Semiannual Reporting

Federal RegisterMay 7, 2026

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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-comment@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/comments/s7-2026-15/semiannual-reporting#no-back.

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:

EP07MY26.001

15 U.S.C. 77a

et seq.

15 U.S.C. 78a

et seq.

15 U.S.C. 77aaa

et seq.

EP07MY26.002

Table of Contents

I. Introduction

II. Background

III. Discussion of Proposed Amendments

A. Proposed Amendments for Semiannual Reporting

B. Proposed Amendments to Regulation S-X

C. Proposed Amendments Regarding Transition Reports

D. Proposed Technical Amendments

E. General Request for Comment

IV. Other Matters

V. Economic Analysis

A. Introduction

B. Broad Economic Considerations

C. Baseline

D. Benefits and Costs

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

F. Reasonable Alternatives

G. Request for Comment

VI. Paperwork Reduction Act Analysis

A. Summary of the Collections of Information

B. Estimated Paperwork Burden Effects of the Proposed Amendments

C. Incremental and Aggregate Burden and Cost Estimates

D. Request for Comment

VII. Congressional Review Act

VIII. Initial Regulatory Flexibility Act Analysis

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

B. Legal Basis

C. Small Entities Subject to the Proposed Rules and Amendments

D. Reporting, Recordkeeping, and Other Compliance Requirements

E. Duplicative, Overlapping or Conflicting Federal Rules

F. Significant Alternatives

G. Request for Comment

Statutory Authority

I. 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”)

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 240.13a-13 (“Exchange Act Rule 13a-13”) or 17 CFR 240.15d-13 (“Exchange Act Rule 15d-13”), with certain exceptions.

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 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.

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.

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). Face-amount 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.

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

as well as current reports on Form 8-K for certain material events since 1936.

In 1946, the Commission required certain reporting companies to file quarterly reports on Form 8-K to disclose, among other things, the dollar amount of gross sales (less discounts, returns, and allowances) and operating revenue.

In 1953, the Commission ended this quarterly reporting requirement,

and, in 1955, it adopted rules requiring semiannual interim reports pursuant to Rules X-13A-13 and X-15D-13.

These rules required one semiannual report to be filed each fiscal year by Exchange Act reporting companies on a new Form 9-K.

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.

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

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.

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.

The rules required Exchange Act reporting companies to file three quarterly reports on Form 10-Q each fiscal year.

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.

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.”

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

the Commission has not changed this cadence of quarterly interim reporting since it was adopted in 1970.

Adoption of Form 10-Q, Rescission of Form 9-K and Amendment of Rules 13a-13 and 15d-13,

Release No. 34-9004 (Oct. 28, 1970) [35 FR 17537 (Nov. 14, 1970)].

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).

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”),

have been reviewed by an independent public accountant (but are not required to be audited),

and are data tagged using inline XBRL.

It also requires narrative disclosures regarding:

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.

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).

• Management's discussion and analysis of financial condition and results of operations (“MD&A”);

See

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

• Market risk;

See

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

• Effectiveness of disclosure controls and procedures and material changes in internal control over financial reporting;

See

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

• Legal proceedings;

See

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

• Material changes in risk factors;

See

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

• Unregistered equity security sales and use of proceeds;

See

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

• Defaults on senior securities;

See

Form 10-Q, Part II, Item 3.

• Material changes to the procedures by which security holders may recommend nominees to the registrant's board of directors;

See

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

• Disclosure of director or officer adoptions or terminations of certain plans for the purchase or sale of registrant securities;

See

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

• Exhibits required under Item 601 of Regulation S-K;

and

See

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

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

See

Sarbanes-Oxley Act of 2002, Public Law 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, Public Law 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).

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.

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.

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 reports on Form 10-Q),

require availability of interim reports,

or require quick dissemination of quarterly earnings information to the market.

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 N-CSR) 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).

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,

and certain other

companies are exempt from quarterly reporting but furnish semiannual information pursuant to other requirements such as exchange listing standards.

Several foreign jurisdictions also require semiannual reporting of financial information (but not quarterly reporting).

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.

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 240.13a-1 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://eur-lex.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://en-rules.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).

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.

In July 2019, the Commission also held a roundtable that discussed issues including the frequency of periodic reporting.

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.

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

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.

Finally, the concept of semiannual reporting was recently discussed at: a meeting of the Commission's Investor Advisory Committee;

the Commission's

45th Annual Small Business Forum

(and the prior year's forum);

and the Commission's 2025

Small Cap Policy Roundtable.

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 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-term-management-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/petn4-872.pdf.

See

comments on 2016 Regulation S-K Concept Release,

available at https://www.sec.gov/comments/s7-06-16/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.

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;

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 10-S 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.

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 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.

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

and smaller reporting companies

may value having the flexibility to select the interim reporting requirement that is most appropriate for them and their investors.

