SUPPLEMENTARY INFORMATION:

The Commission is proposing to amend or add the following rules and forms: 

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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”) ^[4] that file ( printed page 24971) 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.^[5] Pursuant to these rules, Exchange Act reporting companies file with the Commission three quarterly reports on Form 10-Q each fiscal year, with the fourth fiscal quarter subsumed within the reporting company's annual report on Form 10-K. The proposed amendments to Exchange Act Rules 13a-13 and 15d-13, if adopted, would allow Exchange Act reporting companies electing to do so to file semiannual reports on new Form 10-S in lieu of quarterly reports on Form 10-Q. Our proposal would provide an Exchange Act reporting company with the flexibility to determine the frequency of interim reporting that best suits its particular circumstances, such as its ability to bear the costs of preparing the quarterly reports, the stage of its business development, and the expectations of its investors, without undermining fundamental investor protections. Providing such regulatory flexibility could reduce the regulatory burden of being a reporting company, which could potentially influence a company's decision to become or remain a reporting company and encourage more companies to go or remain public. These proposed amendments would not substantively affect investment companies except for business development companies and face-amount certificate companies.^[6]

We are also proposing amendments to the financial statement requirements of 17 CFR part 210 (“Regulation S-X”)—including to 17 CFR 210.3-01 (“Rule 3-01”), 17 CFR 210.3-12 (“Rule 3-12”), and 17 CFR 210.8-08 (“Rule 8-08”)—to facilitate semiannual reporting and to simplify rules regarding the age of financial statements in registration statements and other Commission filings.

II. Background

Companies subject to Exchange Act Sections 13(a) and 15(d) must file periodic and other reports as prescribed in Commission rules. Exchange Act reporting companies have been required to file annual reports on Form 10-K since 1935 ^[7] as well as current reports on Form 8-K for certain material events since 1936.^[8] In 1946, the Commission required certain reporting companies to file quarterly reports on Form 8-K to disclose, among other things, the dollar amount of gross sales (less discounts, returns, and allowances) and operating revenue.^[9] In 1953, the Commission ended this quarterly reporting requirement,^[10] and, in 1955, it adopted rules requiring semiannual interim reports pursuant to Rules X-13A-13 and X-15D-13.^[11] These rules required one semiannual report to be filed each fiscal year by Exchange Act reporting companies on a new Form 9-K.^[12] Semiannual reports on Form 9-K, which were due 45 days after the end of the reporting period, did not require the narrative disclosures mandated by Form 10-Q and provided only limited disclosures typically associated with an income statement.^[13]

After 15 years of this semiannual reporting system, the Commission rescinded semiannual reports on Form 9-K in 1970 and instead required quarterly reporting pursuant to amended Rules 13a-13 and 15d-13.^[14] The rules required Exchange Act reporting companies to file three quarterly reports on Form 10-Q each fiscal year.^[15] When it proposed the quarterly report on Form 10-Q, the Commission explained that the new report would “provide detailed information as a back-up to information released pursuant to timely disclosure policies” and would provide “uniform standards” for all Exchange Act reporting companies.^[16] The Commission's move towards a quarterly reporting requirement was also consistent with the recommendation of the 1969 Wheat Report, which ( printed page 24972) concluded “that a regular, quarterly report would be more useful than the present, irregular 8-K report.” ^[17] Although the Commission has amended Form 10-Q and requirements in connection with quarterly reporting over time,^[18] the Commission has not changed this cadence of quarterly interim reporting since it was adopted in 1970.

Form 10-Q today requires more detailed information than the rescinded semiannual report on Form 9-K. Form 10-Q requires financial statements (inclusive of footnote disclosures) for the covered quarterly period that are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”),^[19] have been reviewed by an independent public accountant (but are not required to be audited),^[20] and are data tagged using inline XBRL.^[21] It also requires narrative disclosures regarding:

• Management's discussion and analysis of financial condition and results of operations (“MD&A”); ^[22]

• Market risk; ^[23]

• Effectiveness of disclosure controls and procedures and material changes in internal control over financial reporting; ^[24]

• Legal proceedings; ^[25]

• Material changes in risk factors; ^[26]

• Unregistered equity security sales and use of proceeds; ^[27]

• Defaults on senior securities; ^[28]

• Material changes to the procedures by which security holders may recommend nominees to the registrant's board of directors; ^[29]

• Disclosure of director or officer adoptions or terminations of certain plans for the purchase or sale of registrant securities; ^[30]

• Exhibits required under Item 601 of Regulation S-K; ^[31] and

• Certifications by the principal executive and financial officers as exhibits.^[32]

Form 10-Q reports are filed electronically with the Commission through its EDGAR system. The deadline for filing Form 10-Q with the Commission is 40 or 45 days after the end of a fiscal quarter, depending on the filer status of the reporting company.^[33]

Finally, securities exchange listing standards generally do not mandate a particular frequency of interim reporting. Instead, they refer generally to compliance with Commission rules requiring interim reports (with at least one exchange making specific reference to quarterly reports on Form 10-Q),^[34] require availability of interim reports,^[35] or require quick dissemination of quarterly earnings information to the market.^[36]

Certain companies that are not subject to Section 13(a) or Section 15(d) already report on a semiannual basis under the Commission's rules,^[37] and certain other ( printed page 24973) companies are exempt from quarterly reporting but furnish semiannual information pursuant to other requirements such as exchange listing standards.^[38] Several foreign jurisdictions also require semiannual reporting of financial information (but not quarterly reporting).^[39]

Over the years, the Commission at times has reassessed the current periodic reporting system, its impact on Exchange Act reporting companies, and potential alternatives including semiannual reporting. Most recently, as part of the Commission's disclosure effectiveness review, the Commission issued two releases that addressed and requested public comment on the frequency of interim reporting.^[40] In July 2019, the Commission also held a roundtable that discussed issues including the frequency of periodic reporting.^[41] The Commission received significant public feedback as a result of these recent efforts, including from companies and their representative organizations, asset managers and institutional investors, investor groups and individual investors, accounting firms, law firms, and other market participants.^[42] Commenters expressed a wide variety of views about the frequency of interim reporting requirements,^[43] with some supporting the current frequency but others recommending less-frequent interim reporting, such as semiannual reports, due to concerns about compliance costs and short-termism.^[44] Finally, the concept of semiannual reporting was recently discussed at: a meeting of the Commission's Investor Advisory Committee; ^[45] the Commission's 45th Annual Small Business Forum (and the prior year's forum); ^[46] and the Commission's 2025 Small Cap Policy Roundtable.^[47]

III. Discussion of Proposed Amendments

Interim reports provide investors with material information about the financial performance of their companies during a fiscal year. Yet quarterly reporting may not be the ideal interim reporting frequency for every Exchange Act reporting company, given the varied circumstances each company faces. We are proposing rule and form amendments to provide all Exchange Act reporting companies with the ( printed page 24974) 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.^[48] These companies could then choose to dedicate any compliance cost and resource savings to their business growth. Other potential benefits of semiannual reporting include: less distraction from running the day-to-day business; reallocation of attention from interim reporting to company strategy; additional time spent on new product development; and ability to engage in transactions that might not be possible when management is focused on preparing interim reports.^[49] To the extent that companies could not previously do so due to quarterly reporting, companies electing semiannual reporting may employ business strategies that may help ensure these companies' long-term viability. In particular, emerging growth companies ^[50] and smaller reporting companies ^[51] may value having the flexibility to select the interim reporting requirement that is most appropriate for them and their investors.^[52] Additionally, reducing the compliance costs associated with quarterly reporting may contribute to more private companies deciding to enter the public markets and more companies deciding to remain public. Further, the flexibility provided in the proposal may appeal to companies in certain industries where investors may focus more on certain business, product, or regulatory developments than interim financial results.^[53]

Under the proposal, companies would have the option to elect on an annual basis to comply with the semiannual reporting requirements. Exchange Act reporting companies could continue to file quarterly reports on Form 10-Q under the proposal. Companies might continue to report quarterly, for example, where they determine that quarterly frequency is best for the company and its investors or due to factors such as expectations of investors and securities analysts, disclosure practices in a particular industry, contractual obligations, or other regulatory requirements.^[54] It is also possible some companies may view semiannual reporting as increasing the length of time that the company's directors or employees possess non-public information that may be subject to the company's closed trading windows and see quarterly reporting as a better approach for the company, because it may provide more frequent open trading windows for the company's directors and employees.

Although one result of the proposal will be a reduction in the frequency of interim reports for some Exchange Act reporting companies, we expect certain material information about these companies between interim semiannual reports and annual reports will continue to be disclosed either voluntarily or as a result of other requirements. Significant regulatory enhancements have occurred since 1970 with regard to disclosure of certain material events during interim periods. Investors currently have access to information through the current reporting system on Form 8-K regarding certain material events that is far more robust and timely than in 1970 when semiannual reports on Form 9-K were last required. Since that time, the Commission significantly accelerated that era's Form 8-K filing deadline of 10 days after the end of the month in which the applicable event occurred to the current general deadline of within four business days of the event.^[55]

In addition to shortening the filing deadlines, the Commission over time significantly expanded the list of events that would trigger a filing obligation under Form 8-K and prescribed standardized disclosures that must be provided upon the occurrence of the material event, including through amendments in 2003 and 2004.^[56] In fact, several of the Form 10-Q disclosure requirements largely duplicate the Form 8-K requirements.^[57] Importantly, in 2003, the Commission added Item 2.02 as a Form 8-K filing trigger event for the furnishing of earnings releases and other material information about companies' ( printed page 24975) results of operations and financial condition for a completed interim period.^[58] Current Item 2.02 requires reporting companies generally to furnish their quarterly earnings releases as an exhibit to Form 8-K on the Commission's EDGAR system.^[59] Many Exchange Act reporting companies hold a conference call in connection with their earnings releases. Item 2.02 provides the conference call does not need to be furnished with Form 8-K subject to certain conditions, including that the call occur within 48 hours of the earnings release, the call be accessible to the public, and the call and dial-in information be announced in advance to the public.^[60] In practice, many public companies make recordings of the call freely available on their website. Recordings of the calls are also commonly freely available on third-party platforms.

We believe that the requirements of Form 8-K elicit important disclosures about material events on a more timely basis than quarterly reports on Form 10-Q. We acknowledge, however, that quarterly earnings releases furnished with an Item 2.02 Form 8-K differ from Form 10-Q financial information because they are not required to be reviewed by an independent public accountant or to comply with the Commission's interim financial statement requirements or certain other requirements in Form 10-Q.^[61] We also acknowledge that, if a company elects to take advantage of semiannual reporting and stops reporting quarterly earnings or having quarterly earnings release conference calls, then the disclosures elicited by Item 2.02 of Form 8-K would not be available. We expect that a company's individual characteristics, facts, and circumstances will determine whether it would make quarterly earnings releases or announcements after electing to report semiannually.^[62]

Regulation FD, adopted in 2000, was another significant development in the evolution of disclosure requirements for Exchange Act reporting companies. Regulation FD requires that any material non-public information selectively shared with certain enumerated persons be promptly (in the case of unintentional disclosure) or simultaneously (in the case of intentional disclosure) disclosed to the market by either furnishing or filing a Form 8-K report or disseminating the information through another method that is reasonably designed to provide broad, non-exclusionary distribution.^[63] In connection with Regulation FD, Exchange Act reporting companies may disclose material information during a fiscal year through Item 7.01 of Form 8-K.^[64] Regulation FD seeks to promote full and fair disclosure and may cause a company to disclose material information—whether on Form 8-K or through other means—at various points during a fiscal year, depending on the company and its circumstances (such as whether the company seeks to communicate previously material non-public information to analysts or other persons covered by Regulation FD). Such disclosure results in greater investor access to material information disclosed outside quarterly reports on Form 10-Q. Regulation FD and current Form 8-K disclosure requirements were either not present or less robust when the Commission last required the limited form of semiannual reporting during the period from 1955 to 1970.

Although we are proposing to amend our rules regarding frequency of interim reporting, our proposal does not include any general changes to the current regulatory requirements governing: (1) earnings releases, other than proposed technical amendments to Item 2.02 of Form 8-K to include references to semiannual periods, or (2) earnings guidance practices. Federal securities laws do not impose general duties upon Exchange Act reporting companies to announce or publish earnings, conduct earnings calls, or issue earnings guidance.^[65] We received public feedback on earnings releases and earnings guidance practice in connection with the Commission's 2016 Regulation S-K Concept Release and 2018 Request for Comment on Quarterly Earnings and Reporting, with commenters expressing a variety of views on these practices and on a wide range of related topics. Our proposal is focused on the more specific issue of the frequency of interim reporting as mandated by the Federal securities laws, with the goal of providing more flexibility with respect to this mandated disclosure. Although the proposal is not intended to change the regulatory framework for voluntary practices regarding earnings releases and guidance, we welcome comments on the impact of our proposal on these voluntary practices.

We believe our proposal represents a balanced approach of maintaining a reporting system that elicits material, timely, and regular disclosures in a manner that best suits the needs of both the company and its investors, ( printed page 24976) promoting efficiency by reducing compliance costs, and maintaining robust investor protections. The proposal is one step in a broader Commission effort to encourage more companies to go and remain public by reducing the costs and burdens associated with Exchange Act reporting. A robust public capital market—with more emerging companies and small businesses choosing to become public companies through initial public offerings or other paths—benefits companies and investors alike. Becoming a public company provides companies with access to the public markets that allows them to raise capital to grow their businesses, a broader set of potential investors who may purchase their securities in the secondary trading market, and the benefits of transparent valuations by public markets and of a market following. For investors, public companies represent opportunities to participate in the future growth of promising companies. Initial public offerings represent liquidity opportunities for early-stage investors. Investors in public companies are protected by mandated disclosures and by liability provisions of the Federal securities laws that apply to public companies' disclosures, such as Securities Act Section 11 and Exchange Act Section 18.^[66]

We are also proposing amendments to Regulation S-X. Our proposed amendments would incorporate provisions applicable to registrants that elect semiannual reporting frequency into the financial statement requirements for periodic reports. We are also proposing changes to the age of financial statement requirements in Regulation S-X to ensure that financial statements in registration statements filed by semiannual filers would not be considered “stale” under existing rules, which were built along a quarterly reporting framework, and to revise those age requirements for semiannual filers to fit with their reporting schedule. The proposed changes to the age of financial statement rules would also simplify existing rules, including by consolidating the age requirements into a single rule.

Finally, we recognize that, if the proposal is adopted, in order to comport with semiannual reporting by public companies, it is possible that changes may be necessary or appropriate to the rules of securities exchanges ^[67] or to various accounting or auditing standards.^[68] If the proposal is adopted, to facilitate any such changes, we expect the Commission staff would coordinate with accounting and auditing standard-setters, securities exchanges, and other market participants. To help inform those efforts, we are soliciting comment in this release on what changes to accounting or auditing standards or rules of securities exchanges should be made to comport with semiannual reporting.^[69]

Our proposal is discussed in greater detail below. We welcome interested parties to submit comments on any aspects of the proposed rule and form amendments. When commenting, please include the reasoning in support of your position or recommendation and provide any supporting documentation or data.

A. Proposed Amendments for Semiannual Reporting

We are proposing amendments to Exchange Act Rules 13a-13 and 15d-13 (and other relevant rules and forms that we discuss below) to change the current quarterly reporting requirements for Exchange Act reporting companies to a more flexible system that permits Exchange Act reporting companies to elect to file semiannual reports instead of quarterly reports.^[70] Under the proposal, an Exchange Act reporting company that elects semiannual reporting would be required to file one semiannual report and one annual report for each fiscal year. Semiannual filers would file their interim report on new Form 10-S. This form would require the same narrative disclosures and financial information as existing Form 10-Q but would cover a six-month period (rather than a fiscal quarter). The deadline for filing Form 10-S would be 40 or 45 days (depending on the company's filer status) after the fiscal year's first semiannual period end—the same as with current Form 10-Q's fiscal quarter end deadline, which would not change—while the second semiannual period would be subsumed in the annual period presented in the annual report on Form 10-K.^[71] Reporting companies that do not elect to report 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.

( printed page 24977)

We are also proposing amendments to add a similar check box concerning the semiannual reporting election to the cover page of Securities Act registration statements on Forms S-1, S-3, S-4, and S-11 and Exchange Act registration statements on Form 10. Companies that have yet to file Exchange Act reports, such as private companies conducting initial public offerings, would make initial elections to use semiannual reporting by checking the box on the cover page of the registration statement filed.^[72] This election would determine what financial statements are required in the registration statement ^[73] and indicate the company's planned interim reporting frequency to investors and other market participants.^[74] Similar to current requirements for the first quarterly report for companies that have newly become Exchange Act reporting companies,^[75] the first semiannual report on Form 10-S would be due the later of 45 days after the effective date of the registration statement or the date that Form 10-S would otherwise have been due had the company been an Exchange Act reporting company.^[76]

In connection with our proposed optional semiannual reporting approach, we are proposing to add two new definitions—“quarterly filer” and “semiannual filer”—to 17 CFR 240.12b-2 (and to add two identical definitions to 17 CFR 230.405) to facilitate a number of amendments we are proposing, including a number of technical amendments to insert references to semiannual reporting in rules that currently refer to quarterly-reporting-related concepts. A “quarterly filer” would be defined as a registrant that is required to file quarterly reports on Form 10-Q, pursuant to 17 CFR 240.13a-13(a). A “semiannual filer” would be defined as a registrant that is required to file semiannual reports on Form 10-S, pursuant to 17 CFR 240.13a-13(b).

Under our proposed optional semiannual reporting approach, we are proposing to permit a change in interim reporting frequency—either from quarterly to semiannually or vice versa—to be indicated on a Form 10-K by checking the box on the cover page to file semiannually or leaving the box unchecked to file quarterly. As proposed, the determination to report semiannually or quarterly would therefore be made on an annual basis and may not be changed until the next Form 10-K annual report is filed.^[77] Companies would then be required to file interim reports based on the chosen frequency, beginning with the report for the first interim period (semiannual or quarterly) of the fiscal year in which the Form 10-K with the election was filed.^[78]

• For example, an Exchange Act reporting company reporting quarterly with a December 31 fiscal year-end wants to file semiannual reports on Form 10-S for the next fiscal year. The company would file its Form 10-K for fiscal year 2026 in March 2027. Under the proposal, the company would have to make its election to switch to semiannual reporting for fiscal year 2027 by checking the box for semiannual reporting on the cover page of its Form 10-K for fiscal year 2026. With this election made in fiscal year 2027 (i.e., when the Form 10-K for fiscal year 2026 was filed), the company would be required to report semiannually and would begin semiannual reporting by filing in August 2027 its Form 10-S for the first six-month period (ended June 30, 2027) of fiscal year 2027.^[79]

• Similarly, for example, an Exchange Act reporting company with a December 31 fiscal year-end that previously chose to file semiannual reports on Form 10-S as indicated in its Form 10-K for the fiscal year ended December 31, 2026 wishes to switch to quarterly reporting. The company will file its Form 10-K for fiscal year 2027 in March 2028. The reporting company would change its interim reporting frequency by leaving the box unchecked for semiannual reporting on the cover page of its Form 10-K for fiscal year 2027. With this election made in fiscal year 2028 (i.e., when the Form 10-K for 2027 was filed), the company would be required to report quarterly and would begin quarterly reporting by filing in May 2028 its Form 10-Q for the first quarter (ended March 31, 2028) of fiscal year 2028. In its Form 10-Q for the first quarter of fiscal year 2028, the company would be required to present statements of comprehensive income, cash flows, and changes in stockholders' equity for the first quarter of the preceding fiscal year (2027).^[80] These first quarter 2027 financial statements would have been subsumed within (but would not have been required to be separately presented in) the semiannual financial statements included in the previously filed Form 10-S covering January to June 2027. Therefore, in changing the election by leaving the box unchecked (thereby choosing to file quarterly reports on Form 10-Q for fiscal year 2028), the reporting company may need to take additional steps to prepare the financial statements for the comparable 2027 quarterly periods, including ensuring that an independent public accountant ( printed page 24978) has reviewed the comparable quarterly periods for fiscal year 2027.^[81]

Once an Exchange Act reporting company has elected its interim reporting frequency, it would be committed to that reporting frequency for the remainder of that fiscal year. This proposed approach would avoid potential investor confusion that could result if Exchange Act reporting companies were permitted to switch interim reporting frequency in the midst of a fiscal year, such as confusion over when the companies would file interim reports.

We recognize the possibility that a company may mistakenly leave the check box unmarked or incorrectly mark the check box (for example, a company mistakenly checking the box for semiannual reporting when it intended to be a quarterly filer or a company mistakenly leaving the check box unmarked when it intended to be a semiannual filer). We therefore propose to amend Rule 13a-13(b) and Rule 15d-13(b) to permit companies to amend their Form 10-K to correct any such inadvertent mistakes. Such corrective amendments would be required to be filed as soon as practicable after discovery of the mistake but no later than the due date by which the company's first Form 10-Q report would be required to be filed for the fiscal year in which the initial Form 10-K with the erroneous election was filed.^[82] For example, a quarterly filer with a December 31 fiscal year-end wants to continue filing quarterly reports on Form 10-Q. The company filed its Form 10-K for fiscal year 2026 in March 2027. It mistakenly marked the check box on the cover page of its Form 10-K for fiscal year 2026, thereby electing to switch to semiannual reporting for fiscal year 2027. The company would be able to correct this error by amending its Form 10-K no later than the due date for its Form 10-Q for the first quarter of fiscal year 2027.^[83]

Proposed Form 10-S would require the same information as currently required by Form 10-Q but for the covered six-month period instead of a quarter.^[84] Required disclosures would include, among other things, MD&A, legal proceedings, material changes in risk factors, unregistered equity security sales and use of proceeds, defaults on senior securities, director nomination procedures, disclosure of director or officer adoptions or terminations of certain plans for the purchase or sale of registrant securities, and exhibits required under Item 601 of Regulation S-K. The financial statements for the covered semiannual period would be required to be prepared in accordance with U.S. GAAP ^[85] and reviewed by an auditor (but not required to be audited).^[86] They would also be required to be data tagged using Inline XBRL. The current disclosure and certifications requirements for disclosure controls and procedures, as well as for internal control over financial reporting, would apply to proposed Form 10-S.^[87] Non-GAAP financial measures presented in proposed Form 10-S would be subject to the current requirements of Regulation G and Item 10(e) of Regulation S-K.

