| Release No. 34-13156 Release No. 35-19853 Release No. IC-9604 Accounting Series Rel. No. 206 January 13, 1977 42 Fed Reg. 4424
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 Table of Contents
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I. Amendments Relating to the Time for Filing Reports on Form 8-K
Securities Exchange Act Rules 13a-11 and 15d-11 have been amended to delete the specific requirement relating to the time for filing reports on Form 8-K and to refer instead to the filing requirements set forth in the form itself. General Instruction B to the form has been amended to require that reports on Form 8-K be filed within fifteen days after the occurrence of an event specified in the form or within ten days after the end of the month during which occurred an event reported pursuant to Item 5, the voluntary disclosure item. Registrants are encouraged, however, to file all reports on Form 8-K as soon as practicable regardless of these filing requirements. Registrants may continue to report more than one event in a report on Form 8-K provided there is compliance with the requirements of the form relating to the time for filing the report.
The Commission has considered the objections to the proposed filing requirement of ten days after the occurrence of the reportable event which were raised by many of the commentators but believes that any inconvenience to registrants will be more than offset by the benefits to investors from more timely reporting. In addition, the Commission believes that upon the occurrence of any one of the four events requiring current disclosure registrants should have knowledge of the event and access to most of the information required to be set forth in response to the applicable item. In order to alleviate any difficulties which registrants might encounter as a result of weekends, holidays or the mail service, the Commission has adopted the filing date of fifteen days after the occurrence of the reportable event rather than the proposed ten days after the occurrence of the event.
In light of the proposed earlier filing date for reports on Form 8-K, the Commission has also amended General Instruction B to provide registrants with an additional 30 days after the report is filed in which to file the auditors letter required by Item 6(b) when the registrant reports a change in its certifying accountant.
The Commission has not adopted, however, the proposal to permit registrants to file within 60 days after the report is filed the financial statements required to be included in reports pursuant to Item 2 of Form 8-K. The Commission believes that the proposed revision is unnecessary because of the provisions of Rule 12b-25 under the Exchange Act (17 CFR 240.12b-25) relating to requests for extension of time for furnishing information. Rule 12b-25 provides for an automatic 30-day extension of time unless the Commission enters an order denying the application or notifies the registrant that the application has been denied within 15 days after the application on Form 12b-25 (17 CFR 249.322) is filed. An additional 30 days in which to file the required information may be available upon separate application.
II. Amendments Relating to the Elimination of Items from Form 8-K
The amendments authorized today eliminate the following information items from Form 8-K: Item 3 (Legal Proceedings), Item 4 (Changes in Securities), Item 5 (Changes in Security for Registered Securities), Item 6 (Defaults Upon Senior Securities), Item 7 (Increase In Amount of Securities Outstanding), Item 8 (Decrease in Amount of Securities Outstanding), Item 9 (Options to Purchase Securities), Item 10 (Extraordinary Item Charges and Credits, other Material Charges and Credits to Income of an Unusual Nature, Restatements of Capital Share Account), and Item 11 (Submission of Matters to a Vote of Security Holders). To the extent that any of the events previously reported pursuant to these former 8-K items, such as material legal proceedings, constitutes an event of material importance to security holders in the opinion of the registrant, it may be reported under the new Item 5 of the Form 8-K, the voluntary disclosure item. The items remaining in Form 8-K have been renumbered.
A. Elimination of Item 6 (Defaults Upon Senior Securities)
In Securities Exchange Act Release No. 12619, the Commission proposed to retain in revised form previously numbered Form 8-K Items 6 and 10. It was proposed that Item 6 be revised to require disclosure of noncompliance with the terms for payment of principal and interest on senior securities. Upon reconsideration of the proposal and after review of the comments, the Commission has transferred the unrevised former 8-K Item 6 to the Form 10-Q. The proposed revision would not have fully achieved the objective of requiring early disclosure of significant liquidity difficulties and the quarterly report is the more appropriate report for disclosure of defaults upon senior securities.
