Leadership1 publisher2 min readPublished
The SEC's Form 10-S would hand boards a reporting cadence decision they remake every year
The Commission would let companies elect semiannual filing on a newly created Form 10-S. The work that election creates for disclosure controls and guidance practice starts long before the rules take effect.
The Board Room · Leadership desk
What happened
- The SEC has proposed letting public companies choose each year how to report interim results, with semiannual filing on a newly created Form 10-S as one of the options.
- An estimated 81% of public companies, representing 6.5% of total public float, would be exempt from the Sarbanes-Oxley Section 404(b) auditor attestation of management's internal control assessment.
- Automatic shelf registration would become available to all shelf-eligible US domestic public companies after one year of SEC reporting.
- IPO on-ramp accommodations would extend to all newly public companies for at least five years, including relief from the internal controls audit and from say-on-pay advisory votes.
- Chair Paul Atkins called the shareholder proposal system "woefully ineffective and in desperate need of reformation", and the Staff has confirmed it will no longer respond to no-action requests.
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Why it matters
- decision Cadence becomes a recurring board decision: each year someone has to sign off on whether the company files twice or four times, and the first election also settles whether guidance stays quarterly.
- constraint A company that keeps quarterly earnings releases while filing semiannually saves the filing, not the close. The quarterly number and the controls behind it still have to be produced.
- exposure Companies heading into the 2027 proxy season decide exclusions without a staff letter behind them, so the judgment and its consequences sit with the board and its counsel.
- precedent Once peers start electing Form 10-S, staying on Form 10-Q stops being the default and becomes a position a board explains to its investors.
The choice would come back every year. The proposal lets companies pick an interim reporting method annually, so a company that files a Form 10-S one year can return to Form 10-Q the next [1][2]. In my view the second election is the harder one. Dropping to two filings a year is something an investor relations team can explain; going back up to four, after two years of semiannual reports, says something a company may not want to say. Latham & Watkins partners Julia Thompson, Charles Ruck and Joel Trotter write that the proposal introduces flexibility and promotes private ordering, and that companies will need to weigh that flexibility against the implications of departing from established quarterly conventions [5][20].
The hybrid keeps the calendar and changes the filing. A company can pair quarterly earnings releases with a semiannual Form 10-S [3]. The quarterly number still has to exist, and disclosure controls head the list of items boards and audit committees are reviewing, alongside earnings release practices, insider trading policies and investor relations practices [10].
The Section 404(b) exemption is drawn by company count, not by size, so the 19% of public companies that stay in scope hold 93.5% of total public float [7].
Part of the package is already operating. Last proxy season the SEC Staff told companies to decide for themselves whether to exclude most types of shareholder proposals [15]. "I am happy to report that the world did not end," Chair Paul Atkins said, against predictions that companies would "exclude most or all proposals" or face "litigation risk or adverse recommendations from proxy advisors" [11][19]. Exclusion trends stayed consistent year over year, he said [19]. One individual proponent accounted for 41% of proposals voted on this season, and 8% of those received majority support [13].
Insider trading policy is being reopened for a second, unrelated reason. Regulators are pursuing enforcement actions against employees who bet on prediction markets using confidential company information, with claims of commodities fraud, wire fraud and money laundering [17]. Some companies have updated their codes of conduct and insider trading policies for prediction markets; others are relying on existing confidentiality and insider trading provisions [18].
The reporting proposals could become effective as early as 2027 and, more likely, 2028 [4]. The memorandum does not estimate how many companies would elect semiannual reporting [21].
What to watch
- Whether the final rules keep the annual election or bind a company to its choice for more than one year.
- How many issuers say in 2027 proxy statements or earnings calls that they intend to file Form 10-S.
- Whether large holders or proxy advisers publish a position on semiannual filing before the rules are adopted.