Request for Comment

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? ^[88] 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?

4. Under the proposal, reporting companies currently required to file Form 10-Q would have the option ( printed page 24979) 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? ( printed page 24980)

17. What impact would the proposed option to file semiannual reports on Form 10-S have on Exchange Act reporting companies' ability to focus on: (1) business operations, (2) growth, or (3) long-term business strategies? Please provide any data on the amount of employee and director time spent on preparing a quarterly report on Form 10-Q.

18. What is the likelihood that companies that elect semiannual reporting will continue to issue quarterly earnings releases (to the extent they did so previously when they reported quarterly)? Why would semiannual filers still issue earnings releases on a quarterly basis? Would this practice create any new or heightened investor protection concerns? For example, would there be any new investor protection concerns if an Exchange Act reporting company with a December 31 year-end elects to file semiannual reports and issues an earnings release for the first quarter of the fiscal year, with the semiannual report for the first six months of the fiscal year (which includes that first quarter) not due until months later ( e.g., in August of that fiscal year)? Would companies that currently issue quarterly earnings releases but elect to become semiannual filers change their earnings release practices either: (1) to issue earnings releases semiannually, or (2) to cease issuing earnings releases? Please provide any data or analysis regarding any experience with earnings releases in foreign jurisdictions where issuers report semiannually.

19. Our proposal generally would not change the current Item 2.02 Form 8-K furnishing requirement for earnings releases (but we are proposing technical amendments to include references to semiannual periods). Should we change these requirements generally for semiannual filers? For example, should we amend the Form 8-K requirements so that Item 2.02 Form 8-K submissions are “filed,” not “furnished,” for semiannual filers thereby subjecting the earnings release to additional liability provisions, such as Exchange Act Section 18 (and Securities Act Section 11 if incorporated into a Securities Act registration statement), given that investors could rely more heavily on earnings releases by semiannual filers due to the less frequent interim reporting by such filers as compared to quarterly filers? If we require the filing (not furnishing) of earnings releases for semiannual filers, should we require the incorporation by reference of earnings releases into Securities Act registration statements of those semiannual filers? Would requirements for semiannual filers to file (not furnish) earnings releases discourage semiannual filers from issuing earnings releases? Would requirements for semiannual filers to file (not furnish) earnings releases have an impact on companies' decisions about whether to elect quarterly or semiannual reporting? Are there particular reasons or need for the information provided in an Item 2.02 Form 8-K submission by a semiannual filer to be treated differently than a similar Item 2.02 Form 8-K submission by a quarterly filer?

20. In connection with any adoption of the proposal, should there be a new requirement for semiannual filers that announce or release earnings for the first or third quarters of their fiscal year ( i.e., the periods that would later be subsumed in Forms 10-S and 10-K but for which there would be no quarterly report filed with the Commission)—that financial information in any first or third quarter earnings releases be reviewed by an independent public accountant? If so, would any changes to current auditing standards ( e.g., governing reviews) be required?

21. For companies that issue earnings releases, would the proposed flexible approach to interim reporting have any effect on how quickly these releases would be issued after the end of the reporting period?

22. Would the option for semiannual reporting result in an overall reduction in material information for investors? Or would other regulatory requirements, such as Form 8-K filing requirements and Regulation FD, elicit sufficient information to offset the less-frequent interim reports and address any investor protection concerns? Would market forces or demands on a company's business—such as contractual obligations, investor expectations, and potential for shareholder activism—encourage semiannual filers to: (1) voluntarily disclose more information than required, (2) disclose information more frequently than is required, or (3) opt not to become semiannual filers at all?

23. With semiannual reporting, would there be an impact on investors or other market participants as a result of less frequent certifications by management relating to internal control over financial reporting and disclosure controls and procedures, as well as less frequent disclosures of changes in such controls? ^[89]

24. Would the nature and extent of procedures that an independent public accountant performs during a review change depending upon whether the independent public accountant is performing a review over a fiscal semiannual period or a fiscal quarterly period? Would independent public accountants conducting reviews do the same amount of work for a fiscal semiannual period as they currently do for two quarterly fiscal periods on a combined basis? Would an independent public accountant experience any impact on efficiency or 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 ( printed page 24981) reporting companies that elect the semiannual reporting option as compared to quarterly filers? Would underwriters' requests for independent public accountants to provide “comfort letters” ^[90] in securities offerings (to support potential due diligence defenses) ^[91] lead semiannual filers to continue to retain independent public accountants to conduct quarterly financial statement reviews? If so, are changes needed to PCAOB Auditing Standards (regarding reviews by independent public accountants)? ^[92] For example, to comport with semiannual reporting, are changes needed to PCAOB Auditing Standard 6101, Letters for Underwriters and Certain Other Requesting Parties, to permit independent public accountants to provide comfort letters expressing negative assurance on changes subsequent to the date and period of the latest financial statements included (or incorporated by reference) in the registration statement? ^[93] If semiannual filers would continue to prepare quarterly financial information or to retain independent public accountants to conduct quarterly reviews, should the Commission make any rule changes or take any other steps to address this issue?

28. Would our proposal have any impact on a semiannual filer's application of relevant accounting standards to prepare financial statements in accordance with U.S. GAAP, IFRS, or home-country GAAP? How? Are any changes to accounting standards, including U.S. GAAP or IFRS, necessary or appropriate to effectuate semiannual reporting ( e.g., changes to the guidance on annual impairment testing, lag reporting, earnings per share, or other topics of authoritative guidance)?

29. Are any changes to rules of securities exchanges necessary or appropriate to effectuate semiannual reporting?

30. Should we require the second semiannual period financial information (for semiannual filers) or the fourth quarter financial information (for quarterly filers) to be included in Form 10-K so investors do not need to back out this information if companies do not voluntarily provide it? Would having a longer period (six months for semiannual reports versus three months for quarterly reports) make it more difficult for investors to back out this information? Relatedly, should we require semiannual filers to break out financial statement information for the six-month period covered by Form 10-S into two three-month periods and provide similarly broken-out three-month information for the fiscal year covered by Form 10-K?

31. Many public companies have standalone insider trading policies or insider trading policies that are part of the company's code of ethics,^[94] and these policies may provide for trading windows.^[95] What impact would optional semiannual reporting have on company insider trading policies, including trading windows? For example, would companies impose longer trading blackout periods at the beginning of a semiannual period or towards the end of a semiannual period than they would impose if reporting quarterly? Even if these periods are longer, would the total number of blackout days be fewer each fiscal year for semiannual filers compared to quarterly filers given that semiannual filers would report less frequently? To the extent that there are longer blackout periods or fewer total blackout period days each year, what effects would these changes have on semiannual filers? Under our proposal, semiannual filers are allowed to voluntarily issue quarterly earnings releases. How would this affect current trading windows practices, if at all? Where a company elects to be a semiannual filer, would this be likely to have an effect on trading plans that may be adopted by companies or insiders ( e.g., company directors, officers, or employees) for purposes of 17 CFR 240.10b5-1 (Exchange Act Rule 10b5-1)? If so, what are the effects?

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 ( printed page 24982) 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.^[96] The requirements for statements of comprehensive income, cash flows, and changes in stockholders' equity—set out in current 17 CFR 210.3-02 (Rule 3-02 of Regulation S-X) and 17 CFR 210.3-04 (Rule 3-04 of Regulation S-X)—are derived from dates of annual and interim balance sheets required by Rule 3-01.^[97] While current Rule 3-01 addresses the dates of the balance sheets as of the filing date, current Rule 3-12 addresses the age of financial statements as of the effective date of a registration statement or mailing of a proxy statement.^[98] Notwithstanding this difference, application of the two rules currently results in age requirements that are aligned: if a registrant were to apply current Rule 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.

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 regardingannual 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).^[99] We do not propose any changes to the three conditions.

• 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 ( printed page 24983) registrant was not in existence as of the end of its fiscal year.
• Proposed Rule 3-01(b)(4), which would be the same as Rules 3-01(b) and 3-12(c),^[100] would require that, notwithstanding the requirements of this section, the filing must be updated with audited financial statements for the most recently completed fiscal year if they become available prior to the filing date.

The proposed amendments to Rules 3-01 and 8-08 reflect the replacement of references to filing dates from the current text of “within” a certain number of days after a milestone ( e.g., filing date or end of the fiscal year or quarter) to “more than” or “no more than” a certain number of days.^[101] We believe this change will clarify the filing requirements and ensure alignment of financial statement updating dates with the Forms 10-K, 10-Q, and 10-S filing deadlines. A registration or proxy statement filed on the same date a periodic report is due would be required to include the financial statements required in that periodic report. We are making similar clarifying amendments to Exchange Act Rules 13a-13 and 15d-13.

We are proposing to place the rules regarding an interim balance sheet in Rule 3-01(c).

• Proposed Rule 3-01(c)(1) would require that, when an audited balance sheet for the most recently completed fiscal yearis 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 yearis 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.^[102]

Smaller reporting companies apply Rule 8-08 to determine the age of financial statements. We are proposing amendments to Rule 8-08 to conform its organization to proposed Rule 3-01, as described above.

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 ( printed page 24984) 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.^[103] A registrant that is not subject to Exchange Act Section 13(a) or 15(d) would apply this rule as if it were required to file Form 10-Q or Form 10-S. In this regard, for a 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.^[104] 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.

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.

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 ( printed page 24985) required to be updated one or two days before those same financial statements are required to be filed on Form 10-Q. Such a difference results from the number of days in a quarter that exceeds 90 days.^[107] Our proposed rule would align the financial statement age requirements of registration statements (and proxy statements) with the filing deadlines of Form 10-Q and Form 10-S, eliminating such one- or two-day differences. Proposed Rule 3-01(c)(2) results in both quarterly filers and semiannual filers having the same date on which the financial statements would be required to be updated because both filers would determine the date from the end of their most recently completed interim period as opposed to, for example, the quarterly filer's determination being from the end of the first quarter and the semiannual filer's determination being from the end of the fiscal year.

Under the proposed amendments to Rule 3-01(c), the interim financial statement period required in a registration or proxy statement would be as of the end of a registrant's fiscal quarterly or semiannual period, as applicable. This would differ from current Rule 3-12, which permits interim financial statements as of any date so long as they cover a period within the prescribed number of days from the date of effectiveness or mailing date. We observe that virtually all registrants file interim financial statements as of the end of a quarter, since those financial statements would be filed in future Exchange Act reports on Form 10-Q. Further, registrants who wish to file interim financial statements as of a date that does not align with a quarterly or semiannual period may request a substitution of financial statements under 17 CFR 210.3-13 (Rule 3-13 of Regulation S-X). As a result, we do not expect that this aspect of the proposed amendments would result in any change in today's practice.^[108]

When interim financial statements for a semiannual filer are required in a registration or proxy statement, proposed Rule 3-01(c)(2) would require those interim financial statements to be for a semiannual period. Under the proposed rules, depending on when the registration statement becomes effective or the proxy statement is mailed, an investor in a registrant that is a semiannual filer may not receive interim financial statements that are as current as would be required today. For example, if a non-reporting registrant with a calendar fiscal year that elects semiannual reporting files a registration statement as late as August 13, proposed Rule 3-01(c)(2) would not require any interim financial statements to be included in the registration statement. In contrast, under the current requirements and under the proposal for those registrants that continue to report quarterly, the filing would include interim financial statements for the first fiscal quarter. As discussed in Section I, we are proposing these amendments that may result in less current interim financial statements in a registration statement to reduce regulatory burden and 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]

Under the proposed amendments to Rule 8-03,^[110] where required, a semiannual filer would provide in Form 10-S a balance sheet as of the end of the issuer's first semiannual period, a balance sheet as of the end of the preceding fiscal year, and statements of comprehensive income and statements of cash flows for the interim period up to the date of the interim balance sheet date and the comparable period of the preceding fiscal year.

We are also proposing related technical amendments to Rules 10-01(b)(6), 10-01(d), and 8-03(b)(5) (which as renumbered would become 8-03(c)(5)) to indicate that the rules apply to Form 10-S, in addition to Form 10-Q. We are proposing amendments to Rules 8-03(a)(5) (which as renumbered would become Rule 8-03(b)(5)) and 10-01(a)(7) to change “interim” to “quarterly” and clarify that the requirement to disclose subtotals in the statement of changes in stockholders' equity for each quarterly period applies only to quarterly filers. We are proposing to relocate current Instruction 1 to Rule 8-03, which requires that statements of comprehensive income for the most recent quarter and the comparable quarter of the preceding fiscal year be provided when the year-to-date interim period is more than one quarter, to Rule 8-03(a)(2) to enhance its prominence.

Lastly, we are proposing a technical amendment to reinsert Instruction 2 to Rule 8-03 concerning management adjustments to financial statements that was inadvertently deleted in a 2018 adopting release, except this provision would be reinserted as paragraph (c)(2) of Rule 8-03.^[111]

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 ( printed page 24986) those proposed that the Commission should make to Regulation S-X to effectuate semiannual reporting?

36. In connection with registration and proxy statements, are the proposed changes to Regulation S-X necessary to take into account semiannual reporting? If the proposed changes to Regulation S-X were not made and the relevant rules remained structured around quarterly reporting, would this have a negative impact on semiannual filers seeking to raise capital or solicit proxies?

37. What impact would the proposal have on the ability of semiannual filers to conduct public offerings? Would reporting companies that elect to become semiannual filers nonetheless decide to include quarterly or more recent financial information in Securities Act registration statements or prospectuses based on market practices or liability concerns and, if so, would that reduce the cost savings that would otherwise be generated by less frequent interim reporting? For example, would semiannual filers continue to retain independent public accountants to review their financial statements on a quarterly basis to facilitate capital-raising by the company in offerings registered under the Securities Act?

38. Should we change how the age of financial statements in a registration statement is determined in order to precisely align with the deadlines of Exchange Act reporting requirements as proposed? Would our proposed changes to consolidate Rule 3-12 into Rule 3-01 help to streamline Regulation S-X's requirements so that they are easier for registrants to apply?

39. Should we have the deadlines that apply at the time of filing and that apply at the time of effectiveness (for registration statements) or mailing (for proxy statements) centrally located in the same rule as we propose? Why or why not? With respect to this dual role the revised Rule 3-01 would serve, does new paragraph (a) make clear to registrants that—in considering what age requirements apply with respect to effectiveness or mailing—they should substitute effectiveness or mailing dates for the filing dates explicitly mentioned in the rule?

40. Instead of the amendments we propose, should we retain the current 135-day age requirement for quarterly filers and adopt a 225-day age requirement for semiannual filers—even if that means semiannual filers may have to update one or two days sooner than quarterly filers? ^[112] Why or why not?

41. As discussed above, the proposed elimination of the 135-day provisions of the current rules would mean that registrants could no longer provide a mid-period dated financial statement but would need to provide financial statements that coincide with fiscal interim period ends or annual fiscal year end. Are there any registrants who employ the 135-day provision to provide mid-period financial statements today? If so, why and under what circumstances do registrants do this? Does providing this ability for some registrants justify the added complexity these provisions may create for other registrants?

42. Are there any other changes needed to simplify the age of financial statement requirements? Are there any other changes we should make to reduce the compliance burdens associated with Regulation S-X's requirements in connection with proposed optional semiannual reporting?

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]

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 ( printed page 24987) Regulation M-A,^[115] and several proxy rules; ^[116]

• changes to rules regarding determination of market capitalization, among other things,^[117] and rules providing definitions; ^[118] and

• changes to rules regarding research reports,^[119] underwriter status,^[120] and liability under the securities laws.^[121]

We are proposing the same types of technical amendments to rules related to several aspects of the process of filing forms and schedules with the Commission regarding incorporation by reference; ^[122] data tagging; ^[123] definitions; ^[124] late filing; ^[125] certifications; ^[126] disclosure controls and internal control over financial reporting; ^[127] foreign private issuers; ^[128] and beneficial ownership schedules.^[129] We are also proposing such technical amendments to a rule regarding Office of Management and Budget (“OMB”) control numbers.^[130] Finally, we are proposing such technical amendments to several Commission forms.^[131]

Request for Comment

46. Should the Commission make any other technical, conforming, clarifying, or implementing changes to effectuate semiannual reporting?

47. We are not proposing any technical amendments to references to “quarter” in Forms F-8 and F-80 (related to the calculation of U.S. holders), because companies that use those forms are foreign private issuers, which do not report quarterly currently. Is there any need for technical amendments to those forms to include references to semiannual reporting?

E. General Request for Comment

We request and encourage any interested person to submit comments on any aspect of our proposal, other matters that might have an impact on the proposed amendments, and any suggestions for additional changes. With respect to any comments, we note that they are of greatest assistance to our rulemaking initiative if accompanied by supporting data and analysis of the issues addressed in those comments and by alternatives to our proposal where appropriate.

IV. Other Matters

This proposing release is an economically significant regulatory action under Section 3(f)(1) of Executive Order 12866, as amended, and has been reviewed by OMB. This action, if finalized as proposed, is expected to be an Executive Order 14192 deregulatory action.

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.

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.

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, ( printed page 24988) 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.

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]

On the other hand, reducing the frequency of periodic disclosures may delay the public disclosure of material information about a company. Such decreased transparency may make it more difficult for investors to make well-informed decisions and may increase the expected return ( i.e., the cost of capital) that they demand for holding a company's securities. In particular, less frequent disclosures may result in a higher cost of capital if investors receive less precise information about a company's cash flows and how they covary with other companies' cash flows ^[139] and/or if there ( printed page 24989) is an increased risk of information asymmetry across investors as a result of the increased time gaps between public disclosures.^[140] A higher cost of capital, in turn, may discourage companies from raising funds for new investments.

It is unclear what frequency of periodic reporting would strike the best balance between the potential benefits related to lower company reporting burdens and reduced disclosure of competitive sensitive information on the one hand, and the potential costs related to a reduction or delay of information to investors on the other hand, and such an optimal frequency may vary across issuers. Fundamentally, in a discounted cash flow valuation framework, both the savings from reduced reporting costs and potential productivity gains from reallocating managerial and other resources would have a positive effect on an issuer's valuation by increasing the expected cash flows it is able to generate from its business and new investments. In contrast, any resulting increase in the cost of capital would negatively affect the valuation by increasing the discount factor that would apply to produce the total value investors are willing to place on those expected cash flows today.

Allowing issuers to choose their own frequency of interim reporting would mitigate some of the risk of a suboptimal tradeoff between the opposing economic effects discussed above by allowing individual issuers to weigh which effects are likely to dominate in their unique situation. An issuer whose quarterly reports would not tend to reflect any material changes beyond those already made public in current reports may determine that the costs of producing quarterly reports would outweigh the benefit of providing these reports to investors and thus choose to report semiannually. For example, commenters have noted that pre-revenue biotechnology companies' securities may trade more based on the outcome of clinical developments and regulatory events than their quarterly financial reporting.^[141] Conversely, companies in other industries or with different investor bases may find that more frequent reporting better serves their needs. Issuers can best estimate their own costs of more frequent reporting and should be incentivized to evaluate the impact of more frequent reporting on investors and other market participants. For instance, if investors demand more frequent interim reporting and issuers fail to meet that demand, the issuers could experience negative market effects such as higher cost of capital or lower liquidity.^[142] Under the proposed optional semiannual reporting approach, individual issuers would be able to make a more tailored trade-off between the costs and the benefits of reporting frequency for interim reports, which they do not have the ability to do under the current system of mandated quarterly reporting. Because issuers are incentivized to consider how their frequency of interim reports would impact investors, having the option to choose between quarterly reporting and semiannual reporting could lead to a more optimal reporting frequency for both the issuers and investors.

That said, there are various reasons why issuers may be likely to provide less disclosure when given optionality in their reporting frequency than would be optimal for investors and the market as a whole. For example, there is substantial literature discussing circumstances in which the incentives of managers are not perfectly aligned with those of their shareholders.^[143] There may also be numerous additional costs and benefits for investors and issuers associated with the frequency of periodic reporting and also associated with any variation in this frequency across issuers, many of which may not be fully accounted for by managers when making these tradeoffs for a particular issuer.

For example, researchers have found that longer gaps between issuer disclosures increase information asymmetry between investors, because some investors are more able than others to access or process information from alternative, often third-party, channels that provide indirect insight into an issuer's financial status or performance.^[144] Recent advancements in alternative data collection, surveillance, and data processing technologies may exacerbate such information asymmetry.^[145] Information asymmetry, in turn, is associated with reduced liquidity and increased transactions costs for investors.^[146] Widespread information asymmetry can also diminish perceptions of fairness, which can erode trust in markets and reduce capital market participation.^[147] To the extent these potential negative externalities borne by market participants from increased information asymmetry may not be fully internalized ( printed page 24990) by individual companies when choosing semiannual reporting under the proposed amendments, it could result in less disclosure than optimal for the market.