B. Elimination of Item 10 of the Form 8-K Relating to Material Charges and Credits
Former Item 10 of Form 8-K required disclosure of material charges and credits to income of an unusual or infrequent nature and direct charges and credits to retained earnings. The objectives of the item were to require appropriate and timely reporting of events or transactions which had a material impact upon the registrants financial position or results of operations. The Commission continues to believe that disclosure of such information is necessary. However, it believes that the objective is achieved without the necessity for specific requirements in Form 8-K, 10-Q and 10-K. The Commission has therefore determined to eliminate Item 10 and not transfer the item to the Form 10-Q.
The Commission believes that Item 10 of Form 8-K is now unnecessary because the information previously required by that item has become a part of other regulations subsequently adopted by the Commission and/or revisions to generally accepted accounting principles. The Commission Board Opinions No. 28 (Interim Financial Reporting) and No. 30 (Reporting the Results of Operations) and Accounting Series Releases No. 159 (Textual Analysis of Summary of Earnings or Operations) (39 FR 31596) and No. 177 (Interim Financial Reporting, including Instruction 5 to Form 10-Q, Managements Analysis of Quarterly Income) (40 FR 46107), provide an appropriate framework of requirements for the disclosure of material charges and credits.
Accounting Principles Board Opinion No. 30 requires that disclosure of the nature and financial effects of unusual or infrequently occurring items on the fact of the income statement. In addition, the management discussion and analysis of the statement of operations required by ASR 159 requires a discussion of material facts, whether favorable or unfavorable, which in the opinion of the management may make the historical operations or earnings not indicative of current or future operations or earnings. The Commission believes that these disclosure requirements encompass reporting the nature of a charge or credit. the reasons for a charge or credit, and an analysis of the components of the charge or credit, including information as to the types of items written off and provision made for future expenses. They also encompass the reporting of the timing of significant future cash requirements or recoveries.
The Commission also believes that provisions for future charges and the changes in such provisions are subject to the reporting requirements of Schedule XII of Regulation S-X (Valuation and Qualifying Accounts and Reserves) (17 CFR 210.12-13). Major components of such reserves should be set forth separately in Schedule XII.
By eliminating the specific material charges and credits item from the forms, the Commission does not believe the requirements for such disclosures have been lessened nor does it believe that the timeliness or quality of disclosures regarding material events or transactions of registrants will be diminished. The Commission again reminds registrants of their responsibilities under the Securities Acts for full and timely disclosure of material charges and credits in the absence of specific requirements in its forms. The Commission intends to monitor compliance with the disclosure requirements for these forms and will take further action in appropriate circumstances.
III. Amendments Relating to the Transfer of Items from the Form 8-K to the Form 10-Q
A. Amendments to Form 10-Q for Quarterly Reports Under Section 13 or 15(d) of the Securities Exchange Act
The information called for by the items which have been eliminated from the Form 8-K will be reported in quarterly reports on Form 10-Q, with the exception of Items 9 (Options to Purchase Securities) and 10 (Extraordinary Item Charges ...). Item 9 has not been included in Form 10-Q because the disclosure it calls for already is required in annual reports on Form 10-K and in proxy and information statements filed pursuant to Section 14 of the Securities Exchange Act; Item 10 has not been transferred to the Form 10-Q for the reasons discussed above.
The amendments to Form 10-Q provide for a two part report. Part I contains quarterly financial information and Part II, which is deemed to be a "filed" document and subject to the liability provisions of Section 18 of the Exchange Act, contains the following items of information: (1) the information reported pursuant to the seven items being transferred to the Form 10-Q from the Form 8-K; (2) a new Item 8 which enables a registrant voluntarily to include in its quarterly report any information not otherwise called for by Form 10-Q which the registrant deems of material importance to security holders; (3) a new Item 9 relating to reports on Form 8-K, if any, which have been filed by registrant during the quarter covered by the report; and (4) appropriate instructions as to required exhibits. The General Instructions to Form 10-Q have been amended to reflect the reorganization of the form into the two parts and to include instructions appropriate to the information required by new Part II of the form.
