As expected, at an open meeting today, the SEC adopted (on a 3-to-2 vote) the final share repurchase disclosure rules, which were proposed in December 2021. Presumably responsive to concerns expressed by the Society (reported on here) and other commenters, the rule does not require day-after reporting of share purchases, as originally proposed; however, companies will be required to report daily repurchase details rather than monthly aggregate figures, which the Society suggested the SEC consider if it deemed current quarterly disclosures to be insufficient.
The SEC’s Fact Sheet highlights these and other key aspects of the rule:
- Companies will be required to disclose daily repurchase activity quarterly.
- Companies will be required to check a box indicating if certain directors or officers traded in the relevant securities within four business days before or after the public announcement of their repurchase plan or program.
- Companies will be required to provide narrative disclosure about their repurchase programs and practices in their periodic reports.
- Companies will be required to provide quarterly disclosure in their Forms 10-K and 10-Q related to their adoption and termination of 10b5-1 trading arrangements.
In her dissenting statement, citing TSC Industries v. Northway, SEC Commissioner Peirce noted: “The final rule, although it wisely backs off essentially real-time disclosure of issuer buybacks, is flawed in its granularity. The reasonable investor does not need to know about every repurchase by every public issuer. Disclosure of daily repurchase information will ‘bury [investors] in an avalanche of trivial information[,] a result that is hardly conducive to informed decisionmaking.’”
Companies other than foreign private issuers and listed closed-end funds will be required to comply with the amendments on Forms 10-Q and 10-K (for their fourth fiscal quarter) beginning with the first filing that covers the first full fiscal quarter that begins on or after October 1, 2023.