Less frequent periodic disclosures may also result in securities prices that deviate for longer periods of time from their issuers' fundamental value.^[148] Reduced information about an issuer can result in deviations not only in the market prices of its own securities but also in the prices of other issuers' securities and other traded assets, given the interdependence of asset valuations on the risk and return profiles of other investible assets.^[149] Increasing the delay before information is released thereby risks obscuring the attractiveness of investment opportunities and impeding the direction of capital to its most productive uses. In effect, the delayed incorporation of information into pricing can result in suboptimal investor portfolios and a misallocation of capital at the market level. These pricing effects may also result in increased “jump” volatility (given that prices may update by larger amounts under a less frequent periodic disclosure schedule, rather than more incrementally across multiple shorter disclosure cycles) which may reduce liquidity.^[150] Less frequent financial reporting by an issuer may also reduce the efficiency of production if managers of that issuer or of other issuers thereby have access to less data ( i.e., less informative market prices and less frequent information from peer companies) on which to base their operating and investing decisions.^[151] The aforementioned negative effects on market dynamics from less frequent reporting are additional examples of potential negative externalities borne by market participants that may not be internalized by an individual issuer when choosing its reporting frequency under the proposed amendments.

These asymmetric information effects and market pricing and volatility effects may be mitigated by the presence of alternative sources of information,^[152] including private information collection and analysis or by market discipline. Such mitigation is most likely in situations where alternate data is available, significant incentives for private collection of such data are present, and the market is efficient at incorporating such information into prices.^[153] For example, with large companies, investors may have abundant and lucrative opportunities for private data collection and analysis, which creates opportunities to trade on the basis of the resulting information, which may result in the incorporation of significant amounts of information into these issuers' security prices even in the absence of public disclosure. Even in such cases, however, the extent of price discovery may be less complete than in the case of public disclosure ^[154] and the process of price discovery may be less efficient ( e.g., because of the resources directed towards information collection rather than other productive purposes).^[155]

Less frequent periodic disclosures may also have implications for the ability of investors and other market participants to hold corporate management accountable. For example, less frequent disclosures may reduce the ability of investors and other market participants to monitor the issuer and its management because they would receive less frequent signals about issuer performance and managerial decision-making. Such a reduced frequency of information revelation can delay investors from intervening when they are concerned with management's choices, whether through direct engagement with management or by making their views known through their trading activity and thus market prices.^[156] These delays can result in poor management decisions compounding into bigger issues ( e.g., poor investments, deficient business strategies, or inefficient operations) before investors can react. Reduced disclosure also could reduce the incentives of analysts to cover an issuer and thus reduce this source of scrutiny and its associated benefits,^[157] such as enhanced liquidity for the issuer's securities.^[158] To the extent a reduced ( printed page 24991) frequency of interim disclosure is accompanied by fewer interim reviews and less interim testing by independent public accountants to support their annual financial statement or integrated audit, the independent auditors may be slower to identify certain accounting misstatements and deficiencies in internal control, which could negatively impact the timeliness and reliability of the audited annual financial statements.^[159] This impact could be more prevalent for smaller reporting companies, particularly for those with fewer qualified accounting staff or other resources available to them.

Less frequent periodic disclosures may affect management incentives. If less frequent disclosure reduces scrutiny of issuers as discussed above, then this could reduce potential managerial incentives to overly focus on short-term outcomes to the detriment of long-term performance.^[160] Survey evidence has found that management feels pressure to meet short-term earnings benchmarks, with a majority reporting a willingness to make corporate investment or operating decisions that smooth earnings ( i.e., reduce their volatility), even if such decisions would reduce long-term value by a small amount.^[161] Still, reductions in the reporting frequency are less likely to affect decision-making regarding long-horizon outcomes, such as investment decisions that are intended to generate profits five or ten years down the road. Further, other factors may play a larger role in short-termism concerns than the periodic disclosure cycle, such as executive compensation design or messaging to investors through, for example, earnings guidance.

Overall, the economic tradeoffs involved in the choice of interim disclosure frequency are complex and difficult to measure,^[162] and the ideal frequency may differ across companies and industries. Allowing issuers the flexibility to report either semiannually or quarterly may help to better balance certain issuer-specific benefits against the issuer-specific costs of interim disclosure. The discussion above, however, identifies externalities borne by investors, other issuers, and the economy resulting from interim disclosure frequency that an individual issuer is unlikely to consider when selecting its own frequency of interim disclosure.^[163] The existence of flexibility in interim disclosure frequency may itself result in additional concerns. For example, such flexibility may reduce the efficiency by which investors digest and use disclosures, because issuers disclosing at different frequencies may complicate comparative evaluations and analyses. The ability of an issuer to change its interim disclosure frequency in the future may also make it difficult for issuers who select a more frequent disclosure frequency to credibly convey to the market that they will continue to disclose at that frequency. This lack of a commitment device could reduce the benefits of an issuer choosing greater transparency because of uncertainty about their future transparency. That said, investor pressure and the development of market norms could help to address some of these concerns.

Ultimately, the costs and benefits of the proposed amendments will depend on how issuers use the accorded flexibility, and the potential outcomes and their effects are explored in depth in the more detailed sections that follow.

C. Baseline

The baseline against which the costs, benefits, and the effects on efficiency, competition, and capital formation of the proposed amendments are measured consists of the current state of the market, Form 10-Q filers' current practices, and the current regulatory framework.^[164]

1. Regulatory Baseline

(a) Commission Regulations

Requirements for Quarterly and Transition Reporting

Companies subject to Exchange Act Sections 13(a) and 15(d) must file periodic and other reports in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.^[165] The Commission has prescribed Form 10-Q for issuers to use for quarterly reports under Exchange Act Sections 13 and 15(d),^[166] and to use for certain transition and quarterly reports when they change their fiscal closing dates.^[167]

Pursuant to Regulation S-X, Form 10-Q must include interim financial statements (inclusive of footnote disclosures) prepared in accordance with U.S. GAAP ^[168] and must be reviewed by (but are not required to be audited by) an independent public accountant.^[169] Parts I and II of Form 10-Q require narrative disclosures regarding certain information, including MD&A and market risk.^[170] Form 10-Q must be filed with exhibits required under Item 601 of Regulation S-K,^[171] including certifications by principal executive and financial officers.^[172]

Certain registrants have scaled reporting obligations. Smaller reporting companies, as defined in Exchange Act Rule 12b-2,^[173] can elect to apply the form and content requirements in Article 8 of Regulation S-X and need not apply the form and content required by Regulation S-X for other reporting ( printed page 24992) companies with certain enumerated exceptions.^[174] Smaller reporting companies may omit reporting material changes from risk factors previously disclosed.^[175] Certain wholly-owned subsidiaries that do not have a history of material defaults may substitute the MD&A analysis with a more streamlined analysis of the results of operations and may omit reporting changes in securities, defaults on senior securities, and quantitative and qualitative disclosures about market risk.^[176]

Form 10-Q reports are filed electronically with the Commission through its EDGAR system,^[177] and reporting companies must structure certain portions of Form 10-Q, including the financial statements and cover page information, in Inline XBRL.^[178] The deadline for filing Form 10-Q with the Commission is within 40 or 45 days after the end of a fiscal quarter, depending on the filer status of the reporting company.^[179]

Age of Financial Statements Requirements

Registrants are also subject to age of financial statements requirements, under which they must update the financial statements provided in their registration and proxy statements. In general, the most recent balance sheet in a registration or proxy statement must be as of a date no more than 134 days for nonaccelerated filers (or 129 days for accelerated and large accelerated filers) before the effective date of the registration statement (or date the proxy statement is mailed).^[180] The audited annual financial statements for the most recently completed fiscal year, however, are not required to be included in a registration statement that goes effective (or proxy statement that is mailed) no more than 45 days after the end of the most recently completed fiscal year, provided interim financial statements as of the end of the third quarter of the most recently completed fiscal year are included.^[181] Further, if the registrant meets certain conditions,^[182] then those interim financial statements would be timely through the 59th day, 74th day, or 89th day (depending on filer status) after the most recently completed fiscal year end.^[183]

Other Commission Rules and Information Collections

Requirements for quarterly reporting on Form 10-Q are referenced in other Commission rules and information collections. For example, registration statements on Form S-1 or S-3 require the issuer's prospectus to describe material changes which have occurred since the end of the latest fiscal year for which certified financial statements were included in the latest annual report to security holders and which have not been described in a Form 10-Q or Form 8-K.^[184]

(b) National Securities Exchanges and PCAOB Standards

National securities exchanges and the PCAOB have rules and standards that incorporate or otherwise reflect the requirement to file quarterly reports on Form 10-Q and would not be amended by the proposed amendments.^[185] The standards may affect entities' incentives to continue filing quarterly reports on Form 10-Q instead of semiannual reports on proposed Form 10-S.

The exchanges' listing standards generally do not mandate a particular frequency of interim reporting.^[186] In some cases, however, the exchanges' listing standards explicitly reference Commission requirements for quarterly reporting on Form 10-Q, for example by requiring listed companies to make quarterly reports available to shareholders prior to or as soon as practicable after filing Form 10-Q or by subjecting listed companies to delinquency procedures for filing Form 10-Q late.^[187]

The regulatory baseline of the proposed amendments also includes PCAOB Auditing Standard 4105,^[188] which addresses the requirement in Regulation S-X Rules 10-01(d) ^[189] and 8-03 ^[190] for a registrant to engage an independent public accountant to review the registrant's interim financial statements before the registrant files its quarterly report on Form 10-Q. Under PCAOB Auditing Standard 6101, less frequent periodic reviews performed in accordance with Auditing Standard 4105 affect auditors' ability to furnish comfort letters to underwriters expressing negative assurance without performing additional interim reviews under AS 4105.^[191]

(c) Other Federal Agency Regulations

Other Federal agencies have incorporated Form 10-Q filing requirements into their own regulatory requirements affecting discrete sectors of the economy. The proposed amendments would not revise these other requirements.

For example, the Federal Deposit Insurance Corporation (“FDIC”) requires State nonmember banks and State savings associations with one or more classes of securities subject to the registration provisions of Section 12(b) or 12(g) of the Exchange Act to file, with the FDIC, “[t]he applicable forms for annual, quarterly, current, and other reports . . . codified in 17 CFR part 249. . . . titled with the name of the FDIC instead of the SEC” (emphasis supplied).^[192] The Federal Housing Finance Administration requires a Federal housing enterprise to make certain public disclosures “no later than 10 business days after an Enterprise files its corresponding Annual Report on SEC Form 10-K at the end of a fiscal year or its corresponding Quarterly Report on SEC Form 10-Q at the end of other calendar quarters.” ^[193] The Office of the ( printed page 24993) Comptroller of the Currency ^[194] will deem offers or sales of national bank or Federal savings association issued nonconvertible debt to be in compliance with certain regulations if a number of requirements are met, including that each purchaser receives an offering document that contains, among other things, the national bank's, the Federal savings association's, or the holding company's (where the national bank or Federal savings association is a subsidiary of a holding company with securities registered under the Exchange Act) Forms 10-K, 10-Q, and 8-K filed under the Exchange Act.

Outside of regulations specific to the financial services industry, the Department of Commerce requires a firm petitioning for certification of eligibility for trade adjustment assistance to submit information, including its most recent Forms 10-Q or 10-K, as appropriate, for the entire period covered by the petition.^[195] The Nuclear Regulatory Commission provides that certain licensees and permit holders that submit Form 10-Q are not subject to other filing requirements.^[196]

(d) State Law

Several states have adopted laws (statutes or administrative regulations) referring to Form 10-Q. In some cases, Form 10-Q is listed as one of a number of forms that must be submitted to the state, if required to be filed with the Commission,^[197] or the law requires submission of either the 10-Q or substitute information.^[198] In other cases, State laws permit entities to submit Form 10-Q to avoid other State financial reporting requirements,^[199] or the timing of State law requirements or exemptions is linked to the timing of entities' Form 10-Q filings.^[200] Other State laws categorize entities based on the contents of their Form 10-Q filings,^[201] affirmatively require entities to submit Form 10-Q in connection with State approvals (or to submit the more recent of Form 10-Q or 10-K),^[202] or make the submission of Form 10-Q a condition for obtaining a regulatory exemption or safe harbor.^[203] These provisions of State law might affect reporting companies' incentives to continue filing quarterly reports on Form 10-Q instead of semiannual reports on proposed Form 10-S. Over time, however, states may revise their corporate law requirements to accommodate for semiannual reporting.

2. Affected Parties

The proposed amendments would directly affect Exchange Act reporting companies that currently must file quarterly reports on Form 10-Q pursuant to Exchange Act Rule 13a-13 or Exchange Act Rule 15d-13,^[204] which excludes investment companies other than business development companies and face-amount certificate companies, foreign private issuers filing annual reports on Form 20-F or Form 40-F, and asset-backed issuers.^[205] We estimate that 5,976 Exchange Act reporting companies, including 133 business development companies and 2 face-amount certificate companies, filed on domestic forms during calendar year 2024 (“CY2024”) and are required to file quarterly reports on Form 10-Q.^[206] Affected parties also include independent public accountants that review the financial statements in connection with quarterly report filings; investors that use the information in the quarterly reports to inform investment decisions; and other market participants and intermediaries ( e.g., financial analysts, investment advisers, underwriters, government agencies) that process and analyze quarterly reports to produce research reports, ratings, or other datasets used by issuers or investors. The proposed amendments could also affect other parties, such as companies who are competitors of Exchange Act reporting companies currently required to file Form 10-Q. In addition, the proposed amendments would directly affect filers of certain Securities Act and Exchange Act registration statements as they would be required to check a box to indicate whether they have elected to file semiannual reports. In CY 2024, we estimate that 933 Forms S-1 were filed, 1,574 Forms S-3 were filed, 193 Forms S-4 were filed, 13 Forms S-11 were filed, and 87 Forms 10 were filed.^[207]

Among the affected Exchange Act reporting companies, we expect there is heterogeneity in terms of both costs of and demand for quarterly financial information due to, for example, differences in regulatory environment, exchange listing status, industry, or other company characteristics. For ( printed page 24994) example, if there is a significant fixed cost component of quarterly reporting costs, smaller companies, such as smaller reporting companies,^[208] may face a disproportionate compliance burden compared to larger companies. On the other hand, due to the smaller size of operations, smaller companies may face lower costs associated with gathering, processing, verifying, and integrating information from across their operations as compared to the costs for larger companies. Smaller reporting companies can also take advantage of certain scaled disclosure requirements when filing Form 10-Q, which incrementally could reduce the costs of Form 10-Q reporting for smaller reporting companies compared to other reporting companies.^[209]

Because of differences in regulation and other market characteristics (such as investor composition), Exchange Act reporting companies that are listed on a national securities exchange may be differentially affected compared to reporting companies whose securities trade only over-the-counter (or, in some cases, are not traded at all). For example, exchange-listed companies are likely to have more widespread professionally managed fund ownership and greater coverage by financial analysts, and, as result, may face greater demand by financial professionals for the quarterly information currently provided in Form 10-Q, even though the proposal would permit these companies to elect to report semiannually on Form 10-S.^[210] We estimate that around 4,300 (72%) of the CY2024 Exchange Act reporting companies had securities listed on either Nasdaq or NYSE exchanges. In addition, current Nasdaq and NYSE listing standards explicitly reference quarterly financial reporting.^[211]

Currently, a company raising external capital in a securities offering (whether registered or exempt) may face demand for quarterly financial information from underwriters and other requesting parties.^[212] Underwriters or other requesting parties also frequently request a comfort letter from an independent public accountant prior to offers or sales of securities.^[213] Under current PCAOB standards, the independent public accountant is required to have performed an audit or interim review in order to provide negative assurance in the comfort letter regarding the interim financial information, and the independent public accountant can only provide negative assurance level of comfort on other subsequent period information that is as of a date less than 135 days from the end of the most recent period audited or reviewed.^[214] Given this practice, even if only semiannual reporting is required, depending on the timing of the offering during the fiscal year, an underwriter may request a review of more recent interim financial statements than those included in the last semiannual or annual report in order to obtain negative assurance comfort in a timely manner (or delay the offering until negative assurance can be obtained from the next set of financial statements scheduled to be filed under the periodic reporting requirements).^[215] Thus, companies needing to raise external capital in a securities offering may have incentives to continue to file Form 10-Q under the proposed amendments to meet underwriting process demands, as discussed in more detail below.

In addition, companies issuing notes or bonds or raising other types of debt may face a contractual demand for quarterly financial information during the lifetime of the bond or loan,^[216] and such demand may persist also under the proposed amendments. Syndicated loans almost invariably include loan covenants based on financial information and may require firms to submit Commission filings to the lenders. Recent evidence suggests that financial information is becoming more informative to debt markets. Specifically, one study finds that financial numbers ( e.g., earnings, liabilities, etc.) are increasingly capable of predicting bond valuation and returns, and concludes that this greater association implies greater relevance of financial disclosures for lenders in recent years.^[217] Some studies, however, have found that lender reliance on financial information declines when the quality of information declines, and, when this happens, debt contract design shifts to rely on other sources of risk mitigation, such as external credit ratings over which managers have less direct control.^[218] Thus, reporting companies with significant debt financing needs may have incentives to provide quarterly financial statements, even if not mandated under the Exchange Act.

As discussed above, other Federal agency regulations or State laws may reduce the incentives to switch to semiannual reporting under the proposed amendments for companies for which those specific provisions are applicable unless conforming changes are made.^[219] For example, we estimate that 143 CY2024 Exchange Act reporting companies are national banks or Federal savings institutions chartered and regulated by the Office of the ( printed page 24995) Comptroller of the Currency (“OCC”),^[220] and, therefore OCC regulations that deem certain information to be provided when Form 10-Q filings are included in offering documents in connection with sales of non-convertible debt are relevant to these firms.^[221]

In addition, Exchange Act reporting companies in different industries could be differentially affected by the proposed amendments due to differences in industry characteristics that may affect the propensity to continue to provide disclosures of quarterly financial information on Form 10-Q. For example, commenters have noted that pre-revenue biotechnology companies' securities may trade more based on the outcome of clinical developments and regulatory events than their quarterly financial reporting.^[222] Conversely, companies in other industries or with different investor bases may find that more frequent reporting better serves their needs.

3. Compliance Costs of Form 10-Q Requirement

Commenters have highlighted several categories of costs of complying with the current Form 10-Q requirement, such as: (1) overall internal resources expended on interim report preparation (including time spent by employees and board members and employment of dedicated staff for reporting),^[223] (2) specific timing issues and burdens of closing the accounting books for the period,^[224] (3) legal counsel fees,^[225] (4) external accounting advice fees,^[226] (5) auditor review fees,^[227] (6) costs for XBRL data tagging,^[228] and (7) distraction and opportunity costs ( i.e., valuable actions forgone because of time and money spent on interim reports).^[229]

Commenters have also provided specific cost estimates. In particular, one stock exchange provided cost estimates from a survey of a sample of listed companies as of March 2019.^[230] In terms of time spent by the survey respondents' employees on complying with quarterly reporting requirements each quarter, the survey results indicated an average of 853 hours and median of 300 hours spent, with a maximum of 20,000 hours spent.^[231]

In terms of monetary costs, the survey results indicated average monetary compliance costs (direct and indirect costs) each quarter of $334,698 and median of $75,000, with a maximum cost of $7,000,000.^[232] Adjusting these cost estimates for inflation would be equivalent to average (median) costs of approximately $426,700 ($95,600) and the maximum cost reported would be ( printed page 24996) approximately $8,923,500, as of December 2025.^[233] The survey also provided monetary cost estimates specifically for XBRL data tagging. The survey respondents reported average (median) XBRL tagging costs of $20,412 ($7,500), with a maximum reported cost of $350,000, as of March 2019. Adjusted for inflation the average (median) reported XBRL tagging cost would be approximately $26,000 ($9,600) and the maximum reported cost would be approximately $446,200, as of December 2025.^[234]

To our knowledge, there are no readily available estimates of the incremental cost of the mandated auditor review of Form 10-Q.^[235] One academic study, however, using data from Canada, where auditor review of interim financial statements of public companies is voluntary, compared total disclosed annual audit fees between companies providing quarterly reviews and those that did not, and estimated that audit fees were 18 percent higher for firms with interim reviews, controlling for the decision to purchase interim reviews and for variables associated with annual audit fees.^[236] Taking this finding at face value, that difference implies that each quarterly review on average cost 6% (18% divided over three quarters) of the cost of the annual audit, which means a company on average could potentially save a monetary amount equivalent to 12% of the cost of the annual audit by switching to semiannual reporting. Such cost savings would be reduced to the extent that review costs for fiscal quarters one and three would transfer to the semiannual review or annual audit.

4. Earnings Release Practices and Prevalence

Exchange Act reporting companies required to file Form 10-Q may also voluntarily communicate certain quarterly financial results through earnings releases. Many academic studies have found that markets react strongly to the information released in these voluntary disclosures, even more so when the releases also contain other information such as managerial forecasts or guidance, or when accompanied by an earnings related conference call.^[237] Some studies have compared the market responses around earnings releases with those around the filing of the associated interim reports for the same period, finding that markets generally react to the information when it is first disclosed, but less so when it is subsequently repeated.^[238] For example, there might be a significant reaction to news in the earnings release but not to the Form 10-Q filed a week later, even though they both reflect the same financial information. As discussed in more detail in Section II above, current Item 2.02 of Form 8-K requires earnings releases to be furnished to the Commission under the cover of Form 8-K.

