On Oct. 11, 2017, during its first open meeting since the confirmation of Chairman Jay Clayton, the Securities and Exchange Commission (SEC or Commission) voted to propose amendments to Reg S-K and related rules and forms (the Proposal) pursuant to recommendations set forth its Nov. 23, 2016 Report to Congress on Modernization and Simplification of Regulation S-K (required by the FAST Act). The Proposal is intended to “update, streamline or otherwise improve” the Commission's disclosure framework. If you are interested in joining a NAREIT task force that will evaluate the Proposal and possibly develop a NAREIT comment letter, please contact Christopher Drula (firstname.lastname@example.org) by Oct. 19. The SEC is requesting comments within 60 days of the publication of the Proposal in the Federal Register.
NAREIT believes that the Proposal is broadly consistent with the recommendations set forth in NAREIT’s July 21 andOct. 28, 2016 comments to the SEC related to Reg S-K Modernization and Simplification Initiative (NAREIT’s Comments). Notably, the Proposal cites NAREIT’s recommendation that it revise disclosure requirements pertaining to the description of properties in Item 102 of Regulation S-K to require disclosure only when the property is material (p. 13).
Among other things, the Proposal would:
- Eliminate the risk factor examples listed in the current Reg S-K disclosure requirement and revise the description of property requirement to emphasize the materiality threshold, per NAREIT’s Comments;
- Limit the period-to-period comparisons required in MD&A to only the two most recent fiscal years presented in the financials, in circumstances when the earlier period discussion is no longer material;
- Require disclosure of legal entity identifiers (“LEIs”) for all issuers and significant subsidiaries identified on Exhibit 21; and,
- Require inline XBRL data tagging for items on the cover page of certain filings and the use of hyperlinks for information that is incorporated by reference and available on EDGAR.