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SEC votes to improve public company disclosure, simplify BDC offerings

The Securities and Exchange Commission voted to simplify disclosure requirements for public companies, consultants and money managers to help investors better understand material information.

The disclosure amendments to Regulation S-K approved Wednesday were mandated by the Fixing America's Surface Transportation Act of 2015 and part of a sweeping review of disclosure rules. The amendments should improve the readability and navigability of company disclosures, and discourage repetition or immaterial information, an SEC statement said.

"The amendments adopted today demonstrate our focus on modernizing our disclosure system to meet the expectations of today's investors while eliminating unnecessary costs and burdens," SEC Chairman Jay Clayton said in the statement.

According to an SEC fact sheet, the amendments will give company officials more flexibility to discuss historical periods, allow them to redact some confidential information without filing a confidential treatment request and incorporate technology to improve access to filing information.

Companies will have to data-tag cover pages of certain filings and provide hyperlinks to information that is incorporated by reference or available on EDGAR.

The amendments relating to redacting confidential information will become effective once they are published in the Federal Register, while the others will be effective 30 days after publication.

Requirements to tag data on the cover pages of certain filings will be phased in over three years, and a requirement for certain filings to be made in HTML format with hyperlinks will be effective for filings on or after April 1, 2020.

Also on Wednesday, the commission voted to advance reforms making it easier for business development companies and registered closed-end funds to communicate with investors about offerings. BDCs are used by private equity firms use to get a permanent source of capital through mostly publicly traded closed-end funds that provide debt to small- and middle-market companies.

The proposed reforms would allow them to use a more streamlined registration process and give them more freedom with communications and prospectus delivery rules that more closely track those for operating companies.

The proposed amendments, now open for a 60-day public comment period, include new periodic and current reporting requirements and new structured data requirements.

Mr. Clayton said the changes should provide more flexibility, facilitate capital formation and ultimately benefit investors.