provide certain scaled disclosure accommodations for SRCs.\195\
---------------------------------------------------------------------------

    \193\ See ASC 360-10-50-3A.
    \194\ See Rule 10-01(b)(5) of Regulation S-X [17 CFR 210.10-
01(b)(5)].
    \195\ See supra note 186.
---------------------------------------------------------------------------

    Based on the foregoing, we propose to delete these requirements in
Rule 8-03(b)(4).
Request for Comment
    36. Would elimination of the specific requirement discussed above
to disclose pro forma revenue affect, in any material respect, the
usefulness of information that investors receive? If so, how? Do the
pro forma disclosures in Form 8-K sufficiently substitute for this
specific line item, despite the differences in timing discussed above?
11. Segments
    Item 101(b) of Regulation S-K \196\ requires disclosure of segment
financial information, restatement of prior periods when reportable
segments change, and discussion of interim segment performance that may
not be indicative of current or future operations. U.S. GAAP \197\ and
Item 303(b) of Regulation S-K \198\ require

similar disclosures. In fact, Item 101(b) explicitly permits issuers to
cross-reference between the notes to the financial statements and the
description of business to avoid duplicative disclosures about
segments. We, therefore, propose to delete Item 101(b). We note that
because these disclosures (or the cross-reference to the notes to the
financial statements) are located in the business section of the
filing, while the corresponding disclosures are in the notes to the
financial statements, their elimination gives rise to Disclosure
Location--Prominence Considerations.
---------------------------------------------------------------------------

    \196\ 17 CFR 229.101(b).
    \197\ See ASC 280-10-50-22, ASC 280-10-50-34, and ASC 280-10-50-
35.
    \198\ 17 CFR 229.303(b). Specifically, Instruction 4 of Item
303(b) of Regulation S-K, which addresses interim periods, requires
that the registrant's discussion of material changes in results of
operations shall identify any significant elements of the
registrant's income or loss from continuing operations which do not
arise from or are not necessarily representative of the registrant's
ongoing business. The introduction paragraph to Item 303(b) also
states that the interim discussion and analysis shall include a
discussion of material changes in those items specifically listed in
paragraph (a) of the Item. Since paragraph (a) indicates that where
in a registrant's judgment a discussion of segment information or of
other subdivisions of the registrant's business would be appropriate
to an understanding of such business, the discussion shall focus on
each relevant, reportable segment or other subdivision of the
business and on the registrant as a whole, the requirement in Item
101(b)(2) of Regulation S-K is duplicative of Item 303 requirements.
---------------------------------------------------------------------------

    Regulation A issuers are similarly required to cross-reference to
their segment disclosures under U.S. GAAP or IFRS.\199\ We also propose
to delete Item 7(b) of Form 1-A. We note that because the cross-
reference to the notes to the financial statements is located in the
business section of the filing, while the corresponding disclosures are
in the notes to the financial statements, its elimination also gives
rise to Disclosure Location--Prominence Considerations.
---------------------------------------------------------------------------

    \199\ See Item 7(b) of Form 1-A.
---------------------------------------------------------------------------

12. Geographic Areas \200\
---------------------------------------------------------------------------

    \200\ Please refer to the related discussion in section III.D.3.
---------------------------------------------------------------------------

a. Financial Information
    Regulation S-K \201\ requires disclosure of financial information
by geographic area. U.S. GAAP requires similar disclosures.\202\ In
fact, Item 101(d)(2) explicitly permits issuers to cross-reference
between the notes to the financial statements and the description of
business to avoid duplicative disclosures about geographic areas. We,
therefore, propose to delete Item 101(d)(1) and Item 101(d)(2).\203\ We
note that because these disclosures (or the cross-reference to the
notes to the financial statements) are located in the business section
of the filing, while the corresponding disclosures are in the notes to
the financial statements, their elimination gives rise to Disclosure
Location--Prominence Considerations.
---------------------------------------------------------------------------

    \201\ 17 CFR 229.101(d)(1) and 17 CFR 229.101(d)(2).
    \202\ See ASC 280-10-50-41.
    \203\ Two commenters on the Disclosure Effectiveness Initiative
recommended that Item 101(d)(1) and Item 101(d)(2) be deleted given
the overlap with ASC 280. See letters from the Disclosure
Effectiveness Working Group of the Federal Regulation of Securities
Committee and the Law & Accounting Committee of the American Bar
Association (``ABA'') (Mar. 6, 2015) and Center for Capital Markets
Competitiveness, U.S. Chamber of Commerce (``CCMC'') (July 29,
2014).
---------------------------------------------------------------------------

b. Risks and Dependence
    Item 101(d)(3) of Regulation S-K requires disclosures of any risks
associated with an issuer's foreign operations and any segment's
dependence on foreign operations. We believe that Item 101(d)(3)
requires disclosures that are largely encompassed by the disclosures
that result from compliance with other parts of Regulation S-K.
Specifically, Item 503(c) of Regulation S-K requires disclosure of
significant risk factors. Although Item 101(d)(3) is more expansive
than Item 503(c) in its requirement to disclose ``any'' risk, rather
than ``significant'' risk factors, we believe that disclosure of
``significant'' risk factors provides appropriate disclosure to
investors and disclosure of ``any'' risk is not necessary.
    In addition, Item 303(a) of Regulation S-K requires disclosure of
trends and uncertainties by segment, if appropriate to an understanding
of the issuer as a whole, which would include disclosure of a segment's
dependence on foreign operations.\204\ We, therefore, propose to delete
Item 101(d)(3).\205\ We note that because these disclosures are located
in the business section of the filing, while the corresponding
disclosures are in the risk factors and management's discussion and
analysis (``MD&A'') sections, their elimination gives rise to
Disclosure Location--Prominence Considerations.
---------------------------------------------------------------------------

    \204\ The proposed amendment to add a reference to ``geographic
areas'' to Item 303(a), as discussed in section III.D.3, would also
help ensure disclosure of a segment's dependence on foreign
operations.
    \205\ One commenter on the Disclosure Effectiveness Initiative
observed that material disclosures about geographic areas would
already be provided under Item 303 of Regulation S-K. See letter
from CCMC (July 29, 2014).
---------------------------------------------------------------------------

Request for Comment
    37. Would deletion of the requirements in Item 101(d)(3) affect, in
any material respect, the usefulness of information that investors
receive? If so, how?
13. Seasonality
    Regulation S-K \206\ and U.S. GAAP \207\ both require disclosures
about seasonality. As discussed below, we believe that these provisions
in Instruction 5 to Item 303(b) (``Instruction 5'') and Item
101(c)(1)(v) require disclosures that convey reasonably similar
information as the disclosures that result from compliance with U.S.
GAAP and other parts of Regulation S-K, in combination.
---------------------------------------------------------------------------

    \206\ See Instruction 5 to Item 303(b) of Regulation S-K. This
disclosure is required where the effect is material. See also Item
101(c)(1)(v) [17 CFR 229.101(c)(1)(v)] of Regulation S-K.
    \207\ See ASC 270-10-45-11.
---------------------------------------------------------------------------

a. Interim Disclosures
    Instruction 5 and U.S. GAAP both require disclosures about
seasonality in interim periods. Accordingly, we propose to delete
Instruction 5. We note that because U.S. GAAP requires seasonality
disclosures in the financial statements, whereas Instruction 5 requires
disclosure in MD&A, its elimination gives rise to Disclosure Location--
Prominence Considerations. With the proposed amendments, issuers may
also be less willing to voluntarily supplement the required disclosures
in the notes to the financial statements with forward-looking
information because note disclosures are not subject to safe harbor
protections under the PSLRA.
Request for Comment
    38. Would the unavailability of the PSLRA safe harbor in this
instance affect issuers or investors? If so, how? What disclosures, if
any, are currently provided to voluntarily supplement the required
disclosures above? Would issuers cease to provide these voluntary
disclosures if we delete Instruction 5? If so, would such a change
affect the information available to investors?
b. Annual Disclosures
    Item 101(c)(1)(v) requires annual seasonality disclosure.
Seasonality, by definition, relates to variations within annual
periods, so the effects of seasonality are not evident in annual
financial statements. We, therefore, believe that interim seasonality
disclosures required under U.S. GAAP, as discussed above, are more
useful to investors than annual seasonality disclosures.
    Item 101(c)(1)(v), unlike U.S. GAAP, incrementally requires
seasonality disclosure at the segment level, to the extent material to
an understanding of the business as a whole. However, Item 303(b) of
Regulation S-K requires disclosure of results of operations, liquidity,
and capital resources in interim periods at the segment level, when
appropriate to an understanding of the business.\208\ Accordingly, we

believe Item 303(b), in conjunction with U.S. GAAP, would result in
reasonably similar disclosures as Item 101(c)(1)(v) about the effects
of seasonality on an issuer's financial statements at the segment
level, if material and appropriate to an understanding of the business.
---------------------------------------------------------------------------

    \208\ Specifically, Item 303(b) requires discussion of material
changes in the items listed in Item 303(a). Item 303(a) requires
discussion at the reportable segment level where appropriate to an
understanding of the business.
---------------------------------------------------------------------------

    Based on the foregoing, we propose to delete Item 101(c)(1)(v). We
note that because these disclosures are located in the business section
and MD&A, while the corresponding disclosures are in MD&A and the notes
to the financial statements, their elimination gives rise to Disclosure
Location--Prominence Considerations. With the proposed amendments,
issuers may also be less willing to voluntarily supplement the required
disclosures in the notes to the financial statements with forward-
looking information because note disclosures are not subject to safe
harbor protections under the PSLRA.
Request for Comment
    39. Would deletion of the requirements in Item 101(c)(1)(v) affect,
in any material respect, the usefulness of information that investors
receive? If so, how?
    40. Would the unavailability of the PSLRA safe harbor in this
instance affect issuers or investors? If so, how? What disclosures, if
any, are currently provided to voluntarily supplement the required
disclosures above? Would issuers cease to provide these voluntary
disclosures if we delete Item 101(c)(1)(v)? If so, would such a change
affect the information available to investors?
14. Research and Development Activities
a. Domestic Issuers
    Regulation S-K requires disclosures, if material, of the amount
spent on research and development activities for all years
presented.\209\ Although Regulation S-K uses terms that differ from
U.S. GAAP,\210\ we believe U.S. GAAP results in reasonably similar
disclosures as this requirement.
---------------------------------------------------------------------------

    \209\ See Item 101(c)(1)(xi) of Regulation S-K for non-SRCs and
Item 101(h)(4)(x) of Regulation S-K for SRCs. Item 101(c)(1)(xi)
only requires this disclosure by non-SRCs if material.
    \210\ See ASC 730-10-50-1 and ASC 730-20-50-1.
---------------------------------------------------------------------------

    First, Regulation S-K refers to the ``amount spent,'' while U.S.
GAAP refers to ``costs charged to expense'' or ``costs incurred.'' We
note, however, that the Regulation S-K adopting release used the term
``expense'' when discussing this requirement.\211\
---------------------------------------------------------------------------

    \211\ See Adoption of Disclosure Regulation and Amendments of
Disclosure Forms and Rules, Release No. 33-5893 (Dec. 23, 1977) [42
FR 65554].
---------------------------------------------------------------------------

    Regulation S-K also uses the term ``company-sponsored,'' but U.S.
GAAP does not. However, the Regulation S-K adopting release specified
that the amount of company-sponsored research and development expenses
to be disclosed should be determined in accordance with U.S. GAAP,
suggesting no difference in scope was intended.\212\
---------------------------------------------------------------------------

    \212\ Id.
---------------------------------------------------------------------------

    In addition, Regulation S-K refers to ``customer-sponsored''
research and development activities, while U.S. GAAP refers to
``research and development performed on behalf of others.'' Because
U.S. GAAP is broader in its reference to all other parties, rather than
only customers, the disclosures required by U.S. GAAP would encompass
those required by Regulation S-K.
    Further, Item 101(c)(1)(xi) only refers to customer-sponsored
``research activities'' rather than research and development
activities. However, we do not believe this difference is substantive
because Item 101(h)(4)(x) refers to ``research and development
activities'' and it was intended to ``parallel'' Item
101(c)(1)(xi).\213\
---------------------------------------------------------------------------

    \213\ See Small Business Initiatives, Release No. 33-6949, (Jul.
30, 1992) [57 FR 36442].
---------------------------------------------------------------------------