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

See infra

economic analysis discussion in Section V.E.

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. 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%).

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

Section VI.C (discussing Federal agency regulations and discussing State law that refers to quarterly filings with the Commission).

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.

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.

Reporting companies that do not elect to report 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 10-Q 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.

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 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.

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.

This election would determine what financial statements are required in the registration statement

and indicate the company's planned interim reporting frequency to investors and other market participants.

Similar to current requirements for the first quarterly report for companies that have newly become Exchange Act reporting companies,

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.

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.

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).

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 until the next Form 10-K annual report is filed.

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.

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).

• 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.

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).

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.

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 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.

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.

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 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.

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).

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.

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.

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

and reviewed by an auditor (but not required to be audited).

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.

Non-GAAP 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.

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)).

Request for Comment

1. 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?

2. 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?

3. 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?

Should only companies below alternative 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?

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).

4. 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?

5. 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?

6. If adopted, would semiannual reporting have an impact on investors' ability to compare same-company performance over time? Why or why not?

7. 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)?

8. 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?

9. 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 10-K. 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?

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).

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 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”

in securities offerings (to support potential due diligence defenses)

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)?

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 statement?

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?

“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.

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).

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?

31. Many public companies have standalone insider trading policies or insider trading policies that are part of the company's code of ethics,

and these policies may provide for trading windows.

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 event-specific 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 3-12 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.

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.

While current 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.

Notwithstanding this difference, application of the two rules currently results in age requirements that are aligned: if a registrant were to apply current Rule 3-01'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.

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 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”).

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).

• 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).

○ 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.

○ 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).

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.

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.

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.

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).”

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 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 3-01(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 3-01(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.

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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 210.15-01(b) to replace reference to Rule 3-12 with reference to 17 CFR 210.3-20 (Rule 3-20 of Regulation S-X).

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.

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 year-to-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 10-S.

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.

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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 non-reporting 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.

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For example, the Form 10-Q or proposed Form 10-S for a company 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.

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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.

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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 introductory text would be eliminated and this requirement would be found in Rule 8-08(b)(2). Current Rule 3-01 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.

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 135-day 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.

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.

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.

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 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

The proposed amendments would not have any effect on the accommodations available for issuers that submit draft registration statements for nonpublic review.

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 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

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.

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).

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 8-03.

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).

Request for Comment

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?

112

See supra

note 107 and accompanying text (providing an example of a one-day difference).

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?

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 3-01 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 15d-10(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

See

proposed amendments to Rule 13a-10(c), Rule 13a-10(d)(2)(ii), Rule 13a-10(d)(2)(iii), Note to Rule 13a-10(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).

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

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

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).

• changes to rules regarding research reports,

119

underwriter status,

120

and liability under the securities laws.

121

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).

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 regarding Office of Management and Budget (“OMB”) control numbers.

130

Finally, we are proposing such technical amendments to several Commission forms.

131

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, 11-K, 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).

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 S-4); 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).

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.

V. 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.

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).

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 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.

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.

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.

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.

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.

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.

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 cash flow for other purposes. For companies that face financing constraints or limited managerial capacity, such savings may be directed to potentially more productive uses, such as strategic planning or capital investments. In other cases, savings may be returned to shareholders. A reduced burden of periodic disclosures on reporting issuers could also be a positive factor in encouraging additional companies to raise capital through registered securities offerings or to become or remain a public company.

138

136

These disclosures generally exist because of the interim reports. While the proposed rules would not directly impact such voluntary disclosure, the proposed rules would have an indirect impact, at least to the extent that semiannual filers would forgo providing such voluntary disclosure for quarters for which they would no longer file interim reports.

137

See, e.g.,

Robert E. Verrecchia,

Discretionary Disclosure,

5 J. Acct. & Econ. 179 (1983) (showing, theoretically, how proprietary costs can result in a manager withholding information when disclosure is discretionary).

138

Studies have found that costs associated with mandated reporting may affect companies' going public decision as well as the decision to exit public markets. For example, there is some evidence of favorable effects of emerging growth company accommodations on IPO activity,

see, e.g.,

Michael Dambra et al.,

The JOBS Act and IPO Volume: Evidence that Disclosure Costs Affect the IPO Decision,

116 J. Fin. Econ. 121 (2015). There is also evidence suggesting that costs associated with the Sarbanes-Oxley Act regulations encouraged companies to exit U.S. public stock markets.

See, e.g.,

Francesco Bova et al.,

The Sarbanes-Oxley Act and Exit Strategies of Private Firms,

31 Contemp. Acct. Rsch. 818 (2014) (finding that “SOX appears to have shifted the preferences of private firms from going public to exiting the private market via acquisition by a public acquirer”); Ellen Engel et al.,

The Sarbanes-Oxley Act and Firms' Going-Private Decisions,

44 J. Acct. & Econ. 116 (2

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