Item 1.01—Entry into a material definitive agreement

Item 1.01 requires a company to disclose material definitive agreements entered into that are not made in the ordinary course of business. It also requires a company to disclose a material amendment to an agreement. A material amendment to an agreement must be disclosed even if the company did not disclose the original agreement. This could occur if, for example, the agreement was entered into prior to the effective date of the rules, or if the amendment results in the agreement becoming a material definitive agreement.

The types of agreements that generally must be reported under this item include, but are not limited to, those contracts described by Item 601(b)(10) of Regulation S-K. The regulation defines a material definitive agreement as one that provides for rights or obligations that are material and enforceable, whether or not performance is subject to stated conditions. For example, a material definitive agreement that is binding and subject to customary closing conditions — such as the delivery of legal opinions or comfort letters, completion of due diligence, or regulatory approval — must be disclosed despite the fact that the conditions of the contract may not yet have been satisfied. The rules do not require disclosure of letters of intent and other non-binding agreements.

The required disclosures under Item 1.01 include (1) the date on which the agreement was entered into or amended; (2) the identity of the parties involved; (3) a brief description of any existing material relationship between the involved parties; and (4) a brief description of the material terms and conditions of the agreement.

The agreement need not be provided as an exhibit to Form 8-K, but a company must file a material agreement reported on Form 8-K as an exhibit to the company’s next periodic report or registration statement under the existing requirements of Item 601(b)(10) of Regulation S-K. The SEC encourages companies to file the exhibit with the Form 8-K when feasible, particularly when no confidential treatment is requested.

If a Form 8-K filing is made to disclose an agreement that relates to a business combination, the filing may constitute the first “public announcement” of the agreement for purposes of Rule 165 under the Securities Act and Rules 14d-2(b), 14a-12 or 13e-14(c) under the Exchange Act. Those rules require all communications relating to business combinations made before the filing of a registration statement, the solicitation of a proxy, or the commencement of a tender offer to be filed with the SEC. To avoid duplicative filings, a registrant may check one of four boxes on the cover page to indicate that it is simultaneously satisfying its filing obligations under these rules, provided that the Form 8-K contains all of the information required by those rules.

Item 1.02—Termination of a material definitive agreement

Item 1.02 requires disclosure if a material agreement not made in the ordinary course of business is terminated for reasons other than expiration of the agreement or completion of the obligations under the agreement. The required disclosures include (1) the termination date; (2) the identity of the parties involved; (3) a brief description of any existing material relationship between the involved parties; (4) a brief description of the material terms and conditions of the agreement and circumstances surrounding the termination; and (5) any material early-termination penalties incurred by the company.

No disclosure is required during negotiations or discussions regarding termination of a material definitive agreement. Further, no disclosure is required if the company believes, in good faith, that the agreement has not been terminated, unless the company has received a notice of termination pursuant to the terms of the agreement.

Item 1.03—Bankruptcy or receivership

If a receiver or similar agent has been appointed for the registrant in a bankruptcy proceeding, disclosure is required concerning the proceeding, the receiver, the court involved, and certain other matters. This item also requires disclosure of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority.

Item 1.04—Mine safety — Reportings of shutdowns and patterns of violations

Item 1.04 has been added to Form 8-K in order for issuers to disclose the information required by Section 1503 of Dodd-Frank Act (the act) relating to mine safety violations.

Section 1503 of the act requires registrants that operate coal or other mines (or that have a subsidiary that operates such a mine) to disclose specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities in their periodic and current reports. The rules apply to issuers that operate a mine in the U.S., including smaller reporting company and foreign private issuers, and were effective January 27, 2012.

Item 1.04 requires disclosure if the registrant or any of its subsidiaries receives an imminent danger order from the Mine Safety and Health Administration, or a written notice that the coal or other mine has a pattern of violations or that it has the potential to have such a pattern. The registrant must disclose the date of receipt of such order or notice, the category of the order or notice, and the name and location of the mine involved.

Item 2.01—Completion of an acquisition or disposition of assets

Item 2.01 requires disclosures when a company has completed any acquisition or disposition of a significant amount of assets other than in the ordinary course of business. Disclosures would include the transaction date, a description of the assets, the nature and amount of consideration given or received for the assets, the parties involved and any relationships between them, and, where a material relationship exists between the parties to the agreement, the sources of funds used.

An acquisition or disposition is significant if

• for an acquisition or disposition of assets (vs. a business) the net book value of the assets or the purchase price or sales price exceeds 10% of the registrant’s consolidated assets before the transaction;
• the interest in the business (vs. assets) acquired meets the Regulation S-X Rule 1-02(w) test of a significant subsidiary, substituting 20% for 10% if the transaction is an acquisition; or
• the interest in the business (vs. assets) sold meets the Regulation S-X Rule 1-02(w) test of as significant subsidiary (that is, at the 10% level).

