SEC Staff Updates Financial Reporting Manual for Acquired and Disposed Business Rules
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Summary
The SEC staff updated the Division of Corporation Finance’s Financial Reporting Manual (FRM) to reflect the 2020 amendments to Regulation S-X (“S-X”) for acquired and disposed businesses. Additional guidance was also added for the 2020 amendments related to financial disclosure requirements about guarantors and issuers of guaranteed securities and affiliates whose securities collateralize a registrant’s securities. A summary of the updates is as follows:
| Rules | Summary of Updates | FRM Topics and Sections |
|---|---|---|
| S-X Rules 3-05, 3-14, 8-04, 8-06, and Article 11 | Made conforming changes related to the 2020 amendments for acquired and disposed businesses, including revised significance tests, updated financial statement requirements (such as the number of years and treatment of individually insignificant businesses), and changes to the presentation of pro forma financial information, among other updates. See our Snapshots, Financial Statements of Acquired Businesses, Financial Statements of Acquired Real Estate Operations, and Pro Forma Financial Information for more information on S-X Rules 3-05, 3-14, and Article 11. | Updated sections 2900, 5320, and Topic 3. Removed sections 2000, 2305, 2310, 2315, 2320, 2325, 2330, and 2335. Additional sections will be revised in a future update to reflect changes made in section 2900. |
| S-X Rules 3-10 and 3-16 | Added guidance on the reporting obligations of each issuer and guarantor when using a shelf registration statement to register guaranteed debt securities. Clarified when disclosures are required for affiliates whose securities collateralize a registrant’s securities in shelf registration statements, and in cases where reporting obligations are suspended, or collateral arrangements are terminated. See our Bulletin, SEC Simplifies Disclosures for Registered Debt Offerings for more information on the 2020 amendments to S-X Rules 3-10, and 3-16. | Added sections 2540.6, 2640.4, and 2640.5, and updated section 2640.2. |
Link to the SEC staff’s Announcement
Link to the FRM