Thomas L. Hanley

The U.S. Securities and Exchange Commission (SEC) issued a proposed rule on May 5 that would significantly alter the periodic reporting framework for public companies by permitting semiannual reporting in lieu of the current quarterly reporting regime. If adopted, the rule would represent one of the most notable changes to public-company disclosure obligations in decades.

Proposed Amendments

The SEC’s proposed rule contemplates amendments to:

• Rules 13a-13 and 15d-13 under the Securities Exchange Act of 1934 that would permit public companies to elect to file semiannual reports instead of quarterly reports on a new Form 10-S (in lieu of Form 10-Q) on which semiannual filers would file semiannual reports.
• Regulation S-X that would revise rules governing financial statement requirements in periodic reports, registration statements, and proxy statements to reflect the new optional semiannual reporting approach.
• Numerous existing rules and forms that refer to quarterly reporting to incorporate the optional semiannual reporting approach.

Optional Semiannual Reporting

Public companies that do not choose to become semiannual filers would continue to file quarterly reports on Form 10-Q. The proposed amendments would provide greater flexibility to public companies to select the interim reporting frequency that best serves the company and its investors. Public companies would make the election to become semiannual filers by marking a checkbox on the cover page of the annual report on Form 10-K, Securities Act of 1933 registration statements (Forms S-1, S-3, S-4 or S-11), or Exchange Act registration statements on Form 10, as applicable.

New Form 10-S

Semiannual filers would file their interim reports on new Form 10-S. This form would require the same narrative disclosures and financial information as the current Form 10-Q but would cover a fiscal six-month period rather than a fiscal quarter. The financial statements for a semiannual period would be required to be prepared in accordance with U.S. generally accepted accounting principles. Semiannual filers would have the same length of time to file the Form 10-S as Form 10-Q, with the Form 10-S due 40 or 45 days (depending on the company’s filer status) after the end of the first semiannual period of the fiscal year.

Rationale and Potential Implications

The SEC has indicated that the option to report twice a year, rather than four times a year, is intended to reduce the short-termism in financial markets, lower compliance costs and administrative burdens on public companies, and encourage a longer-term focus by management and investors. The SEC has indicated this proposed change could be the first of many to lessen the annual disclosure and reporting burdens, resulting in more incentive for companies to “go public.”

Opting into the semiannual reporting regime is likely to have implications for public companies that need to be considered. For example, reporting companies may need to recalibrate internal reporting systems to align with a semiannual cadence while maintaining robust disclosure controls. In addition, with fewer formal reporting periods, companies may rely more heavily on earnings calls, investor presentations, and current reports on Form 8-K to communicate with the market, and the reduced frequency of formal disclosures by reporting companies could impact trading patterns and analyst coverage.

The proposal has already generated discussion among issuers, institutional investors, and market participants. While some support reduced reporting burdens, others have raised concerns regarding transparency, information asymmetry, and potential impacts on market efficiency.

Next Steps

The SEC has provided a 60-day public comment period following publication in the Federal Register. During this time, issuers, investors and other stakeholders are encouraged to submit feedback on the proposed rule. The SEC will review comments before determining whether to adopt the rule, potentially with modifications.

In the meantime, public companies should consider:

• Evaluating the operational and strategic impact of a shift to semiannual reporting.
• Preparing to submit comments to the SEC, if appropriate.
• Monitoring developments closely as the rulemaking process progresses.

These proposed amendments would not substantively affect investment companies under the Investment Company Act of 1940, except for business development companies and face-amount certificate companies, which are investment companies that file periodic reports pursuant to the Exchange Act.

Looking Ahead

If adopted, the proposed rule would meaningfully reshape the public company reporting landscape. While it may ease compliance burdens, it also raises important considerations regarding transparency and investor engagement. Companies should proactively assess how this change could affect their disclosure practices and broader market communications strategy.

If you have any questions about the proposal or how the new rules could impact your company, contact Chris Connell, Tom Hanley or Matt Sadofsky.