Item 2.01(f)—Shell company transactions

The Form 8-K rules require a public company obligated to report an event on Form 8-K that causes it to cease being a shell company (for example, because of the acquisition of an operating company), to include the same type of information that it would be required to file to register a class of securities under the Securities Exchange Act of 1934 (that is, to file information that meets the requirements of Form 10) within four business days of the transaction. No 71-day extension is permitted to include the audited financial statements. The reporting requirements are included under Items 2.02 (Results of Operations and Financial Condition), 5.01(Changes in Control of Registrant), 9.01 (Financial Statements and Exhibits), and Item 5.06 (Change in Shell Company Status).

The rules are aimed at transactions in which a private company becomes public through what is often referred to as a back-door registration. In a back-door registration, a private company becomes a public company by merging with a public shell company. If the Form 8-K is filed shortly after year-end or quarter-end, the company may not have included the most recent financial statements. The Exchange Act rules that prevent a gap in reporting following an initial public offering, Rules 13a-1 and 13a-13, apply to the newly merged company. Consequently, the company is required to file a Form 8-K/A with the latest year-end or quarter-end financial statements and other information required in Forms 10-K or 10-Q. Because foreign private issuers are not subject to Form 8-K reporting requirements, they are required to provide the information on Form 20-F.

Item 2.02—Results of operations and financial condition

Item 2.02 of Form 8-K requires companies to furnish the text of quarterly and annual earnings releases and announcements with the SEC within four business days of the public disclosure. Issuers that make earnings announcements in an interim or annual report to shareholders are allowed to specify in Form 8-K which portion of that report contains the required information.

Companies are not required to issue earnings releases, but issuing such a release triggers the Item 2.02 filing requirement. The filing requirement does not apply to public disclosures that include only earnings estimates for ongoing or future fiscal periods. The 8-K filing would satisfy the requirements under Regulation FD if it were made within the time frame required by Regulation FD.

If a non-GAAP financial measure is included in the earnings release, the requirements of Regulation G apply. In addition, the following two requirements of Regulation S-K Item 10 would have to be furnished:

• The purpose for which management uses the non-GAAP financial measure
• To the extent material, any additional reason that management believes the non-GAAP financial measure provides useful information to investors

In May 2016 and subsequently, the SEC’s staff updated their Compliance and Disclosure Interpretations (C&DIs) related to guidance on the disclosures of non-GAAP financial measures, which includes earnings- related disclosures.

If nonpublic information is disclosed orally, telephonically, by webcast, broadcast, or similar means, Item 2.02 would not require filing of a Form 8-K if

• the disclosure initially occurs within 48 hours of a written release or announcement filed on Form 8-K pursuant to Item 2.02;
• the presentation is accessible to the public by dial-in conference call, webcast, or similar technology;
• the financial and statistical information contained in the presentation is provided on the registrant’s website, together with any information that would be required under Regulation G; and
• the presentation was announced by a widely disseminated press release that included instructions concerning when and how to access the presentation and the location on the registrant’s website where the information would be available.

Item 2.03—Creation of a direct financial obligation or an obligation under an off-balance sheet arrangement of a registrant

Item 2.03 requires disclosure when a company becomes (1) obligated under a material direct financial obligation, or (2) directly or contingently liable for a material obligation arising under an off-balance sheet arrangement. A direct financial obligation includes a long-term debt obligation, a capital lease obligation, or an operating lease obligation, as those terms are defined in Item 303(a)(5) of Regulation S-K (table of contractual obligations). It also includes short-term debt that arises other than in the ordinary course of business. An off-balance sheet arrangement is one that must be disclosed in MD&A pursuant to Regulation S-K Item 303(a)(4).

In the case of a direct financial obligation, the required disclosures include (1) the date on which the company becomes obligated and a brief description of the transaction or agreement creating the obligation; (2) the amount of the obligation and terms of payment; (3) if material, the terms under which the obligation may be accelerated or increased and the nature of any recourse provisions available to the company; and (4) any other material terms and conditions of the agreement.

If the company becomes directly or contingently liable for a material obligation arising out of an off- balance sheet arrangement, it must provide the following information: (1) the date on which the company becomes directly or contingently liable on the obligation and a brief description of the transaction or agreement creating the arrangement and obligation; (2) a brief description of the nature and amount of the obligation, including the material terms under which it may become a direct obligation or may be accelerated or increased, and the nature of any recourse provisions available to the company; (3) the maximum potential amount of future payments (undiscounted) that the company may be required to make, if different; and (4) any other material terms and conditions of the arrangement.

No disclosure is required until a company enters into an agreement that is enforceable against it, whether or not subject to conditions, under which an obligation will arise or be created or issued. If there is no such agreement, the Form 8-K must be filed within four business days after the closing or settlement of the transaction. Disclosures regarding off-balance sheet arrangements are required whether or not the company is a party to the arrangement that creates the contingent obligation. In the event that neither the company nor any of its affiliates is a party to the off-balance sheet arrangement, the four-business- day period for reporting the event under Item 2.03 would begin on the earlier of (1) the fourth business day after the contingent obligation arises or (2) the day on which an executive officer of the company becomes aware of the contingent obligation.