    Based on the foregoing, we propose to delete Item 101(c)(1)(xi) of
Regulation S-K and Item 101(h)(4)(x) of Regulation S-K. We note that
because the Item 101(c)(1)(xi) disclosures are located in the business
section of the filing, while the corresponding disclosures are in the
notes to the financial statements, their elimination gives rise to
Disclosure Location--Prominence Considerations. With the proposed
amendments, issuers may also be less willing to voluntarily supplement
the required disclosures in the notes to the financial statements with
forward-looking information because note disclosures are not subject to
safe harbor protections under the PSLRA.
Request for Comment
    41. Would deletion of the requirements in Item 101(c)(1)(xi) and
Item 101(h)(4)(x) affect, in any material respect, the usefulness of
information that investors receive? If so, how?
    42. Would the unavailability of the PSLRA safe harbor in this
instance affect issuers or investors? If so, how? What disclosures, if
any, are currently provided to voluntarily supplement the required
disclosures above? Would issuers cease to provide these voluntary
disclosures if we delete Item 101(c)(1)(xi) and Item 101(h)(4)(x)? If
so, would such a change affect the information available to investors?
b. Foreign Private Issuers
    Item 5.C of Form 20-F requires foreign private issuers to describe
their research and development policies, where significant, and
disclose the amount spent on company-sponsored research and development
activities. We propose to delete the requirement to disclose the amount
spent, as foreign private issuers are already required to disclose the
amount of research and development expenses in the notes to the
financial statements.\214\ We note that, in certain circumstances, IFRS
requires amounts spent on development be capitalized as an intangible
asset, instead of expensed.\215\ However, although Commission
disclosure requirements use terms different from IFRS, for the same
reasons discussed above about differences between Commission disclosure
requirements and U.S. GAAP terminology, we believe IFRS results in
reasonably similar disclosures as this requirement. We also note that
because the Item 5.C disclosures are located in the operating and
financial review and prospects section of Form 20-F, while the
corresponding disclosures are in the notes to the financial statements,
their elimination gives rise to Disclosure Location--Prominence
Considerations. With the proposed amendments, issuers may also be less
willing to voluntarily supplement the required disclosures in the notes
to the financial statements with forward-looking information because
note disclosures are not subject to safe harbor protections under the
PSLRA.
---------------------------------------------------------------------------

    \214\ Paragraph 126 of IAS 38, Intangible Assets, requires
foreign private issuers that report under IFRS to disclose the
aggregate amount of research and development expenses in the notes
to their financial statements. Foreign private issuers that report
under U.S. GAAP or Another Comprehensive Body of Accounting
Principles with a reconciliation to U.S. GAAP are also required to
disclose the amount of research and development expenses in the
notes to their financial statements, as discussed above.
    \215\ See paragraph 57 of IAS 38, Intangible Assets.
---------------------------------------------------------------------------

Request for Comment
    43. Does the requirement in Item 5.C of Form 20-F to disclose the
amount spent on company-sponsored research and development activities
result in reasonably similar disclosure as IFRS, which requires
disclosure of research and development expense?
    44. Would deletion of the above requirements in Item 5.C of Form
20-F affect, in any material respect, the

usefulness of information that investors receive? If so, how?
    45. Would the unavailability of the PSLRA safe harbor in this
instance affect issuers or investors? If so, how? What disclosures, if
any, are currently provided to voluntarily supplement the required
disclosures above? Would issuers cease to provide these voluntary
disclosures if we delete the above requirement in Item 5.C of Form 20-
F? If so, would such a change affect, in any material respect, the
usefulness of the information that investors receive?
c. Regulation A Issuers
    Form 1-A requires Regulation A issuers to disclose, if material,
the amount spent on research and development activities for all years
presented.\216\ This requirement is based on the requirement in
Regulation S-K. Accordingly, Regulation A issuers that report under
either U.S. GAAP or IFRS will provide substantially the same
information in the notes to their financial statements, as described
above. We, therefore, propose to delete Item 7(a)(1)(iii) of Form 1-A.
We note that because the Item 7(a)(1)(iii) disclosures are located in
the business section of Form 1-A, while the corresponding disclosures
are in the notes to the financial statements, their elimination gives
rise to Disclosure Location--Prominence Considerations. With the
proposed amendments, issuers may also be less willing to voluntarily
supplement the required disclosures in the notes to the financial
statements with forward-looking information because note disclosures
are not subject to safe harbor protections under the PSLRA.
---------------------------------------------------------------------------

    \216\ Item 7(a)(1)(iii) of Form 1-A.
---------------------------------------------------------------------------

Request for Comment
    46. Would deletion of Item 7(a)(1)(iii) of Form 1-A affect, in any
material respect, the usefulness of information that investors receive?
If so, how?
    47. Would the unavailability of the PSLRA safe harbor in this
instance affect issuers or investors? If so, how? What disclosures, if
any, are currently provided to voluntarily supplement the required
disclosures above? Would issuers cease to provide these voluntary
disclosures if we delete Item 7(a)(1)(iii) of Form 1-A? If so, would
such a change affect, in any material respect, the usefulness of the
information that investors receive?
15. Warrants, Rights, and Convertible Instruments \217\
---------------------------------------------------------------------------

    \217\ Please refer to the related discussion in section II.B.5.
---------------------------------------------------------------------------

    Regulation S-K requires disclosure on Form S-1 or Form 10 of the
amount of common equity subject to outstanding options, warrants, or
convertible securities, when the class of common equity has no
established United States public trading market.\218\ U.S. GAAP more
broadly requires disclosure of the terms of significant contracts to
issue additional shares, the number of shares authorized for certain
equity awards,\219\ and, in the calculation of diluted earnings per
share, the weighted-average incremental shares that would be issued
from the assumed exercise or conversion of options, warrants, and
convertible securities.\220\ As such, we propose to delete Item
201(a)(2)(i) of Regulation S-K. We note that because Item 201(a)(2)(i)
disclosures are located with related information about the potential
dilution of equity for which there is no established United States
public trading market, such as the amount of common equity that is
being publicly offered which could have a material effect on the market
price of the issuer's common equity, while the corresponding
disclosures are in the notes to the financial statements, the proposed
amendments give rise to Disclosure Location--Prominence Considerations.
---------------------------------------------------------------------------

    \218\ 17 CFR 229.201(a)(2)(i).
    \219\ ASC 470-20-50, ASC 505-10-50-3, ASC 505-50-50-1, ASC 718-
10-50-1, ASC 718-10-50-2, and ASC 815-40-50-5.
    \220\ ASC 260-10-50. U.S. GAAP also requires disclosure of
amounts not included in the calculation of diluted earnings per
share because exercise or conversion of the securities would have
had an antidilutive effect in the period. In aggregate, these
amounts may be similar to, but not the same as, those required by
Item 201(a)(2)(i) of Regulation S-K, as U.S. GAAP determines the
incremental shares as a weighted average based on the period
outstanding during the year and assumes that cash received from the
assumed exercise or conversion is used to repurchase outstanding
shares.
---------------------------------------------------------------------------

Request for Comment
    48. Would deletion of Item 201(a)(2)(i) affect, in any material
respect, the usefulness of information that investors receive? If so,
how?
16. Dividends
    Item 201(c)(1) of Regulation S-K \221\ requires disclosure of the
frequency and amount of cash dividends declared for the two most recent
fiscal years and any subsequent interim period. Rule 3-04 of Regulation
S-X requires annual disclosure of the amount of dividends per share and
in the aggregate for each class of shares and changes in stockholders'
equity for each period for which an income statement is required to be
filed, but does not apply to interim periods. We propose to add
requirements to Rule 8-03 and Rule 10-01 to mandate that Rule 3-04 be
applied to interim periods. These proposed amendments would provide
disclosure of the amount of dividends in interim periods, similar to
Item 201(c)(1). In addition, the frequency of dividends would be
evident from this disclosure.\222\
---------------------------------------------------------------------------

    \221\ 17 CFR 229.201(c)(1).
    \222\ These proposed amendments also address certain
inconsistencies between Rule 3-04 of Regulation S-X [17 CFR 210.3-
04] and U.S. GAAP and may create some additional burdens for
issuers, as discussed in section V.B.5.
---------------------------------------------------------------------------

    Based on the foregoing, we propose to delete the requirement in
Item 201(c)(1) to disclose the frequency and amount of cash dividends
declared. We also propose to delete the reference to dividends in
Instruction 2 to Item 201 to conform to the deletion of Item
201(c)(1).\223\
---------------------------------------------------------------------------

    \223\ Three commenters on the Disclosure Effectiveness
Initiative stated that the requirement to disclose the frequency and
amount of dividends pursuant to Item 201(c)(1) are unnecessary and
proposed its elimination. See letters from ABA (Mar. 6, 2015), CCMC
(July 29, 2014), and Standards & Financial Market Integrity
Division, CFA Institute (``CFA Institute'') (Nov. 12, 2014). One
commenter on the Disclosure Effectiveness Initiative recommended
more transparency in the disclosure of dividends, observing ``[t]oo
often these amounts are deliberately buried in financial statements
that many small investors cannot read.'' See letter from Rosann
Balfour (Sept. 27, 2015).
---------------------------------------------------------------------------

    Extending Rule 3-04 disclosures to interim periods may create some
additional burden for issuers. However, we expect this burden would be
minimal, as the required information is already available from the
preparation of the interim financial statements.\224\ In addition, we
note that because disclosures required by Regulation S-K are located
with related information about dividends and other stockholder matters,
while the corresponding disclosures are in the notes to the financial
statements, the proposed amendments give rise to Disclosure Location--
Prominence Considerations. With the proposed amendments, issuers may
also be less willing to voluntarily supplement the required disclosures
in the notes to the financial statements with forward-looking
information because note disclosures are not subject to safe harbor
protections under the PSLRA.
---------------------------------------------------------------------------

    \224\ Please refer to further discussion of the potential
additional burden and request for comment in section V.B.5.
---------------------------------------------------------------------------

Request for Comment
    49. Would deletion of Item 201(c)(1) affect, in any material
respect, the

usefulness of information that investors receive? If so, how?
    50. Would the unavailability of the PSLRA safe harbor in this
instance affect issuers or investors? If so, how? What disclosures, if
any, are currently provided to voluntarily supplement the required
disclosures above? Would issuers cease to provide these voluntary
disclosures if we delete Item 201(c)(1)? If so, would such a change
affect the information available to investors?
17. Equity Compensation Plans
    Regulation S-K prescribes the form and content for the disclosure
of existing equity compensation plans with equity securities authorized
for issuance.\225\ This information is currently required in Part III
of Form 10-K,\226\ Item 11 of Form S-1, Item 9 of Form 10, and Item 10
of Schedule 14A.\227\ In 2004, the FASB issued SFAS No. 123 (revised
2004), Share-Based Payment (``SFAS No. 123R''), which resulted in
disclosures that overlap with Item 201(d).\228\
---------------------------------------------------------------------------

    \225\ See Item 201(d) of Regulation S-K [17 CFR 229.201(d)].
    \226\ There was previously uncertainty regarding whether this
disclosure should appear both in Part II, Item 5 and Part III, Item
12 of Form 10-K. The staff of the Division Corporation Finance has
provided guidance to clarify that the general reference to Item 201
of Regulation S-K in Part II, Item 5 does not include Item 201(d).
Issuers therefore provide the Item 201(d) disclosure in response to
Part III, Item 12, which specifically references Item 201(d). See
Division of Corporation Finance CD&I 106.01 available at http://www.sec.gov/divisions/corpfin/guidance/regs-kinterp.htm. As with any
staff guidance referenced in this release, the views of the staff
are not rules or interpretations of the Commission. The Commission
has neither approved nor disapproved the views of the staff.
    \227\ 17 CFR 240.14a-101. Item 1 of Schedule 14C [17 CFR
240.14c-101] also requires inclusion of the information that would
have been provided in a Schedule 14A if proxies were being solicited
even though consents are not being solicited by the information
statement.
    \228\ See ASC 718-10-50-1 to 4. Additionally, ASC 505-50-50-1
requires similar disclosure when share based payments are made to
non-employees.
---------------------------------------------------------------------------

    Regulation S-K incrementally requires: (1) For options, warrants,
or rights assumed in a business combination, disclosure of the number
of securities to be issued upon exercise and the weighted-average
exercise price \229\ and (2) disclosure of any formula for calculating
the number of securities available for issuance under the plan.\230\
Item 201(d) further provides instructions about the aggregation of
equity compensation plan disclosures. Although these requirements and
instruments are not explicitly contained in U.S. GAAP, we believe that
the U.S. GAAP requirement to provide disclosures to enable investors to
understand the nature and terms of equity compensation arrangements and
the potential effects of those arrangements on shareholders \231\ would
results in reasonably similar disclosures.
---------------------------------------------------------------------------

    \229\ See Instruction 5 to Item 201(d).
    \230\ See Instruction 8 to Item 201(d).
    \231\ ASC 718-10-50-1a.
---------------------------------------------------------------------------

