Fast Act Implementation: SEC to Allow Summary Section in Form 10-K

June 30, 2016

On June 1, 2016, the Securities and Exchange Commission issued an interim rule amending Form 10-K to permit the inclusion of a discrete summary of business and financial information contained elsewhere in the annual report. The rule implements Section 72001 of the Fixing America’s Surface Transportation Act (the “FAST Act”), and became effective on June 9, 2016, upon its publication in the Federal Register. The rule’s Adopting Release is available here, and the SEC is seeking public comment on the interim rule through July 9, 2016.

As discussed in our complete analysis of the FAST Act provisions relating to the federal securities laws, available here, the FAST Act, which was signed into law in December 2015, includes several amendments to the Securities Act of 1933 and the Securities Exchange Act of 1934. The amendment to Form 10-K is the SEC’s latest response to the statutory mandate, which required the SEC to, among other things, amend Form 10-K to permit filers to include a summary page to that Form, as long as each item identified in the summary is accompanied by a specific cross-reference to the full discussion elsewhere in the report. The SEC explicitly designed the interim rule to provide filers with significant flexibility in preparing (or electing not to prepare) the summary, as long as the summary includes hyperlinks to the more detailed disclosures. The rule does not prescribe the length of the summary or specify any particular Form 10-K items that should be covered by the summary, and likewise does not dictate the location of the summary within the report. Indeed, the principles-based approach to the statutory mandate “affords a registrant choosing to include a summary the flexibility to decide which items to summarize, as long as the information is presented fairly and accurately.”1

The rule similarly permits a summary of information incorporated by reference from other filings, as long as the discussion is accompanied by a hyperlink to the more fulsome information in the accompanying exhibit. And because filers will not be permitted to summarize information that is not contained in the Form 10-K or other previous filings at the time the Form 10-K is filed, filers may not summarize Part III information that will be incorporated by reference from a proxy or information statement filed subsequent to the filing of the Form 10-K.

Although the rule grants filers significant flexibility and discretion when summarizing Form 10-K information, the summary should conform to the best practices applicable to any public disclosures filed with the SEC. Accordingly, filers should ensure that the summary is an accurate representation of the information it describes, and should also ensure that the summary does not contain materially misleading information (whether by direct statement or omission) relative to other disclosures in the Form 10-K.

1 Exchange Act Release No. 34-77969.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Rob Plesnarski, an O’Melveny partner licensed to practice law in the District of Columbia and Pennsylvania, Shelly Heyduk, an O’Melveny partner licensed to practice law in California, and James M. Harrigan, an O’Melveny associate licensed to practice law in the District of Columbia and Maryland, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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