If a company enters into a credit facility or similar arrangement that gives rise to direct financial obligations in connection with multiple transactions, the company must disclose on Form 8-K the entering into of the facility. Subsequently, the company must disclose on Form 8-K material obligations under the facility as they arise, including when a series of previously undisclosed individually immaterial obligations become material in the aggregate.

No disclosure is required if the obligation is a security that has been or will be sold pursuant to an effective registration statement, provided that the prospectus related to the sale is timely filed and contains the required information.

Item 2.04—Triggering events that accelerate or increase a direct financial obligation or an obligation under an off-balance sheet arrangement

A Form 8-K filing is required under Item 2.04 if a triggering event occurs causing a material increase or acceleration of either a direct financial obligation or an obligation under an off-balance sheet arrangement. Disclosure is also required if a triggering event causes a contingent obligation under an off-balance sheet arrangement that has been accrued pursuant to FASB Accounting Standards Codification (ASC) 450, Contingencies, to become a direct financial obligation.

A company must provide the following: (1) a brief description of the underlying agreement or off-balance sheet arrangement and the triggering event, including the date of the triggering event; (2) the amount of the obligation, as increased if applicable, and the terms of payment or acceleration that apply; and (3) any other material obligations that may arise, increase, be accelerated or become direct financial obligations as a result of the triggering event or the increase or acceleration of the obligation.

No disclosure is required until a triggering event has occurred in accordance with the terms of the agreement. Further, no disclosure is required if the company believes, in good faith, that a triggering event has not occurred, unless the company has received a notice pursuant to the terms of the agreement.

Item 2.05—Costs associated with exit or disposal activities

Item 2.05 requires disclosure when a company’s board of directors, a committee of the board, or authorized officer commits to an exit or disposal plan or otherwise disposes of long-lived assets under a plan of termination described in FASB ASC 420, Exit or Disposal Cost Obligations, under which material charges will be incurred under GAAP.

Item 2.05 requires a company to disclose (1) the commitment date and a description of the expected course of action, including the facts and circumstances leading to the expected action and the expected completion date; (2) for each major type of cost associated with the exit or disposal plan (for example, onetime termination benefits, contract termination costs and other associated costs), an estimate of the total amount or range of amounts expected to be incurred; (3) the total amount estimated for all cost categories combined; and (4) the company’s estimate of the amount or range of amounts of the charge that will result in future cash expenditures.

A company need not disclose an estimate of the amount of the charges at the time of filing if it is unable to make a good faith estimate at that time. The disclosure must be provided when the company formulates the estimates by filing an amended Form 8-K within four business days of formulating the estimate.

Item 2.06—Material impairments

A company must provide disclosures under Item 2.06 when its board of directors, a committee of the board, or an authorized officer determines that a material charge for impairment of one or more of its assets is required.

A company must disclose the following with respect to the impairment: (1) the date of determination that a material impairment charge is required, a description of the impaired assets and the facts and circumstances leading to the determination; (2) an estimate of the amount or range of amounts of the impairment charge; and (3) an estimate of the amount or range of amounts of the impairment charge that will result in future cash expenditures.

Item 2.06 provides the same flexibility regarding the timing of disclosure of estimates as is provided for disclosure of exit and disposal activity cost estimates. In addition, no Form 8-K disclosure is required pursuant to Item 2.06 if the conclusion regarding the material charge is made in connection with the preparation, review, or audit of financial statements required to be included in the next periodic report due to be filed under the Exchange Act (for example, Forms 10-K, 10-Q), the periodic report is filed on a timely basis, and the conclusion is disclosed in the report.

Item 3.01—Notice of delisting, failure to satisfy a continued listing rule or standard, or transfer of listing

Item 3.01(a) requires a company to report receipt of a notice from the national securities exchange or association that maintains the principal listing for any class of the company’s common equity securities regarding the delisting of its securities or a failure to satisfy a rule or listing standard. An early warning notice that merely informs the company that it is in danger of falling out of compliance with the listing standards does not need to be reported.

Item 3.01(b) requires reporting of a notice by the company to the exchange that the company is aware of a material noncompliance with the listing standards.

The disclosures that must be made under Item 3.01(a) or (b) include (1) the date the notice was received or sent; (2) the rule or standard for continued listing that the company has failed to satisfy; and (3) any action or response that, at the time of filing, the company has determined to take in response to the notice.

Item 3.01(c) requires disclosure if the company receives a public letter of reprimand from the exchange (the company must summarize the contents of the letter), and Item 3.01(d) requires disclosure if a company’s board of directors, a committee of the board or authorized officer takes action to withdraw the listing of its securities or transfer the listing of its securities to another exchange.

Companies whose securities are quoted exclusively on automated inter-dealer quotation systems, such as the OTC, the OTCBB, or The Electronic Pink Sheets are not subject to Item 3.01.

