Risk & Compliance

SEC Amendments Respond to Sarbanes 409

New rules for 8-K filings require companies to disclose material information on a ''rapid and current basis.''
Stephen TaubMarch 15, 2004

The Securities and Exchange Commission has approved long-awaited new requirements for 8-K filings, in response to Section 409 of the Sarbanes-Oxley Act.

The amendments add 10 disclosure items that would trigger an 8-K filing, including two items now required in quarterly and annual reports.

In addition, companies will have four business days to file Form 8-K, compared with the current five business days or 15 calendar days. When the SEC first proposed the amendments in April 2002, it had hoped to require that Form 8-K be filed within two business days for most provisions.

The eight new disclosure items include:

  • Entry into a material non-ordinary course agreement
  • Termination of a material non-ordinary course agreement
  • Creation of a material direct financial obligation or a material obligation under an off-balance-sheet arrangement
  • Triggering events that accelerate or increase a material direct financial obligation or a material obligation under an off-balance-sheet arrangement
  • Material costs associated with exit or disposal activities
  • Material impairments
  • Notice of delisting or failure to satisfy a continued listing rule or standard; transfer of listing
  • Non-reliance on previously issued financial statements or a related audit report or completed interim review (that is, restatements)

The two disclosure items transferred, in part, from the quarterly or annual reports are unregistered sales of equity securities and material modifications to rights of security holders.

The SEC also identified two expanded disclosure items: the departure of directors or principal officers, election of directors, or appointment of principal officers; and amendments to articles of incorporation or bylaws, and a change in fiscal year.

The amendments go into effect beginning August 23, 2004.