Brad Goldberg and Jaime L. Chase are Partners and Asher Herzog is an Associate at Cooley LLP. This post is based on a Cooley memorandum by Mr. Goldberg, Ms. Chase, Mr. Herzog, Cydney Posner, Reid Hooper, and Stephanie Gambino. Related research from the Program on Corporate Governance includes Short-Termism and Capital Flows (discussed on the Forum here) by Jesse M. Fried, and Charles C.Y. Wang; and Share Repurchases, Equity Issuances, and the Optimal Design of Executive Pay (discussed on the Forum here) by Jesse M. Fried.
On May 3, 2023, the Securities and Exchange Commission (SEC) voted at an open meeting to adopt final rules to require enhanced disclosure about issuer share repurchases under the Securities Exchange Act of 1934, as amended. The final rules will:
- Require tabular disclosure to be filed quarterly [1] in an exhibit to Forms 10-Q and 10-K of an issuer’s [2] repurchase activity aggregated on a daily basis, replacing the current requirements in Item 703 of Regulation S-K to disclose monthly repurchase data. Foreign private issuers (FPIs) filing on forms available exclusively to FPIs will have to disclose quarterly the same daily repurchase data on a new Form F-SR, in place of the current requirements in Item 16E of Form 20-F to disclose monthly repurchase data.
- Require a company to disclose quarterly via a checkbox whether any of its Section 16 officers or directors – or senior management or directors for FPIs – purchased or sold shares (or other units) that are the subject of a company share repurchase plan or program within four business days before or after the announcement of the plan or program.
- Revise and expand Item 703 to require a company to disclose in its Forms 10-Q and 10-K:
- The objectives or rationales for its share repurchases and the process or criteria used to determine the amount of repurchases.
- Any policies and procedures relating to purchases and sales of the company’s securities by its officers and directors during a repurchase program, including any restrictions on those transactions.