Item 3.02—Unregistered sales of equity securities

Item 3.02 requires a company to disclose the information specified in Regulation S-K Item 701, paragraphs (a) and (c) through (e) require disclosure of

• securities sold, including the date of sale and the tile and amount of the securities;
• consideration, including both the aggregate offering price and the aggregate underwriting discount;
• securities rule or regulation on which exemption was based and the facts relied on for the exemption; and
• terms of the conversion or exercise if the securities sold had such terms.

Under Item 3.02, no Form 8-K need be filed if the equity securities sold in the aggregate since the company’s last Form 8-K filed under Item 3.02 or its last periodic report, whichever is more recent, constitute less than 1% (or 5%, in the case of a smaller reporting company) of the company’s outstanding securities of that class. Any sales not reported on Form 8-K must be reported in the company’s next periodic report filing.

Item 3.03—Material modifications to rights of security holders

Item 3.03 requires a company to disclose material modifications to the rights of the company’s security holders and to briefly describe the general effect of such modifications on such rights. Once a company has reported a material modification on Form 8-K, the disclosure need not be repeated in any subsequently filed periodic report.

Item 4.01—Changes in registrant’s certifying accountant

Certain disclosures are required in Form 8-K as a result of the resignation (or declination to stand for re- election after completion of the current audit) by or dismissal of a registrant’s independent accountant, or the engagement of a new accountant. Such changes in the accountant for a significant subsidiary on whom the principal accountant expressed reliance in his or her report would also be reportable events. See Item 304(a) of Regulation S-K.

When an independent accountant who was the principal accountant for the company or who audited a significant subsidiary and was expressly relied on by the principal accountant resigns, declines to stand for re-election or is dismissed, the registrant must disclose the following:

• Whether the former accountant resigned, declined to stand for re-election, or was dismissed, including the date thereof and whether
  • there was an adverse opinion, disclaimer of opinion, or qualification or modification of opinion concerning uncertainty, audit scopes, or accounting principles issued by such accountant for either of the two most recent years, including a description of the nature of the opinion.
  • the decision to change accountants was recommended by or approved by the audit committee or a similar committee or by the board of directors in the absence of such special committee.
• Whether during the two most recent fiscal years and any subsequent interim period preceding the resignation, declination, or dismissal there were any disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the former accountant, would have caused the accountant to make reference to the subject matter of the disagreements in connection with his or her report. If such disagreements occurred, the registrant must disclose
  • the nature of the disagreement;
  • whether any audit committee, similar committee, or board of directors discussed the subject matter of the disagreement with the former accountant; and
  • whether the registrant has authorized the former accountant to respond fully to the successor accountant concerning the matter.

    Regulation S-K, Item 304 explains that “the term ‘disagreements’ should be interpreted broadly, to include any difference of opinion on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which if not resolved to the former accountant’s satisfaction would have caused it to refer to the subject matter of the disagreement in connection with its report.” Disagreements include issues that were ultimately resolved to the former accountant’s satisfaction. It further explains that preliminary differences of opinion that are “based on incomplete facts” are not disagreements if the differences are resolved by obtaining more complete factual information.

    Disagreements and reportable events are intended to include both oral and written communications to the registrant. Because these communications deal with sensitive areas that may impugn the integrity of management, they will have to be handled with extreme care on the part of all involved.

• Any “reportable events” during the two most recent fiscal years or any subsequent interim period preceding the resignation, declination, or dismissal, including the following:
  • The auditors having advised the registrant that the internal controls necessary to develop reliable financial statements do not exist.
  • The auditors having advised the registrant that information has come to the auditor’s attention that led the auditor to no longer be able to rely on management’s representations, or that has made the auditor unwilling to be associated with the financial statements.
  • The auditors having advised the registrant that there is a need to significantly expand the audit scope or that information has come to the auditor’s attention during the last two fiscal years and any subsequent interim period that, if further investigated, may (1) materially affect the fairness or reliability of either a previously issued audit report or the underlying financial statements; or the financial statements issued or to be issued for a subsequent period or (2) cause the auditor to be unwilling to rely on management’s representations or to be associated with the financial statements and due to the change in auditors, the auditor did not expand his or her scope or conduct a further investigation.
  • The auditors having advised the registrant that information has come to the auditor’s attention that the auditor has concluded materially affects the fairness or reliability of either (1) a previously issued audit report or the underlying financial statements or (2) the financial statements relating to a subsequent period and, unless the matter is resolved to the auditor’s satisfaction, the auditor would be prevented from rendering an unqualified report and, due to the change in auditors, the matter has not been resolved.

The registrant must provide the former accountant with a copy of the disclosures no later than the day the Form 8-K is filed. The former accountant must furnish the registrant a letter, addressed to the SEC and filed as an exhibit, that states whether the accountant agrees with the disclosures and if not, stating the respects in which he or she does not agree. To expedite the process, the registrant generally provides the disclosures to the former accountant, obtains the letter, attaches it as an exhibit, and files a complete Form 8-K within four business days. (See sample letter in exhibit 7-2.) If the former accountant’s letter is not available at the time of filing, the former accountant must provide the letter as promptly as possible, and no later than 10 business days after the filing of the Form 8-K. Such letters must be filed by the registrant as an amendment to the Form 8-K within two business days of receipt.