    Regulation S-K also incrementally requires disaggregation of
information between equity compensation plans approved by security
holders and those not approved by security holders. The Commission
adopted these requirements in 2001 \232\ before the major national
securities exchanges required listed issuers to have, with limited
exceptions, shareholder approved plans.\233\ Because the major
exchanges \234\ now have such requirements, we believe disaggregation
of the disclosures about the plans in this manner is no longer useful
to investors.\235\
---------------------------------------------------------------------------

    \232\ See Disclosure of Equity Compensation Plan Information,
Release No. 33-8048 (Dec. 21, 2001) [67 FR 232], available at
https://www.sec.gov/rules/final/33-8048.htm.
    \233\ For example, the New York Stock Exchange (``NYSE'')
listing standard does not require shareholder approval of employment
inducement awards, certain grants, plans and amendments in the
context of mergers and acquisitions, and certain other specific
types of plans. See Self-Regulatory Organizations; New York Stock
Exchange, Inc. and National Association of Securities Dealers, Inc.;
Order Approving NYSE and Nasdaq Proposed Rule Changes and Nasdaq
Amendment No. 1 and Notice of Filing and Order Granting Accelerated
Approval to NYSE Amendments No. 1 and 2 and Nasdaq Amendments No. 2
and 3 Thereto Relating to Equity Compensation Plans, Release No. 34-
48108 (June 30, 2003). See also New York Stock Exchange, Listed
Company Manual Sec.  303A.08; Nasdaq Listing Rule 5635(c) and IM-
5635-1; American Stock Exchange Rulemaking Re: Shareholder Approval
of Stock Option Plans and Other Equity Compensation Arrangements,
Release No. 34-48610 (Oct. 9, 2003); and NYSE MKT Company Guide
Sec.  711.
    \234\ We refer to the NYSE, NYSE MKT, and Nasdaq as the major
exchanges. The majority of domestic issuers, representing
substantially all domestic issuer market capitalization, is listed
on one of the major exchanges.
    \235\ One commenter on the Disclosure Effectiveness Initiative
recommended that Item 201(d)(3), which requires the material
features of non-shareholder approved equity compensation plans, be
deleted, noting that such plans are either not material or covered
by other disclosure requirements. See letter from ABA (Mar. 6,
2015).
---------------------------------------------------------------------------

    Based on the foregoing, we propose to delete Item 201(d) and the
references to it in Part III of Form 10-K and Item 10(c) of Schedule
14A.\236\ These proposed amendments would not affect the disclosures
related to new plans or modifications of existing plans subject to
shareholder action.\237\ We note that because disclosures required by
Item 201(d) are located with related information about the issuer's
common equity and related stockholder matters, while the corresponding
disclosures are in the notes to the financial statements, the proposed
amendments give rise to Disclosure Location--Prominence Considerations.
In particular, as a result of the proposed amendments, Item 201(d)
disclosures would no longer be provided in Schedule 14A \238\ alongside
information on equity compensation plans subject to security holder
action; rather, investors would obtain that information from the notes
to the financial statements in the separate Form 10-K filing. With the
proposed amendments, issuers may also be less willing to voluntarily
supplement the required disclosures in the notes to the financial
statements with forward-looking information because note disclosures
are not subject to safe harbor protections under the PSLRA.
---------------------------------------------------------------------------

    \236\ Because Form S-1 and Form 10 contain a general reference
to Item 201, rather than a specific reference to Item 201(d), no
amendment to these forms is necessary.
    \237\ See Items 10(a), 10(b), and the Instructions to 10(c) of
Schedule 14A.
    \238\ The proposal to delete the Item 201(d) requirements from
Schedule 14A would also result in such information being omitted
from information statements filed on Schedule 14C disclosing
adoption of an equity compensation plan when shareholder consents
are not being solicited.
---------------------------------------------------------------------------

Request for Comment
    51. Would deletion of Item 201(d) affect, in any material respect,
the usefulness of information that investors receive? If so, how?
    52. Would the unavailability of the PSLRA safe harbor in this
instance affect issuers or investors? If so, how? What disclosures, if
any, are currently provided to voluntarily supplement the required
disclosures above? Would issuers cease to provide these voluntary
disclosures if we delete Item 201(d)? If so, would such a change affect
the information available to investors?
    53. Non-listed issuers and, in limited circumstances, listed
issuers,\239\ are not required to have shareholder approved plans.
Should we retain the requirements in Item 201(d) for these situations?
Why or why not?
---------------------------------------------------------------------------

    \239\ See, e.g., supra note 233.
---------------------------------------------------------------------------

18. Ratio of Earnings to Fixed Charges
    Regulation S-K requires issuers that register debt securities to
disclose the historical and pro forma ratios of earnings to fixed
charges.\240\ Regulation S-K also requires issuers that register
preference equity securities to disclose the historical and pro forma
ratio of combined fixed charges and preference dividends to earnings
(collectively, ``ratio of earnings to fixed charges'').\241\ Regulation
S-K further requires the

filing of an exhibit setting forth the computation of any ratio of
earnings to fixed charges.\242\ These requirements only apply to non-
SRCs.\243\ In addition, Instruction 7 to ``Instructions as to
Exhibits'' of Form 20-F requires foreign private issuers to disclose
how any ratio of earnings to fixed charges presented in the filing was
calculated. As discussed further below, U.S. GAAP and IFRS require
disclosure of many of the components of this ratio, as well as
information from which other ratios that convey reasonably similar
information about an issuer's ability to meet its financial obligations
may be computed.
---------------------------------------------------------------------------

    \240\ See Item 503(d) [17 CFR 229.503(d)] and Item 1010(a)(3)
[17 CFR 229.1010(a)(3)] of Regulation M-A.
    \241\ See id.
    \242\ 17 CFR 229.601(b)(12).
    \243\ See Item 503(e) [17 CFR 229.503(e)] and Item 601(c) [17
CFR 229.601(c)] of Regulation S-K.
---------------------------------------------------------------------------

    The Commission first adopted the requirement to present a ratio of
earnings to fixed charges in 1954 in connection with the adoption of
Form S-9, a short-form registration statement for registration of non-
convertible, fixed-interest debt.\244\ An issuer was required to have a
minimum coverage ratio before it was permitted to use Form S-9. To
demonstrate eligibility, the issuer was required to disclose the ratio
in its filing. The Commission rescinded Form S-9 in 1976. However, the
Commission added a requirement to disclose the ratio in certain other
forms, although use of those forms was not contingent upon a minimum
coverage ratio.\245\
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    \244\ See Registration Statement, Release No. 33-3509, (Jul. 21,
1954) [19 FR 4630].
    \245\ See, e.g., Forms S-1, S-3, S-4, F-1, F-3 and F-4.
---------------------------------------------------------------------------

    In 1980, the Commission issued a concept release that requested
comment on whether the requirements for the presentation of historical
and pro forma ratios should be retained or deleted.\246\ Responses from
commenters were mixed with a substantial number of commenters
supporting retention of the requirement. Although they did not discuss
specific reasons for their support, commenters ``pointed out the
disclosure as an analytical tool and a method for showing trends.''
\247\
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    \246\ See Ratio of Earnings to Fixed Charges, Release No. 33-
6196 (Mar. 7, 1980) [45 FR 16498].
    \247\ See Ratio of Earnings to Fixed Charges, Release No. 33-
6285 (Feb. 18, 1981) [46 FR 12757].
---------------------------------------------------------------------------

    However, today, there are a variety of analytical tools available
to investors that may accomplish a similar objective as the ratio of
earnings to fixed charges.\248\ This ratio measures the issuer's
ability to service fixed financing expenses--specifically, interest
expense, including management's approximation of the portion of rent
expense that represents interest expense, and preference dividend
requirements--from earnings. Other ratios that accomplish similar
objectives include other variations of the ratio of earnings to fixed
charges,\249\ the interest coverage ratio,\250\ and the debt-service
coverage ratio,\251\ which can be calculated based on information
readily available in the financial statements.
---------------------------------------------------------------------------

    \248\ See letter from Ernst & Young (Sept. 11, 2012) on the S-K
Study, which states that the ratio of earnings to fixed charges
``appears an anachronism in the age of sophisticated financial
modeling and analysis, facilitated by the wealth of data available
from issuer financial statements.'' See also letter from CCMC (July
29, 2014).
    \249\ Other variations of the ratio of earnings to fixed charges
include alternative earnings measures such as earnings before
interest and taxes and alternative fixed charges measures such as
total lease payments and one-third of lease payments (to approximate
the interest component in lease payments).
    \250\ The interest coverage ratio is often calculated as
earnings before interest and taxes divided by interest payments.
    \251\ The debt-service coverage ratio is often calculated as
operating income divided by total debt service.
---------------------------------------------------------------------------

    Further, the requirement to disclose the ratio of earnings to fixed
charges, as opposed to the various components (e.g., income, interest
expense, lease expense) of this ratio that investors may use as
desired, may place undue emphasis on this particular measure.
Commenters to the 1980 concept release observed shortcomings in the
measure, such as the lack of uniformity of computation and the failure
of the ratio to give effect to principal payments on debt and lease
obligations.\252\ Unlike other ratios, however, certain components of
the ratio of earnings to fixed charges, such as the portion of rent
expense that represents interest \253\ and the amortization of
capitalized interest, are not readily available elsewhere.
---------------------------------------------------------------------------

    \252\ See Ratio of Earnings to Fixed Charges, supra note 247.
    \253\ In January 2016, the IASB issued IFRS 16, Leases, which is
effective on January 1, 2019, with early application permitted in
certain circumstances. Under IFRS 16, interest expense will be
recognized for all leases with a term of more than 12 months, unless
the underlying asset is of low value. In February 2016, the FASB
issued ASU No. 2016-02, Leases (Topic 842) (``ASU No. 2016-02''),
which is effective for fiscal years beginning after December 15,
2018, with early application permitted. Under ASU No. 2016-02,
leases with a term of more than 12 months will be classified into
one of two types, with one type requiring recognition of an interest
expense component (a finance lease) and the other type requiring
recognition of lease expense without separate recognition of
interest expense (an operating lease). Like IFRS 16, interest
expense will not be recognized on leases with a term less than 12
months. Interested parties may still need to estimate the portion of
lease expense that is viewed to represent interest for operating
leases in order to determine the components of the ratio of earnings
to fixed charges, which will be facilitated by disclosure of the
weighted-average discount rate for operating leases required by ASU
No. 2016-02.
---------------------------------------------------------------------------

    Moreover, while debt agreements may contain fixed charge coverage
covenants,\254\ debt investors often negotiate contractual agreements
with issuers to obtain financial information to meet their needs,\255\
which may be more relevant and useful than a prescribed disclosure of a
ratio of earnings to fixed charges. Companies are also required to
discuss the material impacts of these covenants to the extent that they
are reasonably likely to limit the company's ability to undertake
additional financing or are reasonably likely to be breached.\256\
---------------------------------------------------------------------------

    \254\ See Gerald T. Nowak P.C., Negotiating the High-Yield
Indenture, (Feb. 17, 2009), available at http://www.pli.edu/emktg/toolbox/HighYield_Indenture13.pdf (noting that a typical high-yield
credit agreement might require the debtor to maintain a certain
level of revenue or a certain ratio of earnings to fixed charges).
See also Li, Ningzhoung, Performance Measures in Earnings-Based
Financial Covenants in Debt Contracts, LONDON BUS. SCH. (2011)
available at http://www.olin.wustl.edu/docs/Faculty/Performance_measures_in_earnings_based_financial_covenants.pdf(noting
 that fixed charge coverage covenants are common in loan documents).
    \255\ See letter from ABA (Mar. 6, 2015), which states: Many of
[the financial metrics debt investors use to evaluate an issuer's
financial position and liquidity] are reflected in the measures of
performance or liquidity that are defined in the issuers' debt
instruments. For investors in such instruments, a metric that is
tied to a contractually defined covenant test is more useful than
the SEC-mandated disclosure. Importantly, our experience is that
market participants in unregistered debt offerings--initial
purchasers as well as institutional investors--do not generally
request or require that the SEC-prescribed ratio of earnings to
fixed charges be included in the offering document; instead, issuers
disclose one or more interest coverage ratios or similar financial
metrics that are calculated with reference to the instruments
governing the securities being offered.
    \256\ See Commission Guidance Regarding Management's Discussion
and Analysis of Financial Condition and Results of Operations,
Release No. 33-8350 (Dec. 19, 2003) [68 FR 75056].
---------------------------------------------------------------------------

