[Federal Register Volume 81, Number 169 (Wednesday, August 31, 2016)]
[Proposed Rules]
[Pages 59927-59929]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20906]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 229

[Release No. 33-10198; 34-78687; File No. S7-18-16]


Request for Comment on Subpart 400 of Regulation S-K Disclosure 
Requirements Relating to Management, Certain Security Holders and 
Corporate Governance Matters

AGENCY: Securities and Exchange Commission.

ACTION: Request for comment.

-----------------------------------------------------------------------

SUMMARY: The Commission is requesting public comment on certain 
disclosure requirements in Regulation S-K relating to management, 
certain security holders, and corporate governance matters contained in 
Subpart 400. This request is part of an initiative by the Division of 
Corporation Finance to review the disclosure requirements in Regulation 
S-K to consider ways to improve them for the benefit of investors and 
registrants. Comments received in response to this request for comment 
will also inform the Commission's study on Regulation S-K, which is 
required by Section 72003 of the Fixing America's Surface 
Transportation Act (``FAST Act'').

DATES: Comments should be received on or before October 31, 2016.

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/other.shtml); or
     Send an email to [email protected]. Please include 
File Number S7-18-16 in the subject line; or
     Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments to Brent J. Fields, Secretary, 
Securities and Exchange Commission, 100 F Street NE., Washington, DC 
20549-1090.

All submissions should refer to File Number S7-18-16. This file number 
should be included in the subject line if email is used. To help the 
Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's Web site (http://www.sec.gov/rules/other.shtml). Comments 
also are available for Web site viewing and printing in the 
Commission's Public Reference Room, 100 F Street NE., Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. All comments received will be posted without change; we do 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Eduardo A. Aleman, Special Counsel, 
Office of Rulemaking, Division of Corporation Finance, at (202) 551-
3430, 100 F Street NE., Washington, DC 20549.

SUPPLEMENTARY INFORMATION: 

Background and Discussion

    Over the years, the Commission has evaluated its disclosure regime 
and engaged periodically in rulemakings designed to enhance its 
disclosure and registration requirements.\1\ Most recently, the 
Commission published a concept release to seek public comment on 
modernizing certain business and financial disclosure requirements in 
Regulation S-K.\2\ The purpose of the Regulation S-K Concept Release is 
to assess whether the business and financial disclosure requirements in 
Regulation S-K continue to provide the information that investors need 
to make informed investment and voting decisions. The Regulation S-K 
Concept Release focuses on the business and financial disclosures that 
registrants provide in their periodic reports, which are a subset of 
the disclosure requirements in Regulation S-K, because many of them 
have changed little since they were first adopted and are often the 
foundation of the disclosures investors look to when making investment 
decisions. These requirements have also been revisited by the 
Commission or the staff less

[[Page 59928]]

frequently in the recent past than other disclosure requirements in 
Regulation S-K, such as executive compensation and governance contained 
in Subpart 400 of Regulation S-K.\3\ Last year, the Commission also 
published a request for comment to seek public input about the 
financial disclosure requirements in Regulation S-X for certain 
entities other than a registrant.\4\
---------------------------------------------------------------------------

    \1\ For a summary of the relevant history and background of 
Regulation S-K, see Business and Financial Disclosure Required by 
Regulation S-K, Release No. 33-10064 (Apr. 13, 2016) [81 FR 23916 
(Apr. 22, 2016)] (``Regulation S-K Concept Release'').
    \2\ See id.
    \3\ See, e.g., Executive Compensation and Related Person 
Disclosure, Release No. 33-8732A (Aug. 29, 2006) [71 FR 53157 (Sept. 
8, 2006)]; Proxy Disclosure Enhancements, Release No. 33-9089 (Dec. 
16, 2009) [74 FR 68333 (Dec. 23, 2009)]; Staff Observations in the 
Review of Executive Compensation Disclosure, Division of Corporation 
Finance (Oct. 9, 2007), available at https://www.sec.gov/divisions/corpfin/guidance/execcompdisclosure.htm. As the Commission noted in 
the Regulation S-K Concept Release, the scope of that release does 
not include certain disclosure requirements for information other 
than business and financial disclosures, such as Subpart 400, which 
requires disclosure about management and certain security holders as 
well as corporate governance matters. See Regulation S-K Concept 
Release, supra note 1, at Section I, n. 4. This request for comment 
directly covers those subjects.
    \4\ See Request for Comment on the Effectiveness of Financial 
Disclosures about Entities Other Than the Registrant, Release No. 
33-9929 (Sept. 25, 2015) [80 FR 59083 (Oct. 1, 2015)].
---------------------------------------------------------------------------