The auditor who is aware that a required filing related to a change of accountants has not been made by the registrant should consider advising the registrant in writing of that reporting responsibility with a copy to the Commission.

The PCAOB adopted as part of its interim standards a rule of the Center for Public Company Audit Firms of the AICPA, which also requires the auditor to provide written notification, within five business days, that the auditor has resigned, decided not to stand for re-election, or has been dismissed. The purpose of this “five-day” letter was to provide early notification to the SEC in advance of the Form 8-K filing due date. This letter is addressed to the client, with a copy to the SEC and states simply that the relationship has been terminated. (Exhibit 7-1 is an example of a “five-day” letter.) The SEC updated these rules to require that the auditor file the “five-day” letter only in situations in which the former client did not timely file the required 8-K or situations in which the former client is not subject to the 8-K rules.

When a new independent accountant has been engaged as either the principal accountant for the company or to audit a significant subsidiary (and be expressly relied upon by the principal account), the registrant must identify the newly engaged accountant and the date of the engagement. In addition, if, during the two most recent fiscal years or subsequent interim period, the registrant or someone on its behalf consulted with the newly engaged accountant regarding the application of accounting principles as to any specific transaction, either completed or proposed; the type of audit opinion that would be rendered on the registrant’s financial statements; or any matter of disagreement or a reportable event with the former accountant, Form 8-K must include the following:

• Describe the accounting issue and the newly engaged accountant’s view. Any written opinion issued by the new accountant must be filed as an exhibit, and the new accountant must be provided the opportunity to review the disclosure and furnish a letter to the SEC that clarifies or expresses disagreement with the registrant’s disclosure of its views. Any such letter must be filed as an exhibit.
• State whether the former accountant was consulted regarding such issues and, if so, describe the former accountant’s views.

The resignation or dismissal of an independent accountant is a reportable event separate from the engagement of a new independent accountant. On some occasions, if dismissal and retention are at different times, two reports on Form 8-K will be required. If a decision to dismiss an independent accountant is made but the dismissal will not take effect until a later date (such as at completion of the audit), three filings could be required: a first Form 8-K reporting the dismissal, an amendment to the Form 8-K when the dismissal occurs, and a second Form 8-K reporting the new independent accountant. In such situations, information provided in the first Form 8-K does not have to be repeated in the amendment or the second Form 8-K.

Additionally, Item 304 of Regulation S-K requires the registrant to disclose similar information about auditor changes during the two years preceding the filing of registration statements for initial public offerings.

Item 4.02—Non-reliance on previously issued financial statements or a related audit report or completed interim review

Item 4.02 requires a company to provide certain disclosures when a company’s previously issued financial statements should no longer be relied upon because of an error (as addressed in FASB ASC 250). The disclosures must be made whether the company (Item 4.02a) or its independent auditors (Item 4.02b) make this determination. In either case, the company must disclose the following: (1) the date of the determination and identification of the financial statements and years or periods covered that should no longer be relied upon; (2) a statement that the audit report should no longer be relied upon; (3) a brief description of the facts underlying the determination to the extent known to the company at the time of filing; and (4) a statement about whether the audit committee, the full board if there is no audit committee, or an authorized officer has discussed the matter giving rise to the determination with the company’s independent accountant.

If the company’s independent accountant makes the determination, the company must provide the accountant with a copy of the disclosures it is making no later than the day it files the Form 8-K. The company must also ask the accountant to furnish as promptly as possible a letter addressed to the SEC, stating whether the accountant agrees with the company’s disclosure and if not, why not. The company must then amend the Form 8-K to file the accountant’s letter as an exhibit within two business days of receipt of the letter.

If the registrant determines that its previously issued financial statements can no longer be relied upon because of errors or its auditor advises that the previously issued audit report or completed interim review should no longer be relied on, the company must file a Form 8-K within four business days. If the registrant determines that an error and an associated restatement are not material (and that a Form 8-K filing is therefore not necessary), the staff advised that the company should be prepared to support its conclusion. Also, the staff may question the timing of the Form 8-K if it is filed shortly before an amended Form 10-K or 10-Q filing. Given the time it usually takes to prepare restated financial statements, this suggests that the Form 8-K may not have been filed within four business days of the date that the registrant concluded the financial statement should not be relied upon. The staff observed that registrants are always required to file Item 4.02 Form 8-Ks when prior financial statement should not be relied upon and that it is not appropriate to disclose this information in quarterly or annual reports.

The staff has informally indicated that when companies file amended periodic reports, they should consider the effect of a restatement on their 302 certifications on disclosure controls and internal control over financial reporting.