    Based on the foregoing, we propose to delete Item 503(d) and Item
601(b)(12), with conforming revisions to Item 503(e), Item 601(c), the
Exhibit Table in Item 601, Item 1010(a)(3), Item 1010(b)(2), Item
1010(c)(4), Item 3 of Form S-1, Item 3 of Form S-3, Item 3 of Form S-4,
Item 3 of Form S-11, Item 3 of Form F-1, Item 3 of Form F-3, and Item 3
of Form F-4. We also propose to delete Instruction 7 to ``Instructions
as to Exhibits'' of Form 20-F.
Request for Comment
    54. As stated above, certain components of the ratio of earnings to
fixed charges, such as the portion of rent expense that represents
interest and the amortization of capitalized interest, are not readily
available elsewhere.
    a. Are there any other components to the ratio of earnings to fixed
charges that are not readily available in the notes to the financial
statements?
    b. For the components of the ratio that are not readily available
in the notes to

the financial statements, could they be estimated using information in
the notes to the financial statements? If so, would estimation be
burdensome for investors? How consistent would these methods and
estimates be compared to the methods used and amounts estimated by
issuers?
19. Invitations for Competitive Bids
    Item 601(b)(26) \257\ and Item 512(d) \258\ of Regulation S-K both
set forth disclosure requirements for competitive bids. However, Item
601(b)(26) differs from Item 512(d) in that it requires disclosure
about the invitation of the competitive bid, whereas Item 512(d)
requires issuers to undertake to distribute prior to opening bids a
reasonable number of prospectuses and to amend the registration
statement to reflect the results of the competitive bidding and the
terms of the reoffering. We do not believe that the Item 601(b)(26)
disclosure provides additional value to investors because those
participating in the competitive bid would directly receive the
invitation and all other investors would have access to the
registration statement covering the securities offered at competitive
bidding, as well as the results of the competitive bidding and the
terms of reoffering. Based on the foregoing, we propose to delete Item
601(b)(26) and its accompanying reference in the Exhibit Table within
Item 601.
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    \257\ 17 CFR 229.601(b)(26). Item 601(b)(26) requires that where
a registration statement covers securities to be offered at
competitive bidding, any communication that is an invitation for
competitive bid shall be filed as an exhibit.
    \258\ 17 CFR 229.512(d). Item 512(d) requires an undertaking by
issuers to provide disclosure not later than the first use of a
prospectus relating to the securities offered at competitive
bidding, unless no further public offering and no reoffering of such
securities is proposed to be made.
---------------------------------------------------------------------------

20. Request for Comment
    55. We solicit comment on the foregoing proposed amendments to
eliminate overlapping requirements. Should any proposed amendments not
be adopted? Should any proposed amendments be modified? If so, which
ones and why? Please be as specific as possible for each of the
proposals on which you provide comments.
    56. Are there other overlapping Commission disclosure requirements
that: (1) Require disclosures that convey reasonably similar
information to or are encompassed by the disclosures that result from
compliance with the overlapping, U.S. GAAP, IFRS, or Commission
disclosure requirements or (2) require disclosures incremental to other
U.S. GAAP or Commission disclosure requirements and may no longer be
useful to investors? If so, what requirements do they overlap with and
what action, if any, should we take to address the overlap?
D. Overlapping Requirements--Proposed Integrations
    This section discusses Commission disclosure requirements that
overlap with, but require information incremental to, other Commission
disclosure requirements. In these cases, we propose to integrate the
overlapping Commission disclosure requirements.
1. Foreign Currency Restrictions
    If consolidation of foreign subsidiaries is deemed appropriate in
the presence of foreign currency exchange restrictions, Rule 3A-02(d)
of Regulation S-X requires disclosure of the effect of foreign
subsidiaries' currency exchange restrictions upon the consolidated
financial position and operating results of the issuer and its
subsidiaries. To streamline Commission disclosure requirements, we
propose to relocate this requirement to Rule 3-20(b) of Regulation S-
X,\259\ which addresses other currency considerations.
---------------------------------------------------------------------------

    \259\ 17 CFR 210.3-20(b).
---------------------------------------------------------------------------

    Rule 3-20(b), however, applies only to foreign private issuers,
whereas Rule 3A-02(d) applies to all issuers. To prevent any loss of
disclosure from the relocation of Rule 3A-02(d) to Rule 3-20(b), we
propose to delete the reference to foreign private issuers in the title
of Rule 3-20, which would broaden the scope of Rule 3-20(b) and Rule 3-
20(e) to all issuers.\260\ We do not believe that this expansion of the
scope would create additional burdens for domestic issuers. Rule 3-
20(b) requires disclosure of easily-accessible information, such as the
issuer's reporting currency and the currency in which the issuer
declares dividends. Rule 3-20(e) requires use of the same reporting
currency for all periods presented. Even though Rule 3-20(e) currently
applies only to foreign private issuers, Commission staff has
historically requested issuers to use the same reporting currency for
all periods presented.\261\
---------------------------------------------------------------------------

    \260\ The remaining paragraphs in Rule 3-20 specify the rule's
scope, so broadening the title to Rule 3-20 would have no effect on
the application of these paragraphs.
    \261\ See section 6630.1 of the Division of Corporation
Finance's Financial Reporting Manual.
---------------------------------------------------------------------------

    Rule 3-20(b) also sets forth requirements for foreign private
issuers if their reporting currency is not the U.S. dollar. Despite the
proposed expansion of the scope of Rule 3-20(b) discussed above, we do
not intend to expand the instances in which a reporting currency other
than the U.S. dollar would be permitted. We are therefore proposing
amendments to Rule 3-20(a) to require that a non-foreign private issuer
present its financial statements in U.S. dollars.
Request for Comment
    57. Would disclosure of the reporting currency and the currency in
which the issuer declares dividends result in significant burdens or
costs for issuers? How would the requirement to use the same reporting
currency for all periods presented affect the burdens and costs for
issuers?
    58. Foreign issuers that do not meet the definition of ``foreign
private issuer'' would be required to report in U.S. dollars. Should
such foreign issuers be permitted to report in a foreign currency?
2. Restrictions on Dividends and Related Items
a. Domestic Issuers
    Commission requirements mandate disclosure about restrictions on
the payment of dividends and related items in a number of locations:
     Item 201(c)(1) of Regulation S-K requires disclosure of
restrictions (including restrictions on the ability of issuer's
subsidiaries to transfer funds to it in the form of cash dividends,
loans or advances) that currently or are likely to materially limit the
issuer's ability to pay dividends on its common equity.\262\
---------------------------------------------------------------------------

    \262\ In lieu of disclosures, Item 201(c)(1) permits a cross-
reference to this information in the disclosures required by Item
303 of Regulation S-K and Regulation S-X.
---------------------------------------------------------------------------

     Rule 4-08(d)(2) of Regulation S-X requires disclosure of
any restriction upon retained earnings that arises from the fact that
upon involuntary liquidation the aggregate preferences of the preferred
shares exceed the par or stated value of such shares.\263\
---------------------------------------------------------------------------

    \263\ 17 CFR 210.4-08(d).
---------------------------------------------------------------------------

     Rule 4-08(e) of Regulation S-X requires disclosure related
to the most significant restrictions of the issuer's payment of
dividends.\264\ Rule 4-08(e)(3) also requires, where restricted net
assets, as defined by the rule, exceed 25 percent of consolidated net
assets, a description of: (1) The restrictions on the ability of
subsidiaries to transfer funds to the issuer, and (2) the amount of
restricted net assets.\265\
---------------------------------------------------------------------------

    \264\ 17 CFR 210.4-08(e).
    \265\ 17 CFR 210.4-08(e)(3).
---------------------------------------------------------------------------

    We propose to streamline these disclosure requirements into a
single requirement for the disclosure of material restrictions on
dividends and

related items to which an issuer and its subsidiaries are subject. To
that end, we propose to: (1) Delete the requirements in Item 201(c)(1)
and Rule 4-08(d)(2) to disclose restrictions, and (2) revise Rule 4-
08(e)(3) to require the dividend restrictions and related disclosures
in subparagraphs (i) and (ii) when material, rather than when
restricted net assets exceed the 25 percent threshold. Doing so would
give rise to Bright Line Disclosure Threshold Considerations. In
addition, we note that because disclosures required by Regulation S-K,
unlike those required by Regulation S-X, may be provided outside of the
audited financial statements, the proposed amendments give rise to
Disclosure Location--Financial Statement Considerations.
    Rule 5-04,\266\ Rule 7-05,\267\ and Rule 9-06 \268\ of Regulation
S-X also refer to the definition of restricted net assets in Rule 4-
08(e)(3) in determining when condensed financial information of the
issuer (``parent only financial information'') is required to be
disclosed. We are not changing the requirements in Rules 5-04, 7-05,
and 9-06 of Regulation S-X for parent only financial information at
this time. As such, we propose to move the definition of restricted net
assets in Rule 4-08(e)(3) to a new Rule 1-02(dd) of Regulation S-X and
make corresponding changes to the cross references in Rules 5-04, 7-05,
and 9-06.
---------------------------------------------------------------------------

    \266\ 17 CFR 210.5-04.
    \267\ 17 CFR 210.7-05.
    \268\ 17 CFR 210.9-06
---------------------------------------------------------------------------

b. Foreign Private Issuers
    Form 20-F requires disclosure of dividend restrictions, as follows:
     Item 10.F requires disclosure of any dividend
restrictions.
     Instruction to Item 14.B requires disclosure of any
limitations on the payment of dividends.
    Foreign private issuers are already required to disclose dividend
restrictions in the notes to the financial statements. Specifically,
foreign private issuers that report under U.S. GAAP or Another
Comprehensive Body of Accounting Principles with a reconciliation to
U.S. GAAP must comply with Rule 4-08(e), as discussed above. Foreign
private issuers that report under IFRS must comply with paragraph
79(a)(v) of IAS 1, Presentation of Financial Statements, which requires
disclosure of restrictions on the distribution of dividends and the
repayment of capital for each class of share capital. Item 5.B.1.(b) of
Form 20-F also requires disclosure of an evaluation of the sources and
amounts of cash flows, including the nature and extent of any
restrictions on the ability of subsidiaries to transfer funds to the
parent and the impact of such restrictions.
    Based on the foregoing, we propose to delete the dividend
restriction disclosure requirements in Item 10.F and the Instruction to
Item 14.B of Form 20-F.\269\ We note that because these disclosures,
unlike those required by IFRS, may be provided outside the audited
financial statements with related information such as the rights of
security holders, the proposed amendments give rise to Disclosure
Location--Prominence Considerations.
---------------------------------------------------------------------------

    \269\ Item 5.B.1(b) of Form 20-F requires disclosure of
restrictions on a subsidiary's ability to transfer funds to the
parent in the form of dividends, loans, or advances. Although this
requirement is similar to Rule 4-08(e), which creates duplication
for foreign private issuers that report under U.S. GAAP or Another
Comprehensive Body of Accounting Principles with a reconciliation to
U.S. GAAP, we do not propose its deletion because IFRS does not
contain an equivalent requirement for foreign private issuers that
report under IFRS.
    Item 10.D.2 of Form 20-F requires disclosure of governmental
laws, decrees, regulations, or other legislation which may affect
the remittance of dividends, interest, or other payments to
nonresident securityholders. Although this requirement covers
dividend restrictions, we also do not propose amendments to it
because, through its reference to interest and other payments to
nonresident securityholders, its scope is broader than the
requirements for the notes to the financial statements.
---------------------------------------------------------------------------

3. Geographic Areas 270
---------------------------------------------------------------------------

    \270\ Please refer to the related discussion in section
III.C.12.
---------------------------------------------------------------------------

    Item 101(d)(4) of Regulation S-K requires, when interim financial
statements are presented, a discussion of the facts that indicate the
three-year financial data for geographic performance may not be
indicative of current or future operations. This requirement is similar
to requirements in Instruction 3 to Item 303(a) and Instruction 4 to
Item 303(b) to identify elements of income which are not necessarily
indicative of the issuer's ongoing business, except that there is no
explicit reference to ``geographic areas'' in either item requirement.
To streamline the requirements in Regulation S-K, we propose to revise
Item 303 to add an explicit reference to ``geographic areas'' and
delete Item 101(d)(4).\271\ We note that because these disclosures are
located in the business section of the filing, while the corresponding
disclosures are in MD&A, their proposed elimination gives rise to
Disclosure Location--Prominence Considerations.
---------------------------------------------------------------------------

    \271\ One commenter on the Disclosure Effectiveness Initiative
observed that material disclosures about geographic areas would
already be provided under Item 303 of Regulation S-K. See letter
from CCMC (July 29, 2014).
---------------------------------------------------------------------------