Table 1 below shows statistics on the frequency of such earnings releases associated with Form 10-Q and Form 10-K filings for the sub-sample of CY2024 Exchange Act reporting companies that had a complete set of quarterly filings for their latest reported fiscal year in CY2024 ( i.e., those who filed a Form 10-Q for the first through third fiscal quarters prior to their CY2024 10-K filing). As shown in Table 1, reporting companies issue earnings releases in association with almost three quarters of all quarterly or annual reports. The data also shows that there is not a significant difference in propensity to issue earnings releases across quarters. Comparing smaller reporting companies to other (larger) reporting companies, Table 1 shows that smaller reporting companies issue earnings releases in conjunction with around 56% of Form 10-Q filings, whereas other (larger) reporting companies' issue earnings releases in conjunction with over 90% of their Form 10-Q filings. This difference may indicate that there is less demand from investors for these voluntary earnings releases for smaller companies. It could also indicate that smaller reporting companies face greater costs of such disclosures compared to their larger peers.

( printed page 24997)

5. Empirical Evidence on the Informational Value of Form 10-Q Disclosures

The informational value of quarterly filings has been broadly studied, with results generally suggesting that the quantitative financial information and qualitative descriptive information contained in Form 10-Q filings are both informative but are often preceded by other disclosures, such as earnings releases. Earnings releases will vary in how much information they contain relative to Form 10-Q filings. Further, earnings releases do not always reflect information in the same manner as quarterly filings, for example, by conveying the information in a more optimistic tone.^[240] Consequently, assessing the informational role that quarterly filings provide requires differentiating between the types and timing of information contained therein.

Quarterly filings have been found to provide markets with novel information in certain circumstances. For example, studies find that investors react strongly to abnormally high levels of “discretionary” accruals in quarterly financial information, to firms updating their quarterly disclosure of risk factors, and to quarterly reports that contain specific financial information ( e.g., a specific GAAP measure) that is not included in their associated earnings release.^[241] Together, this suggests that whether quarterly filings are perceived by markets to contain novel information likely depends on the specific firms' facts and circumstances.

Most of these studies find that the filing of quarterly reports is on average associated with a significant market return, which suggests that the market is reacting, on average, to novel information in the filing. Given the common firm practice of reporting earnings separately, in many cases before the quarterly report is filed, one study, however, cautions against drawing conclusions about the information in the quarterly report broadly without separating out specific financial information disclosed in earnings announcements.^[242] This study finds that markets only react to filed quarterly reports when no earnings announcement is disclosed previously. This suggests that the average market response to quarterly report filings that studies have observed may be primarily a reaction to the first disclosure of financial information (typically the primary content of earnings announcements) rather than a reaction to the totality of the information that a quarterly report comprises, both quantitative and qualitative. Overall, this evidence suggests that, on average, quarterly filings may not provide markets with novel information, except to the extent they are the first report of financial performance.

6. Empirical Evidence on Interim Reporting Frequency

The evidence on the informational value of Form 10-Qs and associated earnings releases we discussed in the previous sections does not directly speak to the issue of what reporting frequency would be optimal for investors and companies. Even if Form 10-Q disclosures have incremental informational value per se, investors and the reporting companies they own could still be better off with semiannual reporting. Because all Exchange Act reporting companies have been mandated to file Form 10-Q quarterly interim reports for more than five decades, it is difficult to empirically estimate the counterfactual value of semiannual reporting.^[243] Some studies have attempted to address this issue by examining historical U.S. disclosures prior to and around the time that mandatory quarterly interim reports took effect in 1970. When considering the evidence from these studies, we consider that there are limitations to ( printed page 24998) inferences that can be drawn from such historical U.S. studies due to dramatic changes in institutional investor participation, technology, market structure, and market competition that have occurred since then—together, composing a potentially different information environment for reporting companies today.

Using the U.S. historical setting, one study examined whether increasing reporting frequency improves earnings timeliness ( i.e., the speed with which accounting information is reflected in security prices).^[244] Differentiating between voluntary changes (firms switching from semiannual to quarterly reporting) and mandatory changes (Commission mandates), the study found that firms that voluntarily increased reporting frequency experienced improved earnings timeliness, whereas there was no significant evidence of improved earnings timeliness for those companies that were obligated to move to quarterly reporting following the 1970 Commission mandate of quarterly interim reports. By contrast, another study using a similar historical sample (1951-1973) covering voluntary and mandatory shifts in U.S. reporting frequency, found that higher reporting frequency is significantly associated with lower information asymmetry (measured by bid-ask spread and price impact) and a lower cost of equity capital (measured using realized returns and factor models), which supports the informational benefits hypothesized for more frequent disclosure, even when mandated.^[245] Other studies have used the same historical U.S. setting to analyze the relationship between reporting frequency and corporate investment and innovation and have found that higher reporting frequency is negatively associated with both investments and innovation and found that this result is consistent with higher frequency financial reporting inducing myopic corporate behavior.^[246]

Other studies provide evidence on how reporting frequency affects firms' information environments, market outcomes, and managerial behavior by examining international jurisdictions that have experienced regulatory changes in the frequency of interim financial reporting. These studies provide evidence from more recent regulatory changes, but there are limitations to consider when making inferences from these studies. There are significant regulatory and institutional differences between the U.S. and the countries examined in these studies that may alter how companies and market participants respond to changes in reporting requirements.^[247] One of these regulatory differences is that there are significant differences in the level of information provided in the interim reports across jurisdictions. For example, the type of quarterly reports that were required in the UK (Interim Management Statements) differed significantly from Form 10-Qs. In contrast to the requirements of Form 10-Q described above in Section II, the Interim Management Statements only needed to provide an explanation of material events and transactions that took place during the period and to give a general description of a firm's financial position and performance. In fact, one study reported that many UK firms failed to disclose any sales or earnings figures in their quarterly reports.^[248]

While regulatory differences and institutional differences limit direct comparisons to U.S. markets, the international experience may still highlight potential economic mechanisms relevant to changes in reporting frequency. Evidence from the EU suggests that reductions in the mandated frequency of interim reporting can weaken the information environment, for example, by leading to more selective disclosures.^[249] Related research shows lower financial reporting frequency may increase investors' reliance on alternative sources of information ( e.g., third party information intermediaries and peer companies), but those sources may not fully offset the informational loss associated with less frequent reporting.^[250]

International evidence also indicates that reporting frequency affects analyst behavior. Leveraging the UK's introduction and subsequent relaxation of mandatory quarterly reporting in 2007 and 2014, respectively, studies find that higher frequency of mandatory interim reporting is associated with increased analyst coverage.^[251] Similarly, another study examines firms in Taiwan and finds that firms that voluntarily disclose monthly earnings attract more analysts and have more accurate and less dispersed analyst earnings forecasts.^[252] One study that uses evidence across numerous countries shows that mandatory quarterly reporting is associated with lower analyst forecast errors and lower analyst forecast dispersion relative to semiannual regimes, particularly in settings with higher information acquisition costs.^[253]

( printed page 24999)

There is some evidence that decreasing reporting frequency could reduce short termism. Overall, however, the effects of reporting frequency on real corporate decisions are mixed. Evidence from the EU suggests that increasing reporting frequency can exacerbate managerial short-termism by increasing their manipulation of real business activities.^[254] In contrast, studies using data from the UK and Singapore find little evidence that changes in reporting frequency materially affect firms' investment decisions.^[255]

D. Benefits and Costs

The proposed amendments would provide Exchange Act reporting companies with flexibility regarding the frequency of mandatory periodic reporting by permitting issuers to elect whether to continue filing quarterly reports on Form 10-Q or to shift to a semiannual reporting cadence using a new Form 10-S.^[256] We do not expect issuers to respond homogeneously to this flexibility, since they will make reporting decisions based on how they assess the relative costs and benefits of more or less frequent periodic reporting in their particular circumstances, such as size, industry, stage of business development, financing needs, contractual obligations, investor expectations, and other regulatory requirements.^[257]

For purposes of our analyses, we distinguish among three categories of issuers based on how they could respond to the proposed rules. This categorization is intended to facilitate a clearer assessment of how the incidence and magnitude of costs and benefits may vary across issuers and market participants.

Some issuers may elect to provide mandatory periodic disclosures on a semiannual basis, without systematically providing voluntary disclosure for the first and third quarters. We refer to these issuers as semiannual reporters. For these issuers, the proposed amendments would meaningfully alter both the frequency and timing of mandatory and likely voluntary disclosures relative to the baseline.

Other issuers may elect to continue filing quarterly reports notwithstanding the availability of semiannual reporting. These issuers, referred to as quarterly reporters, may do so because they perceive limited compliance cost savings from reducing reporting frequency or because they face investor, contractual, or regulatory expectations favoring quarterly disclosure. They may also view more frequent reporting as improving the liquidity of their stock, the valuation of their stock, or their access to capital and not worth the cost savings associated with less frequent reporting.^[258]

Finally, some issuers may elect semiannual reporting for purposes of mandatory periodic disclosure while continuing to provide voluntary disclosure of information on a quarterly basis through other channels, such as earnings releases, earnings guidance, or conference calls. They could even voluntarily provide quarterly financial information in a Form 10-S.^[259] These issuers, referred to as hybrid reporters, occupy an intermediate position between the first two groups. For these issuers, the proposed amendments may reduce some regulatory compliance costs while preserving aspects of the quarterly information environment through voluntary disclosures.

This section discusses the potential economic benefits and costs of the proposed amendments relative to the baseline of mandatory quarterly reporting for all affected issuers. The economic effects of the proposed amendments depend in part on issuer reporting choices. As such, this analysis is organized by issuer reporting category to reflect heterogeneity in issuer responses as well as to clarify how costs and benefits may accrue differently to issuers, investors, and other market participants. It is important to note that reporting companies would likely choose the reporting category ( i.e., semiannual reporter, quarterly reporter, or hybrid reporter) that is optimal for them after weighing the perceived benefits and costs that they would experience as a result of their decision.

While it is difficult to predict which reporting category particular issuers will choose, we discuss factors that could potentially affect issuers' choice of reporting frequency in Section V.D.4 below. With that in mind, on average, for each issuer that switches to semiannual reporting, we estimate annual direct compliance costs per issuer associated with filing three Form 10-Q's to be $330,000 ^[260] and the ( printed page 25000) annual compliance costs per issuer associated with filing one Form 10-S to be $132,000.^[261] Hence, for issuers that choose to provide semiannual reports in lieu of quarterly reports, we estimate a net reduction in direct compliance costs equal to $198,000 per fiscal year. As discussed below, there are additional cost savings that could not reasonably be quantified. In addition to these cost savings, all filers of certain Securities Act and Exchange Act registration statements and of Form 10-K would incur the cost of either checking or not checking the semiannual box on the associated forms. We estimate that the direct compliance cost per filing of completing the semiannual box when filing Securities Act registration statements on Forms S-1, S-3, S-4, and S-11, Exchange Act registration statements on Form 10, and annual reports on Form 10-K to be $123.^[262]

1. Semiannual Reporters

(a) Potential Benefits

Issuers that elect to shift from quarterly to semiannual reporting are expected to realize direct compliance cost savings from forgoing the preparation, review, and filing of quarterly reports on Form 10-Q for the first and third quarters. These savings may include reductions in internal staff time (including time spent by employees and board members) devoted to gathering, processing, and presenting interim financial information, as well as investor relations and post-earnings release events such as quarterly earnings conference calls. The savings may also include lower expenditures on external legal counsel, accounting advisors, and other professional service providers. Semiannual reporters may also avoid certain costs associated with auditor reviews of interim financial statements and with structured data tagging requirements applicable to Form 10-Q filings. A detailed discussion of costs of complying with the current Form 10-Q requirement, and therefore potential direct compliance cost savings for issuers that elect to shift from quarterly to semiannual reporting can be found in Section V.C.3 above.

In response to the Commission's 2018 Request for Comment on Quarterly Earnings and Reporting, several commenters expressed the view that smaller issuers should be able to provide disclosure less frequently.^[263] To the extent that ongoing compliance costs include a fixed component, the relative impact of these savings may be greater for smaller issuers and issuers with simpler operations. Other commenters, however, argued that more frequent reporting is critical for smaller companies as well as emerging growth companies given that their information environment is generally more opaque.^[264]

Semiannual reporters may also realize indirect benefits. Reducing the frequency of mandatory periodic reporting may lessen managerial distraction associated with quarterly reporting cycles and investor engagement activities that are closely tied to Form 10-Q filings. To the extent that quarterly reporting contributes to managerial focus on short-term financial metrics at the expense of long-term value creation,^[265] reduced reporting frequency could mitigate this behavior and associated resource misallocation, although the academic literature is mixed on whether quarterly reporting is a primary driver of such behavior.^[266]

( printed page 25001)

In addition, to the extent there is proprietary information that companies are required to or have an incentive to disclose in quarterly reporting, less frequent mandatory reporting may reduce or at least delay the disclosure of competitively sensitive information and lead to a better competitive environment from the perspective of the reporting firms.^[267] The proposed amendments would not change what is required to be disclosed in the interim reports, simply the frequency of those reports. Still, instead of providing financial information for each quarter, semiannual reports would likely aggregate the financial information over six-month periods, which could potentially obfuscate information that would have been useful to competitors if disclosed for each quarter.^[268] Thus, the impact of the proposed amendments on reducing proprietary costs would be limited to instances where aggregating financial information over six months reduces the amount of competitively sensitive information that could have been gleaned if financial information were presented for each quarter as well as instances where delaying the disclosure of interim reports by three months would reduce its usefulness to competitors. Moreover, some semiannual reporters may voluntarily provide quarterly financial information in a Form 10-S which could further limit the impact of the proposed amendments on reducing the disclosure of competitively sensitive information.^[269]

For some issuers, however, the magnitude of realized compliance cost savings may be attenuated by private contractual reporting obligations. Debt agreements, lending arrangements, and other creditor contracts frequently require the provision of quarterly or even monthly financial information to the lender, often irrespective of the frequency of mandatory reporting under the Federal securities laws. As a result, some issuers that elect semiannual reporting for purposes of reports under Exchange Act Sections 13(a) and 15(d) may nonetheless continue to prepare quarterly financial information internally or obtain interim auditor reviews to satisfy creditor monitoring, covenant compliance, or to facilitate raising capital (at least until contracts or agreements are renegotiated to reflect different reporting frequencies). In such cases, reductions in Form 10-Q filing obligations may not translate into commensurate reductions in overall reporting-related costs.^[270]

(b) Potential Costs

Potential costs for semiannual reporters and investors arise primarily from a reduction in the frequency and timeliness of standardized public disclosures. Longer intervals between mandatory reports may delay the dissemination of material information about an issuer's financial condition and operating performance, including through other market participants and intermediaries, increasing information asymmetry among market participants.^[271] Such effects may disproportionately affect less sophisticated or less resourced investors who may rely more heavily on periodic reports for their investment decisions.

Increases in information asymmetry resulting from a reduction in reporting frequency could be mitigated or exacerbated based on whether and how information intermediaries respond to changes in reporting frequency. On the one hand, some information intermediaries ( e.g., financial analysts) could provide information that substitutes for at least some of the information that would have been included in the interim quarterly reports ( i.e., Q1 and Q3), which could mitigate potential increases in information asymmetry. On the other hand, studies of foreign markets have found a positive correlation between reporting frequency and analyst following.^[272] To the extent that a reduction in reporting frequency reduces analyst following for an issuer, the incremental information that would have been provided by the discontinuing analysts would be lost as well, further increasing information asymmetry.^[273]

Increased information asymmetry may, in turn, adversely affect market outcomes. Academic literature and commenters have linked higher information asymmetry to lower liquidity, higher transaction costs, reduced price informativeness, and a higher cost of capital.^[274] Some commenters also expressed concern that less frequent reporting could impair investors' ability to identify trends,^[275] value securities,^[276] and detect emerging problems in a timely manner,^[277] particularly for smaller or less followed issuers. Some commenters argued that the elimination of quarterly reporting may increase stock price volatility, particularly around earnings announcements.^[278] Less frequent ( printed page 25002) interim reports could also increase the degree to which investors rely on other required disclosures ( e.g., Form 8-K, Form 4, etc.) that are issued during the quarters without quarterly interim reports, resulting in greater price movements following those disclosures and a potentially higher cost of processing information for investors.^[279]

Beyond delaying the dissemination of information, a reduction in reporting frequency could also result in an overall loss in information provided to the public. Specifically, for semiannual reporters, there would be a loss in the granularity of financial information across time. Financial statements would no longer provide accounting information at the quarterly level, instead aggregating two quarters into a single semiannual number. Investors may value information on how companies change quarter over quarter and how certain quarters compare across issuers. Such information would likely be more relevant to issuers with more seasonal business operations and performance.^[280] To the extent that more granular quarterly information is valuable for investors' decision-making, losing such granularity could exacerbate the issues related to information asymmetry discussed above.

The proposed rules could also reduce comparability of financial statements both across issuers and across time. It may be difficult to compare semiannual reports to quarterly reports and even to certain semiannual reports that have different fiscal periods. For instance, a semiannual report with a fiscal year end in December would cover different periods from a semiannual report with a fiscal year end in March. The first would report financial information for January through June and for July through December while the other would report financial information for April through September and for October through March.^[281] Such lack of comparability would be more severe for semiannual reporters with seasonal variation in operations. Academic studies that examine other aspects of comparability provide evidence that reductions in comparability could lead to lower liquidity, lower investor engagement, larger analyst forecast errors, greater analyst forecast dispersion, and less institutional ownership.^[282]

Of the 5,976 Exchange Act reporting companies that filed a domestic annual report during calendar year 2024, 4,813 (81%) ended their fiscal year in December (calendar quarter 4); 236 (4%) ended their fiscal year in September (calendar quarter 3); 253 (4%) ended their fiscal year in June (calendar quarter 2); 179 (3%) ended their fiscal year in March (calendar quarter 1); and 495 (8%) ended their fiscal year in a month that did not coincide with the end of a calendar quarter. Reduced comparability between semiannual reporters will be limited to issuers that do not have the same fiscal period and have fiscal end dates that are more or less than six months apart. For example, roughly 85% of the reporting companies have a fiscal end date in December or June. Comparability between any of these issuers that move to semiannual reporting should not be impacted by the proposed rules. Potential impacts of reduced comparability between semiannual reports should be mitigated further to the extent that companies that are more likely to be compared to each other ( e.g., firms in the same industry or sector) are more likely to have similar fiscal reporting periods.^[283]

Reduced reporting frequency may also affect corporate accountability and financial reporting quality. Several commenters noted that interim auditor reviews associated with quarterly reporting can facilitate the early identification of accounting issues and internal control deficiencies and that less frequent reviews could delay the resolution of such issues.^[284]

The information asymmetry between insiders and outside investors generally decreases following the disclosure of interim reports or associated earnings announcements.^[285] A move to semiannual reporting would generally delay the disclosure of information that would have been contained in interim reports for the first and third quarters and therefore increase the length of time for which information asymmetry between corporate insiders and outside investors is higher. A potential additional cost may arise if insiders engage in trading on the information that has not yet been released or if investors perceive that to be more likely ^[286] —even though trading on the ( printed page 25003) basis of material non-public information would be, among other things, a violation of Exchange Act Section 10(b) and a violation of Rule 10b-5. Moreover, as part of internal compliance, many companies monitor insider transactions as well as voluntarily implement “blackout periods” or windows during which corporate insiders are prohibited from purchasing or selling shares of the company.^[287] One study documents that that the mean (median) window for a blackout period begins roughly 46 (47) days before an earnings announcement and extends until one day after the announcement.^[288] Companies that move to semiannual reporting could choose to incorporate, preserve, or extend such blackout periods to alleviate the potential concerns described above. Some research, however, has found that companies may need to compensate corporate insiders for restricting their trading activities.^[289]

Finally, companies choosing to become semiannual reporters would incur switching costs as they transition from quarterly reporting to semiannual reporting. Issuers generally have systems, procedures, and controls in place to gather, process, review, and disclose information in a Form 10-Q and relevant voluntary disclosures. Semiannual reporters would therefore incur initial switching costs to update their systems, procedures, and controls. Such costs are likely to be higher for larger firms with complex operations. Additionally, some semiannual reporters would need to expend time and resources to renegotiate contracts or other agreements that relied, at least to some degree, on quarterly reports. These could include, among other things, debt contracts that rely on quarterly financial metrics for maintenance covenants as well as incentive-based executive compensation contracts that rely on quarterly performance metrics.

2. Quarterly Reporters

(a) Potential Benefits

Issuers that elect to continue filing quarterly reports are not expected to experience material changes in their direct reporting costs or disclosure practices as a result of the proposed amendments. For these issuers, a potential benefit of the proposal is the availability of flexibility should their circumstances change in the future. The option to adjust reporting frequency may have value even if it is not exercised immediately.

Quarterly reporters may also benefit indirectly from market-level effects if the proposal alters competitive dynamics or reporting norms among peer firms. For example, if some competitors reduce reporting frequency, issuers that continue quarterly reporting may differentiate themselves by signaling a commitment to transparency, which could be valued by investors.^[290] Additionally, maintaining quarterly reporting may help these issuers meet the expectations of certain investors, analysts, or contractual partners who prefer or require more frequent disclosure.

