The Securities and Exchange Commission (SEC) has approved amendments that expand the disclosure rules regarding share repurchases by domestic issuers, foreign private issuers (FPIs), and listed closed-end funds. The amendments represent a significant increase in disclosure requirements, that include (i) disclosure of daily repurchase activity on a quarterly or semiannual basis; (ii) a new checkbox disclosure indicating if certain directors or officers traded in the relevant securities within four business days before or after the public announcement of an issuer’s repurchase plan or program; (iii) narrative disclosure regarding the repurchase program, including its objectives and rationale; and (iv) quarterly disclosures regarding the issuer’s adoption or termination of any Rule 10b5-1 trading arrangements. These enhanced disclosure requirements are intended to allow investors to draw clearer and more informed conclusions about the purposes and effects of share repurchases. What are the new disclosure requirements? Disclosure Regarding Daily Repurchase Activity: The new amendments require tabular disclosure of an issuer’s daily repurchase activity during the prior quarter. As with the prior rules, terms like “share repurchase plan” are not defined so, unless the SEC issues further interpretive guidance, issuers should include any “repurchases” that they disclose under the rules currently in effect (e.g., many issuers disclose repurchases of shares under equity compensation plans and other situations that may not be traditional open-market repurchase plans). The tabular disclosure will be filed as an exhibit to Form 10-Q and Form 10-K (for the issuer's fourth fiscal quarter), for U.S. domestic issuers. New Exchange Act Rule 13a-21 will require FPIs to disclose daily share repurchase data quarterly on a new Form F-SR, which will be due 45 days after the end of each fiscal quarter. Listed closed-end funds will be required to report the information in their semiannual and annual reports on Form N-CSR. There are no exemptions to the reporting requirements, including for smaller reporting companies or for classes of equity securities that are not exchange-traded. However, the SEC is not imposing the amended share repurchase disclosure requirements on eligible Canadian issuers using the multijurisdictional disclosure system (MJDS). The exhibit must be provided in XBRL-tagged format, and must report, for each day on which shares were repurchased: class of shares; number of shares purchased; average price paid per share; total number of shares purchased under publicly announced plans; aggregate maximum number of shares or approximate dollar value that may still be purchased under a publicly announced plan; number of shares purchased on the open market; total number of shares purchased that are intended to qualify for a safe harbor in Rule 10b-18; and total number of shares purchased under a plan that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), referred to as a “10b5-1 trading arrangement.” The amendments will replace the current requirements in Regulation S-K, Form 20-F, and Form N-CSR to disclose monthly repurchase data in periodic reports. Disclosures Regarding Director and Officer Trading Activity: The amendments require issuers to include a checkbox above the tabular disclosures indicating whether officers and directors subject to the Exchange Act Section 16(a) reporting requirements for domestic issuers and listed closed-end funds, or their directors and members of senior management who would be identified pursuant to Item 1 of Form 20-F for FPIs, purchased or sold shares or other units of the class of the issuer’s equity securities within four business days before or after the issuer’s announcement of such repurchase plan or program or the announcement of an increase of an existing share repurchase plan or program. An issuer may include additional disclosure to provide context to investors regarding any purchases or sales that triggered the checkbox required disclosures. The SEC noted that such disclosure would be required if material and necessary to prevent the reported information from being misleading. Disclosure of Repurchase Program and Practices: The new amendments will also expand the requirements for narrative disclosures about repurchases in Regulation S-K, Form 20-F, and Form N-CSR to require an issuer to disclose the following information: The objectives or rationales for each repurchase plan or program and the process or criteria used to determine the amount of repurchases; The number of shares purchased other than through a publicly announced repurchase plan or program, and the nature of the repurchase transactions (e.g., whether the purchases were made in open-market transactions, tender offers, in satisfaction of the issuer’s obligations upon exercise of outstanding options, or other transactions); Information about publicly announced repurchase plans or programs, including: the date each plan or program was announced; the dollar amount (or share or unit amount) approved; the expiration date of each plan or program; each plan or program that has expired during the period covered by the table; and each plan or program the issuer has determined to terminate prior to expiration, or under which the issuer does not intend to make further purchases; and Any policies and procedures relating to purchases and sales of the issuer's securities by its officers and directors during a repurchase program, including whether there are any restrictions on such transactions. 