The U.S. Securities and Exchange Commission (SEC) officially proposed rule amendments on Wednesday that would allow public companies to file semiannual reports instead of quarterly filings. The centerpiece of the proposal is the introduction of Form 10-S, an alternative to the existing Form 10-Q. Eligible companies opting for semiannual reporting would submit one semiannual report and one annual report per fiscal year, replacing the current cycle of three quarterly and one annual report.
The initiative is designed to reduce compliance burdens, which the SEC and business groups argue have become excessive. SEC Chairman Paul S. Atkins stated that the current framework limits flexibility for both companies and investors, and that allowing parties to determine reporting frequency based on their needs is a necessary step. “Over the next few months, I expect that the Commission will be considering a series of proposals that, if adopted, will not only redefine what it means to be a public company, but will make being public attractive again,” Atkins said.
Commissioner Hester Peirce voiced support, noting that semiannual reports were once the norm and that the frequency of reporting can deter companies from entering public markets. The U.S. Chamber of Commerce welcomed the proposal, with Senior VP Mike Flood emphasizing that when reporting requirements make it harder and costlier for companies to go and stay public, rules should be reevaluated. It is estimated that quarterly report filing can cost large firms over $5 million, and compliance costs have risen sharply over the past two decades.
Under the proposed deadlines, semiannual reports would be due 40 or 45 days after the end of a fiscal half, depending on filer status. The SEC also plans to revise Regulation S-X to align financial statement disclosure requirements with the new structure. The proposal now enters a 60-day public comment period following publication in the Federal Register, after which the SEC will decide whether to adopt or amend the new rules.