    These efforts, in addition to this request for comment, are part of 
a comprehensive evaluation of the Commission's disclosure requirements 
recommended in the staff's Report on Review of Disclosure Requirements 
in Regulation S-K (``S-K Study''), which was mandated by Section 108 of 
the Jumpstart Our Business Startups Act (``JOBS Act'').\5\ As noted in 
the Regulation S-K Concept Release, based on the S-K Study's 
recommendation and at the request of the Chair, Commission staff 
initiated a comprehensive evaluation of the type of information our 
rules require registrants to disclose, how this information is 
presented, where and how this information is disclosed, and how the 
Commission can leverage technology as part of these efforts 
(collectively, ``Disclosure Effectiveness Initiative''). Section 
72003(a) of the FAST Act \6\ also requires the Commission to carry out 
a study of the requirements contained in Regulation S-K.\7\ 
Specifically, Section 72003(a) requires that the study of Regulation S-
K:
---------------------------------------------------------------------------

    \5\ Public Law 112-106, Sec. 108, 126 Stat. 306 (2012). Section 
108 of the JOBS Act requires the Commission to conduct a review of 
Regulation S-K to determine how such requirements can be updated to 
modernize and simplify the registration process for emerging growth 
companies. The S-K Study is available at http://www.sec.gov/news/studies/2013/reg-sk-disclosure-requirements-review.pdf. For a 
further discussion of the S-K Study, see the Regulation S-K Concept 
Release, supra note 1, at Section II.C.
    \6\ Public Law 114-94, Sec. 72003, 129 Stat. 1312 (2015).
    \7\ In conducting this study, the Commission is required to 
consult with the Investor Advisory Committee and the Advisory 
Committee on Small and Emerging Companies.
---------------------------------------------------------------------------

     Determine how best to modernize and simplify such 
requirements in a manner that reduces the costs and burdens on issuers 
while still providing all material information;
     Emphasize a company-by-company approach that allows 
relevant and material information to be disseminated to investors 
without boilerplate language or static requirements while preserving 
completeness and comparability of information across registrants; and
     Evaluate methods of information delivery and presentation 
and explore methods for discouraging repetition and the disclosure of 
immaterial information.\8\
---------------------------------------------------------------------------

    \8\ Public Law 114-94, Sec. 72003, 129 Stat. 1312 (2015).
---------------------------------------------------------------------------

Request for Comment

    The initiative to review the disclosure requirements in Regulation 
S-K is intended to result in recommendations and proposals that will 
improve our disclosure system for the benefit of investors and 
registrants. The purpose of this request for comment is to solicit 
public input on Subpart 400 of Regulation S-K, which requires certain 
disclosures about a registrant's management, certain security holders, 
and corporate governance matters.\9\ The input can include comments on 
existing requirements in these rules as well as on potential disclosure 
issues that commenters believe the rules should address.\10\ The 
comments received in response to this request for comment, as well as 
comments received in response to the Regulation S-K Concept Release, 
will inform the Commission in carrying out the study of Regulation S-K 
required by Section 72003(a) of the FAST Act.\11\
---------------------------------------------------------------------------