Item 5.01—Changes in control of registrant

Detailed information is required about a change in control of the registrant, including the identity of acquiring and selling parties; source and amount of consideration; the basis of control; date and description of the transaction; percentage of ownership of acquiring parties; terms and identification of loans and pledges secured by acquiring parties for purposes of acquiring control; and any arrangements or understanding among the acquiring and selling parties (that is, election of directors).

Additionally, the registrant must provide the information required by Item 403(c) of Regulation S-K, which requires a description of any arrangements, including pledging of securities that may result in a change in control in the future.

Item 5.02—Departure of a director or certain officers; election of directors; appointment of certain officers; compensatory arrangements of certain officers

Disclosure under Item 5.02 is required under the following circumstances.

Item 5.03—Amendments to articles of incorporation or bylaws; change in fiscal year

Item 5.03 requires a company with a class of equity securities registered under Section 12 of the Exchange Act to disclose any amendment to its articles of incorporation or bylaws if the company did not propose the amendment in a previously filed proxy or information statement. The company must disclose the effective date of the amendment and provide a description of the provision adopted or changed by amendment and, if applicable, the previous provision. The company need file the text of the amendment only as an exhibit to the filing, but must file the entire articles of incorporation or bylaws as an exhibit to its next periodic report.

Item 5.03 also requires a company to report a change in fiscal year if it was not made by means of (1) a submission to a vote of security holders or (2) an amendment to its articles of incorporation or bylaws.

When such an event has occurred, a registrant must disclose the date the change was decided on, the date of the new fiscal year, and whether the report on the transition (that is, “short”) period will be filed on Form 10-Q or Form 10-K. Exchange Act Rules 15d-10 and 13a-10 provide, in general, that reports for transition periods of less than six months may be filed on Form 10-Q, and those for periods of six months or more must be filed on Form 10-K. If the transition period is one month or less, and certain requirements are met, separate transition reports do not have to be filed.

Item 5.04—Temporary suspension of trading under registrant’s employee benefit plans

The SEC adopted Regulation Blackout Trading Restriction (BTR) (17 CFR 245) to clarify the rules contained in Section 306(a) of the Sarbanes-Oxley Act. Section 306(a) applies to public companies that sponsor individual account plans through which participants invest in company equity securities. During blackout periods, investors cannot transfer balances between investment options. Section 306(a) prohibits directors and executive officers from purchasing or selling any equity security of the issuer during a pension plan blackout period, if the director or executive officer acquired the equity security in connection with his or her service or employment as a director or executive officer.

Regulation BTR clarifies what a blackout period is, to whom the restrictions would apply, and what types of transactions and securities are subject to trading restrictions. It also requires companies to notify directors and officers of an impending blackout period and to notify the SEC by filing the notice on a Form 8-K. Item 5.04 of Form 8-K requires a company to provide the same information to the SEC that is provided to the directors and executive officers regarding the blackout, as follows:

• Reasons for the blackout
• A description of the plan transactions to be suspended
• The class of securities subject to the suspension
• The actual or expected beginning and ending dates (or calendar weeks) of the blackout period
• The name, address, and telephone number of the person to contact with questions

In addition, the company must disclose the date it received notice from its plan administrator of the impending blackout, if it received such a notice.

Form 8-K must be filed no later than four business days after a company receives notice of the impending blackout from its plan administrator. If no such notice is received, Form 8-K must be filed on same date the notice is transmitted to directors and executive officers, which under Regulation BTR must be at least 15 calendar days before the actual or expected blackout.

Item 5.05—Amendments to the registrant’s code of ethics, or waiver of a provision of the code of ethics

Item 5.05 requires a domestic company to report the following within four business days after the event occurred:

• The nature of any change to a company’s code of ethics that applies to the company’s principal executive, financial, and accounting officers or persons performing similar functions (that is, the code of ethics for which a company must provide disclosure in annual reports under Regulation S-K Item 406)
• The nature of any waiver, including an implicit waiver, of an ethics code provision for a specified officer, including the name of the person to whom the waiver was granted and the date of the waiver

As an alternative to filing a Form 8-K, a company can disseminate the required information using its website. To take advantage of this option, a company must have disclosed in its most recent annual report that it intends to disclose these events on its website and provide its website address. Website dissemination is subject to the same four-business-day deadline. The website disclosure must be maintained for at least 12 months.

Companies, including smaller reporting companies, must comply with the Form 8-K code of ethics disclosure requirements for any changes or waivers that occur on or after the date on which they file their first annual report that includes the required code of ethics disclosures.

Item 5.06—Changes in shell company status

A registrant that was a shell company (other than a business combination related shell company, as those terms are defined in Rule 12b-2) and has completed a transaction that has the effect of causing it to cease being a shell company, must disclose the material terms of the transaction.

Item 5.07—Submission of matters to a vote of security holders

Registrants must disclose the results of a shareholder vote under Item 5.07 of Form 8-K within four business days after the end of the meeting at which the vote was held. The registrant must state the date of the meeting (and whether it was an annual or special meeting), describe all matters voted upon and the voting results, and, if applicable, identify directors elected and directors with terms continuing after the meeting.

