SEC proposes optional semiannual reporting cadence: Considerations that companies should weigh now

In the release, the SEC explained that the proposed framework is designed to provide companies the flexibility to choose a reporting cadence that best serves their circumstances, including their business needs and investor expectations, while also potentially reducing compliance costs, which “may contribute to more private companies deciding to enter the public markets and more companies deciding to remain public.” SEC Chair Paul Atkins emphasized that the proposed rule is the “first step” of the SEC’s broader effort to “review and reshape the current SEC rules governing public companies with respect to their ongoing reporting obligations.” 

Considerations for reporting companies 

Reporting companies should consider the extent to which their current and planned capital raising activity, contractual arrangements, compliance policies, and investor base might allow for a transition to semiannual reporting: 

• Active Offerings: Issuers conducting a continuous public offering or engaging in underwritten offerings using a shelf registration statement (including at-the-market offerings) may be required to provide underwriters, placement agents, or other similar parties with interim financial data as of a more recent date than a semiannual report would otherwise provide in connection with such offerings. This also raises the question of whether underwriters’ requests for independent auditors to provide comfort letters¹ in such offerings would result in semiannual filers retaining their independent auditors to continue conducting quarterly financial statement reviews. 
• Contractual Arrangements: Semiannual filers still may be subject to specific contractual obligations to provide financial information on a quarterly basis. For example, borrowing arrangements with lenders may include covenants providing for the delivery of quarterly financial statements. 
• Open Trading Windows: Semiannual reporting may increase the length of time that a registrant’s insiders are in possession of non-public information, which may subject directors and employees to a longer closed trading window under their insider trading policies. While the proposal allows for semiannual filers to voluntarily issue quarterly earnings releases, it remains unclear how this approach would affect trading window practices.
• Quarterly Earnings Materials: Item 2.02 of Form 8-K does not mandate that companies provide earnings information, it only requires that if a company announces such information for a completed fiscal period, it must be furnished in a Form 8-K filing. As a result, Item 2.02 does not create an obligation to supply quarterly earnings data, and investors would not necessarily be able to rely on a Form 8-K filing to receive interim financial information from a semiannual filer that chooses not to report its earnings information quarterly. 

Reporting companies also should be mindful of the following: 

• Investor Expectations: Semiannual filers should consider whether their investors will continue to expect quarterly financial information and how to present that data without engaging in selective disclosure. Responding to specific investor inquiries regarding interim financial information may present Regulation FD compliance questions, as a reporting company generally must provide the same information to all investors. A semiannual reporting regime may require the registrant to enhance their policies relating to Regulation FD.
• Stock Exchange Requirements: NYSE and Nasdaq listing standards both reference the SEC’s current interim reporting rules and the consequences of failing to timely file such reports. In the proposed rule, the SEC explains that such listing standards are based on the SEC’s current reporting rules, rather than independently requiring quarterly financial reporting. However, listed companies may decide it is prudent to continue reporting quarterly until the applicable listing standards are amended to conform with the proposed rule. 

New Form 10-S: content and deadline 

Under the proposed rule, companies choosing to report semiannually would file one semiannual report and one annual report for each fiscal year, with the interim report filed on new Form 10-S. Compared to Form 10-Q, Form 10-S would require the same narrative disclosure, financial information, and iXBRL tagging data, but would instead cover a six-month period, rather than a fiscal quarter. The six-month interim financial statements would be required to be prepared in accordance with US Generally Accepted Accounting Principles and reviewed by an auditor, but would not need to be audited, consistent with the current reporting requirements of interim financial statements. Form 10-S also would include the same exhibits and certifications relating to a company’s internal control over financial reporting and disclosure controls and procedures as are currently required by Regulation S-K in Form 10-Q filings. 

The filing deadline for a semiannual report on Form 10-S would be 40 days (for large accelerated filers and accelerated filers) or 45 days (for all other filers) after the reporting period, which is consistent with the filing deadline for quarterly reports on Form 10-Q. 

Opting into semiannual reporting 

The proposed rule allows companies to maintain their existing quarterly reporting schedule without taking further action. To opt in to semiannual reporting, companies would select a check box on the cover of Form 10-K, and once selected, the reporting company would not be able to change its reporting frequency for the remainder of the fiscal year until it files its next Form 10-K. Registrants seeking to maintain their quarterly reporting cadence would leave the semiannual box unchecked. 

Under the proposed rule, a company that intends to be a semiannual filer and neglects to check the box (or a company that intends to be a quarterly filer and inadvertently checks the box) can file an amended Form 10-K to correct such mistake. Any corrective amendment must be filed as soon as practicable after the mistake is discovered, but no later than the due date for the first quarterly report on Form 10-Q of the applicable fiscal year. 

Additionally, the proposed rule would add a check box on Forms S-1, S-3, S-4 and S-11 and Form 10 registration statements for companies to indicate their intent to file semiannual reports where such companies have not yet filed an Exchange Act report.² This election would determine the financial statements required to be filed with the registration statement, while also flagging the company’s intended reporting frequency to potential investors. 

Amended financial statement staleness framework and technical amendments

The proposed rule would amend the financial statement requirements in Regulation S-X to accommodate the semiannual schedule and simplify the rules governing the age of financial statements in registration statements and other SEC filings. Specifically, a company would no longer count back 130 days (for large accelerated filers or accelerated filers) or 135 days (for all other filers) from the filing date or effective date of a registration statement to determine whether an interim balance sheet is “stale.”³ Instead, the company would simply include the interim financial statements as of the end of the most recently completed fiscal quarter (for quarterly filers) or semiannual period (for semiannual filers) that have been filed, or are required to be filed, on or before the filing date. To achieve this, the proposed rule would eliminate Rule 3-12 under Regulation S-X, and would consolidate those requirements in an amended Rule 3-01 under Regulation S-X. 

The proposed rule also includes several technical amendments to existing rules to add references to semiannual reporting. 

Next steps

The proposed rule will be subject to a 60-day comment period, which ends on July 6, 2026, after which the SEC will consider whether to adopt final rules to implement optional semiannual reporting. The SEC has solicited comments on a range of topics that may ultimately shape the final form of these rule amendments. Stakeholders should carefully review the proposed rules, identify issues that should be addressed by the SEC in its proposed amendments, and submit written comments.

Companies that are considering reporting on a semiannual basis should evaluate and weigh the expectations of their investors, existing and future capital raising efforts, and current contractual obligations in determining whether to opt in to the proposed new structure. Based on these factors, the landscape for financial reporting may be slow to evolve if the proposed rules are adopted.

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.

_{1 The proposal acknowledges, but does not address, the 135-day window under PCAOB Auditing Standard 6101, Letters for Underwriters and Certain Other Requesting Matters for negative assurance in comfort letters, but instead requests comment on whether changes to the auditing standard are needed.
2 Notably, the proposal does not reference Form N-2, which is a form registration statement used by business development companies (“BDCs”). The proposal notes that the amendments would apply to BDCs, but would not substantively impact other investment companies, which are not subject to Exchange Act reporting. The proposal, however, requests comments on whether any type of reporting company, such as BDCs, that currently files on Form 10-Q should be excluded from the option of electing semiannual reporting. 
3 Note that investment companies, including BDCs, must apply the requirements of Rule 3-18 under Regulation S-X instead of the foregoing requirements of Rules 3-01 and 3-12 of Regulation S-X.}