New Item 8 of Part II of Form 10-Q, which permits registrants to report matters of material importance to security holders, is similar to former Item 13 of Form 8-K and to Item 5 of the amended form. It differs from the 8-K item in that it provides for disclosure of events "not previously reported in a report on Form 8-K."
In addition, new Item 9 of Part II of Form 10-Q requires registrants to file certain necessary exhibits to the other items of Part II and state whether any reports on Form 8-K have been filed during the quarter covered by the report, listing the dates of any such reports, the items reported and any financial statements filed. This amendment is intended to provide users of the reporting system with a convenient reference to determine whether a registrant has filed any reports on Form 8-K.
B. Amendments to Securities Exchange Act Rules 13a-13 (17 CFR 240.13a-13) and 15d-13 (17 CFR 240.15d-13)
In connection with the transfer of items from the Form 8-K to the Form 10-Q, the Commission has adopted certain technical amendments to Rules 13a-13 and 15d-13 under the Exchange Act in order to set forth the persons required to file pursuant to and the nature of the filing requirements of Parts I and II of the form.
Rules 13a-13 and 15d-13 have been amended to revise the exemption contained therein from the requirement to file quarterly reports on Form 10-Q. All life insurance companies and holding companies, regardless of the effect on such companies of the amendments announced in Accounting Series Release No. 197 (41 FR 42645), and certain mining companies henceforth will be required to file quarterly reports on Part II of Form 10-Q to report the occurrence of any one or more of the events specified in Part II and to state whether or not any reports on Form 8-K have been filed. These companies have been required to file current reports on Form 8-K and, therefore, the amendment merely preserves the status quo. The exemption from the requirements to file quarterly and current reports on Forms 10-Q and 8-K formerly available to certain investment companies and foreign private issuers has not been affected by the amendments announced today.
Secondly, in order to retain the requirement that public utilities, common carriers and pipeline carriers report the information called for by the items which have been transferred from the Form 8-K to the 10-Q, Rules 13a-13 and 15d-13 have been amended to provide that those corporations which are regulated by the Civil Aeronautics Board, the Federal Communications Commission, the Federal Power Commission or the Interstate Commerce Commission may file their reports submitted to such agencies in lieu only of Part I of the form. 3
Securities Exchange Act Rules 13a-13 and 15d-13 have provided prior to their amendment that the quarterly reports are not deemed to be "filed" for the purpose of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. 4 Section 18 has been applicable to the information reported on Form 8-K and, accordingly, the Commission has amended Rules 13a-13 and 15d-13 to extend Section 18 liability to the information required by Part II of the Form 10-Q.
C. Amendments to Form 10-K for Annual Reports Pursuant to Section 13 or 15(d) of the Securities Exchange Act
Reports on Form 10-Q are not required for the fourth quarter of a registrants fiscal year, and the Form 10-K has not previously required the disclosure of certain of the events reportable under the items contained in new Part II of the Form 10-Q. Therefore, in order to provide for prompt reporting of the information called for by these items concerning events occurring during registrants fourth quarter, the Commission has amended the Form 10-K to require disclosure of the following matters unless previously reported in a report on Form 10-Q:
1) The institution and termination of material legal proceedings (revised Item 5);
2) Increases and decreases in registered debt securities and in indebtedness (revised Item 6);
3) Changes in securities and changes in security for registered securities (new Item 7);
4) Defaults upon senior securities (new Item 8); and
5) Submission of matters to a vote of security holders (new Item 10). 5
Item 6 has been amended further to eliminate former paragraph (b) which required disclosure relating to securities sold by registrants in reliance upon Section 4(2) of the Securities Act of 1933 (the "Securities Act") (15 U.S.C. 77a et seq. as amended by Pub. L. No. 94-29 (June 4, 1975)). The Commission believes that this paragraph is unnecessary because disclosure of sales of securities in reliance upon Section 4(2) is required already by other provisions. All issuances of equity securities are reported under paragraph (a) of Item 6. In addition, all increases in the amount outstanding of debt securities will be reported in quarterly reports on Form 10-Q (or in annual reports on Form 10-K when the transactions occurred during the fourth quarter of registrants fiscal years) if the aggregate amount of all such increases not previously reported exceeds five percent of the outstanding securities of the class. In lieu of former paragraph (b) of Item 6, new paragraph (b) requires registrants to list and briefly discuss increases and decreases in the amount outstanding of debt securities and indebtedness which were previously reported in quarterly reports on Form 10-Q. The Commission believes that this amendment will make disclosure in the Form 10-K more complete while eliminating disclosure of less significant transactions and unnecessary repetition of previously disclosed information.
