CONGRESSWOMAN ELISE STEFANIK
On Tuesday, December 2, 2014, the House will consider H.R. 4569, the Disclosure Modernization and Simplification Act of 2014, under a suspension of the rules. H.R. 4569 was introduced on May 6, 2014 by Rep. Scott Garret (R-NJ) and referred to the Committee on Financial Services, which ordered the bill reported by a vote of 59-0.
H.R. 4569 directs the Securities and Exchange Commission (SEC), within 180 days of the bill’s enactment, to issue regulations to permit companies to submit a summary page on form 10-K, but only if each item on the summary page includes a cross-reference to material contained in form 10-K. Moreover, this legislation requires the SEC to: 1) scale or eliminate requirements of S-K in order to reduce the burden on emerging growth companies, accelerated filers, smaller reporting companies, and other smaller issuers; and 2) eliminate provisions of regulation S-K that are duplicative, overlapping, outdated, or unnecessary.
H.R. 4569 requires the SEC to carry out a study of the requirements contained in regulation S-K that: 1) determine how best to modernize and simplify requirements in regulation S-K; 2) emphasize a company by company approach that allows relevant and material information be disseminated to investors; and 3) evaluate methods of information delivery and presentation that discourage repetition and the disclosure of immaterial information. The SEC is required to consult with the Investor Advisory Committee and the Advisory Committee on Small and Emerging Companies. Within a year of the bill’s enactment, the SEC is required to issue a report to Congress containing all findings and recommendations on how to modernize and simplify the requirements in regulation S-K.
Form 10-K is an annual report that requires companies to disclose their business and financial condition, including audited financial statements. Regulation S-K is a regulation issued by the SEC that establishes reporting requirements for filings used by companies. H.R. 4569 is an attempt to modernize and simplify the form 10-K and regulation S-K to benefit both investors and companies. This legislation would enable companies to disclose pertinent information to investors, while enabling investors to more easily access relevant information about a company.
CBO estimates that implementing this legislation would cost about $1 million over the 2015-2019 period. The SEC is authorized to collect fees in order to offset its appropriation; therefore the net cost to the SEC would be negligible. Enacting this legislation would not have an effect on direct spending or revenues.
For questions or further information contact the GOP Conference at 5-5107.