4. Request for Comment
    59. We solicit comment on the foregoing proposed amendments to
integrate overlapping Commission disclosure requirements. For each
topic in this section:
    a. Do investors use the disclosures required by the Commission
disclosure requirement? If so, in what way?
    b. Should any proposed amendments not be made? Should any proposed
amendments be modified? If so, which ones and why? Please be as
specific as possible for each of the proposed amendments on which you
provide comments.
    60. Are there additional Commission disclosure requirements that
overlap with, but require information incremental to, other Commission
disclosure requirements? If so, what requirements do they overlap with
and what action, if any, should we take to address the overlap?
E. Overlapping Requirements--Potential Modifications, Eliminations, or
FASB Referrals
    This section discusses Commission disclosure requirements that
overlap with, but require information incremental to, U.S. GAAP for
which we solicit comment to determine whether to retain, modify,
eliminate, or refer them to the FASB for potential incorporation into
U.S. GAAP. The comments received in response to this release may inform
both potential future Commission rulemaking and FASB standard-setting
activities. Future amendments to these Commission disclosure
requirements may depend on the outcome of any FASB standard-setting
activities to address the Commission disclosure requirements. Our staff
has discussed these overlapping requirements with the FASB staff.
    Incorporating these overlapping Commission disclosure requirements
into U.S. GAAP could alleviate any inconsistencies that currently arise
when the corresponding Commission disclosure requirements are not
simultaneously amended to conform to U.S. GAAP updates, as discussed in
section V.A.
    Because U.S. GAAP does not scale disclosure requirements by issuer
status, incorporation into U.S. GAAP would result in the application of
some of these requirements to SRCs, as identified below. Incorporation
into U.S. GAAP would also potentially result in the application of all
such requirements to Regulation A issuers

and crowdfunding issuers that report under U.S. GAAP. We solicit
comment on the costs and benefits of this expanded scope below.
1. REIT Disclosures 272--Tax Status of Distributions
---------------------------------------------------------------------------

    \272\ Please refer to the related discussions in sections
III.C.1 and V.B.3.
---------------------------------------------------------------------------

    U.S. GAAP requires disclosure of a public entity's tax status.\273\
For REITs, in addition to its tax status, Regulation S-X requires
disclosure in the notes to the financial statements of the tax status
of distributions per unit, for example as ordinary income, capital
gain, or return of capital.\274\
---------------------------------------------------------------------------

    \273\ See ASC 740-10-50-16.
    \274\ See Rule 3-15(c) of Regulation S-X.
---------------------------------------------------------------------------

2. Consolidation 275
---------------------------------------------------------------------------

    \275\ Please refer to the related discussion in sections II.B.2,
III.C.2, and V.B.4.
---------------------------------------------------------------------------

    Although Regulation S-X \276\ and U.S. GAAP \277\ both set forth
disclosure requirements about consolidation matters, Regulation S-X
incrementally requires disclosure of material changes in the entities
included in or excluded from the consolidated financial statements.
---------------------------------------------------------------------------

    \276\ See Rule 3A-03(b) of Regulation S-X.
    \277\ See ASC 810-10-50.
---------------------------------------------------------------------------

3. Discount on Shares
    Regulation S-X \278\ and U.S. GAAP \279\ both set forth
requirements about the presentation of items in the equity section of
the financial statements. However, Regulation S-X incrementally
requires discounts on shares to be presented separately as a deduction
from the applicable accounts. Discounts on shares may arise, for
example, from stock issuance costs, which are recognized as a reduction
in equity.\280\
---------------------------------------------------------------------------

    \278\ See Rule 4-07 of Regulation S-X [17 CFR 210.4-07].
Pursuant to Rule 4-02 of Regulation S-X, this separate presentation
is only required if material.
    \279\ See ASC 505-10-45.
    \280\ See SAB Topic 5:A, Expenses of Offering.
---------------------------------------------------------------------------

4. Assets Subject to Lien
    Regulation S-X \281\ and U.S. GAAP \282\ both require disclosure in
the notes to the financial statements of assets subject to lien and the
obligation collateralized for the most recent audited balance sheet
being filed. However, these U.S. GAAP disclosure requirements only
apply to certain financial assets (e.g., repurchase agreements or
securities lending transactions), whereas Rule 4-08(b) applies to all
assets.
---------------------------------------------------------------------------

    \281\ See Rule 4-08(b) of Regulation S-X [17 CFR 210.4-08(b)].
    \282\ See ASC 860-30-50-1A and ASC 860-30-50-7.
---------------------------------------------------------------------------

5. Obligations 283
---------------------------------------------------------------------------

    \283\ Please refer to the related discussion in section II.B.3.
We note that the FASB has a project underway on simplifying the
balance sheet classification of debt that may address these
disclosures. See http://www.fasb.org/jsp/FASB/FASBContent_C/ProjectUpdatePage&cid=1176164405275.
---------------------------------------------------------------------------

a. Defaults Not Cured
    Regulation S-X requires disclosure in the notes to the financial
statements of the facts and amounts related to defaults of obligations
or breaches of covenants that existed at the most recent balance sheet
date and have not been subsequently cured.\284\ This disclosure
requirement is incremental to U.S. GAAP, which sets forth
classification requirements for obligations for which there has been a
covenant violation \285\ and more limited disclosure requirements.\286\
---------------------------------------------------------------------------

    \284\ See Rule 4-08(c) of Regulation S-X [17 CFR 210.4-08(c)].
    \285\ See ASC 470-10-45-1 and ASC 470-10-45-11.
    \286\ See ASC 470-10-50-2, which requires disclosure of the
circumstances surrounding a covenant violation in certain
situations, but not the amount of the obligation.
---------------------------------------------------------------------------

Request for Comment
    61. Item 2.04 of Form 8-K requires disclosure of a triggering event
that causes the increase or acceleration of a direct financial
obligation, among other disclosures, if material. In addition, Part II,
Item 3 of Form 10-Q and Part II, Item 13 of Form 20-F both require
disclosure of material defaults and the amount of default for debt that
exceeds 5 percent of total assets. Moreover, Item 303(a)(1) of
Regulation S-K requires liquidity-related disclosures.\287\ These
disclosures, unlike those required by Rule 4-08(c), may be provided
outside the audited financial statements, giving rise to Disclosure
Location--Financial Statement Considerations. In addition, the
disclosures under Form 8-K and Form 10-Q are required at different
times than the annual disclosures required by Rule 4-08(c). In light of
these requirements in Form 8-K, Form 10-Q, Form 20-F, and Item
303(a)(1), should the disclosure requirement in Rule 4-08(c) be
eliminated, rather than retained, modified, or referred to the FASB for
potential incorporation into U.S. GAAP?
---------------------------------------------------------------------------

    \287\ Item 303(a)(1) requires disclosure of any known demands,
commitments, events or uncertainties that will result in or that are
reasonably likely to result in the issuer's liquidity materially
increasing or decreasing. In addition, if a material deficiency is
identified, Item 303(a)(1) requires disclosure of the course of
action that the issuer has taken or proposes to take to remedy the
deficiency.
---------------------------------------------------------------------------

b. Waived Defaults
    If a default of an obligation exists, but acceleration of the
obligation has been waived for a period of time, Rule 4-08(c) requires
disclosure of the amount of the obligation and the period of the
waiver. This disclosure requirement is incremental to U.S. GAAP, which
sets forth requirements for when to present debt subject to a covenant
violation as a current liability on the balance sheet,\288\ but does
not require disclosure of the amount of the obligation or the period of
the waiver for all waived defaults.
---------------------------------------------------------------------------

    \288\ See ASC 470-10-45-1 and ASC 470-10-45-11.
---------------------------------------------------------------------------

c. Changes in Obligations
    Regulation S-X \289\ and U.S. GAAP \290\ both require disclosure of
issuances of debt subsequent to the balance sheet date. However, Rule
4-08(f) of Regulation S-X incrementally requires disclosure of
significant changes in the authorized amounts of debt subsequent to the
latest balance sheet date.
---------------------------------------------------------------------------

    \289\ See Rule 4-08(f) of Regulation S-X.
    \290\ See ASC 855-10-50-2 and ASC 855-10-55-2a.
---------------------------------------------------------------------------

d. Amounts and Terms of Financing Arrangements
    Regulation S-X \291\ and U.S. GAAP \292\ both require certain
disclosures of an issuer's financing arrangements. However, Regulation
S-X incrementally requires disclosure, if significant, of the amount
and terms (including commitment fees and the conditions under which
lines may be withdrawn) of unused lines of credit for short-term
financing, the weighted average interest rate on short-term borrowings
outstanding as of each balance sheet date, and the amount of any lines
of credit which support a commercial paper borrowing or similar
arrangement. It also requires similar disclosure of the amount and
terms (including commitment fees and the conditions under which
commitments may be withdrawn) of unused commitments for long-term
financial arrangements.
---------------------------------------------------------------------------

    \291\ See Rule 5-02.19(b) [17 CFR 210.5-02.19(b)], Rule 5-
02.22(b) [17 CFR 210.5-02.22(b)], Rule 6-04.13(b) [17 CFR 210. 6-
04.13(b)], Rule 7-03.16(b) [17 CFR 210.9-03.16(b)], Rule 7-03.16(c)
[17 CFR 210.7-03.16(c)], Rule 9-03.13(a) [17 CFR 210.9-03.13(a)],
and Rule 9-03.16 [17 CFR 210.9-03.16] of Regulation S-X.
    \292\ See ASC 470-10-50.
---------------------------------------------------------------------------

6. Preferred Shares
    Regulation S-X \293\ and U.S. GAAP \294\ both require disclosure
about preferred share preferences in involuntary liquidation. However,
Regulation S-X

requires disclosure in more circumstances than U.S. GAAP. Specifically,
Regulation S-X requires disclosure when preferences are other than par
or stated value, whereas U.S. GAAP requires disclosure when preferences
are considerably in excess of par or stated value.
---------------------------------------------------------------------------

    \293\ 17 CFR 210.4-08(d)(1).
    \294\ ASC 505-10-50-4.
---------------------------------------------------------------------------

7. Income Tax Disclosures \295\
---------------------------------------------------------------------------

    \295\ Please refer to the related discussion in sections II.B.4
and IV.B.2.
---------------------------------------------------------------------------

    Regulation S-X \296\ and U.S. GAAP \297\ both require disclosures
about income taxes in the notes to the financial statements.\298\
However, Rule 4-08(h) includes certain incremental requirements, some
of which gives rise to Bright Line Disclosure Threshold Considerations.
---------------------------------------------------------------------------

    \296\ See Rule 4-08(h) of Regulation S-X [17 CFR 210.4-08(h)].
    \297\ See ASC 740-10-50.
    \298\ We note that the FASB has an income tax disclosure project
underway regarding income tax disclosures. See http://www.fasb.org/jsp/FASB/FASBContent_C/ProjectUpdatePage&cid=1176164227426.
---------------------------------------------------------------------------

    Specifically, although U.S. GAAP and Regulation S-X both require
disclosure of the components of income tax expense, Rule 4-08(h)
incrementally: (1) Requires disclosure of the amount of domestic and
foreign pre-tax income and income tax expense, (2) requires
disaggregation of the foreign component of pre-tax income and income
tax expense with the domestic component if it exceeds five percent of
the respective total, and (3) defines ``foreign'' for purposes of this
disclosure.
    In addition, although U.S. GAAP and Regulation S-X both require a
reconciliation of the domestic federal statutory tax rate to the
effective tax rate, Rule 4-08(h) incrementally: (1) Requires
disaggregation of reconciling items if they individually exceed five
percent of the amount computed by multiplying pre-tax income by the
applicable statutory income tax rate, (2) clarifies the statutory tax
rate to use in the income tax rate reconciliation for foreign issuers,
and (3) requires, when the statutory tax rate used differs from the
U.S. federal corporate income tax rate, disclosure of the basis for
using that rate.
Request for Comment \299\
---------------------------------------------------------------------------

    \299\ The S-K Concept Release also seeks input on updating and
modernizing our business and financial disclosure requirements,
including income tax disclosures. See sections IV.A.4 and IV.G.7 of
the S-K Concept Release.
---------------------------------------------------------------------------

    62. Are there additional income tax disclosures that would be
useful to investors? Please explain. As discussed above, Rule 4-08(h)
requires disclosure of the amount of domestic and foreign pre-tax
income and income tax expense. Would further disaggregation of foreign
amounts be useful to investors? What, if any, burdens would such
additional disclosure create for issuers? Issuers are currently
required to provide foreign amounts. Would there be impediments to
disaggregating these amounts by material jurisdiction? If so, what are
the impediments?
8. Related Parties \300\
---------------------------------------------------------------------------

    \300\ Please refer to the related discussion in section II.B.6.
---------------------------------------------------------------------------

