Corrected to Conform to Federal Register Version - SEC.gov

1 1 Corrected to Conform to Federal Register Version SECURITIES AND EXCHANGE COMMISSION 17 CFR Parts 210, 229, 230, 239, 240, 249, and 274 [Release No. 33-10110; 34-78310; IC-32175; File No. S7-15-16] RIN 3235-AL82 Disclosure Update and Simplification AGENCY: Securities and Exchange Commission. ACTION: proposed rule. SUMMARY: We are proposing amendments to certain of our disclosure requirements that may have become redundant, duplicative, overlapping, outdated, or superseded, in light of other Commission disclosure requirements, Generally Accepted Accounting Principles ( GAAP ), International Financial Reporting Standards ( IFRS ), or changes in the information environment. We are also soliciting comment on certain Commission disclosure requirements that overlap with, but require information incremental to, GAAP to determine whether to retain, modify, eliminate, or refer them to the Financial Accounting Standards Board ( FASB ) for potential incorporation into GAAP.

2 The proposed amendments are intended to facilitate the disclosure of information to investors, while simplifying compliance efforts, without significantly altering the total mix of information provided to investors. These proposals are part of an initiative by the Division of Corporation Finance to review disclosure requirements applicable to issuers to consider ways to improve the requirements for the benefit of investors and issuers. We are also issuing these proposals as part of our efforts to implement title LXXII, section 72002(2) of the Fixing America s Surface Transportation Act. 2 DATES: Comments should be received on or before October 3, 2016. ADDRESSES: Comments may be submitted by any of the following methods: Electronic c omments: Use the C ommission s Interne t c omment form ( ); or Send an e-mail to Please include F ile Number S7-15-16 on the subject line; or Use the F ede ral e Rulemaking Por tal ( ).

3 Follow the instruc tions for submitting comments. Paper comments: Send pape r c omments to Brent J. Fields, Secretary, Securities and Excha ng e C ommission, 100 F S treet, NE, Washing ton, DC 20549-1090. All submissions should refer to File Number S7-15-16. This file number s hould be included on the subject line if e -mail is used. To help us proc ess and review your c omments more efficiently, please use only one method. The C ommission will post all comments on the Commission s website ( ). C omments also are ava ilable f or w ebsite viewing and printing in the C ommission s Public Reference R oom, 100 F Street, NE, Washington, DC 20549, on official business days be tween the hours of 10:00 am and 3:00 pm. All comments received will be posted without cha nge; the Commission does not edit personal identifying infor mation from submissions.

4 You should submit only infor mation that you wish to make publicly availa ble. 3 Studies, memoranda, or other substantive items may be added by the Commission or staff to the comment file during this rulemaking. A notification of the inclusion in the comment file of any such materials will be made available on the SEC s website. To ensure direct electronic receipt of such notifications, sign up through the Stay Connected option at to receive notifications by e-mail. FOR FURTHER information CONTACT: Nili Shah, Deputy Chief Accountant, at (202) 551-3255, Division of Corporation Finance; Duc Dang, Senior Special Counsel, at (202) 551-3386, Office of the Chief Accountant; Matt Giordano, Chief Accountant, at (202) 551-6918, Division of Investment Management; Valentina Minak Deng, Special Counsel, at (202) 551-5778 and Tim White, Special Counsel, at (202) 551-5777, Division of Trading and Markets; Harriet Orol, Branch Chief, at (212) 336-0554, Office of Credit Ratings; Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549.

5 SUPPLEMENTARY information : The Commission is proposing amendments to, or soliciting comment on potential FASB referrals of, Rules 1-02, 2-01, 2-02, 3- 01, 3-02, 3-03, 3-04, 3-05, 3-12, 3-14, 3-15, 3-17, 3-20, 3A-01, 3A-02, 3A-03, 3A-04, 4-01, 4-07, 4-08, 4-10, 5-02, 5-03, 5-04, 6-03, 6-04, 6-07, 6-09, 6A-04, 6A-05, 7-02, 7-03, 7-04, 7-05, 8-01, 8-02, 8-03, 8-04, 8-05, 8-06, 9-03, 9-04, 9-05, 9-06, 10-01, 11-02, 11-03, 12-16, 12-17, 12-18, 12-28, and 12-29 of Regulation S-X under the Securities Act of 1933 (the Securities Act ) and the Securities Exchange Act of 1934 (the Exchange Act ), Items 10, 101, 103, 201, 302, 303, 503, 512, and 601 of Regulation S-K under the Securities Act and the Exchange Act, Item 1010 of Regulation M-A under the Securities Act and the Exchange Act, and Item 1118 of Regulation AB under the Securities Act and the Exchange Act, Rule 158 of the Securities Act, Rules 405 and 436 of 4 Regulation C under the Securities Act, Forms S-1, S-3, S-11, S-4, F-1, F-3, F-4, F-6, F-7, F-8, F-10, F-80, SF-1, SF-3, 1-A, 1-K, and 1-SA under the Securities Act, Rules 3a51-1, 10A-1, 12b-2, 13a-10, 13b2-2, 14a-101, 15c3-1g, 15d-2, 15d-10, 17a-5, 17a-12, 17g-3, and 17h-1T of the Exchange Act, Forms 20-F, 40-F, 10-K, 11-K, 10-D, and X-17A-5 under the Exchange Act, Forms N-5, N-1A, N-2, N-3, N-4.