In addition, the instructions to Form 8-K state that companies are required to file the preliminary voting results within four business days after the end of the shareholders’ meeting, and then file an amended report on Form 8-K within four business days after the final voting results are known. If a company obtains the definitive voting results before the preliminary voting results must be reported and decides to report its definitive results on Form 8-K, it will not be required to file the preliminary voting results. For example, if a company obtains the definitive voting results two days after the end of the shareholders’ meeting, it could report its definitive voting results on Form 8-K within four business days after the meeting and would not be required to file its preliminary voting results. To the extent that companies are concerned that the disclosure of preliminary voting results could be confusing to investors, they can include additional disclosure that helps to put the preliminary voting disclosure in a proper context.

Item 5.08—Shareholder director nominations

Item 5.08 was added to facilitate the SEC’s rules regarding proxy. The first sentence of Item 5.08 appears to be inapplicable because it refers to Rule 14a-11, which was vacated by the U.S. Court of Appeals for the District of Columbia Circuit. The second sentence of Item 5.08, however, is operative and applicable to issuers that are required by their charter or state to include shareholder director nominees in their proxy materials. Within four business days of determining a meeting date, an issuer is required to disclose the date by which a nominating shareholder or group must submit notice on Form 14N required by Rule 14a-18 to include a nominee in the company’s proxy materials.

Item 7.01—Regulation FD disclosure

In response to concerns about the advantages that investment professionals enjoyed due to the practice by public companies of selectively disclosing financial information to them, to the exclusion of the general public, the SEC adopted rules designed to promote full and fair disclosure of financial information. Regulation FD (Fair Disclosure) requires companies to disclose to the general public information that has been provided, either intentionally or unintentionally, to the following persons:

• A broker or dealer
• An investment adviser
• An investment company
• A holder of the company’s securities who would likely trade on the information

Intentional disclosures of nonpublic information to any of the aforementioned people also must be disclosed simultaneously to the public, either by filing Form 8-K and disclosing the information under either Item 8.01 (Other Events) or Item 7.01, or by any other method designed to provide non- exclusionary distribution (such as by press release or inclusion on the company’s website).

If a senior official of a company (director or executive officer) learns of an unintentional disclosure of nonpublic information by the company, that information must be disclosed promptly (either within 24 hours or by the beginning of the next day’s trading) to the public.

Communications made in connection with securities offerings being registered under the Securities Act are exempt from these rules. In addition, failure to make the disclosures required by these rules will not result in a violation of the antifraud provisions (Rule 10b-5 of the Securities Act) and will not affect the ability of companies to file registration statements on Forms S-3 or S-8.

A matter reported under Item 8.01 would be filed and automatically be incorporated into future filings, but a matter reported under Item 7.01 would be furnished and not automatically incorporated into future filings. The decision about whether a matter should be reported under Item 8.01 or Item 7.01 is a legal issue.

Item 8.01—Other events

The registrant should report under Item 8.01 any information that it believes to be important to the stockholders but that is not specifically required to be reported in another item on Form 8-K. Examples would be the commencement of material litigation, plant closings due to fire or strike, the discovery of mineral resources, and the introduction of any important new products or product lines and Regulation FD disclosure (see Item 7.01 discussion regarding fair disclosure).

XBRL exhibit

Issuers are required to provide to the Commission financial statements in interactive data format using Extensible Business Reporting Language, or XBRL. The rules apply to public companies and foreign private issuers that prepare their financial statements in accordance with U.S. GAAP and foreign private issuers that prepare their financial statements using IFRS as issued by the IASB. An issuer will be required to provide the XBRL data as an exhibit to its annual and quarterly reports, transition reports, Form 8-K and 6-K reports containing updated or revised versions of financial statements that appeared in a periodic report, and registration statements, and on its corporate website if it maintains one. Regulation S-K Item 601 mandates XBRL as an exhibit that is required when updated or revised versions of financial statements that appeared in a periodic report are included in a Form 8-K filing.

Events falling under multiple items

A company may need to report a given event under Item 1.01 (Entry into a Material Agreement) as well as one or more other items, such as Item 2.03 (Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant). The instructions to Form 8-K clarify that a company may use a single Form 8-K to satisfy one or more disclosure items. The filing should identify by item number and caption all applicable items being satisfied.

Item 601 of Regulations S-K

The following Regulation S-K Item 601 exhibits have been conformed to the current Form 8-K reporting requirements: (1) correspondence from an accountant regarding non-reliance on a previously issued audit report or completed interim review; (2) correspondence regarding the departure of a director; (3) articles of incorporation; and (4) bylaws. Item 601 specifies that a company need file only the exhibits marked in the “8-K” column of the table that are relevant to a particular report on Form 8-K.

Certification under Section 906 of the Sarbanes-Oxley Act

The Commission confirmed that Section 906 certifications do not apply to Form 8-K, Form 6-K, or Form 11-K. The Commission’s staff had been making this statement and confirmed its conclusions with the Department of Justice.

