Key facts
- The SEC proposed rules to reduce disclosure obligations for public companies.
- The changes would exempt many issuers from auditor attestation on internal controls and reduce executive compensation disclosure requirements.
- Companies could opt to file semiannual reports instead of quarterly reports.
- The proposed rules aim to simplify filer categories into Large Accelerated Filer (LAF) and Non-Accelerated Filer (NAF).
- Experts warn that reduced disclosures might mask fraud or financial difficulties.
The U.S. Securities and Exchange Commission (SEC) has proposed new rules that could significantly reduce the disclosure requirements for public companies. The proposals, announced on May 5 and May 19, 2026, aim to simplify the current complex system of filer categories and provide companies with more flexibility in their reporting frequency. Under the proposed changes, over 80% of issuers would fall under a scaled disclosure regime, similar to that for smaller reporting companies (SRCs) and emerging growth companies (EGCs). This would exempt many companies from requirements such as auditor attestation on internal controls over financial reporting (Section 404(b) of Sarbanes-Oxley) and reduce executive compensation disclosures. Additionally, companies would have the option to file semiannual reports on a new Form 10-S instead of quarterly reports on Form 10-Q, filing one semiannual and one annual report per fiscal year. The SEC stated these changes are intended to reduce costs for companies and provide flexibility for investors to determine reporting frequency. However, experts have raised concerns that these reduced disclosure obligations could potentially allow companies to disguise fraud or financial stress.