(b) Potential Costs

The proposed rules could also alter competitive dynamics in a way that increases the relative costs for quarterly reporters. Quarterly reporters would continue to bear the direct and indirect costs associated with quarterly reporting, including internal preparation costs, external professional fees, auditor review costs, and investor relations activities while peer firms that move to semiannual reporting would experience these costs less frequently. In addition, peer firms who report semiannually could benefit from spillover effects of information provided by the quarterly reporters. Such factors could result in a competitive disadvantage for quarterly reporters as they bear the cost of certain disclosures that could inadvertently benefit their competitors. Still, these issuers may view such costs as justified by the potential benefits of more frequent disclosure, including enhanced liquidity, lower cost of capital, and alignment with investor and analyst expectations. Some issuers, however, may effectively be constrained to continue quarterly reporting due to contractual obligations, debt covenants, bank regulatory requirements, or listing standards imposed by self-regulatory organizations.^[291]

The proposed rules could reduce comparability of quarterly reporters as well. It may be difficult to compare quarterly financial statements from quarterly reporters to semiannual financial statements. For example, investors would have to aggregate quarterly reports to compare with semiannual reports and may have difficulty extracting quarter-level information from the semiannual reports, depending on how the reports are structured.^[292] This lack of comparability could increase the cost of acquiring information, which could negatively impact market factors such as liquidity, analyst following, and forecast accuracy.^[293]

3. Hybrid Reporters

(a) Potential Benefits

Hybrid reporters—issuers that elect semiannual mandatory reporting while continuing to provide certain quarterly voluntary disclosures—would benefit from the same compliance costs savings as semiannual reporters as they would have the same reporting obligations. The effective overall cost savings for hybrid reporters would be mitigated, however, to the extent that they choose to prepare and provide additional voluntary disclosure. By forgoing Form 10-Q filings for the first and third quarters, these issuers would reduce costs and time associated with the preparation and review of full interim financial statements, but may incur (or continue to incur) costs associated with voluntarily engaging in quarterly ( printed page 25004) earnings communications that meet investor expectations. Practically, the impact on this group of moving to semiannual reporting under the proposed amendments while continuing to provide voluntary interim disclosures would range somewhere between the impact on the quarterly reporters and the semiannual reporters (both discussed above) depending on the amount of voluntary information provided and the degree to which the perceived reliability of the voluntary disclosure matches that of mandatory disclosure.^[294]

Such issuers may preserve aspects of the quarterly information environment, potentially mitigating increases in information asymmetry relative to semiannual reporters. The hybrid approach may therefore represent a middle ground for issuers seeking to balance cost savings with market demand for more frequent information.

(b) Potential Costs

At the same time, the hybrid reporting approach may introduce distinct costs. Voluntary quarterly disclosures may differ from Form 10-Q filings in scope, standardization, structured data requirements, and associated litigation risk. For example, earnings releases are typically furnished rather than filed and are not subject to the same liability provisions as Form 10-Q filings, which some commenters suggested could affect their credibility and informational value.^[295]

Like semiannual reporters, hybrid reporters would have less frequent interim auditor reviews. An independent public accountant's review of a registrant's interim financial statements required as part of quarterly reporting can facilitate the early identification of accounting misstatements and internal control deficiencies, especially for smaller firms. Less frequent reviews could delay the identification and resolution of such issues. Relative to semiannual reporters, however, this concern could be mitigated to the extent that hybrid reporters' voluntary quarterly financial disclosures are reviewed by their independent public accountants.

Hybrid reporting may also increase processing and comparability costs for investors and information intermediaries. If quarterly voluntary information is provided in less standardized formats or on varying timelines across issuers, then analysts and investors may incur additional costs to retrieve, standardize, and compare such information. To the extent that hybrid practices become prevalent, these effects could reduce comparability across firms and over time. This cost could be mitigated if issuers establish and follow common practices with standardized voluntary disclosure across peers.

The voluntary disclosure would not be subject to XBRL requirements and therefore, unless voluntarily tagged, would not provide the benefits that derive from structured data. Research has shown XBRL requirements improve the information environment for market participants by increasing disclosure processing efficiency.^[296] Such research indicates this has led to benefits for individual companies and for the market as a whole, such as reduced information asymmetry,^[297] greater stock price reflectiveness of public disclosures,^[298] enhanced market competition,^[299] increased liquidity,^[300] decreased cost of capital,^[301] more accurate financial analysis,^[302] enhanced artificial intelligence capabilities,^[303] and others.^[304] To the extent the magnitude of these effects varies with the frequency of XBRL data availability, these benefits may be reduced as a whole given the lack of quarterly XBRL-tagged financial data from semiannual and hybrid reporters.

Hybrid reporters that disclose voluntary quarterly information may not gain the same value from their disclosures as quarterly reporters gain, because markets assess the value of voluntary and mandated disclosures differently. For example, studies have argued that certain voluntary disclosures are believed by markets because they are subsequently confirmed by mandatory disclosures covering materially the same information, and thus voluntary disclosure becomes less valuable in the absence of such mandatory disclosures.^[305] Mandatory semiannual reports could serve this function, but the information provided in these mandatory reports would be delayed and potentially less precise relative to ( printed page 25005) mandatory quarterly reports. To the extent that hybrid reporters provide voluntary disclosures that are of a higher frequency than their mandatory reporting, it could be the case that the market's ability to confirm those disclosures is diminished, thereby reducing the market's perceived value of those voluntary disclosures.

Finally, hybrid reporters would likely incur switching costs similar to those of semiannual reporters as they transition from quarterly reporting to semiannual reporting. For example, hybrid reporters may also incur initial switching costs to update their systems, procedures, and controls as well as costs to renegotiate certain contracts. The changes, however, and their respective costs may be more limited, relative to semiannual reporters, to the extent that hybrid reporters preserve existing systems and procedures for the voluntary quarterly disclosure that they provide.

To the extent that hybrid reporters voluntarily provide quarterly financial information in a Form 10-S filing, some of the costs discussed above, such as reduced comparability of information, reduced credibility of information, and less structured data, could be mitigated.

4. Factors Affecting Issuers' Decisions on Their Reporting Frequency

Issuers' reporting choices under the proposed amendments are likely to reflect a combination of firm-specific, market-based, and institutional considerations. Firm size, operating complexity, growth stage, and seasonality of business operations may influence both the perceived costs of quarterly reporting and the perceived benefits of more frequent disclosure. For instance, to the extent that the costs of providing interim reports are fixed, smaller issuers may face relatively higher compliance burdens (in a relative sense compared to larger issuers as a percentage of the issuer's revenue) and be more motivated to switch to semiannual reporting from a cost savings perspective. Conversely, investors may demand more frequent reporting from such firms as there tends to be less available public information about smaller firms and therefore higher information asymmetry.^[306] Investors' expectations for more frequent reporting may also be driven by poorer prior performance and more uncertain operating environments.^[307]

Investor base composition and analyst coverage are also expected to play an important role. Issuers with substantial institutional ownership or active analyst following may face stronger market expectations for quarterly information, whether through Form 10-Q filings or other disclosures.^[308] In contrast, issuers with more concentrated or long-term-oriented ownership may perceive less pressure to maintain quarterly reporting.

Contractual and regulatory constraints may further shape issuer decisions.^[309] Debt agreements, bank regulatory requirements, exchange listing standards, or foreign legal obligations may effectively necessitate continued quarterly reporting for certain issuers, limiting their ability to rely on the proposed flexibility, unless these agreements and requirements are modified.

Issuers may also consider how reporting frequency interacts with capital raising activities and liability frameworks. As discussed above in Section V.C.2, underwriters and investors may expect reviewed interim financial information in registered offerings, which could lead issuers that access capital markets frequently to continue quarterly reporting or to obtain voluntary auditor reviews of their quarterly financials even under a semiannual reporting regime. The proposed amendments to Rule 3-01, Rule 3-12, and Rule 8-08 of Regulation S-X would alter the age of financial statements requirements so that semiannual filers would not be required to include or incorporate by reference quarterly financial statements in a registration statement (or a proxy statement).^[310] Nonetheless, investors and underwriters may still demand quarterly financial disclosure to have more recent or granular information. Likewise, issuers participating in or planning to participate in a merger or acquisition could face similar pressures.

Finally, strategic and competitive considerations (including peer behavior and evolving market norms) may influence issuer decisions. Issuers may weigh potential reductions in disclosure of proprietary information against concerns that reduced reporting frequency could be perceived negatively by investors or analysts. Given these interacting factors, issuer responses to the proposed amendments are likely to be heterogenous and may evolve over time as market practices adjust.

5. Aggregate Monetized Benefits and Costs

Throughout this economic analysis, we have estimated monetized benefits and costs per response. In this section, we present aggregate measures of these monetized effects. These totals include only benefits and costs that are monetized in the economic analysis ^[311] and thus do not encompass all of the proposed amendments' benefits and costs.

(a) Annual Aggregate Monetized Benefits and Costs

We report the annual aggregate monetized benefits and costs, respectively, of the proposed amendments, which are aggregated across all affected entities and instances of reporting each year. To aggregate these monetized effects, we use estimates of the number of affected filings ^[312] and estimated burdens per filing under the Paperwork Reduction Act in Section VI. Consistent with these estimated burdens, there are no initial monetized costs or benefits that would accrue immediately upon adoption of the proposed rules ( i.e., at Time 0). Under the proposed amendments, these benefits and costs are incurred by reporting companies that elect to report on a semiannual basis and by all ( printed page 25006) companies that file certain registration and reporting forms.

Because the decision to switch to semiannual reporting is voluntary and firm-specific, we are unable to predict with certainty how many reporting companies would make this change. For the purpose of computing annual aggregate monetized effects, we assume that 20 percent of all affected issuers would switch to semiannual reporting, which represents 1,195 issuers ( i.e., 20% of 5,976 affected issuers = 1,195 issuers).^[313] As shown in Table 2, these issuers would save the annual direct compliance costs associated with filing three Form 10-Q's, which we estimated earlier to be $330,000 per issuer on average.^[314] Multiplying the number of affected issuers that would switch by this cost saving per issuer, we estimate aggregate monetized cost savings ( i.e., benefits) across all affected issuers and filings of $394,350,000 per year ( i.e., 1,195 issuers × $330,000 per issuer = $394,350,000). The same 1,195 issuers would instead file Form 10-S. As shown in Table 3, these issuers would thus incur annual direct compliance costs associated with filing Form 10-S, which we estimated earlier to be $132,000 per issuer on average.^[315] Multiplying the number of affected issuers that would switch by this cost per issuer, we estimate aggregate monetized costs across all affected issuers of $157,740,000 ( i.e., 1,195 issuers × $132,000 per issuer = $157,740,000). The estimated aggregated annual monetized costs and benefits would increase or decrease depending on whether more or fewer issuers decide to report on a semiannual basis than we assumed. In addition, as shown in Table 3, all filers of Securities Act registration statements on Forms S-1, S-3, S-4, and S-11, and Exchange Act registration statements on Form 10, and annual reports on Form 10-K would incur a per filing cost of $123 associated with completing the semiannual box. The aggregate annual costs for each form are calculated by multiplying $123 by the estimate for the number of affected filings of each form each year.^[316] Adding each of those aggregate monetized costs for each form to the aggregate monetized costs associated with filing Form 10-S results in a total estimate of $158,821,000 aggregate annual monetized costs across all affected parties ( i.e., $157,740,000 aggregate annual monetized costs for Form 10-S + $1,081,000 total aggregate annual monetized costs for semiannual check boxes = $158,821,000).

( printed page 25007)

(b) Present Values and Annualized Values of Aggregate Monetized Benefits and Costs

Consistent with the requirements of Executive Order 12866, the Commission reports estimated total monetized benefits and costs for all affected entities in two additional ways specified in OMB Circular A-4.^[317] The two presentations are intended to address the fact that the various benefits and costs of the proposed amendments would not accrue at the same point in time; rather, benefits and costs that accrue sooner are generally more valuable than those that occur later in time.^[318]

We report (1) the present values of expected benefits and costs that are monetized in our Economic Analysis, aggregated across all affected entities, over a 10-year time horizon, starting in 2026, as well as (2) the annualized values over the same time horizon that are derived from the present values. This time horizon represents the period over which the principal benefits and costs that are monetized in the Economic Analysis are expected to accrue.^[319] The present values and annualized values account for the timing of benefits and costs through discounting, which is a procedure that accounts for the time value of money.^[320] Under the proposed amendments, these benefits and costs are only incurred by reporting companies that elect to report on a semiannual basis.

Table 4 reports the present values of the aggregated monetized benefits and costs. The analysis uses annual real discount rates of 3 percent and 7 percent over a 10-year time horizon, starting in 2026.^[321] We assume that affected issuers would switch to semiannual reporting in the first year of the 10-year time horizon. We further assume that the number of affected issuers would remain constant over that period. We estimated in Table 2 that aggregated monetized benefits across affected issuers are $394,350,000 per year. Over a 10-year time horizon, the present value of aggregated monetized benefits is thus $3,413,970,906 using a 3 percent discount rate and $2,865,051,037 using a 7 percent discount rate. For the same affected issuers, we estimated in Table 3 that aggregated monetized costs are $158,821,000 per year. Over a 10-year time horizon, the present value of aggregated monetized costs is thus $1,374,946,807 using a 3 percent discount rate and $1,153,874,149 using a 7 percent discount rate.

Table 5 reports annualized monetized benefits and costs using real discount rates of 3 percent and 7 percent over a 10-year horizon.^[322] The lump sum present values of monetized benefits and costs reported in Table 4 are converted in Table 5 into a constant stream of annualized benefits and costs over a 10-year time horizon, starting in 2026.^[323] Because the annual aggregated monetized benefits and costs reported in Tables 2 and 3 are identical in every year of the 10-year time horizon and because there are no initial benefits or costs at Time 0, the annualized ( printed page 25008) aggregate monetized benefits and costs in Table 5 are the same as the annual aggregate monetized benefits and costs in Table 3. Hence, across all affected issuers, we estimate that annualized total monetized benefits are $394,350,000 per year using a 3 percent discount rate and $394,350,000 per year using a 7 percent discount rate. For those same affected issuers, we estimate that annualized total monetized costs are $158,821,000 per year using a 3 percent discount rate and $158,821,000 per year using a 7 percent discount rate.

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

Based on our discussion above, we expect that Exchange Act reporting companies that would switch to becoming semiannual or hybrid reporters under the proposed amendments could incur some cost savings in terms of both time and cash flows by not having to prepare and disclose Form 10-Qs for the first and third fiscal quarters. We expect these savings would be greater for those companies that would become semiannual reporters, rather than hybrid reporters, depending on the extent of voluntary quarterly disclosure provided by the hybrid reporters. To the extent any future semiannual or hybrid reporters currently face limited managerial capacity or financing constraints, some or all of the time and cash flows saved may be redirected to more productive use, thereby increasing the allocative efficiency of the companies' resources. In addition, to the extent that companies moving to semiannual reporting would feel less pressure to focus on shorter term earnings at the possible expense of long-term value creation, there could be further efficiency gains through improved managerial incentives.

The proposed amendments, however, could also lead to efficiency reductions. As discussed above,^[324] a switch to semiannual (or hybrid) reporting would likely increase information asymmetries, thereby reducing the informational efficiency of share prices and reducing stock market liquidity for the companies that move away from quarterly reporting. The magnitude of this effect would likely vary based on company characteristics and the degree to which the delayed disclosure would impact investor decision-making. For instance, as discussed above, for some companies or industries, investors may mainly base their investment decisions on information that is provided in current reports, in which case a switch to semiannual reporting may only have a limited impact on information asymmetry.

To the extent there would be an increase in information asymmetries for companies choosing semiannual reporting, there could also be related spillover effects, including on the companies that would continue to report at a quarterly frequency. In particular, as discussed above, to the extent there would be a reduction in the frequency of interim financial reports under the proposal for a significant number of reporting companies, it would make it more difficult for investors and information intermediaries, such as financial analysts, to compare disclosures over time and across companies and arrive at accurate company valuations in a timely fashion, which could decrease the informational efficiency of share prices even for companies that would continue to file quarterly reports.^[325] To the extent a switch by companies to semiannual reporting would reduce liquidity and reduce the informational efficiency of share prices, it would, in turn, reduce investors' ability to make informed investment and voting decisions and could have adverse effects on their ability to make efficient capital allocation decisions within their portfolios.^[326]

The proposed amendments could also potentially affect competition. To the extent required quarterly reporting currently makes companies disclose time-sensitive proprietary business information useful to competitors earlier than they would otherwise do, or the quarterly reporting frequency gives competitors greater insight into a company's business dynamics than semiannual reporting would give, there could be competitive benefits to a company that adopts semiannual reporting. In addition, to the extent a reporting company's competitors are privately held domestic companies or foreign companies (including foreign private issuers) without mandated quarterly reporting, companies may improve their competitive position by switching to semiannual reporting if the current compliance costs of the required quarterly reporting are a competitive disadvantage. To the extent there is a fixed cost component to the quarterly reporting requirements, smaller companies may benefit disproportionately more from any cost savings associated with switching to semiannual reporting relative to larger ( printed page 25009) industry peers (because these fixed costs represent a larger percentage of their revenues) and thereby may also get a comparatively larger competitive benefit from switching. We note that any competitive benefits from cost savings or a reduction in the frequency of disclosures of proprietary information could be mitigated if less frequent reporting leads to a higher cost of capital, as discussed above.

The proposed amendments may also have effects on capital formation. On the one hand, to the extent that companies adopt semiannual (or hybrid) reporting and the cost savings from switching from quarterly reporting can be redeployed to a more productive use such as new investments, there could be an increase in net capital formation. In addition, a reduced burden of periodic disclosures on reporting companies may encourage additional companies to raise capital through registered securities offerings in public markets. An increase in the number of companies who access public capital markets could increase capital formation to the extent it facilitates the raising of more capital than would be available to these issuers outside of public markets, for example, due to an enhancement of investor protections and a broadening of the investor base.

On the other hand, less frequent disclosures may result in a higher cost of capital if investors receive less precise information about an issuer's cash flows and how they covary with other issuers' cash flows or if there is an increased risk of information asymmetry across investors because of the increased time gaps between public disclosures. A higher cost of capital could, in turn, reduce corporate investment and thereby negatively impact capital formation. Thus, to the extent the proposed amendment would lead to higher cost of capital for semiannual or hybrid reporters, it could negatively affect capital formation. Capital formation could be further impaired to the extent companies' choice of switching to semiannual reporting would lead to the negative externalities on the broader information environment discussed above, thereby also potentially raising the cost of capital for quarterly reporters as well. Such a negative spillover effect on quarterly reporters' cost of capital could be mitigated, however, if continued quarterly reporting is viewed by investors as a credible signal of company quality, and therefore quarterly reporters may benefit from a comparatively higher degree of investor confidence compared to those companies that would choose to become semiannual or hybrid reporters.

The aggregate effects on efficiency, competition, and capital formation will depend on how many reporting companies choose to report on a semiannual basis and how investors respond to that choice. It also depends on which types of reporting companies choose to report on a semiannual basis as the importance of more frequent periodic disclosure to investors and market participants would vary across reporting companies.

F. Reasonable Alternatives

In this section, we present certain significant alternatives and a discussion of their benefits and costs relative to the proposed rules.

1. Mandatory Semiannual Reporting; Elimination of Quarterly Reporting

As an alternative to the proposed optional semiannual reporting approach, we considered retaining the existing Form 10-Q disclosure requirements but requiring interim reporting on a semiannual rather than quarterly basis for all reporting companies.^[327]

Compared to the proposed optional semiannual reporting approach, this alternative would provide no flexibility for reporting companies to elect the reporting frequency option—either semiannual or quarterly—that may best serve the company and its investors. This lack of flexibility could run counter to what some companies may view as the better reporting frequency to serve the company and its investors. For example, if a reporting company believed the best way to manage investor or analyst expectations or obligations under an agreement would be to report quarterly to the Commission, this ability could be frustrated under the alternative proposal consisting of mandated semiannual reporting.

Because mandated semiannual reporting would force companies to become either semiannual or hybrid reporters, with no choice of filing reports on Form 10-Q, we expect the potential costs to be larger under this alternative than under the proposal. To the extent those companies that would have incentives to remain as quarterly reporters under the proposal would have incentives to become hybrid reporters under this alternative, the expected larger costs of this alternative relative to the proposal would be mitigated to some extent.

We expect that the benefits associated with reporting cost savings, as discussed above, would be larger under this alternative than under the proposal since no company would incur the costs associated with filing interim reports with the Commission for the company's first and third fiscal quarters. These larger benefits, however, would be reduced for those companies that would choose to become hybrid reporters under this alternative, as they may continue to provide voluntary quarterly information.

In terms of the effects on efficiency, competition, and capital formation, we expect the potential negative market externalities from less frequent reporting, as discussed in Section V.F above, to be greater under this alternative than under the proposal, because we expect a greater potential loss of information (compared to the baseline) under this alternative than under the proposal.

2. Semiannual Reporting Only for Certain Registrant Categories

As an alternative, we considered an optional semiannual reporting approach that would be available only to reporting companies in certain smaller size categories, for example reporting companies that are: (1) within one of the existing categories under Commission rules, which generally base the criteria for the category on company size—including (A) emerging growth companies, (B) smaller reporting companies, or (C) companies that are not accelerated filers or large accelerated filers—or (2) companies that meet the criteria of a new size-based category the Commission could create. Or such an alternative could consist of one or more combinations of those categories.

As compared to the proposal, an alternative that limited optional semiannual reporting to one category or a combination of categories of companies that generally indicate small company size would result in the exclusion of larger companies from optional semiannual reporting. Thus, under that alternative, larger companies would have less flexibility to opt for the reporting frequency that best serves those companies and their shareholders and would not be able to avail themselves of the benefits of cost savings and time savings that could accrue under the proposal. Even though the alternative would reduce the aggregate potential benefits from reporting cost savings compared to the proposal (by precluding large ( printed page 25010) companies from filing semiannual reports), it would still provide the flexibility of reporting frequency choice and the associated potential cost savings for smaller sized reporting companies that may currently face a disproportionate cost burden of the quarterly reporting requirement, as discussed above.

The potential informational costs of the proposal stem from those companies that choose to switch to semiannual reporting, as discussed above. As compared to the proposal, an alternative that does not allow this option for larger companies would have the potential informational costs limited to smaller, potentially less economically influential companies. This difference in costs is limited by the extent to which we would expect large companies to opt to continue filing quarterly under the proposal. To the extent that larger companies may convey more information about market fundamentals, this alternative could result in less expected informational costs, compared to the proposal, because there would still be potentially valuable information spillovers from the large quarterly filers to smaller semiannual filers.

3. Form 8-K Filing Requirement When Company Decides To Change Reporting Frequency for Next Fiscal Year

Another alternative would be a requirement that a reporting company must file a report on Form 8-K within four business days of a decision that the company intends to change its frequency of reporting in connection with periodic reports that cover the next fiscal year.

As compared to the proposal, this alternative could add complexity to Commission rules as we expect that under such an alternative the Commission would need to provide for requirements concerning when a decision is considered to have been made that triggers the Form 8-K filing obligation. Once a decision to change the frequency of interim reporting has been disclosed in a Form 8-K, companies may have less flexibility to change their minds before filing the next Form 10-K as doing so would likely confuse investors or be interpreted negatively.

To the extent uncertainty about what interim reporting frequency to expect from a company for the upcoming fiscal year imposes costs on investors or other market participants,^[328] they may benefit from the alternative of a Form 8-K filing obligation by receiving an earlier notice of what the company intends to do.

The alternative of a Form 8-K filing obligation would impose Form 8-K filing costs not present under the proposal that could marginally offset time and money savings for semiannual filers under the proposal.

4. Longer Filing Deadline for Form 10-S Than for Form 10-Q

Another alternative would be a longer filing deadline for Form 10-S than for Form 10-Q. Under this alternative, the disclosure requirements of Form 10-S would be the same as those of Form 10-Q (except that Form 10-S would cover a longer six-month period). One factor relevant to this alternative is whether it would take the independent public accountant a longer period of time to review financial statements covering a six-month period than a three-month period because of the longer period of time covered or because less frequent auditor review would involve a loss of economies of scale that could slow down the independent public accountant's review process.

Extending the reporting deadline for semiannual interim reports could grant semiannual reporters and independent public accountants that conduct reviews more time to effectively manage their resources. This could potentially reduce the overall cost of preparing the interim reports, reduce the likelihood of delinquent filings, and potentially reduce the risk of errors in the interim financial statements. Conversely, extending the deadline to file Form 10-S could delay the disclosure of Form 10-S even further which could incrementally increase information asymmetry and costs to investors.

5. Revisions to Form 10-Q

As another alternative to the proposed semiannual reporting, we considered revising Form 10-Q to reduce the burden on reporting companies of filing this form. Potential changes to Form 10-Q could include changes related to one of the following items or a combination of these items: required interim financial statement review by an independent public accountant, XBRL data tagging, MD&A, certain items disclosed in Part II of Form 10-Q such as Item 2 information required by Item 701 of Regulation S-K and associated referencing to any previously filed Form 8-K containing Item 701 disclosures, or year-to-date comparisons involving financial statements and MD&A.

Relative to the baseline, such revisions to Form 10-Q could reduce reporting companies' compliance costs in terms of both time and money, thereby potentially enabling the companies to improve the allocative efficiency of their resources. Private companies could be more inclined to enter public markets if they expect lower compliance costs under this alternative, and more companies could decide to remain public for the same reason. To the extent the reduced disclosure requirements would result in less information provided publicly, however, such compliance cost savings could be offset by increased costs associated with higher information asymmetry, such as less liquidity and a higher cost of capital. There could also be other costs depending on the specific type of revisions that would be made to Form 10-Q under this alternative. For example, if the revisions would remove the requirement of financial statement review by an independent public accountant it could increase the likelihood of errors in the interim financial statements, which could be costly to both issuers and investors.

Fundamentally, the difference in benefits between this alternative and the proposal is that the alternative would lower reporting costs by reducing mandated reporting requirements, whereas the proposal would lower reporting costs by reducing mandated reporting frequency. The difference in costs would primarily be costs associated with less information disclosed to investors (and potentially also reliability of quarterly reports depending on type of revisions to Form 10-Q) under the alternative versus the costs associated with investors receiving existing disclosures less frequently under the proposal. The optionality of semiannual reporting would allow issuers to tailor reporting frequency to their own specific situation, whereas the Form 10-Q revisions under the alternative would apply to all issuers, which could make the proposal more beneficial to both issuers and investors than this alternative, all else equal. The comparative cost and benefits of this alternative versus the proposal would ultimately depend on the extent of the potential changes to Form 10-Q under the alternative and how many and what type of companies would elect semiannual reporting under the proposal. It would also depend on how many and what type of companies would choose to voluntarily provide disclosure that would no longer be required under the alternative. For example, depending on the specific type of revisions that would be done to Form 10-Q under this alternative, such a reduction in information could increase the likelihood that errors in financial ( printed page 25011) statements go unnoticed by investors, reduce investors' understanding of changes in the business over time, or increase information asymmetry and related costs to investors, potentially resulting in less liquidity and a higher cost of capital.

G. Request for Comment

We request comment on all aspects of our economic analysis, including the potential costs and benefits of the proposed amendments and alternatives, and whether the amendments, if adopted, would promote efficiency, competition, and capital formation. Commenters are requested to provide empirical data, estimation methodologies, and other factual support for their views, in particular, on costs and benefits estimates. In addition, we request comment on the following:

48. What would be the benefits to investors from reporting companies' flexibility to file semiannual reports on Form 10-S, instead of quarterly reports on Form 10-Q? Are there certain types of companies or industries for which such benefits would be greater than for others? Would the benefits to investors be limited to the pass-through of cost savings, or would there be other kinds of benefits, such as improved managerial incentives or reallocation of company resources to potentially more productive corporate activities?

49. What would be the costs to investors from providing reporting companies with flexibility to file semiannual reports on Form 10-S, instead of quarterly reports on Form 10-Q? Would the option for semiannual reporting increase information asymmetries in ways that impair investors' abilities to make investment and voting decisions? To the extent there are such costs or information is reduced, would other regulatory requirements (beyond those requiring interim reports) or market forces mitigate such factors?

50. What compliance cost savings would be realized by companies that would elect the proposed semiannual reporting option? Please provide any data regarding the cost of preparing quarterly reports, including employee and director time, legal counsel fees, external accounting advice or independent public accountant review fees, costs for XBRL data tagging, and other costs associated with filing Form 10-Q. To what extent would the option to file one semiannual report, rather than two quarterly reports for the same period, result in lower costs, such as independent public accountant review fees? Would semiannual filers' audit fees paid—in connection with an annual audit of their financial statements or management's assessment of the effectiveness of internal control over financial reporting—be materially different in any way compared to the fees that would have been paid if the same company were a quarterly filer?

51. If the proposal were adopted and a reporting company were to switch from quarterly to semiannual reporting as a result, what would be the initial costs of the switch? What would be the recurring costs, if any? In connection with such a switch, would there be costs associated with procuring, developing, and testing new information technology, engaging service providers, or updating policies, procedures, and compliance systems and, if so, what would be the amount of those costs? Would there be potential costs associated with adjusting or renegotiating contracts and agreements that may rely on quarterly financial information, such as loan agreements or managerial compensation contracts, and, if so, what would be the amount of those costs?

52. What percentage of companies currently required to report quarterly on Form 10-Q would likely switch to semiannual reporting? Please provide an explanation of any percentage estimate(s), including assumptions and methodology used.

53. What general economic consequences would result from companies electing to report semiannually under the proposed flexible approach? Would semiannual filers reallocate any resources freed up from a potentially lower reporting burden to alternative uses, such as capital expenditure or other business needs?

54. Are there capital market factors that would limit a reporting company's ability to switch to semiannual reporting if the proposal were adopted? For example, is creditor demand for quarterly financial information one such potential limiting factor?

55. For semiannual filers who would not voluntarily release earnings quarterly, would stock price movements around the release of semiannual financial information be more volatile compared to movements around quarterly releases? If so, what are the reasons this would occur? If so, how would this affect investors, companies, and markets?

56. If the proposal were to reduce securities analyst coverage of Exchange Act reporting companies that elect the semiannual reporting option, what effect would this have on investors and companies? How would such a reduction in analyst coverage affect stock market price efficiency? How would such a reduction affect liquidity of semiannual filers' securities?

57. What impact would the proposal—including the proposed option to file interim reports on a semiannual basis and the proposed financial statement rule changes, including to age of financial statement rules—have on the ability of semiannual filers to conduct public offerings? Would any cost savings generated by the less frequent interim reporting be offset by a potential perceived need to include quarterly or more recent financial information in Securities Act registration statements or prospectuses based on market practices or liability concerns? 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?

58. Would a company's valuation or cost of capital differ based on whether the company is a quarterly filer or a semiannual filer? Please explain the reasons why there would be a difference and provide any specific data. Would less frequent interim reporting negatively affect the ability of investors or other market participants to value the company's securities? If cost of capital would increase for semiannual filers, would this result from an increase in the cost of equity or cost of debt (or both)? How?

VI. Paperwork Reduction Act Analysis

A. Summary of the Collections of Information

Certain provisions of our rules and forms that would be affected by the proposed amendments contain “collection of information” requirements within the meaning of the Paperwork Reduction Act (“PRA”).^[329] We are submitting the proposed amendments to OMB for review and approval in accordance with the PRA.^[330] The hours and costs associated with preparing, filing, and sending the forms and retaining records constitute reporting and cost burdens imposed by each collection of information. An agency may not conduct or sponsor, and a person is not required to comply with, a collection of information requirement unless it displays a currently valid OMB control number. The titles for the collections of information are:

• Form S-1 (OMB Control No. 3235-0065);
• Form S-3 (OMB Control No. 3235-0073); ( printed page 25012)
• Form S-4 (OMB Control No. 3235-0324);
• Form S-11 (OMB Control No. 3235-0067);
• Form 10-K (OMB Control No. 3235-0063);
• Form 10-Q (OMB Control No. 3235-0070);
• Form 10 (OMB Control No. 3235-0064); and
• Form 10-S (a proposed new collection of information).

We are applying for an OMB control number for the proposed new collection of information in accordance with 44 U.S.C. 3507(j) and 5 CFR 1320.13, and OMB has not yet assigned a control number to this new collection. The forms listed above were adopted or, in the case of proposed Form 10-S, would be adopted under the Securities Act or the Exchange Act. These forms set forth the disclosure requirements for registration statements, annual reports, quarterly reports, and proposed semiannual reports filed by registrants to provide investors with information to make informed investment decisions.^[331] Responses to these collections of information are mandatory. Responses to these information collections are not kept confidential, and there is no mandatory retention period for the information disclosed.

A description of the proposed amendments, including the need for the information and its use, as well as a description of the likely respondents, can be found in Section III above, and a discussion of the economic effects of the proposed amendments can be found in Section V above.

B. Estimated Paperwork Burden Effects of the Proposed Amendments

The following PRA Table 1 summarizes the estimated effects of the proposed amendments on the paperwork burdens associated with the affected forms.

C. Incremental and Aggregate Burden and Cost Estimates

We estimate below the incremental and aggregate increase in paperwork burden as a result of the proposed amendments. These estimates represent the average burden for all respondents, both large and small. In deriving our estimates, we recognize that the burdens will likely vary among individual respondents based on a number of factors, including the size and complexity of their business. These estimates include the time and the cost of preparing and reviewing disclosure, filing documents, and retaining records. We believe that some registrants would experience costs in excess of this average and some registrants would experience less than the average costs. Our methodologies for deriving these estimates are discussed below.

For purposes of the PRA, the burden is generally allocated between burden hours and costs. The cost burden generally reflects the portion of the burden carried by outside professionals, while the burden hours generally reflect the portion of the burden carried by the company internally. With respect to the changes related to the inclusion of a check box on Forms S-1, S-3, S-4, S-11, 10, and 10-K, we believe the burden would typically be assumed entirely by the registrant internally and reflected as burden hours and, therefore, we have not reflected an increased cost burden associated with those proposed amendments. The following PRA Table 2 summarizes the estimated effects of the proposed amendments on the paperwork burdens associated with ( printed page 25013) these affected collections of information:

With respect to Form 10-Q, we expect the proposed amendments would reduce the number of annual responses proportionate to the number of registrants that elect to report semiannually. For purposes of the PRA, taking a conservative approach, we estimate that approximately 20% of reporting companies would change their reporting frequency from quarterly reporting to semiannual reporting if the proposed rules are adopted.^[332] As a result, we estimate that this would result in a reduction of approximately 3,585 Form 10-Q filings per year.

The following PRA Table 3 summarizes the requested paperwork burden changes to existing information collections, including the estimated total reporting burdens and costs, under the proposed amendments.

( printed page 25014)

For purposes of the proposed new Form 10-S, we estimate the number of annual responses based on the conservative estimate noted above that approximately 20% of reporting companies will elect to report ( printed page 25015) semiannually. Additionally, while the disclosure requirements of proposed new Form 10-S for semiannual reporting would be substantially the same as the disclosure requirements in current Form 10-Q, we believe the burden of Form 10-S would be incrementally greater than Form 10-Q because it will cover a longer period.^[333] Accordingly, we estimated the burden hour and cost burden for Form 10-S by using the current burden inventory for Form 10-Q as the starting point and have estimated that the burdens would be approximately 20% higher for Form 10-S. We specifically request comment on the reasonableness of these estimates.

The following PRA Table 4 summarizes the requested paperwork burden for the collection of information for proposed new Form 10-S, including the estimated total reporting burdens and costs.

D. Request for Comment

Pursuant to 44 U.S.C. 3506(c)(2)(B), we request comment in order to:

• Evaluate whether the proposed changes to the collections of information are necessary for the proper performance of the functions of the Commission, including whether the information will have practical utility;
• Evaluate the accuracy of our estimates of the additional burden hours that would result from adoption of the proposed amendments and new Form 10-S;
• Determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected;
• Evaluate whether there are ways to minimize the burden of the collections of information on those who respond, including through the use of automated collection techniques or other forms of information technology; and
• Evaluate whether the proposed amendments and new Form 10-S would have any effects on any other collection of information not previously identified in this section.

Any member of the public may direct to us any comments concerning the accuracy of these burden estimates and any suggestions for reducing these burdens. Persons submitting comments on the collection of information requirements should direct their comments to the OMB Desk Officer for the Securities and Exchange Commission, MBX.OMB.OIRA.SEC_desk_officer@omb.eop.gov, and should send a copy to, Vanessa A. Countryman, Secretary, U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090, with reference to File No. S7-2026-15. Requests for materials submitted to OMB by the Commission with regard to the collection of information should be in writing, refer to File No. S7-2026-15 and be submitted to the U.S. Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington DC 20549-2736. OMB is required to make a decision concerning the collections of information between 30 and 60 days after publication of this release. Consequently, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication.

VII. Congressional Review Act

For purposes of Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (also known as the Congressional Review Act),^[334] the Commission must seek OMB's determination as to whether a final regulation constitutes a “major” rule. Under the Congressional Review Act, a rule is considered “major” where, if adopted, it results or is likely to result in:

( printed page 25016)

• An annual effect on the economy of $100 million or more;
• A major increase in costs or prices for consumers or individual industries; or
• Significant adverse effects on competition, investment, or innovation.^[335]

To help inform OMB's determination whether any final rule that results from the proposal would be a “major rule,” we solicit comment and data on:

• The potential effect on the U.S. economy on an annual basis;
• Any potential increase in costs or prices for consumers or individual industries; and
• Any potential effect on competition, investment, or innovation.

We request those submitting comments to provide data and other factual support for their views to the extent possible.

VIII. Initial Regulatory Flexibility Act Analysis

The Regulatory Flexibility Act ^[336] requires an agency, when issuing a rulemaking proposal, to prepare and make available for public comment an Initial Regulatory Flexibility

Analysis (“IRFA”) that describes the impact of the proposal on small entities, unless the Commission certifies that the proposal, if adopted, would not have a significant economic impact on a substantial number of small entities.^[337] This IRFA has been prepared in accordance with the Regulatory Flexibility Act. It relates to the proposed amendments and new Form 10-S described in Section III above.

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

The proposed amendments and new Form 10-S would provide Exchange Act reporting companies with the option of filing interim reports on a semiannual basis rather than on a quarterly basis. Semiannual reports would be filed on new Form 10-S in lieu of quarterly reports on Form 10-Q. We are also proposing various amendments to Regulation S-X, including age of financial statement requirements, that will help enable the proposed option to report semiannually and simplify these requirements. We are also proposing to add a check box to indicate whether the registrant has elected to file semiannual reports pursuant to Exchange Act Rule 13a-13(b) or 15d-13(b) to the cover page of Forms S-1, S-3, S-4, S-11, 10, and 10-K. We are also proposing technical changes, including to various rules that currently refer to quarterly reporting to refer to semiannual reporting or to Form 10-S and to correct references to rescinded forms.

The proposal, if adopted, would provide an Exchange Act reporting company with the flexibility to determine the frequency of interim reporting that best suits its particular circumstances. Companies that decide to report on a semiannual basis may reduce interim reporting compliance costs of time and money. Companies that elect semiannual interim reporting 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. Providing such regulatory flexibility could reduce the regulatory burden of being a public company, which could potentially influence a company's decision to become a public company and encourage more companies to become public companies.

The proposed changes to Regulation S-X will conform the financial statement requirements in periodic reports to the semiannual reporting frequency of semiannual filers. The proposed changes to Regulation S-X concerning age of financial statement requirements would also help ensure that, among other things, when semiannual filers file registration statements, their financial statements in those registration statements are not considered “stale” under existing rules built along a quarterly framework and would revise those age requirements for registrants that would be semiannual filers to fit with their reporting schedule. The proposed changes to the age of financial statement rules would also simplify existing rules, including by combining and centralizing the age requirements in a single rule and by using plain wording and plain methods of counting the age of financial statements in order to reduce the complexity of existing rules.

The reasons for, and objectives of, the proposed amendments are discussed in more detail in Section III above.

B. Legal Basis

We are proposing amendments and new Form 10-S under the authority set forth in Sections 2(a), 4(a), 7, 10, 19(a), and 28 of the Securities Act; Sections 3, 12, 13, 14, 15, 23(a), and 36 of the Exchange Act; and Section 319(a) of the Trust Indenture Act of 1939.

C. Small Entities Subject to the Proposed Rules and Amendments

The proposed amendments and new Form 10-S would apply to registrants that are small entities. The Regulatory Flexibility Act defines “small entity” to mean “small business,” “small organization,” or “small governmental jurisdiction.” ^[338] The regulation at 17 CFR 240.0-10(a) (Rule 0-10(a) under the Exchange Act) defines a registrant, other than an investment company, to be a “small business” or “small organization” for purposes of the Regulatory Flexibility Act if it had total assets of $5 million or less on the last day of its most recent fiscal year. The regulation at 17 CFR 270.0-10(a) (Rule 0-10(a) under the Investment Company Act of 1940 (“Investment Company Act”)) defines the terms “small business” or “small organization” for purposes of the Regulatory Flexibility Act as an investment company that, together with other investment companies in the same group of related investment companies, had net assets of $50 million or less as of the end of its most recent fiscal year.^[339] The regulation at 17 CFR 230.157 (Rule 157 under the Securities Act) defines a registrant, other than an investment company, to be a “small business” or “small organization” for purposes of the Regulatory Flexibility Act if it had total assets of $5 million or less on the last day of its most recent fiscal year and is engaged or proposing to engage in an offering of securities not exceeding $5 million.

In connection with Exchange Act Rule 0-10(a), we estimate that there are approximately 705 registrants with a class of securities registered under Section 12 of the Exchange Act that file reports on Form 10-Q and on Form 10-K that are small entities.^[340] We expect that the proposed amendments that provide the option to report semiannually on Form 10-S in lieu of quarterly on Form 10-Q and the related proposed amendments to Regulation S-X will affect some reporting companies ( printed page 25017) that elect to report semiannually and are small entities under the definitions of small entity under the Exchange Act for purposes of the Regulatory Flexibility Act. In addition, we are proposing to add a check box to indicate whether the registrant has elected to file semiannual reports pursuant to Exchange Act Rules 13a-13(b) or 15d-13(b) to the cover page of Form 10 and 10-K. The proposed amendments to Forms 10 and 10-K to provide this check box will affect registrants that file registration statements on Form 10 or annual reports on Form 10-K, including registrants that are small entities under the definition of small entity under the Exchange Act for purposes of the Regulatory Flexibility Act.