Form 8-K compliance and disclosure interpretations

The SEC staff issued a C&DI document that replaces previous interpretative guidance on current reports. The C&DI addresses a number of questions and provides additional interpretive responses regarding particular situations. Several questions on material agreements address disclosure requirements related to officer and director employment agreements, equity compensation arrangements, and cash bonus awards.

Some of the more common reporting issues covered in the C&DI include the following:

• Reporting triggering events on periodic reports. The staff clarified that a Form 8-K triggering event that occurs within four business days before a registrant’s filing of a periodic report on Form 10-Q and 10- K may be disclosed in that periodic report rather than on Form 8-K. Two exceptions to this are triggering events under Item 4.01, Changes in Registrant’s Certifying Accountants, and Item 4.02, Non-Reliance on Previously Issued Financial Statements or Related Audit Report or Completed Interim Review. These two events must be reported on Form 8-K.

  In a December 2007 speech, the SEC staff reminded registrants of the need to file an Item 4.02 Form 8-K if previously filed financial statements can no longer be relied upon. Despite the guidance in the FAQ, the General Accountability Office (GAO) noted a number of restatements that were disclosed in quarterly or annual reports rather than on Form 8-K in its report, Financial Restatements, dated July 2006. The GAO recommended that the Commission end this practice of so-called “stealth restatements” by codifying the guidance in the FAQ. The staff commented that it plans to implement the GAO’s recommendation and recommend rulemaking to codify the FAQ requirement in Form 8-K.

• Triggering events that apply to a registrant’s subsidiaries. The staff clarified that all triggering events on Form 8-K apply to a registrant’s subsidiaries if the event is material to the registrant.
• Item 1.01 Entry into a Material Definitive Agreement. The staff clarified that an agreement that was not material when the registrant entered into it does not have to be disclosed under Item 1.01 if it later becomes material, unless it becomes material concurrent with an amendment to the agreement. In any event, the registrant must file the agreement as an exhibit to the periodic report relating to the period in which the agreement becomes material.
• Item 2.02, Results of Operations and Financial Condition. The staff clarified that compliance with all of the requirements of, and instructions to, Item 2.02 of Form 8-K is required when a registrant reports “preliminary earnings” and results of operations for a completed quarterly period.
• Item 2.05, Costs Associated with Exit or Disposal Activities. The staff clarified that costs associated with an exit activity that must be disclosed under Item 2.05 are not limited to the costs addressed by the specific accounting guidance, FASB ASC 420, but also related costs, such as pension or postretirement benefits. The staff also clarified that when a registrant plans to terminate employees under an exit plan, it need not disclose the termination plan until it has informed affected employees.
• Item 4.01, Changes in Registrant’s Certifying Accountant. If registrant engages a new principal accountant that is related in some manner to the former principal accountant (for example, the firms are affiliates or are member firms of the same network), but the new principal accountant is a separate legal entity and is separately registered with the PCAOB, the registrant should file an Item 4.01 Form 8-K to report a change in certifying accountant.
• Item 4.02, Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review
  • If a registrant has filed a Form 8-K under Item 4.02(a) to report its determination that its financial statements should no longer be relied on, it need not file a second Form 8-K to indicate that its auditor has also concluded that future reliance should not be placed on its audit report, unless the auditor’s conclusion relates to an error or matter different from that which triggered the registrant’s filing under Item 4.02(a). This guidance is intended to address the fact pattern where a registrant decides that disclosure is necessary, and the auditor subsequently informs the registrant that it agrees with that conclusion. The auditor’s agreement with management’s conclusion does not trigger a filing requirement under Item 4.02(b). On the other hand, if the auditor concludes that management has not made the disclosure it believes is necessary and informs management of the need to prevent further reliance on its report, a report under Item 4.02(b) is required.
  • The staff clarified that no reporting under Item 4.02 is required when a registrant discovers a material error in its Interactive Data File while the financial statements upon which they are based do not contain an error and may continue to be relied upon.
• Item 5.02, Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. The staff clarified that a registrant’s decision not to nominate a director for re-election does not trigger a disclosure requirement under Item 5.02 unless the director, upon receiving notice that he or she will not be nominated, then resigns or refuses to stand for re-election. The staff also clarified that a registrant may delay disclosure under Item 1.01, Entry into a Material Agreement, of an employment agreement with a newly appointed officer until the time a public announcement of the appointment is made, consistent with the permitted delay under Item 5.02(c).
• Item 5.07, Submission of Matters to a Vote of Security Holders. The staff clarified that an issuer may report its decision about how frequently it will include a shareholder advisory vote on executive compensation in its proxy materials in a periodic report instead of an Item 5.07 Form 8-K, as long as the periodic report is filed on or before the date that the disclosure would be due under Form 8-K.

The updated interpretative guidance is available on the SEC’s website at www.sec.gov/divisions/corpfin/guidance/8-kinterp.htm.