Governance & Securities Law Focus - November 2018/Latin America

US DEVELOPMENTS

SEC and NYSE/Nasdaq Developments

SEC Adopts Amendments to Simplify and Update Disclosure Requirements

On August 17, 2018, the U.S. Securities and Exchange Commission (SEC) adopted amendments to simplify and update disclosure requirements that have become duplicative, overlapping or outdated in light of other SEC disclosure requirements, U.S. Generally Accepted Accounting Principles (GAAP) or "changes in the information environment." The amendments affect annual reports on Form 20-F, as well as registration statements on Form F-1, Form F-3 and Form F-4.

The noteworthy changes affecting foreign private issuers include:

Exchange Rate Data. Form 20-F will no longer require foreign private issuers to provide exchange rate data when financial statements are prepared in a currency other than the U.S. dollar as such data is widely available. This change also affects registration statements on Form F-1 and Form F-4, which currently refer to the same disclosure requirement in Form 20-F. Earnings Per Share Calculation. The requirement to file as an exhibit a statement explaining how any earnings per share information presented in a filing was calculated has been eliminated. This change affects annual reports on Form 20-F, as well as registration statements on Form F-1, Form F-3 and Form F-4. Ratio of Earnings to Fixed Charges. The amendments eliminate the requirement to include historical and pro forma ratios of earnings to fixed charges and the related exhibit when registering debt securities or preferred stock. GAAP already covers disclosure of the components commonly used to calculate these ratios, and the SEC recognizes that debt investors are more focused on the information readily available from the financial statements and EBITDA or similar metrics. These amendments are implemented through the changes to Instruction 7 of "Instructions as to Exhibits" to Form 20-F, as well as in registration statements on Form F-1, Form F-3 and Form F-4 through amendments to Items 503(d) and 601(b)(12) of Regulation S-K. Eliminate Trading Price History. Companies with common equity traded in an established trading market no longer need to disclose high and low trading prices for each quarter in the last two full fiscal years and interim periods, given that such information is easily accessible to investors, so long as the company's trading symbol and principal trading markets are disclosed. Additionally, issuers with common equity that is not...

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