    \9\ 17 CFR 229.401 et seq.
    \10\ For example, as noted in the Regulation S-K Concept 
Release, supra note 1, this could include industry-specific 
disclosure requirements, information about sustainability and 
governance matters, and additional instances in which scaled 
disclosure could be implemented.
    \11\ Comment letters received in response to this request for 
comment will be considered in connection with any future rulemaking 
related to the disclosure requirements in Subpart 400 of Regulation 
S-K. If the Commission proposes changes to these disclosure 
requirements the proposed changes will be subject to public notice 
and comment.
---------------------------------------------------------------------------

     Item 401 of Regulation S-K generally requires certain 
disclosures about a registrant's directors, executive officers, 
promoters and control persons.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 229.401.
---------------------------------------------------------------------------

     Item 402 of Regulation S-K generally requires disclosure 
of all plan and non-plan compensation awarded to, earned by, or paid to 
a registrant's named executive officers and directors.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 229.402. Item 402 also describes the disclosure 
requirements for certain categories of registrants such as foreign 
private issuers and smaller reporting companies. The Commission has 
a number of outstanding proposals related to executive compensation 
disclosure and listing requirements. See Disclosure of Hedging by 
Employees, Officers and Directors, Release No. 33-9723 (Feb. 9, 
2015) [80 FR 8485 (Feb. 17, 2015)]; Pay Versus Performance, Release 
34-74835 (Apr. 29, 2015) [80 FR 26329 (May 7, 2015)]; Listing 
Standards for Recovery of Erroneously Awarded Compensation, Release 
No. 33-9861 (July 1, 2015) [80 FR 41143 (July 14, 2015)]. This 
release requests comment on the disclosure requirements in Item 402 
generally and is not intended to solicit specific comment on those 
proposals.
---------------------------------------------------------------------------

     Item 403 of Regulation S-K generally requires a 
description of the security ownership of certain beneficial owners and 
management.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 229.403.
---------------------------------------------------------------------------

     Item 404 of Regulation S-K generally requires a 
description of certain transactions with related persons, promoters and 
certain control persons.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 229.404.
---------------------------------------------------------------------------

     Item 405 of Regulation S-K generally requires a registrant 
to identify certain persons who failed to file on a timely basis, as 
disclosed in certain forms, reports required by Section 16(a) of the 
Securities Exchange Act \16\ during the most recent fiscal year or 
prior fiscal years.\17\
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78p.
    \17\ 17 CFR 229.405.
---------------------------------------------------------------------------

     Item 406 of Regulation S-K generally requires disclosures 
about whether the registrant has adopted a code of ethics that applies 
to certain of the registrant's executive officers, or persons 
performing similar functions, and, if it has not adopted such a code of 
ethics, an explanation why it has not done so.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 229.406.
---------------------------------------------------------------------------

     Item 407 of Regulation S-K generally requires certain 
corporate governance disclosure about director independence, board 
meetings, various board committees (e.g., nominating, audit and 
compensation committees) and any process for shareholder 
communications.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 229.407.
---------------------------------------------------------------------------

    In connection with the staff's continuing Disclosure Effectiveness 
Initiative and corresponding work on the FAST Act mandate, the 
Commission welcomes public comments on the issues that the staff should 
consider in conducting its review of Subpart 400 of Regulation S-K, 
including, among other things, how best to modernize and

[[Page 59929]]

simplify these disclosure items in view of the objectives of the 
Regulation S-K study set forth in Section 72003 of the FAST Act and 
whether additional disclosures in these areas are necessary or 
appropriate to facilitate investor protection, to maintain fair, 
orderly, and efficient markets, and/or to facilitate capital formation. 
In addition to the substance of the disclosure requirements, the 
Commission welcomes comments on how information can be presented to 
improve its readability, navigability and comparability and how 
technology and structured data can facilitate data aggregation and 
analysis. All interested parties are invited to submit their views and 
any data, in writing, on any matter relating to Subpart 400 of 
---------------------------------------------------------------------------
Regulation S-K.

    By the Commission.

    Dated: August 25, 2016.
Brent J. Fields,
Secretary.
[FR Doc. 2016-20906 Filed 8-30-16; 8:45 am]
 BILLING CODE 8011-01-P