The SEC Increases Disclosure Requirements for Issuer Share Repurchases

On May 3, the Securities and Exchange Commission (SEC) adopted amendments to the disclosure requirements relating to repurchases of an issuer’s securities. The amended rules require companies to disclose on a quarterly basis quantitative information about their share repurchases and check a box indicating if certain directors or officers traded within four business days before or after the public announcement of an issuer’s repurchase program. In addition, the amendments expand existing disclosure requirements so that issuers must disclose: the objectives or rationales for their repurchases and the process or criteria they used in determining the amount of repurchases, and any policies and procedures relating to purchases and sales of issuer securities during a repurchase program by the issuer’s officers and directors, including any restriction on such transactions. Lastly, the SEC adopted new rules to require issuers to disclose on Forms 10-Q and 10-K whether they have adopted or terminated Rule 10b5-1 trading plans. The SEC’s stated goals in adopting the amendments is to increase transparency and lessen information asymmetry, along with providing investors with material information to evaluate the purposes and effects of share repurchase programs. This article focuses on the rule changes as they relate to reporting companies that are domestic issuers, even though certain of the amendments apply more broadly, such as to foreign private issuers.

Issuers that file Forms 10-Q and 10-K will be required to comply with the new disclosure and tagging requirements, which are further described below, in their periodic reports beginning with the first filing that covers the first full fiscal quarter that begins on or after October 1, 2023. As a result, calendar-year companies will first need to comply with the new rule regime in connection with the filing of their Forms 10-K for fiscal year 2023 to be filed in early 2024. There are no exceptions to the filing requirements for smaller reporting companies or emerging growth companies, or with respect to issuers with securities that are not traded on an exchange.

Quantitative Disclosures on Share Repurchases