    Regulation S-X \301\ and U.S. GAAP \302\ both require the amount of
related party transactions to be disclosed in the financial statements.
We note that Rule 4-08(k)(1) incrementally requires that these amounts
be presented on the face of the financial statements, if material,\303\
giving rise to Disclosure Location--Prominence Considerations. In
addition, in separate financial statements, Rule 4-08(k)(2)
incrementally requires disclosure of the intercompany profits or losses
on transactions with related parties that are not eliminated.
---------------------------------------------------------------------------

    \301\ See Rule 4-08(k) of Regulation S-X [17 CFR 210.4-08(k)].
    \302\ See ASC 850-10-50-1.
    \303\ Pursuant to Rule 4-02 of Regulation S-X, this separate
presentation is only required if material.
---------------------------------------------------------------------------

9. Repurchase and Reverse Repurchase Agreements \304\
---------------------------------------------------------------------------

    \304\ Please refer to the related discussion in section III.C.3.
---------------------------------------------------------------------------

    Regulation S-X \305\ and U.S. GAAP \306\ both set forth
presentation and disclosure requirements for repurchase and reverse
repurchase agreements in the financial statements. However, Regulation
S-X incrementally requires: (1) The liabilities associated with
repurchase agreements that are separately presented on the balance
sheet to include accrued interest payable,\307\ (2) disclosure of the
interest rates associated with certain repurchase liabilities,\308\ (3)
information about counterparties and agreements with them, where there
is a concentration of counterparties,\309\ (4) separate presentation on
the balance sheet of the carrying amount of reverse repurchase
agreements,\310\ and (5) disclosure of the nature of any provisions to
ensure that the market value of the underlying assets remains
sufficient to protect the issuer in the event of counterparty
default.\311\ Regulation S-X requires these incremental disclosures
when a specified bright line threshold is met, giving rise to Bright
Line Disclosure Threshold Considerations.
---------------------------------------------------------------------------

    \305\ See Rule 4-08(m) of Regulation S-X [17 CFR 210.4-08(m)].
    \306\ See ASC 860-30-45-2 and ASC 860-30-50.
    \307\ See Rule 4-08(m)(1)(i) of Regulation S-X.
    \308\ See Rule 4-08(m)(1)(ii)(A)(ii) of Regulation S-X.
    \309\ See Rule 4-08(m)(1)(iii) and Rule 4-08(m)(2)(ii) of
Regulation S-X.
    \310\ See Rule 4-08(m)(2)(i)(A) of Regulation S-X.
    \311\ See Rule 4-08(m)(2)(i)(B)(2) of Regulation S-X.
---------------------------------------------------------------------------

10. Interim Financial Statements--Computation of Earnings Per Share
\312\
---------------------------------------------------------------------------

    \312\ Please refer to the related discussion in section II.B.8.
---------------------------------------------------------------------------

    Although Commission disclosure requirements \313\ and U.S. GAAP
\314\ both require disclosure in the notes to the financial statements
of the computation of earnings per share, U.S. GAAP does not
specifically require disclosure of the computation in interim financial
statements.
---------------------------------------------------------------------------

    \313\ See Rule 10-01(b)(2) of Regulation S-X and Item 601(b)(11)
of Regulation S-K.
    \314\ See ASC 260-10-50-1.
---------------------------------------------------------------------------

11. Interim Financial Statements--Retroactive Prior Period Adjustments
    Regulation S-X requires disclosure, in interim period financial
statements, of material retroactive changes to prior period financial
statements.\315\ Retroactive prior period adjustments arise due to:
---------------------------------------------------------------------------

    \315\ See Rule 8-03(b)(5) and Rule 10-01(b)(7) [17 CFR 210.10-
01(b)(7)] of Regulation S-X. Rule 8-03(b)(5) applies to SRCs and
Regulation A issuers in a Tier 2 offering that report under U.S.
GAAP, while Rule 10-01(b)(7) applies to non-SRCs.
---------------------------------------------------------------------------

     Changes in accounting principle, as discussed in sections
II.B.11 and III.C.8.
     Corrections of errors. Regulation S-X \316\ and U.S. GAAP
\317\ both require disclosure, in interim financial statements, of the
effect of a correction of an error on income, income per share, and
retained earnings.
---------------------------------------------------------------------------

    \316\ Regulation S-X only requires disclosure of the effect of a
correction of an error on retained earnings for non-SRCs. U.S. GAAP
requires disclosure of the effect on all financial statement lines
items, not only income, income per share, and retained earnings.
    \317\ See ASC 250-10-50-7 and ASC 250-10-50-8.
---------------------------------------------------------------------------

     Changes in reporting entities.\318\ Regulation S-X and
U.S. GAAP \319\ both require disclosure of the effect of changes in
reporting entities on net income and per share amounts. However,
Regulation S-X, unlike U.S. GAAP, explicitly requires such disclosures
in the interim period of change and, for non-SRCs,

incrementally requires disclosure of the effect on retained earnings.
---------------------------------------------------------------------------

    \318\ Examples of changes in reporting entity include: (1)
Changes in the specific subsidiaries that comprise the group of
entities for which consolidated financial statements are presented,
or (2) changes in the entities included in combined financial
statements. See FASB ASC Master Glossary.
    \319\ See ASC 250-10-50-6.
---------------------------------------------------------------------------

    Because U.S. GAAP does not scale disclosure requirements by SRC
status, any incorporation of these requirements into U.S. GAAP would
result in the application of these requirements to SRCs.
Request for Comment
    63. Would the application of the requirement to disclose the effect
of retroactive prior period adjustments on retained earnings to SRCs
result in additional costs? Please discuss any such costs. Would
investors benefit from such disclosure? Does that affect your view as
to whether we should refer this requirement to the FASB? If so, how?
12. Interim Financial Statements--Common Control Transactions \320\
---------------------------------------------------------------------------

    \320\ Please refer to the related discussion in section II.B.13.
---------------------------------------------------------------------------

    Regulation S-X \321\ and U.S. GAAP \322\ both set forth accounting
and disclosure requirements for combinations of entities under common
control. However, Rule 10-01(b)(3) incrementally requires non-SRCs to
disclose the separate results of the combined entities for periods
prior to the combination.\323\ Because U.S. GAAP does not scale
disclosure requirements by SRC status, any incorporation of these
requirements into U.S. GAAP would result in the application of these
requirements to SRCs.
---------------------------------------------------------------------------

    \321\ See Rule 10-01(b)(3) of Regulation S-X.
    \322\ See ASC 805-50-45-1 to 5.
    \323\ Should the FASB revise ASC 250-10-50-6 to address the
incremental Commission disclosure requirements discussed in section
III.E.11, such revisions would also address the incremental
Commission disclosure requirements discussed in this section.
Specifically, ASC 250-10-50-6 requires disclosure of the effect of a
change in a reporting entity, of which a combination of entities
under common control is an example. From this information, an
investor can determine the separate results of the combined entities
for periods prior to the combination, as required by Rule 10-
01(b)(3).
    However, as discussed in section III.E.11, ASC 250-10-50-6 does
not explicitly apply to interim periods, while Rule 10-01(b)(3)
does. Thus, any revision to U.S. GAAP to apply the provisions of ASC
250-10-50-6 to interim periods, to address the points raised in
section E.E.11, would also address the points raised in this
section.
---------------------------------------------------------------------------

Request for Comment
    64. Would the application of this disclosure requirement to SRCs
result in additional costs? Please discuss any such costs. Would
investors benefit from such disclosure? Does that affect your view as
to whether we should refer this requirement to the FASB? If so, how?
13. Products and Services
    Regulation S-K \324\ and U.S. GAAP \325\ both require disclosure of
the amount of revenue from products and services. Regulation S-K,
however, only requires this disclosure for products and services which
account for 10 percent or more of consolidated revenue in each of the
last three fiscal years.\326\ U.S. GAAP, on the other hand, requires
this disclosure for each product or service, or group of similar
products and services, unless impracticable. We note that because
disclosures required by Regulation S-K, unlike those required by U.S.
GAAP, may be provided outside of the audited financial statements,
these differences give rise to Disclosure Location--Financial
Disclosure Considerations. These differences also give rise to Bright
Line Disclosure Threshold Considerations.
---------------------------------------------------------------------------

    \324\ See Item 101(c)(1)(i) of Regulation S-K [17 CFR
229.101(c)(1)(i)].
    \325\ See ASC 280-10-50-40.
    \326\ If an issuer's revenue does not exceed $50 million,
Regulation S-K only requires disclosure for products and services
which accounted for 15 percent or more of consolidated revenue.
---------------------------------------------------------------------------

Request for Comment
    65. Do issuers encounter challenges in disclosing revenue by
products and services? If so, how significant are these challenges and
how do issuers overcome these challenges, given that Regulation S-K
does not provide an impracticability exception?
14. Major Customers
    Regulation S-K \327\ and U.S. GAAP \328\ both require disclosures
about major customers. However, Regulation S-K is more expansive in its
requirements and differs from U.S. GAAP in two ways: (1) The threshold
for disclosure and (2) the requirement to disclose a customer's name in
certain instances. We note that because disclosures required by
Regulation S-K, unlike those required by U.S. GAAP, may be provided
outside of the audited financial statements, these differences give
rise to Disclosure Location--Financial Disclosure Considerations. These
differences also give rise to Bright Line Disclosure Threshold
Considerations.
---------------------------------------------------------------------------

    \327\ See Item101(c)(1)(vii) [17 CFR 229.101(c)(1)(vii)] and
Item 101(h)(4)(vi) [17 CFR 229.101(h)(4)(vi)] of Regulation S-K.
Item 101(c)(1)(vii) applies to non-SRCs and Item 101(h)(4)(vi)
applies to SRCs.
    \328\ See ASC 280-10-50-42.
---------------------------------------------------------------------------

    First, Item 101(c)(1)(vii) of Regulation S-K requires disclosure if
loss of a customer, or a few customers, would have a material adverse
effect on a segment. This threshold differs from U.S. GAAP in that it
is qualitative and focuses on the impact on a segment. In contrast,
U.S. GAAP requires disclosure, for each customer that comprises 10
percent or more of total revenue, of that fact. Although the
requirements for SRCs in Item 101(h)(4)(vi) are more similar to U.S.
GAAP in that they do not prescribe a segment focus, they also differ
from U.S. GAAP in that they do not set forth a 10 percent bright line
test for disclosure.
    Second, Item 101(c)(1)(vii) requires disclosure of the name of any
customer that represents 10 percent or more of the issuer's revenues
and whose loss would have a material adverse effect on the issuer.\329\
In 1999, the Commission considered deleting this requirement to conform
to U.S. GAAP. However, the Commission determined to retain this
requirement, as it continued to believe that the identity of major
customers is material information to investors and that the disclosure
allows a reader to better assess risks associated with a particular
customer, as well as material concentrations of revenues related to
that customer.\330\
---------------------------------------------------------------------------

    \329\ Item 101(h)(4)(vi) of Regulation S-K does not require
disclosure of the name of major customers.
    \330\ See Segment Reporting, Release No. 33-7620, (Jan. 5, 1999)
[64 FR 1728].
---------------------------------------------------------------------------

    Because U.S. GAAP does not scale disclosure requirements by SRC
status, any incorporation of these requirements into U.S. GAAP would
result in the application to SRCs of the disclosure threshold and the
requirement to name a customer in certain instances.
Request for Comment
    66. U.S. GAAP does not require identification of major customers by
name because many constituents argued in the standard-setting process
that it could be competitively harmful to either the enterprise or the
customer.\331\ In what way would such disclosures be competitively
harmful? Does the fact that the Regulation S-K requirement to identify
the customer is triggered where the loss would be material, whereas the
U.S. GAAP disclosure is based on a bright line percentage of revenues,
affect the determination of whether disclosure would be competitively
harmful?
---------------------------------------------------------------------------

    \331\ Basis for Conclusions to SFAS No. 14, Financial Reporting
for Segments of a Business Enterprise, paragraph 89.
---------------------------------------------------------------------------

    67. What would be the impact on SRCs if the disclosure threshold
discussed above and requirement to disclose a customer's name in
certain circumstances were to apply to SRCs? Would investors benefit
from such disclosure? Does any potential impact affect your view as to
whether we should refer this requirement to the FASB? If so, how?

