In November 2020, the Securities and Exchange Commission adopted amendments to simplify and enhance Management’s Discussion and Analysis (“MD&A”) and certain related financial disclosures as required by Regulation S-K. The amendments aimed to reduce the costs and burdens of public companies, while still providing investors with the material information necessary to assess an issuer’s financial condition and results of operations.

Key amendments to the disclosure requirements included the following:

  • Item 301, Selected financial data, which required companies to provide selected financial data for each of the last five fiscal years, was eliminated;
  • The requirement to present a quarterly tabular disclosure was replaced with a principles-based requirement for material retrospective changes;
  • Item 303(a), Objective, was added to state the objectives of the MD&A;
  • The requirement to furnish the tabular disclosure of contractual obligations was eliminated, while the disclosure of liquidity and capital resources was amended to include material cash requirements from known contractual obligations;
  • Item 303(b)(3), Critical accounting estimates, was added to clarify the guidance on critical accounting estimates;
  • The requirement to disclose off-balance sheet arrangements as a separate item was replaced with an instruction to discuss off-balance sheet arrangements in the broader context of the MD&A;
  • The interim disclosure requirements were amended to allow more flexibility in the interim periods compared; and
  • Item 303(a)(3)(ii), requiring disclosure of the impact of known events on the relationship between costs and sales, was clarified.

In addition, certain comparable amendments were introduced to the disclosure requirements applicable to foreign private issuers.

Public companies will be required to apply the amended rules for their first fiscal year ending on or after August 9, 2021.

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