10b5-1 Plan Disclosure: For domestic issuers, new Item 408(d) of Regulation S-K will require an issuer to disclose whether, during its most recently completed fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report), the issuer adopted or terminated a contract, instruction, or written plan to purchase or sell its securities intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c). Issuers will also be required to provide a description of the material terms of the contract, instruction, or written plan (other than terms with respect to the price at which the party executing the respective trading arrangement is authorized to trade), such as: the date on which the registrant adopted or terminated the Rule 10b5-1 trading arrangement; the duration of the Rule 10b5-1 trading arrangement; and the aggregate number of securities to be purchased or sold pursuant to the Rule 10b5-1 trading arrangement. Item 408(d) will not require disclosure of the price at which the party executing the trading arrangement is authorized to trade. Issuers will be required to disclose this information in their quarterly reports on Form 10-Q and Form 10-K (for the issuer’s fourth fiscal quarter), and tag the information using Inline XBRL. Although there may be some overlap in the disclosure provided pursuant to new Item 408(d) and the disclosure provided pursuant to the amendment to Item 703 of Regulation S-K about an issuer’s Rule 10b5-1(c) trading arrangements adopted during the prior fiscal quarter, new Item 408(d) would complement the new Item 703 disclosure. The disclosure requirement in Item 703 will be triggered only if an issuer had conducted a share repurchase in the prior fiscal quarter. In contrast, Item 408(d) will require disclosure if a Rule 10b5-1 plan was adopted or terminated, regardless of whether a share repurchase transaction pursuant to that plan actually occurred during the prior fiscal quarter that is covered in the Form 10-Q or Form 10-K. To prevent potential duplicative disclosures, if the disclosure provided pursuant to Item 703 contains disclosure that would satisfy the requirements of Item 408(d)(1), a cross-reference to that disclosure will satisfy the Item 408(d)(1) requirements. The SEC also confirmed that companies that rely on recently amended Rule 10b5-1 will not be subject to a cooling-off period, any limitation on the use of multiple overlapping plans, any limitation on the use of single-trade plans or any disclosure regarding non-10b5-1 trading arrangements. What are the Deadlines for Compliance? Domestic issuers will be required to comply with the amended rules beginning with the filing that covers the first full fiscal quarter that begins on or after October 1, 2023. For example, a calendar year-end entity with a fourth quarter beginning on October 1, 2023 would be required to comply beginning with its December 31, 2023 Form 10-K (covering activity in that fourth quarter), and in Form 10-Q filings thereafter. FPIs will be required to comply by filing a new quarterly Form F-SR related to the first full fiscal quarter that begins on or after April 1, 2024. Narrative disclosures related to filed Form F-SRs will be required in the following Form 20-F. For example, a calendar year-end FPI with a fiscal quarter beginning on April 1, 2024 will be required to file a Form F-SR for the quarter ended June 30, 2024 that will be due within 45 days of the fiscal quarter end. Narrative disclosures covering Form F-SRs filed during 2024 will be required beginning with the Form 20-F for the year-ended December 31, 2024. Listed closed-end funds will be required to comply starting with the Form N-CSR that covers the first six-month period that begins on or after January 1, 2024. How should issuers prepare for the new amendments? To comply with the amendments, issuers should review and, if necessary, update their processes and controls to obtain the required information, such as tracking daily share repurchase activity and trades made by directors and officers close in time to the announcement of a share repurchase plan. FPIs should consider changes to their disclosure controls to meet the new quarterly disclosure and tagging requirements on the new Form F-SR. Enhanced narrative disclosures will be required, prompting issuers to evaluate current policies and procedures related to trades made by directors and officers during a repurchase program. The board of directors should discuss, and document in their policies and procedures, the objectives or rationales for the issuer's share repurchases, the process or criteria used to determine the amount of repurchases approved, and any policy regarding officer or director trades made in the days leading up to the board's decision. Along these lines, issuers should review their insider trading policies to consider if changes are needed to those to make clear any restrictions on directors and officers trading before and during share repurchase plan execution. Ongoing or future repurchases should be consistent with disclosed objectives, rationales, and policies. ***** If you would like further information regarding the new share repurchase disclosure rules, please contact the lawyers at Sullivan & Worcester LLP with whom you regularly consult or any of the lawyers listed above.