In addition, a new item has been adopted in Form 10-K requiring registrants to state whether any reports on Form 8-K have been filed during the last quarter of the period covered by the report and to list the items reported and financial statements filed, and the dates of the reports. Certain technical amendments to the Form 10-K have also been adopted to renumber the prior 10-K items and reference to items contained therein, and to list the exhibits required by the new items of the form. (New Item 13(b) Reports on Form 8-K).
III. Amendments to Form 8-K for Current Reports under Section 13 or 15(d) of the Securities Exchange Act and to Schedule 14A to Regulation 14 under the Securities Exchange Act
A. Amendment to Item 1 of Form 8-K (Changes in Control of Registrant) and to Item 5 of Schedule 14A to Regulation 14 (Voting Securities and Principal Holders Thereof)
The Commission has revised Item 1 of Form 8-K to expand the disclosure heretofore required to be reported concerning changes in control of registrants and to conform the disclosure requirements of the item to the existing requirements of Item 5(e) and (f) of Schedule 14A to Regulation 14 under the Securities Exchange Act, applicable to proxy and information statements. The revised item will require disclosure of (1) the identity of the person or persons from whom control was assumed and (2) a description of any arrangements, including a pledge of securities of the registrant or any of its parents, which might result in a change in control of the registrant.
The Commission has also amended Item 1 of Form 8-K and Item 5 of Schedule 14A 6 to require the following additional disclosure concerning changes in control: (1) the amount and source of the consideration used by the person or persons who acquired control; (2) the terms of any loans or pledges obtained by the new control group for the purpose of acquiring control and the names of the lenders or pledgees; and (3) a description of any arrangements or understandings among members of both the former and new control group and their associates with respect to election of directors or others matters. If the source of all or any part of the consideration paid by the person(s) who acquired control is a loan made in the ordinary course of business by a bank as defined in Section 3(a)(6) of the Act, the revised items permit the registrant to delete the name of the bank provided a request for confidentiality has been made pursuant to Section 13(d)(1)(B) of the Act by the person(s) who acquired control. 7
Certain commentators questioned the need for requiring disclosure of changes in control of registrants in reports on the Form 8-K in view of the filing requirements of Section 13(d) of the Exchange Act. It is the Commissions belief that a change in control of a registrant is an important event about which current information should be readily available to investors. The Schedule 13D (17 CFR 240.13d-101) is not an adequate substitute for the report on Form 8-K for the following reasons: (1) Section 13(d) is not applicable to the acquisition of securities of a company which files reports under the Exchange Act pursuant to Section 15(d) of the Act; (2) many, if not most, of the acquisitions of securities reported in accordance with Section 13(d) do not result in changes in control of the registrant; and (3) changes in control are not always the result of an acquisition of securities. Accordingly, Item 1 has been retained in the Form 8-K.
In addition, various commentators noted that the disclosure required by the item may be unavailable to the management. Rule 12b-21 under the Exchange Act (17 CFR 240.12b-21) relates to those instances when information is unknown to the registrant; therefore, these items have not been amended to state that information need be given only insofar as it is known or reasonably available to management.
