Simplified Disclosure for Acquisitions and Dispositions

The Harvard Law School Forum on Corporate Governance and Financial Regulation 2019-05-22

Posted by Marcel Fausten, Joseph A. Hall, and Michael Kaplan, Davis Polk & Wardwell LLP, on Wednesday, May 22, 2019
Editor's Note: Marcel Fausten, Joseph A. Hall, and Michael Kaplan are partners at Davis Polk & Wardwell LLP. This post is based on their Davis Polk memorandum.

On May 3 the SEC proposed amendments to the financial disclosure requirements relating to acquisitions and dispositions of businesses. The proposed amendments are intended to reduce the costs and complexity of required financial disclosure and should reduce the circumstances under which financial statements for acquired businesses need to be filed. The SEC previously requested comment in 2015 on the effectiveness of financial disclosure requirements for entities other than the registrant, including for acquisitions and dispositions, as part of its ongoing disclosure effectiveness initiative pursuant to its mandate under the FAST Act of 2015 to modernize and simplify public- company reporting requirements. This proposal incorporates the SEC’s consideration of comments received from Davis Polk and others in response to that request.

We believe this proposal is a step in the right direction of easing the burden of complying with current financial disclosure requirements for acquisitions and dispositions without meaningfully impacting the flow of material information to investors. Significantly, the proposed amendments would: