Client Publication
June 20, 2002
SEC Proposes to Expand and
Accelerate Form 8-K Filings
On June 17, 2002, the Securities and Exchange
Commission (the “SEC”) proposed rules that would:
loss equal to at least ten percent of the
company’s revenues for the most recent
fiscal year;
• shorten the filing deadline for reports on
Form 8-K to two business days after a
reportable event;
• creation of a material direct or contingent
financial obligation;
• add 11 events that require current disclosure
on Form 8-K; and
• events triggering a direct or contingent
material financial obligation;
• move two items from quarterly and annual
reports to the Form 8-K.
• definitive authorization of company action that
will result in the company incurring material
write-offs and restructuring charges;
The proposing release, “Additional Form 8-K
Disclosure Requirements and Acceleration of Filing
Date,” Rel. No. 33-8106 (June 17, 2002), is available
at: http://www.sec.gov/rules/proposed/33-8106.htm.
Comments on the proposing release are due 60 days
from publication in the Federal Register, which is
expected shortly.
Accelerated Filing Deadline
The proposed rule would require companies to file
required current reports on Form 8-K within two
business days of a reportable event.
The shortened deadline would not apply to Forms
8-K that report (i) voluntary Item 5 disclosures,
(ii) Item 9 Regulation FD disclosures, or
(iii) disclosures of transactions in a company’s
securities by its officers and directors pursuant to
recently proposed Item 10 of Form 8-K. See Release
No. 33-8090 (Apr. 12, 2002).
New Form 8-K Reportable Events
The SEC has proposed to add the following 11 events
to Form 8-K:
• entry into a material agreement, including
letters of intent and other non-binding
agreements not made in the ordinary course
of business;
• termination of a material agreement not made
in the ordinary course of business;
• termination or reduction of a business
relationship with a customer that results in a
• board or executive determination that the
company is required to record a material
charge for impairments;
• change in credit rating or outlook, or placing
the company or its securities on credit watch;
• notice of failure to satisfy rating standards
or of delisting or transfer of a listing to
another exchange;
• board or executive conclusion that security
holders should no longer should rely on the
company’s previously issued financial
statements; or notice from the independent
auditor that its prior audit report should no
longer be relied upon; and
• any event that would materially limit, restrict
or prohibit transactions in the company’s
employee benefit, retirement and stock
ownership plans.
The SEC also proposes to require (i) unregistered
sales of equity securities by the company and
(ii) material modifications to rights of holders of
the company’s securities to be reported on
Form 8-K instead of Forms 10-Q and 10-K, as is
currently required.
In addition, the proposals would:
• expand the current Form 8-K item that
requires disclosure about the resignation of a
director to also require disclosure regarding
the departure of a director for reasons other
than a disagreement or removal for cause, the
2
appointment or departure of a principal officer,
and the election of new directors; and
and not later than two business days after
becoming aware of its failure to file) filed a
Form 8-K with the SEC containing the
required information and stating the date or
approximate date on which the report should
have been filed.
• add a requirement to disclose on Form 8-K
any material amendment to the company’s
articles of incorporation or bylaws.
Waivers of Corporate Codes of
Conduct and Changes in Critical
Accounting Policies
The SEC notes that it is also considering two
additional Form 8-K items not specifically proposed:
waivers under corporate codes of conduct and
changes in critical account policies. The release
solicits specific comment on both items.
The safe harbor would not protect a company from
liability under Section 10 or Rule 10b-5 under the
Exchange Act or under Sections 11, 12 or 17 under
the Securities Act of 1933; nor would the safe harbor
protect a company from the consequences of a late
filing, namely, loss of eligibility to use shortform registration or Form S-8 and unavailability of
Rule 144.
Late Filing Notice and Filing Extension
Safe Harbor for Form 8-K Filing
Violations
The SEC proposes to create a safe harbor under
which a company would not be liable under the
reporting provisions of Sections 13(a) and 15(d) of
the Securities Exchange Act of 1934 (the “Exchange
Act”) for failure to file a Form 8-K. The safe harbor
would be available if:
• the company, on the Form 8-K due date, had
in place sufficient procedures to provide
reasonable assurances that it is able to collect,
process and disclose, within the specified time
period, the information required to be
disclosed on Form 8-K;
• no officer, employee or agent of the company
knew, or was reckless in not knowing, that
a report on Form 8-K was required to be
filed; and
• once an executive officer of the company
became aware of the company’s failure to file
a required Form 8-K, the company (promptly
Companies that are unable to file their Form 8-K
report on time will be required to file a notice of late
filing under Exchange Act Rule 12b-25. The Rule
12b-25 notice would be due no later than one
business day after the due date of the Form 8-K. The
SEC proposes to grant companies that properly file a
Rule 12b-25 notice an automatic two-business day
extension to file their Form 8-K. In such case, the
Form 8-K report, if properly filed within two
business days after its original due date, would be
deemed to be timely filed.
Foreign Private Issuers
The proposals do not apply to foreign private issuers.
Proposed Effective Date
The SEC plans to make the amendments effective 60
days after adoption for events occurring after the
effective date.
This memorandum is intended only as a general discussion of these issues. It should not be regarded as legal
advice. We would be pleased to provide additional details or advice about specific situations if desired. For
more information on the topics covered in this issue, please contact:
Linda C. Quinn
New York Office
(212) 848-8747
[email protected]
Abigail Arms
Washington D.C. Office
(202) 508-8025
[email protected]
Ottilie L. Jarmel
New York Office
(212) 848-8611
[email protected]
www.shearman.com
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