B. Amendment to Item 2 of Form 8-K (Acquisition or Disposition of Assets)
In order to provide for reporting of more complete information concerning acquisitions or dispositions of significant amounts of assets, otherwise than in the ordinary course of business, the Commission has amended Item 2 of Form 8-K to require disclosure of the source of the funds used by the registrant or its subsidiary in making an acquisition. If all or any part of the consideration is a loan made in the ordinary course of business by a bank as defined in Section 3(a)(6) of the Act, the revised item permits the registrant to delete the name of the bank provided a request for confidentiality has been made pursuant to Section 13(d)(1)(B) of the Act by the person(s) who acquire control. 8 The proposed revision to require disclosure of managements reasons for acquiring or disposing of the assets has been deleted upon its reconsideration by the Commission.
C. Addition of New Item 3 to Form 8-K (Bankruptcy or Receivership)
The Commission has adopted a new Item 3 to Form 8-K to require reporting of information concerning the appointment of a receiver for the registrant or its parent in a proceeding under the Bankruptcy Act or in any other proceeding under State or Federal law in which a court or governmental body has assumed jurisdiction over substantially all of the assets or business of the registrant or its parent, or if such jurisdiction has been assumed by leaving the existing directors and officers in possession, but subject to the supervision and control of a court or governmental body. The Commission believes that the availability of this information in the Commissions public files will be useful to investors.
D. Amendment to Instruction 4 of the Instruction Relating to the Filing of Financial Statements of Businesses Acquired
Instruction 4 relating to the financial statements required when an acquisition of a business is reported pursuant to Item 2 has been amended to clarify when the Commission may grant a waiver from the requirement to furnish financial statements. In addition, the instruction has been revised to state that requests for relief should be filed as a part of the report on Form 8-K and to set forth the information to be included together with such a request.
The Commission may grant relief from the provisions relating to the required financial statements if the statements are not reasonably available to the registrant, because the obtaining thereof would involve unreasonable effort or expense or practicable difficulties. When a request for relief is submitted, the Commission considers the reasons advanced by the registrant and the magnitude of the acquisition based on the financial data submitted.
The Commission believes that these amendments will facilitate the consideration of request for relief in the future.
E. Technical Amendments
The new item and the items which have been retained in the Form 8-K as well as the instructions to the required exhibits have been renumbered and revised to reflect the above-outlined changes, the deletion of Items 9 and 10 and the transfer of former Items 3, 4, 5, 6, 7, 8 and 11 to the Form 10-Q. The cover page of the form has been amended to add a line for disclosure of the registrants former name or former address, if they have been changed since the registrants last report was filed. General Instruction E has been deleted because Rule 12b-23 under the Exchange Act (17 CFR 240.12b-23) clearly discusses incorporation by reference.
IV. Amendments to Items of the Form 8-K Transferred to New Part II of Form 10-Q
A. Item 1, Part II of Form 10-Q (legal Proceedings) (formerly Item 3 of Form 8-K)
The Commission has transferred to the Form 10-Q in revised form previously numbered Item 3 of the Form 8-K. This item has been revised to require registrants to describe the disposition of previously reported legal proceedings.
B. Item 4 (increase in Amount Outstanding of Securities or Indebtedness) and Item 5 (Decrease in Amount Outstanding of Securities or Indebtedness) of Part II of Form 10-Q (formerly Items 7 and 8 of Form 8-K)
Former Items 7 and 8 of the Form 8-K relating to disclosure of increases and decreases in securities outstanding have been transferred to Part II of the Form 10-Q in revised form. The items have been revised to reflect the staffs interpretation that increases and decreases in commercial loans must be reported thereunder.
A few commentators questioned the applicability of prior Form 8-K Items 7 and 8 to various types of commercial loans, such as revolving credit agreements, citing cases which hold that commercial loans are not securities. In view of their observations and in order to clarify the extent of disclosure which the Commission believes should be required by these items, the captions and the text of the items in the Form 10-Q have been revised to require disclosure of fluctuations in the amount outstanding of indebtedness as well as securities. Obligations which mature not later than one year from the date of issuance are excluded from the applicability of the items.