In connection with Investment Company Act Rule 0-10(a), we estimate that there are approximately seven business development companies and one face-amount certificate company that file reports on Form 10-Q and Form 10-K that are small entities. We expect that the proposed amendments that provide the option to report semiannually on Form 10-S in lieu of quarterly on Form 10-Q and the related proposed amendments to Regulation S-X will affect some of these entities that elect to report semiannually and are small entities under the definition of small entity under the Investment Company Act for purposes of the Regulatory Flexibility Act. In addition, we are proposing to add a check box to indicate whether the registrant has elected to file semiannual reports pursuant to Exchange Act Rules 13a-13(b) or 15d-13(b) to Forms 10 and 10-K. The proposed amendments to Forms 10 and 10-K to provide this check box will affect entities that file registration statements on Form 10 and annual reports on Form 10-K, including registrants that are small entities under the definition under the Investment Company Act for purposes of the Regulatory Flexibility Act.

We estimate that there are 137 registrants that are small entities for purposes of Securities Act Rule 157.^[341] We are proposing amendments to Regulation S-X to facilitate semiannual reporting (which would affect financial statements in registration and proxy statements as described above). We are proposing to add a check box to indicate whether the registrant has elected to file semiannual reports pursuant to Exchange Act Rules 13a-13(b) or 15d-13(b) to the cover page of Forms S-1, S-3, S-4, and S-11. The proposed amendments to Regulation S-X and to these forms will affect registrants filing registration statements on these forms, including registrants that are small entities under the definition of small entity under the Securities Act for purposes of the Regulatory Flexibility Act.

D. Reporting, Recordkeeping, and Other Compliance Requirements

We expect that the proposal, which would provide Exchange Act reporting companies with the option of filing interim reports on a semiannual basis on new Form 10-S rather than filing Form 10-Q on a quarterly basis and would provide for related amendments to Regulation S-X, will have a significant effect on reporting, recordkeeping, and other compliance burdens for registrants, including small entities, if adopted. To comply with existing Form 10-Q filing obligations, registrants commonly incur costs, including those related to the retention of professional advisors such as lawyers and accountants, who would provide some of the types of professional skills necessary for the preparation of the report. If the proposal is adopted, Exchange Act reporting companies will have the option to file one semiannual report on Form 10-S for each fiscal year in lieu of filing three quarterly reports on Form 10-Q each fiscal year. As a result, if the proposal is adopted, we expect interim reporting compliance costs for registrants that are Exchange Act reporting companies that elect to file interim reports semiannually (instead of quarterly) will be significantly reduced. We generally expect that the cost reduction and benefit would be greater in absolute terms for larger companies than for smaller companies, because larger companies may spend more time preparing their Form 10-Q reports currently than smaller companies due to larger companies' scope of operations and because larger companies may incur greater costs to retain outside professionals for similar reasons. We generally expect, however, that the cost reduction and benefit would be greater in a relative sense for smaller companies than for larger companies, because the fixed costs of preparing periodic reports for smaller companies represent a greater percentage of revenue than for larger companies.

The proposed changes to Regulation S-X would revise the age of financial statement requirements for registrants that would be semiannual filers to fit with their reporting schedule. We expect that these proposed Regulation S-X amendments would reduce registrant costs compared to the absence of such amendments, because, in connection with registration and proxy statements, in the absence of such amendments, semiannual filers would be required to file quarterly financial statements in the registration or proxy statement that they would not be required to file otherwise under the current Exchange Act periodic reporting system. For the same reasons discussed above in connection with proposed optional semiannual reporting, we believe the cost reduction and benefit would be greater in an absolute sense for larger companies than for smaller companies but that the cost reduction and benefit in a relative sense would be greater for smaller companies than for larger companies.

We are also proposing to add a check box to indicate whether the registrant has elected to file semiannual reports pursuant to Exchange Act Rules 13a-13(b) or 15d-13(b) to the cover page of Forms S-1, S-3, S-4, S-11, 10, and 10-K. If the proposal is adopted, we expect the addition of these form check boxes will result in an incremental increase in the time all registrants, including small entities, spend on preparing these forms for filing with the Commission. We generally expect that this incremental increase will be the same for larger companies and for smaller companies.

Among small entities, we expect that the economic benefits and costs of the proposal may be based on factors including the nature of their business, which makes it difficult to project the economic impact on small entities with precision. The proposed amendments and new Form 10-S are discussed in detail in Section III above. We discuss the economic effects, including the estimated costs and burdens, of the proposed amendments and new Form 10-S on all registrants, including small entities, in Section V above and discuss the paperwork burden on all registrants, including small entities, in Section VI above.

E. Duplicative, Overlapping or Conflicting Federal Rules

We do not believe the proposed amendments and new Form 10-S would duplicate, overlap, or conflict with other existing Federal rules. Proposed Form 10-S for semiannual reports would be ( printed page 25018) substantially similar to existing Form 10-Q, as discussed in Section III above, but reporting companies would file only one form or the other for purposes of interim reporting, depending on whether they elect to file interim reports semiannually or file quarterly.

F. Significant Alternatives

The Regulatory Flexibility Act directs us to consider alternatives that would accomplish our stated objectives, while minimizing any significant adverse impact on small entities. In connection with the proposal, we considered the following alternatives:

• Establishing different compliance or reporting requirements or timetables that take into account the resources available to small entities;
• Clarifying, consolidating, or simplifying compliance and reporting requirements under the rules for small entities;
• Using performance rather than design standards; and
• Exempting small entities from all or part of the requirements.

The proposal would provide Exchange Act reporting companies with the option of filing interim reports on a semiannual basis on new Form 10-S rather than filing Form 10-Q on a quarterly basis and make related changes to financial statement requirements in Regulation S-X. As discussed above, if the proposal is adopted, we expect interim reporting compliance costs for registrants that are Exchange Act reporting companies that elect to file interim reports semiannually (instead of quarterly) will be significantly reduced. We have not proposed to apply different compliance and reporting requirements or timetables for small entities or to exempt small entities from the proposal, because we believe small entities, as with all reporting companies, should be able to avail themselves of the benefits of the proposal in terms of cost reduction. The proposed option to report semiannually would consolidate existing reporting requirements (by replacing three quarterly reports with one semiannual report for semiannual filers). The proposed option to report semiannually may add incremental complexity to existing rules by allowing for a choice of options. We believe this complexity is minimal and is a necessary part of the beneficial flexibility we propose providing to all registrants, including small entities, with respect to interim reporting. While the proposal would result in this marginal increase in complexity, we have proposed creating the optional semiannual reporting system in a manner we believe will be simple for registrants to understand. In particular the proposed approach would feature simplicity by: (1) maintaining existing quarterly reporting rules as the default approach but adding an option to report semiannually in lieu thereof, and (2) requiring the same disclosure in semiannual Form 10-S as in quarterly Form 10-Q (except Form 10-S would cover a six-month period). This simplicity would mean registrants would not need to adapt to an entirely different reporting system (although they would need to become familiar with the potential new semiannual reporting option). We do not believe further simplification, clarification, or consolidation for small entities is needed.

Filing interim reports semiannually on Form 10-S with the Commission through its EDGAR system is a design standard that provides uniformity that enables comparison across registrants and centralizes the information in a way that makes it readily and freely accessible to the investing public. The alternative of a performance standard would not result in uniform, comparable information across registrants and, therefore, in this case, would not accomplish our objective of allowing for more flexibility while still providing information necessary for the protection of investors.

As described in detail above, the proposed changes to Regulation S-X would conform the financial statement requirements in periodic reports to the semiannual reporting frequency of semiannual filers and change the age of financial statement requirements for semiannual filers in connection with registration and proxy statements to fit with their reporting schedule. We have not proposed to apply different compliance and reporting requirements or timetables for small entities or to exempt small entities from the proposed changes to Regulation S-X, because we believe small entities, as with all reporting companies, should be able to avail themselves of the benefits of the proposal in terms of cost reduction. The proposed changes to Regulation S-X age of financial statement rules would clarify, consolidate, and simplify existing rules, including by combining and centralizing the age requirements in a single rule and by using plain wording and plain methods of counting the age of financial statements in order to reduce the complexity of existing rules. We believe these design standards are appropriate for all registrants, including small entities, because this required financial information provides uniformity that enables comparison across registrants and enables the investing public to understand the financial position and performance of the registrant based on consistent principles.

The proposed changes to registrant forms would add a check box to indicate whether the registrant has elected to file semiannual reports pursuant to Exchange Act Rule 13a-13(b) or 15d-13(b) to the cover page of Forms S-1, S-3, S-4, S-11, 10, and 10-K. We have not proposed different compliance or reporting requirements or different timetables, proposed provisions that would consolidate compliance and reporting requirements, or proposed exemptions related to these check boxes for small entities, because we believe uniformity across all registrants is necessary to inform investors about the frequency of the company's disclosure, which may affect their investment decisions. We believe these check boxes will be simple and will be clear for all registrants, including small entities: these proposed form amendments are limited to one, short sentence asking whether the registrant has elected to report semiannually and a check box that the registrant would be required to check if the registrant has so elected.

We do not believe there are existing requirements in other rules or forms that could be consolidated in connection with the addition of the proposed new check box. We believe the check box is a design standard that is appropriate for all registrants, including small entities, because it is a simple, clear, and minimally burdensome method to convey the information in a way that can be easily stored and retrieved by the Commission and the public and is simple to find on the cover of the filed form. Unlike a performance standard, the check box would provide a consistent approach at minimal cost.

G. Request for Comment

We encourage the submission of comments with respect to any aspect of this IRFA. In particular, we request comments regarding:

• The number of small entities that may be affected by the proposal;
• The existence or nature of the potential impact of the proposal on small entities discussed in the analysis;
• How the proposal could further lower the burden on small entities; and
• How to quantify the impact of the proposal.

We request that commenters describe the nature of any impact and provide empirical data supporting the extent of the impact. Comments will be considered in the preparation of the Final Regulatory Flexibility Analysis if ( printed page 25019) the proposal is adopted and will be placed in the same public file as other comments on the proposal.

Statutory Authority

We are proposing the rule and form amendments contained in this document under the authority set forth in Sections 2(a), 4(a), 7, 10, 19(a), and 28 of the Securities Act; Sections 3, 12, 13, 14, 15, 23(a), and 36 of the Exchange Act; and Section 319(a) of the Trust Indenture Act of 1939.

Text of Proposed Amendments

1. The authority citation for part 200 continues to read as follows:

Authority: 5 U.S.C. 552, 552a, 552b, and 557; 11 U.S.C. 901 and 1109(a); 15 U.S.C. 77c, 77e, 77f, 77g, 77h, 77j, 77o, 77q, 77s, 77u, 77z-3, 77ggg(a), 77hhh, 77sss, 77uuu, 78b, 78c(b), 78d, 78d-1, 78d-2, 78e, 78f, 78g, 78h, 78i, 78k, 78k-1, 78l, 78m, 78n, 78o, 78o-4, 78q, 78q-1, 78t-1, 78u, 78w, 78ll(d), 78mm, 78eee, 80a-8, 80a-20, 80a-24, 80a-29, 80a-37, 80a-41, 80a-44(a), 80a-44(b), 80b-3, 80b-4, 80b-5, 80b-9, 80b-10(a), 80b-11, 7202, and 7211 et seq.;29 U.S.C. 794; 44 U.S.C. 3506 and 3507; Reorganization Plan No. 10 of 1950 (15 U.S.C. 78d); sec. 8G, Pub. L. 95-452, 92 Stat. 1101 (5 U.S.C. App.); sec. 913, Pub. L. 111-203, 124 Stat. 1376, 1827; sec. 3(a), Pub. L. 114-185, 130 Stat. 538; E.O. 11222, 30 FR 6469, 3 CFR, 1964-1965 Comp., p. 36; E.O. 12356, 47 FR 14874, 3 CFR, 1982 Comp., p. 166; E.O. 12600, 52 FR 23781, 3 CFR, 1987 Comp., p. 235; Information Security Oversight Office Directive No. 1, 47 FR 27836; and 5 CFR 735.104 and 5 CFR parts 2634 and 2635, unless otherwise noted.

2. Amend § 200.800(b) by:

a. Adding “Form 10-S” after “Form 10-Q” in the “Information collection requirement” column in the table; and

b. Adding “249.308b” after “249.308a” in the column for “17 CFR part or section where identified and described” in the table.

3. The authority citation for part 210 continues to read as follows:

Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 77aa(25), 77aa(26), 77nn(25), 77nn(26), 78c, 78j-1, 78 l, 78m, 78n, 78o(d), 78q, 78u-5, 78w, 78 ll, 78mm, 80a-8, 80a-20, 80a-29, 80a-30, 80a-31, 80a-37(a), 80b-3, 80b-11, 7202 and 7262, and sec. 102(c), Pub. L. 112-106, 126 Stat. 310 (2012), unless otherwise noted.

4. Revise and republish § 210.3-01 to read as follows:

5. Remove and reserve § 210.3-12.

6. Amend § 210.8-03 by:

a. Redesignating paragraph (b) as paragraph (c) and revising newly redesignated paragraphs (c)(2) and (c)(5);

b. Redesignating paragraph (a) as paragraph (b) and revising newly redesignated paragraph (b)(5);

c. Redesignating the introductory text as paragraph (a) and revising the newly redesignated paragraph (a); and

d. Removing Instruction 1.

The renumbered and revised paragraphs read as follows:

7. Amend § 210.8-08 by:

a. Removing the introductory text; and

b. Revising paragraphs (a) and (b).

The revisions read as follows:

8. Amend § 210.10-01 by revising paragraphs (a)(7) and (b)(1) and (6), the introductory text to paragraph (c), and paragraphs (c)(1) through (4) and (d).

The revisions read as follows:

9. Amend § 210.11-02 by revising paragraph (c)(3) and Instruction 1 to paragraph (c)(3) to read as follows:

10. Amend § 210.15-01 by revising paragraphs (b) and (c) to read as follows:

11. The authority citation for part 229 continues to read as follows:

Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj, 77nnn, 77sss, 78c, 78i, 78j, 78j-3, 78 l, 78m, 78n, 78n-1, 78o, 78u-5, 78w, 78 ll, 78mm, 80a-8, 80a-9, 80a-20, 80a-29, 80a-30, 80a-31(c), 80a-37, 80a-38(a), 80a-39, 80b-11 and 7201 et seq.;18 U.S.C. 1350; sec. 953(b), Pub. L. 111-203, 124 Stat. 1904 (2010); and sec. 102(c), Pub. L. 112-106, 126 Stat. 310 (2012).

12. Amend § 229.10 by revising paragraphs (f)(2)(i)(A) and (C) and (ii)(C) to read as follows:

13. Amend § 229.101 by revising paragraph (a)(3)(iii)(A) and (B) and (e)(4)(i) to read as follows:

14. Amend § 229.103 by revising paragraph (c)(3)(iii)(B) to read as follows:

15. Amend § 229.201 by revising paragraph (a)(1)(iii) to read as follows:

16. Amend § 229.302 by revising paragraph (a) to read as follows:

17. Amend § 229.303 by revising paragraph (c)(2)(ii) to read as follows:

18. Amend § 229.308 by revising paragraph (c) to read as follows:

19. Amend § 229.402 by revising paragraph (x)(2)(i) to read as follows:

20. Amend § 229.407 by revising the instructions to paragraphs (c)(2)(ix) and (c)(3) to read as follows:

21. Amend § 229.408 by revising the instructions to paragraph (a)(1) to read as follows:

22. Amend § 229.601 by:

a. Adding a column for “10-S” between the column for “10-Q” and the column for “10-K” and revising the entries for rows (2), (3)(i) and (ii), (4), (6), (10), (13), (15), (18), (22), (23), (24), (31), (37) through (94), (95), (99), (101) and (104) and footnote 6 to the exhibit table in paragraph (a);

b. Revising paragraph (a)(4), Instruction 3 to paragraph (b)(10), and paragraph (b)(4), (13), (15), (95), (99), and (101); and

c. Revising paragraph (b)(31)(i) to add the words “or most recent fiscal semiannual period for registrants that report semiannually (the registrant's second fiscal semiannual period in the case of an annual report)” after the words “Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report)”;

Other than the revisions to paragraph (b)(31)(i), the additions and revisions read as follows:

23. Amend § 229.701 by revising paragraph (e) to read as follows:

24. Amend § 229.1010 by revising paragraph (a)(2) to read as follows:

25. Amend § 229.1100 by revising paragraph (c)(2)(ii)(F) to read as follows:

26. The general authority citation for part 230 continues to read, in part, as follows:

Authority: 15 U.S.C. 77b, 77b note, 77c, 77d, 77f, 77g, 77h, 77j, 77r, 77s, 77z-3, 77sss, 78c, 78d, 78j, 78 l, 78m, 78n, 78o, 78o-7 note, 78t, 78w, 78 ll (d), 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a-30, and 80a-37, and Pub. L. 112-106, sec. 201(a), sec. 401, 126 Stat. 313 (2012), unless otherwise noted.

27. Amend § 230.138 by revising paragraph (a)(2)(i)(A) to read as follows:

28. Amend § 230.139 by revising paragraph (a)(1)(i)(A)(2) to read as follows:

29. Amend § 230.139b by revising paragraph (a)(1)(i)(A)(2) to read as follows:

30. Amend § 230.144 by revising paragraph (c):

31. Amend § 230.158 by revising paragraph (a)(1)(i), (a)(2)(i), and (b)(2) to read as follows:

32. Amend § 230.175 by revising paragraph (b)(1) and (2) to read as follows:

33. Amend § 230.405 by:

a. Adding in alphabetical order a definition for the terms “quarterly filer” and “semiannual filer”; and

b. Revising paragraph (3)(i)(A) and (C) and (ii)(C) of the definition of “smaller reporting company”.

The additions and revisions read as follows:

34. Amend § 230.485 by revising paragraph (b)(i)(1) to read as follows:

35. The general authority citation for part 232 continues to read, in part, as follows:

Authority: 15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s(a), 77z-3, 77sss(a), 78c(b), 78 l, 78m, 78n, 78n-1, 78o(d), 78w(a), 78 ll, 80a-6(c), 80a-8, 80a-29, 80a-30, 80a-37, 7201 et seq.; and 18 U.S.C. 1350, unless otherwise noted.

36. Amend § 232.11 by deleting both the first and second definitions of “related official filing” and, in their place, adding a single revised definition of “related official filing” to read as follows:

37. Amend § 232.303 by revising paragraph (b) to read as follows:

38. Amend § 232.405 by revising Note 1 to read as follows:

39. Revise § 232.406 to read as follows:

40. The general authority citation for part 239 continues to read, in part, as follows:

Authority: 15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 77sss, 78c, 78l, 78m, 78n, 78o(d), 78o-7 note, 78u-5, 78w(a), 78ll, 78mm, 80a-2(a), 80a-3, 80a-8, 80a-9, 80a-10, 80a-13, 80a-24, 80a-26, 80a-29, 80a-30, 80a-37, and sec. 71003 and sec. 84001, Pub. L. 114-94, 129 Stat. 1321, unless otherwise noted.

41. Amend Form S-1 (referenced in § 239.11) by:

a. Adding on the form cover page the text “Indicate by check mark if the registrant has elected to file semiannual reports pursuant to Rule 13a-13(b) or Rule 15d-13(b) of the Act. ☐;”; and

b. Revising Item 11A.

Note:

The additions and revisions to Form S-1 read as shown in Appendix A to this document. The text of Form S-1 does not, and the text of the amendments to Form S-1 will not, appear in the Code of Federal Regulations.

42. Amend Form S-3 (referenced in § 239.13) by:

a. Adding on the form cover page the text “Indicate by check mark if the registrant has elected to file semiannual reports pursuant to Rule 13a-13(b) or Rule 15d-13(b) of the Act. ☐;”; and

b. Revising Item 11(a).

Note:

The additions and revisions to Form S-3 read as shown in Appendix B to this document. The text of Form S-3 does not, and the text of the amendments to Form S-3 will not, appear in the Code of Federal Regulations.

43. Amend Form S-11 (referenced in § 239.18) by:

a. Adding on the form cover page the text “Indicate by check mark if the registrant has elected to file semiannual reports pursuant to Rule 13a-13(b) or Rule 15d-13(b) of the Act. ;”; and

b. Revising Item 28A.

Note:

The additions and revisions to Form S-11 read as shown in Appendix C to this document. The text of Form S-11 does not, and the text of the amendments to Form S-11 will not, appear in the Code of Federal Regulations.

44. Amend Form S-4 (referenced in § 239.25) by:

a. Adding on the form cover page the text “Indicate by check mark if the registrant has elected to file semiannual reports pursuant to Rule 13a-13(b) or Rule 15d-13(b) of the Act. ☐;”; and

b. Revising Item 10, 12, 13, 16, and 17.

Note:

The additions and revisions to Form S-4 read as shown in Appendix D to this document. The text of Form S-4 does not, ( printed page 25030) and the text of the amendments to Form S-4 will not, appear in the Code of Federal Regulations.

45. Amend Form F-1 (referenced in § 239.31) by revising Item 4A and 5.

Note:

The revisions to Form F-1 read as shown in Appendix E to this document. The text of Form F-1 does not, and the text of the amendments to Form F-1 will not, appear in the Code of Federal Regulations.

46. Amend Form F-3 (referenced in § 239.33) by revising Item 5 and 6.

Note:

The revisions to Form F-3 read as shown in Appendix F to this document. The text of Form F-3 does not, and the text of the amendments to Form F-3 will not, appear in the Code of Federal Regulations.

47. Amend Form F-4 (referenced in § 239.34) by revising Item 10, 11, 12, 13, and 17.

Note:

The revisions to Form F-4 read as shown in Appendix G to this document. The text of Form F-4 does not, and the text of the amendments to Form F-4 will not, appear in the Code of Federal Regulations.

