.302 (Supplementary financial information); 17 CFR 229.303 (Management’s discussion

and analysis of financial condition and results of operations); 17 CFR 229.308 (Internal control over financial

reporting); 17 CFR 229.402 (Executive compensation); 17 CFR 229.407 (Corporate governance); 17 CFR

229.408 (Insider trading arrangements and policies); 17 CFR 229.601 (Exhibits); 17 CFR 229.701 (Recent sales

of unregistered securities; use of proceeds from registered securities); 17 CFR 229.1100 (General).

115

17 CFR 229.1010 (Financial statements).

116

17 CFR 240.14a-5 (Presentation of information in proxy statement); 17 CFR 240.14a-8 (Shareholder

proposals); 17 CFR 240.14a-101 (Schedule 14A. Information required in proxy statement).

•

changes to rules regarding determination of market capitalization, among other things, 117

and rules providing definitions; 118 and

•

changes to rules regarding research reports, 119 underwriter status, 120 and liability under

the securities laws. 121

We are proposing the same types of technical amendments to rules related to several

aspects of the process of filing forms and schedules with the Commission regarding

incorporation by reference; 122 data tagging; 123 definitions; 124 late filing; 125 certifications; 126

disclosure controls and internal control over financial reporting; 127 foreign private issuers; 128 and

beneficial ownership schedules. 129 We are also proposing such technical amendments to a rule

117

17 CFR 240.3a55-1 (Method for determining market capitalization and dollar value of average daily trading

volume; application of the definition of narrow-based security index).

118

17 CFR 230.158 (Definitions of certain terms in the last paragraph of section 11(a)); 17 CFR 230.405

(Definitions of terms); 17 CFR 232.11 (Definition of terms used in this part).

119

17 CFR 230.138 (Publications or distributions of research reports by brokers or dealers about securities other

than those they are distributing); 17 CFR 230.139 (Publications or distributions of research reports by brokers

or dealers distributing securities); 17 CFR 230.139b (Publications or distributions of covered investment fund

research reports by brokers or dealers distributing securities).

120

17 CFR 230.144 (Persons deemed not to be engaged in a distribution and therefore not underwriters).

121

17 CFR 230.175 (Liability for certain statements by issuers); 17 CFR 240.3b-6 (Liability for certain statements

by issuers); 17 CFR 240.10b5-1 (Trading “on the basis of” material nonpublic information in insider trading

cases); 17 CFR 260.0-11 (Liability for certain statements by issuers).

122

17 CFR 232.303 (Incorporation by reference).

123

17 CFR 232.405 (Interactive Data File submissions); 17 CFR 232.406 (Cover Page XBRL Data Tagging).

124

17 CFR 240.12b-2 (Definitions).

125

17 CFR 240.12b-25 (Notification of inability to timely file all or any required portion of a Form 10-K, 20-F, 11K, N-CEN, N-CSR, 10-Q, or 10-D).

126

17 CFR 240.13a-14 (Certification of disclosure in annual and quarterly reports); 17 CFR 240.15d-14

(Certification of disclosure in annual and quarterly reports).

127

17 CFR 240.13a-15 (Controls and procedures); 17 CFR 240.15d-15 (Controls and procedures).

128

17 CFR 240.13a-16 (Reports of foreign private issuers on Form 6-K (17 CFR 249.306)); 17 CFR 240.15d-16

((Reports of foreign private issuers on Form 6-K (17 CFR 249.306))..

129

17 CFR 240.13d-1 (Filing of Schedules 13D and 13G).

regarding Office of Management and Budget (“OMB”) control numbers. 130 Finally, we are

proposing such technical amendments to several Commission forms. 131

Request for Comment

46.

Should the Commission make any other technical, conforming, clarifying, or

implementing changes to effectuate semiannual reporting?

47.

We are not proposing any technical amendments to references to “quarter” in Forms F-8

and F-80 (related to the calculation of U.S. holders), because companies that use those

forms are foreign private issuers, which do not report quarterly currently. Is there any

need for technical amendments to those forms to include references to semiannual

reporting?

E. General Request for Comment

We request and encourage any interested person to submit comments on any aspect of

our proposal, other matters that might have an impact on the proposed amendments, and any

suggestions for additional changes. With respect to any comments, we note that they are of

greatest assistance to our rulemaking initiative if accompanied by supporting data and analysis of

the issues addressed in those comments and by alternatives to our proposal where appropriate.

IV.

OTHER MATTERS

This proposing release is an economically significant regulatory action under Section

3(f)(1) of Executive Order 12866, as amended, and has been reviewed by OMB. This action, if

finalized as proposed, is expected to be an Executive Order 14192 deregulatory action.

130

17 CFR 200.800 (OMB control numbers assigned pursuant to the Paperwork Reduction Act).

131

17 CFR 239.11 (Form S-1); 17 CFR 239.13 (Form S-3); 17 CFR 239.18 (Form S-11); 17 CFR 239.25 (Form S4); 17 CFR 239.31 (Form F-1); 17 CFR 239.33 (Form F-3); 17 CFR 239.34 (Form F-4); 17 CFR 239.40 (Form

F-10); 17 CFR 249.306 (Form 6-K); 17 CFR 249.308 (Form 8-K); 17 CFR 249.310 (Form 10-K); 17 CFR

249.322 (Form 12b-25—Notification of late filing).

ECONOMIC ANALYSIS

We are attentive to the costs that would be imposed by and the benefits that would be

obtained from the proposed amendments. 132 The discussion below addresses the potential

economic effects of the proposed amendments, including the likely benefits and costs, as well as

the likely effects on efficiency, competition, and capital formation. We also analyze the potential

costs and benefits of reasonable alternatives to the amendments.

