In order to minimize repeated or duplicate disclosures under this section, the amendments to section 103 allow a registrant to use hyperlinks or cross-references to other sections of a submission that provide the same details, such as the MD&A, risk factors or closing notes. In addition, the SEC concluded that the $100,000 unit monetary penalty threshold for disclosure of certain environmental proceedings is ineffective in requiring meaningful disclosure of those proceedings. Accordingly, the amendments to item 103 require disclosure of certain environmental procedures that result in potential monetary penalties of $300,000 or more, or any other amount that the notifier determines, in its sole discretion, to disclose all material proceedings. If the registrant uses a threshold other than $300,000, the registrant must also include this threshold in each annual and quarterly return. It should be noted, however, that regardless of the registrant`s determination of the threshold, disclosure is required for any proceedings that could result in penalties of less than $1 million or 1% of the current assets of the registrant and its subsidiaries. Currently, section 103 also requires a company to disclose all proceedings under environmental laws (or several proceedings that raise the same issues) involving a government agency, unless it has reason to believe that doing so will not result in penalties of $100,000 or more. This lower disclosure threshold was previously adopted by the SEC because it believed that disclosure of fines by government agencies might be more important in assessing a company`s environmental performance, as government fines are more likely to indicate possible illegality or conduct contrary to public policy. In addition, environmental procedures must be disclosed if they are material to the company`s business or financial position (regardless of exceptions for routine or routine procedures or the 10% working capital threshold). The amendments revise item 103 to increase the monetary threshold to $300,000, but to allow a company to choose another threshold it considers appropriate to disclose significant environmental procedures, provided that the company-specific threshold does not exceed the lower of $1 million or one per cent of the company`s working capital. Such a company-specific threshold must be specified by the company in each Form 10-K and Form 10-Q filing.
The amendments do not change any requirements for climate change disclosure, which led Commissioner Lee, in her opposition to the publication of the adoption, to state that “the SEC`s continued failure to participate in the discussion [on climate change] of this significant risk to the financial system” exposes the United States to the risk of “falling behind international efforts and placing U.S. companies in a situation of global competitive disadvantage”. Contains a disclosure threshold based on a specified amount ($100,000) for proceedings related to federal, state, or local environmental laws. (b) For proceedings that (iii) involve a governmental authority in such proceedings and that such proceedings give rise to potential monetary penalties, unless the declarant has reason to believe that such proceedings will not result in monetary penalties or non-interest-free monetary penalties and costs of less than US$ 300,000, or another threshold is disclosed when the registrant is selected; (A) in the registrant`s opinion, it is reasonably designed to result in disclosure of such a process that is material to the registrant`s business or financial condition, (B) the registrant discloses (including any changes to it) in each annual and quarterly return, and (C) does not exceed the lesser of $1 million or one percent of the current assets of the registrant and its subsidiaries. consolidated database; however, these procedures of a similar nature can be grouped together and described in general terms. Requires disclosure of all elements relating to the ongoing judicial proceedings, including the name of the court or authority before which the proceedings are pending, the date, the authorities initiated, a description of the facts on which the proceedings are alleged to be based and the appeal sought. Similar information should be included for procedures that are known to be taken into consideration by government authorities. (2) This is primarily a claim for damages if the value of the claim, excluding interest and costs, does not exceed 10% of the current assets of the registrant and its subsidiaries on a consolidated basis.
However, where a proceeding raises roughly the same questions of law or fact as other known ongoing or planned proceedings, the amount of that other proceeding shall be included in the calculation of that percentage. The changes to paragraph 103 (disputes) were less important for most undertakings. When complying with Section 103, registrants often repeat some or all of the information provided in the notes to the U.S. GAAP financial statements or add a cross-reference to the notes. The final rules simply specify that registrants are allowed to provide information under paragraph 103 by means of hyperlinks or references to disclosure of legal proceedings elsewhere in the document, such as the MD&A, risk factors or a note to conclusion. Effective November 2020, the SEC changed the description of disclosures of business, litigation and risk factors in Settlement S&K. The amendments moved to a principles-based disclosure system, which gives registrants greater discretion to determine which developments meet the materiality threshold and therefore require disclosure. Among other changes, registrants are now required to: describe their human capital resources; describe compliance with all essential government regulations, not just environmental laws; and disclose material changes to a previously disclosed business strategy. The amendments also removed the five- and three-year disclosure periods and instead required the registrant to focus on materiality. For more information, see The New SEC Regulation S-K Rules of the Harvard Law School Forum on Corporate Governance. (a) Briefly describe all pending legal proceedings, other than ordinary routine litigation relating to the Company, in which the Registrant or any of its subsidiaries is involved or held.