SEC proposes optional semiannual reporting

On May 5, the SEC issued a Proposed Rule (PDF - 1.88KB), Semiannual Reporting, to provide registrants with the option to file semiannual reports instead of quarterly reports to meet interim reporting requirements.

The proposal applies to all registrants that are required to file quarterly reports on Form 10-Q under the Securities Exchange Act of 1934 (Exchange Act registrants) as well as to those that file initial registration statements under the Securities Act of 1933 or the Exchange Act.

The proposal is intended to provide flexibility by allowing registrants to select the interim reporting frequency that best serves them and their investors.

The Proposed Rule would add a new Form 10-S and amend Regulation S-X to incorporate the semiannual reporting requirements and would simplify the staleness dates for semiannual reporting, among other updates.

The comment period on the proposal ends on July 6.

Semiannual reporting on Form 10-S

Under the proposal, Exchange Act registrants that elect semiannual reporting would file one semiannual report covering the first six-months of the fiscal year on the new Form 10-S, and one annual report on Form 10-K. Consistent with the current Form 10-Q deadlines, the new Form 10-S would be due 40 or 45 days (depending on filer status) after the fiscal year’s first semiannual period-end.

Similar to the fourth-quarter information for Form 10-Q filers, the second semiannual period would be included in the annual period on Form 10-K and would not be required to be presented separately. Further, scaled disclosures currently available to smaller reporting companies on Form 10-Q would be available on the new Form 10-S.

Form 10-S would require similar disclosures as the current Form 10-Q, including

• Management’s Discussion and Analysis, legal proceedings, and material changes in risk factors, among other disclosures
• Financial statements for the first six months of the fiscal year and prior-year comparative period prepared in accordance with U.S. GAAP and reviewed by an independent public accountant (quarter-to-date financial information is not required)
• Certifications for disclosure controls and procedures, as well as internal controls over financial reporting
• Compliance with data tagging using inline XBRL

Exchange Act registrants would have the annual option to elect semiannual or quarterly reporting through use of a check box on the cover page of Form 10-K. The registrant would not be permitted to change this election midyear. If the registrant inadvertently checks the box or leaves it unchecked, it can amend Form 10-K to fix that error no later than the date when it would be required to file the first Form 10-Q.

Registrants that elect to report on a quarterly basis after reporting on Form 10-S in the preceding fiscal year would be required to include quarterly financial information for the prior periods in their Form 10-Qs. Consistent with current rules, such financial statements would have to be reviewed by an independent public accountant. For example, a calendar year-end registrant that elects semiannual reporting for 2027 would check the semiannual box on its 2026 Form 10-K and would file Form 10-S for the six-month periods ended June 30, 2027 and 2026.

The same registrant could elect to change from semiannual reporting to quarterly reporting for 2028 by leaving the semiannual reporting box unchecked in its 2027 Form 10-K. The switch from semiannual reporting to quarterly reporting would require quarter-to-date and year-to-date financial information for comprehensive income and changes in stockholders’ equity for both 2028 and 2027 in Form 10-Q, even though quarterly information for 2027 was not disclosed in Form 10-S filed in 2027.

Exchange Act registrants that elect semiannual reporting would continue to have the option to report quarterly earnings and other financial information in Form 8-K (such as earnings release) and might also be required to furnish this material information under Regulation FD.  

Registration statements

The proposal would also add the semiannual election check box to Securities Act registration statements on Forms S-1, S-3, S-4, and S-11, as well as on Exchange Act registration statement on Form 10. Companies that are not Exchange Act registrants, such as private companies conducting initial public offerings, would make their initial election to use semiannual reporting by checking the box on the cover page of the registration statement filed.

The election would determine the reporting requirements in the registration statement and indicate the interim reporting frequency the company plans to use after the registration statement is effective. Under the proposal, a private company may change its check box election until the registration statement becomes effective.

If semiannual reporting is elected, the newly public Exchange Act registrant would be required to file Form 10-S the later of 45 days after the registration statement is effective or the date when Form 10-S would otherwise be due.

Exchange Act registrants filing a registration statement would elect the same interim reporting frequency on the registration statement cover page as the election made in the most recent Form 10-K.