A. Introduction

As discussed in Section III, the proposed amendments would provide companies subject

to reporting obligations under Exchange Act Section 13(a) or 15(d) with the option of filing

interim reports on a semiannual basis rather than on a quarterly basis. This flexibility would

allow reporting companies to choose the reporting frequency that best aligns with their business

needs and investor expectations.

Currently, Exchange Act reporting companies must file quarterly reports on Form 10-Q.

These interim reports can be costly to prepare and provide. Reporting companies dedicate time

and resources for preparing quarterly reports and associated voluntary disclosures (i.e., earnings

announcements and management guidance), for independent public accountant’s reviews of

quarterly financial statements, and for related investor engagements such as earnings conference

calls. Further, more frequent disclosure increases the risk of disclosing proprietary information

132

Securities Act Section 2(b) and Exchange Act Section 3(f) require us, when engaging in rulemaking that

requires us to consider or determine whether an action is necessary or appropriate in the public interest, to

consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and

capital formation. 15 U.S.C. 77b(b), 78c(f). Exchange Act Section 23(a)(2) requires us, when making rules

under the Exchange Act, to consider the impact that the rules would have on competition and prohibits the

Commission from adopting any rules that would impose a burden on competition not necessary or appropriate

in furtherance of the purposes of the Exchange Act. 15 U.S.C. 78w(a)(2).

that could benefit competitors to the detriment of the reporting company. 133 Reporting

companies that reduce their reporting frequency could potentially redirect resources towards

strategic priorities and other business needs while reducing the risk of disclosing proprietary

information.

Conversely, the efficiency of financial markets rests on material information becoming

public in a timely fashion. In addition to protecting investors, greater availability of material

information allows securities prices to better reflect their issuers’ fundamental value and

ultimately promotes capital formation as issuers have access to lower cost of capital and

investors in those issuers’ securities have access to higher liquidity, as discussed in detail below.

A reduction in the frequency of interim reporting could result in delayed disclosure of material

information, reduced comparability, and some lost information. Therefore, there exists a tradeoff

between reducing regulatory burdens so that reporting companies can reallocate their resources

to potentially more value enhancing activities, which would ultimately benefit investors, and

promoting efficient financial markets through timely disclosure. The optimal reporting frequency

may differ across reporting companies and industries, depending on their size, business model,

investor base, and other factors. Under the proposed rules, reporting companies could choose the

frequency of reporting that best fits their circumstances. This flexibility is intended to allow

reporting companies to make firm-specific choices that reflect the unique needs and preferences

of their investors. Barring significant agency costs, this could lead to a more efficient, firm

specific choice for reporting frequency that would benefit both issuers and investors.

133

The proposed amendments would not change what is required to be disclosed in the interim reports, simply the

frequency. The impact of the proposed rules on the disclosure of proprietary information would be limited to

instances where delaying competitively sensitive information contained in the interim reports or aggregating

quarterly information into semiannual information decreases the value of the information to competitors.

Reporting companies that would choose to report on a semiannual basis could also decide

whether to supplement with voluntary information on a quarterly basis. For instance, these

companies may still voluntarily provide earnings announcements or similar disclosures during

the first or third quarter or both. 134 Reporting companies that would be impacted by the proposed

rules would fall into three broad groups: (1) companies that would file a Form 10-S semiannual

report and choose not to voluntarily provide information for the first and third quarters; (2)

companies that would continue to file Form 10-Q quarterly reports; and (3) companies that

would file a Form 10-S semiannual report and choose to voluntarily provide information for the

first or third quarter or both. 135 For purposes of our analyses, we discuss these groups separately

and refer to the first group of issuers as semiannual reporters, the second group of issuers as

quarterly reporters, and the third group of issuers as hybrid reporters.

Overall, the impact of the proposed rules would depend on the number and type of

reporting companies that decide to provide interim reports on a semiannual basis instead of a

quarterly basis and the extent to which those companies supplement with voluntary disclosure.

Because the decision to switch reporting frequency is voluntary and firm-specific, the aggregate

effects will reflect a range of company and investor preferences. While we are unable to quantify

the number of companies that would switch to semiannual reporting, we discuss factors that

likely would influence reporting frequency decisions in Section V.D.4 below.

134

See supra note 61 and accompanying text for a discussion of quarterly earnings releases and the fact that there

is no requirement that they be reviewed by an independent public accountant or prepared in accordance with

U.S. GAAP, among other regulatory requirements that apply to quarterly reports filed with the Commission on

Form 10-Q.

135

There is a wide range of information that these issuers could choose to disclose voluntarily for the first or third

quarter or both. The economic effects of the proposed rules would therefore vary based on the amount of

information these issuers provide and the costs of producing this information. Specifically, both the benefits and

costs for an issuer would generally be reduced as more information is voluntarily disclosed.

B. Broad Economic Considerations

This section summarizes a number of broad economic considerations regarding the

frequency of periodic disclosures to provide context for the more detailed analysis of potential

outcomes and the associated economic costs and benefits that follow.

The production of financial reports and disclosures on a periodic basis is a significant

undertaking by reporting companies, involving internal staff time as well as the use of external

service providers and requiring the attention of management. Additional voluntary efforts to

engage with investors on some or all of the content of the disclosures, such as through earnings

releases and conference calls, 136 may increase the burden of periodic reporting on company

resources and, in particular, on management time. Periodic disclosures may also affect a

company’s value by increasing proprietary costs of revealing information that has competitive

value to rival companies. 137 Reducing the frequency of periodic disclosures can, for some

companies, provide savings of time and

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