As previously discussed in the April 12, 2019 edition of Corporate & Financial Weekly Digest, the Securities and Exchange Commission adopted final rules on March 20, 2019, that allow registrants to omit a discussion and analysis of the earliest of the three years of required financial statements from the Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section of their annual reports. Omitting that section from the annual reports filing with the SEC is permissible so long as the discussion of such year is already included in an earlier SEC filing and the registrant includes a statement identifying the location of such discussion in the prior filing. On January 24, the staff of the SEC’s Division of Corporation Finance (the Staff) issued three Compliance and Disclosure Interpretations (C&DIs) to address questions related to the final rule.

C&DI 110.02. The Staff clarified that a statement in a registrant’s filing identifying the location of where the omitted information can be found in a prior filing, in reliance on the rule amendment, does not have the effect of incorporating such prior disclosure by reference, unless the registrant’s current filing expressly provides that the information is incorporated by reference.

C&DI 110.04. The Staff further clarifies, that, when a company updates an effective registration statement by filing a Form 10-K in which the discussion of the earliest of the three years is omitted and there is a statement identifying the location of the discussion in a prior filing, the prior discussion would not be incorporated into the updated registration statement, unless the registrant’s current Form 10-K filing expressly provides that the information with respect to such omitted year is specifically incorporated by reference.

C&DI 110.03. This provides that a registrant may not omit a discussion of the earliest of the three years of financial statements in a filing, in reliance on the rule amendment, if the registrant believes that such discussion would otherwise be required in order to understand the registrant’s financial condition, changes in financial condition and results of operations. In such case, the registrant must either expressly incorporate the discussion by reference from a previous filing or include the discussion in the current filing.

The new C&DIs are available here.