48. Amend Form F-10 (referenced in § 239.40) by revising Part II.

Note:

The revisions to Form F-10 read as shown in Appendix H to this document. The text of Form F-10 does not, and the text of the amendments to Form F-10 will not, appear in the Code of Federal Regulations.

49. The general authority citation for part 240 continues to read, in part, as follows:

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78j-4, 78k, 78k-1, 78 l, 78m, 78n, 78n-1, 78o, 78o-4, 78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78dd, 78 ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 1681w(a)(1), 6801-6809, 6825, 7201 et seq., and 8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350; Pub. L. 111-203, 939A, 124 Stat. 1887 (2010); and sec. 503 and 602, Pub. L. 112-106, 126 Stat. 326 (2012), unless otherwise noted.

50. Amend § 240.3a55-1 by revising paragraph (d)(7) to read as follows:

51. Amend § 240.3b-6 by revising paragraph (b)(1) and (2) to read as follows:

52. Amend § 240.10b5-1 by revising paragraph (c)(1)(ii)(B) (1)(ii) to read as follows:

53. Amend § 240.12b-2 by:

a. Revising paragraph (1)(i), 2(i), and (3)(i) through (iv) of the definition of “accelerated filer and large accelerated filer”;

b. Adding definitions in alphabetical order for “quarterly filer” and “semiannual filer”; and

c. Revising paragraph (3)(i)(A) and (C) and (ii)(C) of the definition “smaller reporting company”.

The additions and revisions read as follows:

54. Amend § 240.12b-25 by revising paragraph (a) and (b)(2)(ii) to read as follows:

55. Amend § 240.13a-10 by revising paragraph (c), (d), (e), (f) and (j) to read as follows:

56. Revise § 240.13a-13 to read as follows:

57. Amend § 240.13a-14 by revising paragraph (a) to read as follows:

58. Amend § 240.13a-15 by revising paragraphs (b) and (d) to read as follows:

59. Amend § 240.13a-16 by revising paragraph (a)(3) to read as follows:

60. Amend § 240.13d-1 by revising paragraph (j) to read as follows:

61. Amend § 240.14a-5 by revising paragraph (f) to read as follows:

62. Amend § 240.14a-8 by revising paragraph (e)(1):

63. Amend § 240.14a-101 by revising NOTES D.4. and Item 9. (e)(1) to read as follows:

64. Amend § 240.15c2-11 by revising paragraph (f)(3)(i)(C)(1):

65. Amend § 240.15d-10 by revising paragraph (c), (d), (e), (f), and (j) to read as follows:

66. Revise § 240.15d-13 to read as follows:

67. Amend § 240.15d-14 by revising paragraph (a) to read as follows:

68. Amend § 240.15d-15 by revising paragraphs (b) and (d) to read as follows:

69. Amend § 240.15d-16 by revising paragraphs (a)(2) and (3) and adding new paragraph (a)(4) to read as follows:

70. Amend § 249.322 by revising paragraph (a) to read as follows:

71. The authority citation for part 249 continues to read, in part, as follows:

Authority: 15 U.S.C. 78a et seq. and 7201 et seq.;12 U.S.C. 5461 et seq.;18 U.S.C. 1350; Sec. 953(b), Pub. L. 111-203, 124 Stat. 1904; Sec. 102(a)(3), Pub. L. 112-106, 126 Stat. 309 (2012); Sec. 107, Pub. L. 112-106, 126 Stat. 313 (2012), and Sec. 72001, Pub. L. 114-94, 129 Stat. 1312 (2015), and secs. 2 and 3 Pub. L. 116-222, 134 Stat. 1063 (2020), unless otherwise noted.

( printed page 25038)

72. Amend Form 10 (referenced in § 249.210) by adding on the form cover page the text “Indicate by check mark if the registrant has elected to file semiannual reports pursuant to Rule 13a-13(b) or Rule 15d-13(b) of the Act. ☐ ”;

Note:

The additions to Form 10 read as shown in Appendix I to this document. The text of Form 10 does not, and the text of the amendments to Form 10 will not, appear in the Code of Federal Regulations.

73. Amend Form 6-K (referenced in § 249.306) by revising General Instruction (C)(6)(a)(i).

Note:

The revisions to Form 6-K read as shown in Appendix J to this document. The text of Form 6-K does not, and the text of the amendments to Form 6-K will not, appear in the Code of Federal Regulations.

74. Amend Form 8-K (referenced in § 249.308) by revising Item 2.02.

Note:

The revisions to Form 8-K read as shown in Appendix K to this document. The text of Form 8-K does not, and the text of the amendments to Form 8-K will not, appear in the Code of Federal Regulations.

75. Add new Form 10-S (to be referenced in § 249.308b).

Note:

Proposed Form 10-S is attached as Appendix L to this document. The text of Form 10-S will not appear in the Code of Federal Regulations.

76. Amend Form 10-K (referenced in § 249.310) by:

a. Adding on the form cover page the text: “Indicate by check mark if the registrant has elected to file semiannual reports pursuant to Rule 13a-13(b) or Rule 15d-13(b) of the Act.☐”;

b. Revising the cover page sentence: “State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.”; and

c. Revising Item 3, 5, 9B, and 14.

Note:

The additions and revisions to Form 10-K read as shown in Appendix M to this document. The text of Form 10-K does not, and the text of the amendments to Form 10-K will not, appear in the Code of Federal Regulations.

77. Amend Form 12b-25 (referenced in § 249.322) by revising the cover page, Part II, and Part III.

Note:

The revisions to Form 12b-25 read as shown in Appendix N to this document. The text of Form 12b-25 does not, and the text of the amendments to Form 12b-25 will not, appear in the Code of Federal Regulations.

78. The authority citation for part 260 continues to read as follows:

Authority: 15 U.S.C. 77c, 77ddd, 77eee, 77ggg, 77nnn, 77sss, 78 ll (d), 80b-3, 80b-4, and 80b-11, unless otherwise noted.

79. Amend § 260.0-11 by revising paragraph (b)(1) and (2) to read as follows:

Appendix A—Form S-1

Form S-1

Indicate by check mark if the registrant has elected to file semiannual reports pursuant to Rule 13a-13(b) or Rule 15d-13(b) of the Act. ☐

Item 11A. Material Changes

If the registrant elects to incorporate information by reference pursuant to General Instruction VII., describe any and all material changes in the registrant's affairs which have occurred since the end of the latest fiscal year for which audited financial statements were included in the latest Form 10-K and that have not been described in a Form 10-Q, Form 10-S, or Form 8-K filed under the Exchange Act.

Appendix B—Form S-3

Form S-3

Indicate by check mark if the registrant has elected to file semiannual reports pursuant to Rule 13a-13(b) or Rule 15d-13(b) of the Act. ☐

Item 11. Material Changes

(a) Describe any and all material changes in the registrant's affairs which have occurred since the end of the latest fiscal year for which certified financial statements were included in the latest annual report to security holders and which have not been described in a report on Form 10-Q (§ 249.308a of this chapter), Form 10-S (§ 249.308b of this chapter), or Form 8-K (§ 249.308 of this chapter) filed under the Exchange Act.

Appendix C—Form S-11

Form S-11

Indicate by check mark if the registrant has elected to file semiannual reports pursuant to Rule 13a-13(b) or Rule 15d-13(b) of the Act. ☐

Item 28A. Material Changes

If the registrant elects to incorporate information by reference puruant to General Instruction H, describe any and all material changes in the registrant's affairs which have ( printed page 25039) occurred since the end of the latest fiscal year for which audited financial statements were included in the latest Form 10-K and which have not been described in a Form 10-Q, Form 10-S, or Form 8-K filed under the Exchange Act.

Appendix D—Form S-4

Form S-4

Indicate by check mark if the registrant has elected to file semiannual reports pursuant to Rule 13a-13(b) or Rule 15d-13(b) of the Act. ☐

Item 10. Information With Respect to S-3 Registrants

If the registrant meets the requirements for use of Form S-3 and elects to furnish information in accordance with the provisions of this Item, furnish information as required below:

(a) Describe any and all material changes in the registrant's affairs that have occurred since the end of the latest fiscal year for which audited financial statements were included in the latest annual report to security holders and that have not been described in a report on Form 10-Q (§ 249.308a of this chapter), Form 10-S (§ 249.308a of this chapter), or Form 8-K (§ 249.308 of this chapter) filed under the Exchange Act.

Item 12. Information With Respect to S-3 Registrants

(a) * * *

(2) Provide financial and other information with respect to the registrant in the form required by Part I of Form 10-Q as of the end of the most recent fiscal quarter (or, if applicable, required by Part I of Form 10-S as of the end of the most recent fiscal semiannual period) which ended after the end of the latest fiscal year for which certified financial statements were included in the latest Form 10-K or the latest report to security holders (whichever the registrant elects to deliver pursuant to paragraph (a) of this Item), and more than forty-five days prior to the effective date of this registration statement (or as of a more recent date) by one of the following means:

(i) including such information in the prospectus;

(ii) providing without charge to each person to whom a prospectus is delivered a copy of the registrant's latest Form 10-Q or latest Form 10-S; or

(iii) providing without charge to each person to whom a prospectus is delivered a copy of the registrant's latest quarterly report or semiannual report that was delivered to its security holders and which included the required financial information.

(4) Describe any and all material changes in the registrant's affairs which have occurred since the end of the latest fiscal year for which audited financial statements were included in the latest Form 10-K or the latest annual report to security holders (whichever the registrant elects to deliver pursuant to paragraph of this Item) and that were not described in a Form 10-Q, Form 10-S, or quarterly report or semiannual report delivered with the prospectus in accordance with paragraphs (a)(2)(ii) or (iii) of this Item.

Instruction. Where the registrant elects to deliver the documents identified in paragraph (a) with a preliminary prospectus, such documents need not be redelivered with the final prospectus.

(b) * * *

(2) * * *

(i) the interim financial information required by Rule 10-01 of Regulation S-X (§ 210.10-01 of this chapter) for a filing on Form 10-Q or Form 10-S;

Item 13. Incorporation of Certain Information by Reference

(a) * * *

(4) If the registrant elects, pursuant to Item 12(a)(2)(iii) of this Form, to provide a copy of its latest quarterly report or latest semiannual report, as applicable, which was delivered to security holders, financial information equivalent to that required to be presented in Part I of Form 10-Q or Part I of Form 10-S.

Instruction. Attention is directed to Rule 439 regarding consent to the use of material incorporated by reference.

(b) The registrant also may state, if it so chooses, that specifically described portions of its annual, semiannual, or quarterly report to security holders, other than those portions required to be incorporated by reference pursuant to paragraphs (a)(3) and (4) of this Item, are not part of the registration statement. In such case, the description of portions that are not incorporated by reference or that are excluded shall be made with clarity and in reasonable detail.

(c) Electronic filings. Electronic filers electing to deliver and incorporate by reference all, or any portion, of the quarterly, semiannual, or annual report to security holders pursuant to this Item shall file as an exhibit such quarterly, semiannual, or annual report to security holders, or such portion thereof that is incorporated by reference, in electronic format.

Item 16. Information With Respect to S-3 Companies

(b) Electronic filings. In addition to satisfying the requirements of paragraph (a) of this Item, electronic filers that elect to deliver and incorporate by reference all, or any portion, of the quarterly, semiannual, or annual report to security holders of a company being acquired pursuant to this Item shall file as an exhibit such quarterly, semiannual, or annual report to security holders, or such portion thereof that is incorporated by reference, in electronic format.

Item 17. Information With Respect to Companies Other Than S-3 Companies

(b) * * *

(8)

(i) the quarterly financial and other information as would have been required had the company being acquired been required to file Part I of Form 10-Q (§ 249.308a) for the most recent quarter for which such a report would have been on file at the time the registration statement becomes effective or for a period ending as of a more recent date; or

(ii) the semiannual financial and other information as would have been required had the company being acquired been required to file Part I of Form 10-S (§ 249.308b) for the most recent semiannual period for which such a report would have been on file at the time the registration statement becomes effective or for a period ending as of a more recent date.

Appendix E—Form F-1

Form F-1

Item 4A. Material Changes

If the registrant elects to incorporate information by reference pursuant to General Instruction VI., describe any and all material changes in the registrant's affairs which have occurred since the end of the latest fiscal year for which audited financial statements were included in accordance with Item 5 of this Form and which have not been described in a report on Form 6-K, Form 10-Q, Form 10-S, or Form 8-K filed under the Exchange Act and incorporated by reference pursuant to Item 5 of this Form.

Item 5. Incorporation of Certain Information by Reference

(a) * * *

2. Any report on Form 10-Q, Form 10-S, or Form 8-K filed since the date of filing of the annual report. The registrant may also incorporate by reference any Form 6-K meeting the requirements of this Form.

Appendix F—Form F-3

Form F-3

Item 5. Material Changes

(a) Describe any and all material changes in the registrant's affairs that have occurred since the end of the latest fiscal year for which certified financial statements are included in this registration statement in accordance with Item 6 of this Form and that have not been described in a report on Form 6-K (§ 249.306 of this chapter), Form 10-Q (§ 249.308a of this chapter), Form 10-S (§ 249.308b of this chapter), or Form 8-K (§ 249.308 of this chapter) filed under the ( printed page 25040) Exchange Act and incorporated by reference pursuant to Item 6 of this Form.

Item 6. Incorporation of Certain Information by Reference

(a) The registrant's latest Form 20-F, Form 40-F, Form 10-K or Form 10 filed pursuant to the Exchange Act shall be incorporated by reference. Any report on Form 10-Q, Form 10-S, or Form 8-K filed since the date of filing of the annual report incorporated by reference also shall be incorporated by reference. If capital stock is to be registered and securities of the same class are registered under Section 12 of the Exchange Act, the description of such class of securities which is contained in a registration statement filed under the Exchange Act, including any amendment or reports filed for the purpose of updating such description, shall be incorporated by reference.

Instruction

If the registrant's latest filing on Form 20-F, Form 40-F or Form 10-K is amended to include the information specified in Item 18 of Form 20-F, the prospectus shall state that the Form 20-F, Form 40-F or Form 10-K has been so amended. Reference is made to the Transaction Requirements in General Instruction I.B. that, in some cases, require the financial statements in the Form 20-F, Form 40-F or Form 10-K to comply with Item 18 of Form 20-F as a condition for eligibility to use Form F-3.

(b) The prospectus shall also state that all subsequent annual reports filed on Form 20-F, Form 40-F or Form 10-K, and all subsequent filings on Forms 10-Q, 10-S, and 8-K filed by the registrant pursuant to the Exchange Act, prior to the termination of the offering, shall be deemed to be incorporated by reference into the prospectus.

Appendix G—Form F-4

Form F-4

Item 10. Information With Respect to F-3 Companies

If the registrant meets the requirements for use of Form F-3 and elects to furnish information in accordance with the provisions of this Item, furnish information as required below:

(a) Describe any and all material changes in the registrant's affairs that have occurred since the end of the latest fiscal year for which audited financial statements are incorporated by reference in accordance with Item 11 of this Form and that have not been described in a report on Form 6-K (§ 249.306 of this chapter), Form 10-Q (§ 249.308a of this chapter), Form 10-S (§ 249.308b of this chapter), or Form 8-K (§ 249.308 of this chapter) filed under the Exchange Act;

(b) If the financial statements incorporated by reference in accordance with Item 11 of this Form are not sufficiently current to comply with Item 8.A of Form 20-F, financial statements necessary to comply with that rule shall be presented either in the prospectus, in an amended Form 20-F, 40-F or 10-K (in which case the prospectus shall disclose that such form has been so amended), or in a Form 6-K, Form 10-Q, Form 10-S, or Form 8-K; and

Item 11. Incorporation of Certain Information by Reference

If the registrant furnishes information in accordance with the provisions of Item 10 of this Form:

(a) * * *

Instructions

2. Where common equity securities are being issued, the information required by Item 9.A.4 of Form 20-F, nature of trading markets, should be updated, to cover any subsequent interim periods for which interim financial statements are required to be included to comply with Item 8.A of Form 20-F. Such updating may be made in the prospectus, in an amended Form 20-F, Form 10-K or, in the case of registrants described in General Instruction A.(2) of Form 40-F, Form 40-F, or in a Form 6-K, Form 10-Q, Form 10-S, or Form 8-K, as applicable.

(b) The prospectus also shall state that all annual reports on Form 20-F, on Form 10-K or, in the case of registrants described in General Instruction A.(2) of Form 40-F, on Form 40-F and all Forms 10-Q, Form 10-S, and 8-K, and any Form 6-K so designated, subsequently filed by the registrant pursuant to sections 31(a), 13(c) or 15(d) of the Exchange Act, prior to one of the following dates, whichever is applicable, shall be deemed to be incorporated by reference into the prospectus:

Item 12. Information With Respect to F-3 Registrants

(a) * * *

(2) * * *

(ii) providing without charge to whom a prospectus is delivered a copy of the registrant's Form 10-Q, Form 10-S, Form 8-K or Form 6-K report that contains such later information; or

(4) Describe any and all material changes in the registrant's affairs that have occurred since the end of the latest fiscal year for which audited financial statements are incorporated by reference in accordance with Item 13 of this Form and that have not been described in a report on Form 6-K, Form 10-Q, Form 10-S, or Form 8-K delivered with the prospectus in accordance with paragraph (2)(ii) of this Item.

(5) Where common equity securities are being issued, the information required by Item 9.A.4 of Form 20-F, nature of trading markets, should be updated to cover any subsequent interim periods for which interim financial statements are required to be included to comply with Item 8.A of Form 20-F. Such updating may be made in the prospectus, in an amended Form 20-F, Form 10-K or Form 40-F, or in a Form 6-K, Form 10-Q, Form 10-S, or Form 8-K.

Item 13. Incorporation of Certain Information by Reference

Instructions

2. Where common equity securities are being issued, the information required by Item 9.A.4. of Form 20-F, nature of trading markets, should be updated to cover any subsequent interim periods for which interim financial statements are required to be included to comply with Item 8-A of Form 20-F. Such updating may be made in the prospectus, in an amended Form 20-F, Form 10-K or Form 40-F or in a Form 6-K, Form 10-Q, Form 10-S, or Form 8-K.

3. The registrant may incorporate by reference and deliver with the prospectus any Form 6-K, Form 10-Q, Form 10-S, or Form 8-K containing information eligible to be incorporated by reference into Form F-1. See Rules 4-01(a)(2) and 10-01 of Regulation S-X and Item 18 of Form 20-F.

Item 17. Information With Respect to Foreign Companies Other Than F-3 Companies

(b) * * *

(2) Where common equity securities are being issued, the information required by Item 9.A.4 of Form 20-F, nature of trading markets, updated to cover any subsequent interim periods for which interim financial statements are required to be included to comply with Item 8.A of Form 20-F. Such updating may be made in the prospectus, in an amended Form 20-F, Form 10-K or, in the case of registrants described in General Instruction A.(2) of Form 40-F, Form 40-F, or in a Form 6-K, Form 10-Q, Form 10-S, or Form 8-K;

Appendix H—Form F-10

Form F-10

PART II—INFORMATION NOT REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS

(101) * * *

(a) * * *

(i) First is required for a periodic report on Form 10-Q (§ 249.308a of this chapter), Form 10-S (§ 249.308b of this chapter), Form 20-F (§ 249.220f of this chapter), or Form 40-F (§ 249.240f of this chapter), as applicable; and

Appendix I—Form 10

Form 10

( printed page 25041)

Indicate by check mark if the registrant has elected to file semiannual reports pursuant to Rule 13a-13(b) or Rule 15d-13(b) of the Act.

Appendix J—Form 6-K

Form 6-K

General Instructions

(C) * * *

(6) * * *

(a) * * *

(i) First is required for a periodic report on Form 10-Q (§ 249.308a of this chapter), Form 10-S (§ 249.308b of this chapter), Form 20-F (§ 249.220f of this chapter), or Form 40-F (§ 249.240f of this chapter), as applicable; and

Appendix K—Form 8-K

Form 8-K

Item 2.02 Results of Operations and Financial Condition

(a) If a registrant, or any person acting on its behalf, makes any public announcement or release (including any update of an earlier announcement or release) disclosing material non-public information regarding the registrant's results of operations or financial condition for a completed quarterly, semiannual, or annual fiscal period, the registrant shall disclose the date of the announcement or release, briefly identify the announcement or release and include the text of that announcement or release as an exhibit.

(b) * * *

Instructions

1. The requirements of this Item 2.02 are triggered by the disclosure of material non-public information regarding a completed fiscal year, semiannual period, or quarter. Release of additional or updated material non-public information regarding a completed fiscal year, semiannual period, or quarter would trigger an additional Item 2.02 requirement.

3. Issuers that make earnings announcements or other disclosures of material non-public information regarding a completed fiscal year, semiannual period, or quarter in an interim or annual report to shareholders are permitted to specify which portion of the report contains the information required to be furnished under this Item 2.02.

4. This Item 2.02 does not apply in the case of a disclosure that is made in a quarterly report filed with the Commission on Form 10-Q (17 CFR 249.308a), semiannual report on Form 10-S (17 CFR 249.308b), or an annual report filed with the Commission on Form 10-K (17 CFR 249.310).

( printed page 25042)

( printed page 25043)

( printed page 25044)

( printed page 25045)

( printed page 25046)

( printed page 25047)

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( printed page 25052)

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( printed page 25057)

( printed page 25058)

91 FR 24968