U.S. SEC adopts rules requiring hyperlinks for corporate exhibits

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By Sarah N. Lynch

<span class="articleLocation”>Public companies will be required to make it
easier for investors to locate exhibits attached to their
financial filings by including hyperlinks, under a new rule
adopted on Wednesday by the U.S. Securities and Exchange

The change is widely viewed as a common sense measure that
is long overdue, and did not spark opposition from the SEC’s two
commissioners, Mike Piwowar, the acting Republican chairman, and
Kara Stein, a Democrat.

Under current rules, companies are required to provide a
list of exhibits, such as their bylaws and underwriting
agreements, and where they can be located. But they can be hard
for investors to quickly and easily locate without hyperlinks.

“In many cases, exhibits are incorporated by reference,
meaning that they are not attached to a current filing,” Stein
said. “In order to find an exhibit, an individual would need to
embark on a time-consuming search.”

The final hyperlink rule, which is slated to take effect in
September for most companies, is among a raft of other proposals
unveiled Wednesday, with all of them geared toward modernizing
how public companies disclose information to investors.

Collectively, the measures unveiled by the SEC on Wednesday
aim to “focus the light of disclosure in ways that empower
investors” while also promoting “efficient regulation,” Piwowar

One such initiative, for instance, calls for public comments
on how the SEC should update stale, 30-year-old guidance to the
banking sector about certain statistical disclosures provided to

“Industry Guide 3,” as the SEC calls it, does not reflect
changes the sector has experienced over the last few decades.
The SEC asks for comments about things such as how regulation
impacts banks’ operations, capital structures, dividend policies
and treatment in bankruptcy, among other things, and how the
disclosure regime can be improved.

A second proposal, meanwhile, would require companies to use
inline XBRL, an open source software designed to make it easier
to view, navigate and search financial data.

Companies already provide data using XBRL, a software that
labels financial statements with computer-readable tags that can
be read like barcodes. By requiring inline XBRL, companies will
then embed that structured data into the financial statements.

In addition to the various public company disclosure
proposals, the SEC also proposed a measure that would require
brokers who underwrite municipal bonds to ask municipalities for
additional disclosures related to bank loans, swaps and other
financial obligations.

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