15. Legal Proceedings
    U.S. GAAP requires disclosure of loss contingencies.\332\
Regulation S-K requires disclosure of certain legal proceedings,\333\
which are one type of loss contingency. In practice, to comply with
Regulation S-K, issuers commonly repeat some or all of the disclosures
provided in the notes to the financial statements under U.S. GAAP or
include a cross-reference thereto.
---------------------------------------------------------------------------

    \332\ See ASC 450.
    \333\ See Item 103 of Regulation S-K [17 CFR 229.103].
---------------------------------------------------------------------------

    Three commenters to the Disclosure Effectiveness Initiative
generally noted similarities between the disclosures required by Item
103 of Regulation S-K and U.S. GAAP.\334\ One commenter suggested
removing any overlap between Item 103 and relevant accounting standards
and financial reporting requirements.\335\ Another commenter encouraged
the Commission to coordinate with the FASB to determine, generally,
whether differences between U.S. GAAP and the disclosures required by
Regulation S-K continue to serve a purpose.\336\
---------------------------------------------------------------------------

    \334\ See letters from CCMC (July 29, 2014); Society of
Corporate Secretaries and Governance Professionals (``SCSGP'')
(Sept. 10, 2014); and Shearman & Sterling LLP (``Shearman'') (Nov.
26, 2014).
    \335\ See letter from CCMC (July 29, 2014).
    \336\ See letter from SCSGP (Sept. 10, 2014).
---------------------------------------------------------------------------

    As further described below, although Item 103 and U.S. GAAP have
overlapping requirements, they differ in certain respects.
Incorporation of Item 103 requirements into U.S. GAAP would have
implications for investors, issuers, and other stakeholders.
    The discussion below is organized as follows:
     Section III.E.15.a identifies differences between Item 103
and U.S. GAAP.
     Section III.E.15.b discusses the potential consequences of
incorporating the Item 103 requirements into U.S. GAAP.
     Section III.E.15.c discusses other considerations related
to Item 103.
a. Differences
    The table below presents differences in: (1) The types of matters
covered by Item 103 and U.S. GAAP and (2) other criteria. Each type of
matter in part (1) of the table is subject to each of the other
criteria discussed in part (2) of the table. These differences give
rise to Disclosure Location--Financial Disclosure Considerations and
Bright Line Disclosure Threshold Considerations.

----------------------------------------------------------------------------------------------------------------
                Scope                          Item 103                U.S. GAAP                Difference
----------------------------------------------------------------------------------------------------------------
                                               1. Types of Matters
----------------------------------------------------------------------------------------------------------------
Ordinary routine litigation..........  Requires disclosure of   Encompasses all legal    U.S. GAAP is more
                                        material legal           proceedings, including   expansive than Item
                                        proceedings other than   ordinary routine         103. See consequence 3
                                        ordinary routine         litigation.              in section III.E.15.b.
                                        litigation incidental
                                        to the business.
Proceedings known to be contemplated   Requires disclosure of   Encompasses all legal    U.S. GAAP is more
 by governmental authorities.           proceedings that are     proceedings, as well     expansive than Item
                                        not only pending, but    as unasserted claims     103, except for
                                        known to be              probable of being        proceedings known to
                                        contemplated.            asserted.                be contemplated which
                                                                                are not probable of
                                                                                being asserted. See
                                                                                consequence 3 in
                                                                                section III.E.15.b.
                                                                                For proceedings known
                                                                                to be contemplated
                                                                                which are not probable
                                                                                of being asserted,
                                                                                Item 103 is more
                                                                                expansive than U.S.
                                                                                GAAP. See consequences
                                                                                1 and 2 in section
                                                                                III.E.15.b.
Proceedings with any director,         Requires disclosure of   Encompasses all legal    U.S. GAAP is more
 officer, affiliate, or shareholder.    material proceedings     proceedings, including   expansive than Item
                                        when a director,         matters with             103. See consequence 3
                                        officer, affiliate,      directors, officers,     in section III.E.15.b.
                                        shareholder with more    affiliates,
                                        than five percent        shareholders with more
                                        ownership, or            than five percent
                                        associate thereof is a   ownership, or
                                        party adverse to the     associates thereof.
                                        issuer, or has a
                                        material interest
                                        adverse to the issuer.
Bankruptcy, receivership, or similar   Requires a description   Disclosure not required  Item 103 is more
 proceeding.                            of any material                                   expansive than U.S.
                                        bankruptcy,                                       GAAP. See consequence
                                        receivership, or                                  2 in section
                                        similar proceeding.                               III.E.15.b.
Environmental matters................  Notwithstanding the      Encompasses all legal    For legal proceedings
                                        ordinary routine         proceedings that         that affect the income
                                        litigation exception     affect the income        statement, U.S. GAAP
                                        above, requires          statement, including     is more expansive than
                                        disclosure of all        environmental matters.   Item 103. See
                                        proceedings, under                                consequence 3 in
                                        federal, state, or                                section III.E.15.b.
                                        local provisions
                                        related to
                                        environmental
                                        regulation.
                                       Includes proceedings     Does not address legal   For legal proceedings
                                        involving capital        proceedings involving    involving capital
                                        expenditures or          capital expenditures     expenditures or
                                        deferred charges that    or deferred charges.     deferred charges, Item
                                        may be recognized on                              103 is more expansive
                                        the balance sheet                                 than U.S. GAAP. See
                                        (rather than losses                               consequence 2 in
                                        recognized on the                                 section III.E.15.b.
                                        income statement).
----------------------------------------------------------------------------------------------------------------

                                                2. Other Criteria
----------------------------------------------------------------------------------------------------------------
Damages..............................  Applies to proceedings   Covers matters that      Item 103 is more
                                        that involve both        give rise to a           expansive than U.S.
                                        monetary and non-        liability--that is,      GAAP. See consequence
                                        monetary (e.g.,          monetary damages.        2 in section
                                        injunctions) damages.                             III.E.15.b.
Quantitative Thresholds..............  For all matters other    Does not provide         U.S. GAAP is more
                                        than (1) bankruptcies,   quantitative             expansive than Item
                                        receiverships, or        thresholds.              103 where material
                                        similar proceedings                               proceedings fall below
                                        and (2) environmental                             the 10 percent or the
                                        matters, does not                                 $100,000 threshold.
                                        require disclosure of                             See consequence 3 in
                                        material proceedings,                             section III.E.15.b.
                                        where the amounts                                Item 103 could be more
                                        involved do not exceed                            expansive than U.S.
                                        10 percent of the                                 GAAP where
                                        issuer's consolidated                             environmental
                                        current assets.                                   proceedings exceed the
                                       For environmental                                  10 percent or $100,000
                                        matters involving a                               thresholds but
                                        claim for damages,                                otherwise may not be
                                        potential monetary                                material to the
                                        sanctions, capital                                registrant. See
                                        expenditures, or other                            consequences 1 and 2
                                        charges, requires                                 in section III.E.15.b.
                                        disclosure of
                                        proceedings that
                                        exceed 10 percent of
                                        the issuer's
                                        consolidated current
                                        assets..
                                       For environmental
                                        matters involving a
                                        governmental authority
                                        and potential monetary
                                        sanctions, requires
                                        disclosure if
                                        potential monetary
                                        sanctions exceed
                                        $100,000.
Likelihood...........................  For all matters other    Requires disclosure      Item 103 is more
                                        than environmental       when the likelihood of   expansive than U.S.
                                        matters, requires        loss is at least         GAAP, in low
                                        disclosure if            reasonably possible..    probability-high
                                        material. Materiality                             magnitude situations.
                                        depends on likelihood                             See consequences 1 and
                                        and magnitude.\337\                               2 in section
                                                                                III.E.15.b.
----------------------------------------------------------------------------------------------------------------

b. Consequences
    In light of the differences between Item 103 and U.S. GAAP, as
discussed above, incorporation of Item 103's requirements into U.S.
GAAP would result in the following consequences. These consequences
assume that the most expansive requirements from either Item 103 or
U.S. GAAP are retained. Refer to the table above to identify the
specific consequences associated with each difference between Item 103
and U.S. GAAP.
---------------------------------------------------------------------------

    \337\ See Basic, Inc. v. Levinson, 485 U.S. 224 (1988) (stating
that, in the case of speculative or contingent events, materiality
will depend at any given time upon a balancing of both the indicated
probability that the event will occur and the anticipated magnitude
of the event in light of the totality of the company activity).
---------------------------------------------------------------------------

1. Disclosure of the Possible Range of Loss in More Circumstances
    U.S. GAAP requires disclosure of the possible loss or range of loss
in excess of amounts accrued \338\ or a statement that such an estimate
cannot be made.\339\ Where the scope of proceedings or matters covered
by Item 103 is more expansive than that of U.S. GAAP, incorporation of
these incremental disclosure requirements into U.S. GAAP may benefit
investors, as they would receive range of loss disclosures for matters
previously outside the scope of U.S. GAAP. Provision of this
disclosure, however, may create additional burdens for issuers and
auditors to develop and audit additional estimates and disclosures.
---------------------------------------------------------------------------

    \338\ See ASC 450-20-25-2, which requires accrual of an
estimated loss from a loss contingency if: (a) It is probable that a
liability has been incurred at the date of the financial statements
and (b) the amount of loss can be reasonably estimated.
    \339\ See ASC 450-20-50-3.
---------------------------------------------------------------------------

2. Disclosure Subject to Audit/Review, Internal Control Over Financial
Reporting, and XBRL Tagging Requirements in More Circumstances
    Certain disclosures made outside the audited financial statements
would be included within the notes to the financial statements, giving
rise to Disclosure Location--Financial Statement Considerations. Some
issuers already include this information in their audited financial
statements, and, thus, the additional burdens should not be significant
for these issuers.
3. Disclosure of Factual Information in More Circumstances
    Item 103 requires disclosure of the court or agency in which the
proceedings are pending, the date instituted, the principal parties
involved, the alleged factual basis to the proceeding, and the relief
sought. Where the scope of U.S. GAAP is more expansive than that of
Item 103, incorporation of these factual disclosure requirements into
U.S. GAAP may benefit investors, as they would newly receive these
factual disclosures for incremental matters previously outside the
scope of Item 103. Provision of this disclosure, however, may create
additional burdens for issuers and auditors to develop and audit
additional disclosures.
c. Other Considerations
    Under the National Environmental Policy Act of 1970
(``NEPA''),\340\ Congress required all federal agencies to include
consideration of the environment in regulatory action. In response to
this mandate, the Commission adopted environmental

compliance and litigation disclosure requirements.\341\ The
incorporation of Item 103's requirements into U.S. GAAP could result in
changes to required disclosures about environmental legal proceedings,
such as replacement of the 10 percent and $100,000 thresholds \342\
related to environmental matters with a more general materiality
threshold. We solicit comment about alternative thresholds in section
III.B.2 in our discussion of Bright Line Disclosure Threshold
Considerations.
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    \340\ 42 U.S.C. 4321 et seq.
    \341\ As a result of NEPA, the Commission issued an interpretive
release in 1971 alerting companies to potential disclosure
obligations that could arise from material environmental litigation
and the material effects of compliance with environmental laws. The
Commission later adopted more specific disclosure requirements
relating to these matters and, in 1976, the Commission amended its
forms to require disclosure of any material estimated capital
expenditures for environmental control facilities.
     See Disclosures Pertaining to Matters Involving the Environment
and Civil Rights, Release No. 33-5170 (July 19, 1971) [36 FR 13989
(July 29, 1971)], Disclosure with Respect to Compliance with
Environmental Requirements and Other Matters, Release No. 33-5386
(April 20, 1973) [38 FR 12100 (May 9, 1973)], Disclosure of
Environmental and Other Socially Significant Matters, Release No.
33-5569 (Feb. 11, 1975) [40 FR 7013 (Feb. 18, 1975)], Conclusions
and Final Action on Rulemaking Proposals Relating to Environmental
Disclosure, Release No. 33-5704 (May 6, 1976) [41 FR 21632 (May 27,
1976)], Natural Resources Defense Council et al., v. SEC, 389 F.
Supp. 689 (D.D.C. 1974).
    \342\ The Commission adopted the $100,000 threshold in 1982. See
Adoption of Integrated Disclosure System.
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Request for Comment
    68. For the following disclosures, would inclusion of these
disclosures in the audited financial statements create significant
burdens for issuers and auditors? Would it require revision to
standards of the Public Company Accounting Oversight Board (United
States) (``PCAOB'') or the American Bar Association Statement of Policy
Regarding Lawyers' Responses to Auditors' Requests for Information?
\343\ If so, how do auditors of issuers that currently include the
above disclosures in the audited financial statements audit them?
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    \343\ See AU sec. 337C: Exhibit II--American Bar Association
Statement of Policy Regarding Lawyers' Responses to Auditors'
Request for Information.
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    a. Proceedings known to be contemplated but which are not probable
of being asserted.
    b. Material bankruptcy, receivership, or similar proceeding.
    c. Non-monetary damages.
    d. Proceedings involving capital expenditures or deferred charges.
    e. Environment proceedings in excess of the 10 percent or $100,000
thresholds that may not be otherwise material to the registrant.
    f. Low probability-high magnitude proceedings.
    g. The court or agency in which the proceedings are pending, the
date instituted, the principal parties involved, the alleged factual
basis to the proceeding, and the relief sought.
16. Oil and Gas Producing Activities
    Regulation S-K \344\ and U.S. GAAP \345\ both require issuers
engaged in oil and gas producing activities to disclose information
about those activities in the notes to the financial statements.
However, Item 302(b) of Regulation S-K incrementally requires that the
U.S. GAAP disclosures must be provided for each period presented. This
requirement is only applicable to non-SRCs.\346\ Because U.S. GAAP does
not scale disclosure requirements by SRC status, any incorporation of
these requirements into U.S. GAAP would result in the application of
this requirement to SRCs.
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    \344\ See Item 302(b) of Regulation S-K [17 CFR 229.302(b)].
    \345\ See ASC 932-235-50.
    \346\ See Item 302(c) of Regulation S-K [17 CFR 229.302(c)].
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Request for Comment
    69. Would the application of this disclosure requirement to SRCs
impose additional costs? Please describe any such costs. Would
investors benefit from such disclosure? Does that affect your view as
to whether we should refer this requirement to the FASB? If so, how?
17. Request for Comment
    70. Do investors use the incremental disclosures required by the
overlapping Commission disclosure requirements? If so, in what way?
    71. Should we retain, modify, eliminate, or refer the foregoing
incremental Commission disclosure requirements to the FASB for
potential incorporation into U.S. GAAP? If so, which ones and why? If
not, please discuss why not. Please be as specific as possible for each
of the proposed referrals on which you provide comments.
    72. For each topic in this section:
    a. What would be the potential costs and benefits of incorporating
the incremental disclosure requirements into U.S. GAAP? Do these
potential costs and benefits affect your views as to whether we should
refer any or all of the foregoing disclosure requirements to the FASB
for potential incorporation into U.S. GAAP? If so, which requirements
and how?
    b. Would the expansion of the disclosure requirements to Regulation
A and crowdfunding issuers that report under U.S. GAAP result in
additional costs and benefits? Please describe any such costs and
benefits. Do any of these potential costs and benefits affect your
views as to whether the disclosure requirements should be referred to
the FASB? If so, how?
    73. Are there other Commission disclosure requirements that overlap
with, but require information incremental to, U.S. GAAP? If so, what
requirements do they overlap with and what action, if any, should we
take to address the overlap?