6 And N-6 under the Securities Act and the Investment Company Act of 1940 (the Investment Company Act ), and Form N-8B-2 under the Investment Company Act. Table of Contents I. Introduction .. 8 A. Objective .. 9 B. Scope of Proposals .. 11 1. Issuers with Offerings Registered Under the Securities Act and Securities Registered Under the Exchange Act .. 12 2. Issuers Offering Securities under Regulation A .. 14 3. Issuers Regulated under the Investment Company Act .. 16 4. Other Entities .. 16 C. FASB-Related Considerations .. 16 1. Role of the FASB .. 16 2. Interaction of Commission Disclosure Requirements and GAAP .. 18 3. Current FASB Projects Concerning the Application of GAAP .. 19 II. Redundant or Duplicative Requirements .. 21 A. Background .. 21 B. proposed Amendments .. 22 1. Foreign Currency.

7 22 2. Consolidation .. 22 3. Obligations .. 24 4. Income Tax Disclosures .. 24 5. Warrants, Rights, and Convertible Instruments .. 24 6. Related Parties .. 25 5 7. Contingencies .. 25 8. Earnings per Share .. 25 9. Insurance Companies .. 26 10. Bank Holding Companies .. 26 11. Changes in Accounting Principles .. 27 12. Interim 27 13. Interim Financial Statements Common Control Transactions .. 27 14. Interim Financial Statements Dispositions .. 27 15. Report Furnished to Security 28 C. Request for Comment .. 28 III. O verlapping Requirements .. 29 A. Background .. 29 B. Broad Considerations .. 30 1. Disclosure Location Considerations .. 30 2. Bright Line Disclosure Threshold Considerations .. 32 C. Overlapping Requirements - proposed Deletions .. 33 1. REIT Disclosures .. 34 2. Consolidation .. 37 3.

8 Repurchase and Reverse Repurchase Agreements .. 39 4. Derivative Accounting Policies .. 44 5. Distributable Earnings for Registered Investment Companies .. 47 6. Insurance Companies .. 48 7. Interim Financial Statements Material Events Subsequent to the End of the Most Recent Fiscal Year .. 50 8. Interim Financial Statements Changes in Accounting Principles .. 52 9. Interim Financial Statements Pro Forma Business Combination 53 10. Interim Financial Statements Dispositions .. 56 11. Segments .. 58 12. Geographic 59 13. Seasonality .. 61 14. Research and Development Activities .. 63 15. Warrants, Rights, and Convertible Instruments .. 67 6 16. Dividends .. 69 17. Equity Compensation Plans .. 70 18. Ratio of Earnings to Fixed Charges .. 74 19. Invitations for Competitive Bids .. 78 20. Request for Comment.

9 78 D. Overlapping Requirements proposed Integrations .. 79 1. Foreign Currency Restrictions .. 79 2. Restrictions on Dividends and Related Items .. 81 3. Geographic 84 4. Request for Comment .. 84 E. Overlapping Requirements Potential Modifications, Eliminations, or FASB Referrals .. 85 1. REIT Disclosures Tax Status of Distributions .. 86 2. Consolidation .. 86 3. Discount on Shares .. 86 4. Assets Subject to Lien .. 87 5. Obligations .. 87 6. Preferred Shares .. 90 7. Income Tax Disclosures .. 90 8. Related Parties .. 91 9. Repurchase and Reverse Repurchase Agreements .. 92 10. Interim Financial Statements Computation of Earnings Per Share .. 93 11. Interim Financial Statements Retroactive Prior Period Adjustments .. 93 12. Interim Financial Statements Common Control Transactions .. 94 13. Products and Services.

10 95 14. Major Customers .. 96 15. Legal Proceedings .. 98 16. Oil and Gas Producing Activities .. 106 17. Request for Comment .. 106 IV. Outdated Requirements .. 107 A. Background .. 107 B. proposed Amendments .. 108 1. Stale Transition Dates .. 108 7 2. Income Tax Disclosures .. 108 3. Available information .. 109 4. Market Price Disclosure .. 112 5. Exchange Rate Data .. 117 6. Foreign Private Issuer Initial Public Offering Age of Financial 118 C. Request for Comment .. 119 V. Superseded Requirements 119 A. Background .. 119 B. proposed Amendments .. 120 1. Auditing 120 2. Statement of Cash Flows .. 122 3. Gain or Loss on Sale of Properties by REITs .. 122 4. Consolidation .. 123 5. Development Stage Entities .. 128 6. Insurance Companies .. 129 7. Bank Holding Companies .. 131 8. Discontinued Operations.