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On January 30, the SEC proposed new rules and issued interpretive guidance that could result in significant changes to MD&A and other financial disclosures. The proposals and guidance represent an attempt to “refresh” MD&A disclosures that in some cases have become stale or amount to little more than boilerplate.

The proposals would eliminate a number of current requirements under Regulation S-K, including selected financial data, supplementary financial data, certain data on oil and gas producing activities, disclosures on inflation and changing prices, and tabular disclosure of contractual obligations that overlaps with financial statement requirements. However, they would add a number of new requirements, including a statement of “principal objectives” of the MD&A, a discussion of material cash requirements, and a discussion of “reasonably likely” changes in the relationships between costs and revenues. The proposals would also replace the requirement for disclosure of off-balance sheet financing arrangements with principles-based instructions, and they would provide more flexibility for companies to compare recent quarter performance with the most recent quarter or the prior-year quarter.

The SEC’s interpretive guidance reminds companies of the requirement to disclose key variable qualitative and quantitative factors that management uses to run the business.

Conspicuous by its absence from the proposals or interpretive guidance was any mention of climate change disclosure, though the topic was addressed in statements by some of the Commissioners.

The rule proposals are subject to a 60-day public comment period.

If you have any questions, please contact Gunster securities law and corporate governance practice leader Bob Lamm.


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