IV. Outdated Requirements

A. Background

    We have also preliminarily identified Commission disclosure
requirements that have become obsolete as a result of the passage of
time or changes in the regulatory, business, or technological
environment. We propose to amend these outdated requirements. The
proposed amendments are intended to simplify issuer compliance efforts.
To reduce any loss of information or increased burdens for investors,
we also propose to require additional disclosure of information which
is expected to be readily available to issuers at minimal to no cost.
    Section IV.B below discusses each outdated Commission disclosure
requirement and the proposed amendment.

B. Proposed Amendments

1. Stale Transition Dates
    In certain circumstances, when the Commission revised its
disclosure requirements, it specified the date beyond which issuers are
required to comply with the new requirements.\347\ Given the passage of
these transition dates, we propose to delete references to them in our
disclosure requirements.
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    \347\ See Rule 4-01(a)(3) of Regulation S-X [17 CFR 210.4-
01(a)(3)] for non-SRCs and Note 6 to Rule 8-01 of Regulation S-X [17
CFR 210.8-01] for SRCs. See Forms S-3, F-1, F-3, F-4, and 20-F. See
Exchange Act Rule 13a-10(g)(3) [17 CFR 240.13a-10(g)(3)], Exchange
Act Rule 15d-2 [17 CFR 240.15d-2], and Exchange Act Rule 15d-
10(g)(3) [17 CFR 240.15d-10(g)(3)].
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2. Income Tax Disclosures \348\
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    \348\ Please refer to the related discussions in sections II.B.4
and III.E.7.
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    In February 1992, the FASB revised its income tax disclosure
requirements, as part of a broader project on the accounting for income
taxes,\349\ effective for fiscal years beginning after December 15,
1992. In October 1992, the Commission amended Regulation S-

X \350\ to clarify that parts of certain rules \351\ do not apply to
issuers that have adopted the new FASB standard.\352\ Because all
issuers are now required to apply the FASB's revised standard, we
propose to eliminate the parts of Rule 4-08(h) that no longer apply:
Rule 4-08(h)(1)(ii), the parenthetical at the end of Rule 4-08(h)(1),
part of the introductory sentence of Rule 4-08(h)(2), and all of Rule
4-08(h)(3) of Regulation S-X.
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    \349\ SFAS No. 109, Accounting for Income Taxes.
    \350\ See Amendments to Rules and Forms, Release No. 33-6958A,
(Oct. 1, 1992) [57 FR 45287].
    \351\ See Rule 4-08(h)(1) [17 CFR 210.4-08(h)(1)] and 4-08(h)(2)
of Regulation S-X [17 CFR 210.4-08(h)(2)].
    \352\ Rule 4-08(h)(3) of Regulation S-X [17 CFR 210.4-08(h)(3)].
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3. Available Information
a. Public Reference Room
    Various Commission disclosure requirements and forms require
issuers to disclose the availability of their filings for reading or
copying at the Commission's Public Reference Room and the Public
Reference Room's physical address and phone number.\353\ However, the
Commission staff has observed that the Commission's Public Reference
Room is rarely used by the public to obtain or review issuer
filings,\354\ as paper filings are now only permitted (and sometimes
required) in very limited circumstances.\355\ Generally, issuers are
required to file most filings electronically and, with the widespread
availability of the Internet, investors can access for free
substantially all issuers' Commission filings on EDGAR. As a result, we
propose to delete the requirements to identify the Public Reference
Room and disclose its physical address and phone number.\356\
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    \353\ See Item 101(e)(2) of Regulation S-K [17 CFR
229.101(e)(2)] for non-SRCs and Item 101(h)(5)(iii) of Regulation S-
K [17 CFR 229.101(h)(5)(iii)] for SRCs. The Commission's Securities
Act registration statements filed on Forms S-1, S-3, S-11, S-4, F-1,
F-3, and F-4 require similar disclosures. Regulation AB also has
similar disclosure requirements for asset-backed issuers. See Item
1118(b) of Regulation AB [17 CFR 229.1118(b)] and Forms SF-1 [17 CFR
239.44] and SF-3 [17 CFR 239.45]. In addition, Forms N-1A [17 CFR
239.15A and 274.11A], N-2 [17 CFR 239.14 and 274.11a-1], N-3 [17 CFR
239.17a and 274.11b], N-5 [17 CFR 239.24 and 274.5], N-6 [17 CFR
239.17c and 274.11d], and N-8B-2 [17 CFR 274.12] have similar
disclosure requirements.
    \354\ Commission staff who currently operate the Public
Reference Room indicate that it is now primarily used by legal
publishers who wish to review paper Forms 144 [17 CFR 239.144]
(filings made by an affiliate of an issuer as notice of the proposed
sale of securities in reliance on Rule 144), which are still
permitted to be filed in paper form. See http://www.sec.gov/answers/form144.htm.
    \355\ See Rules 14 [17 CFR 232.14], 101[17 CFR 232.101], and 102
[17 CFR 232.102] of Regulation S-T.
    \356\ We also propose to delete the requirement to disclose how
to send a written request by mail to the SEC's Public Reference Room
to obtain certain hard copy information. Disclosure of how to obtain
this information electronically would still be required.
     Three commenters on the Disclosure Effectiveness Initiative
recommended deleting the requirements to identify the Public
Reference Room and disclose its location and phone number. See
letters from ABA (Mar. 6, 2015); CCMC (July 29, 2014); and SCSGP
(Sept. 10, 2014).
    Although we are proposing to delete the requirements to identify
the Public Reference Room, its physical address, and its phone
number, the Public Reference Room will remain open and available for
interested persons to access Commission filings.
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    Additionally, electronic filers are required to disclose the
Commission's Internet address and that electronic SEC filings are
available there. We intend to retain this requirement but propose to
delete the qualifier ``if you are an electronic filer'' as all but a
limited number of issuers are now required to file electronically.\357\
We also propose to expand this requirement to Forms 20-F and F-1, which
do not currently call for such disclosure, to align the requirements
for foreign private issuers with domestic issuers. While these proposed
amendments would impose additional disclosure burdens on certain
classes of issuers (i.e., paper filers and foreign private issuers), we
believe the cost of providing this information would be minimal.
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    \357\ See Rules 100 [17 CFR 232.100] and 101 [17 CFR 232.101] of
Regulation S-T.
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Request for Comment
    74. Are the disclosures to identify the Public Reference Room and
disclose its physical address and phone number useful to investors?
    75. Are there significant burdens and costs associated with
disclosing the Commission's Internet address and a statement that
electronic SEC filings are available there?
b. Issuer Internet Address
    In 2002, the Commission recognized that ``[a]n efficient and
economical method for companies to make information available about
themselves to many investors is through their Internet Web sites.''
\358\ The Commission believed that it was important for issuers to make
investors aware of the different sources, including corporate Web
sites, that provide access to information about the issuer.\359\
Consequently, the Commission revised Regulation S-K to require
accelerated and large accelerated filers \360\ to disclose their
Internet address, if they have one, in their annual reports filed on
Form 10-K,\361\ and to encourage other filers to do so.\362\ Various
forms also encourage filers to disclose their Internet address, if
available.\363\
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    \358\ See Acceleration of Periodic Report Filing Dates and
Disclosure Concerning Web sites Access to Reports, Release No. 33-
8128 (Sept. 5, 2002) [67 FR 58480].
    \359\ Id.
    \360\ Rule 12b-2 of the Exchange Act defines the terms
accelerated filer and large accelerated filer.
    \361\ See Item 101(e)(3) of Regulation S-K [17 CFR
229.101(e)(3)].
    \362\ See id. See also Item 101(h)(5)(iii) of Regulation S-K [17
CFR 229.101(h)(5)], which encourages SRCs to disclose their internet
addresses, if available.
    \363\ See Forms S-3, S-4, F-3, F-4. See also Forms SF-1 and SF-3
for asset-backed issuers.
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    In the 2002 adopting release, the Commission noted that commenters
supported extending this disclosure requirement to all issuers,
including smaller issuers and foreign private issuers.\364\ The
Commission indicated it would ``continue to study this issue and
consider extending the requirement to all reporting companies after
evaluating [its] initial experience with the requirement by accelerated
filers.'' \365\
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    \364\ See Release No. 33-8128, supra note 358, at n.138.
    \365\ Id.
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    The Commission staff has observed that many non-accelerated filers
already disclose their Internet addresses annually in their Form 10-Ks.
This current practice, combined with the minimal costs of disclosing an
Internet address, suggest that such a requirement would impose limited
burden on issuers. In addition, the Commission has provided guidance
about the liability framework for certain types of disclosures on
company Web sites, including hyperlinked and archived data, so that
investors could gain the benefits of Internet disclosure.\366\ We also
believe that such a requirement would help ensure that investors are
aware of an additional resource for information about issuers.
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    \366\ See, e.g., Commission Guidance on the Use of Company Web
sites, Release No. 34-58288 (Aug. 1, 2008) [73 FR 45862].
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    Based on the foregoing, we propose to amend Items 101(e) and
101(h)(5) of Regulation S-K and Forms S-3, S-4, F-1, F-3, F-4, 20-F,
SF-1, and SF-3 to require all issuers to disclose their Internet
addresses (or, in the case of asset-backed issuers, the address of the
specified transaction party), if they have one.
Request for Comment
    76. Are there significant burdens and costs associated with
disclosing the issuer's Internet address? Are the burdens or costs that
may be imposed on non-accelerated filers, including

SRCs, different from those that may be borne by accelerated and large
accelerated filers?
4. Market Price Disclosure
a. Item 201(a)(1) of Regulation S-K
    Item 201(a)(1) of Regulation S-K \367\ requires issuers to disclose
the following:
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    \367\ 17 CFR 229.201(a)(1).
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     The principal U.S. market(s) where its common equity is
traded. Foreign issuers must also disclose the principal established
foreign public trading market, if applicable. Where applicable, issuers
must disclose that there is no established public trading market for
their common equity.\368\
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    \368\ Item 201(a)(1)(i) of Regulation S-K [17 CFR
229.201(a)(1)(i)].
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     If the principal U.S. market is an exchange, issuers must
disclose the high and low sale prices for their common equity for each
quarter within the two most recent fiscal years and subsequent interim
period.\369\
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    \369\ Item 201(a)(1)(ii) of Regulation S-K [17 CFR
229.201(a)(1)(ii)].
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