In addition, the items have been revised in order to require disclosure only of significant increases and decreases of indebtedness. A new instruction applicable to these items has been adopted which permits registrants to classify all of their indebtedness (including short term indebtedness) into convertible long term debt and other indebtedness for the purpose of determining whether the aggregate amount of all changes in the amount of one of these two classes of indebtedness, including changes not previously reported, exceeds five percent of the outstanding debt in the class.
The required disclosure with respect to increases and decreases in the amount of equity securities will be the same as that required by former Items 7 and 8 of the Form 8-K.
The Commission believes that the narrative disclosure relating to increases and decreases in commercial debt is necessary in Part II of the Form 10-Q despite the opinion expressed by certain commentators that the expanded balance sheet disclosure required in the quarterly report should be sufficient. The information which must be disclosed pursuant to Items 5 and 6 of Part II of the Form 10-Q is more complete than the information which is required by Part I of the form.
C. Technical Amendments
The instructions to Part I and the items and the instructions in Part II of the Form 10-Q have been numbered, revised or drafted to reflect the above-outlined changes and the reorganization of the form into 2 parts. Former General Instruction M to the Form 10-Q has been deleted because similar disclosure is not required in Part II of the revised form.
The text of Amendments is set forth below:
[Text omitted ]
Date of Effectiveness
The amendments to Rules 13a-11 and 15d-11, to the Form 8-K, and to Schedule 14A shall be effective for events which occur subsequent to February 28, 1977. The amendments to Rules 13a-13 and 15d-13 and to Form 10-Q shall be effective for quarterly periods beginning after December 31, 1976. The amendments to the Form 10-K shall be effective for reports filed for periods beginning after March 31, 1976.
Statutory Authority for Amendments
The foregoing amendments are adopted pursuant to Sections 13, 14(a), 15(d) and 23(a) of the Securities Exchange Act of 1934, Sections 12(e) and 20(a) of the Public Utility Holding Company Act of 1935, and Sections 20(a) and 38(a) of the Investment Company Act of 1940. Pursuant to Section 23(a) of the Securities Exchange Act, the Commission has considered the effect that the proposed amendments would have on competition and has concluded that, to the extent the amendments impose burdens on competition, such burdens are necessary and appropriate in furtherance of the purpose of the securities laws.
By the Commission.
1 These commentators expressed support for the recommendations of the so-called Wheat Report that the Form 8-K be substantially eliminated and that most of the 8-K items be included in a quarterly report. See "Report and Recommendations to the Securities and Exchange Commission from the Disclosure Policy Study, Disclosure to Investors, A Reappraisal of Administrative policies under the 1933 and 1934 Acts" (March 1969), at pp. 356-364.
2 See Securities Act Release No. 5092 (October 15, 1970), 35 FR 16733 (October 29, 1970).
3 In Securities Exchange Act Release No. 12769 (September 3, 1976) (41 FR 39050), the Commission proposed amendments to Rules 13a-13 and 15d-13 to require registrants subject to the jurisdiction of the above federal agencies to file annual reports on Form 10-K and quarterly financial reports on Form 10-Q; these proposals are still pending.
4 The basis stated for the determination that Section 18 should not apply to the quarterly financial information was that "interim earnings figures can frequently be arrived at only by the use of reasonable estimates or on the basis of certain assumptions ..." See Securities Exchange Act Release No. 5129 (January 27, 1955), 20 FR 771 (February 4, 1955).
5 These matters have heretofore been reported in reports on Form 8-K under Items 10, 3, 7 and 8, 4 and 5, 6, and 11 respectively. For a discussion of the amendments of some of these items in Part II of the Form 10-Q, see the discussion in Section IV.
6 The Commission recently has proposed for comment certain amendments to Item 5 of Schedule 14A which would require more disclosure regarding the background of the management of publicly-held companies. See Securities Act Release No. 5728 (November 2, 1976), 41 FR 4949 (November 9, 1976).
7 If a request for confidentiality has not been made pursuant to Section 13(d)(1)(B) of the Act, registrant may request confidentiality of the identity of the bank pursuant to the provisions of Rule 24b-2 of the Act (17 CFR 240.24b-2).
8 See also note 7 supra.
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