Also Provides More Flexibility in IPOs
On May 5, 2026, the Securities and Exchange Commission (SEC) proposed a significant change to its periodic reporting framework that would permit public companies to elect to file periodic reports on a semiannual instead of a quarterly basis. If adopted, this would represent a paradigm shift in the SEC’s periodic reporting regime and would introduce meaningful new flexibility for both existing public companies and those contemplating going public. The proposal also reflects a broader SEC effort to simplify the disclosure regime, reduce regulatory burdens and incentivize companies to become and stay public.
A potential shift to semiannual reporting raises a number of legal and practical considerations for public companies, including, for example, whether semiannual reporting will align with investor expectations and applicable contractual obligations, and potential effects on trading windows under the company’s insider trading policy, Rule 10b5-1 trading plans, share repurchase programs, audit and review procedures, and the company’s disclosure controls and internal control over financial reporting. Below we discuss the proposed rule and considerations for companies beginning to evaluate a shift to semiannual reporting.
The proposed rule would permit companies to elect, on an annual basis, to file a single periodic report covering the first six months of the fiscal year on a new Form 10-S, with disclosure of the second half of the year incorporated into the Form 10-K (in the same way as fourth quarter disclosures are currently incorporated into the Form 10-K). The proposed rule would not eliminate quarterly reporting. Companies may elect to continue to file three quarterly reports on Form 10-Q, in addition to an annual report on Form 10-K.
Form 10-S calls for the same disclosures as Form 10-Q, except that the financial statements and other disclosures in the report would cover the first six months of the company’s fiscal year instead of a quarterly period. The Form 10-S would include, for example, management’s discussion and analysis of financial condition and results of operations (MD&A), disclosures regarding legal proceedings, risk factor updates and other material developments, among others. As with quarterly financial statements, the semiannual financial statements in the Form 10-S would be required to be reviewed by the company’s independent registered public accounting firm. Companies would continue to provide executive officer certifications and comply with Inline XBRL requirements. The filing deadline for Form 10-S would be the same as the Form 10-Q deadline, i.e., 40 or 45 days after the end of the semiannual period, depending on the company’s filer status.
To accommodate reporting flexibility, the SEC has proposed a series of conforming amendments to Regulation S-X and related rules governing financial statements to reflect semiannual reporting, including proposed changes to Rule 3-01, and the elimination of Rule 3-12, of Regulation S-X to simplify and align requirements regarding the age of financial statements included in periodic reports, registration statements under the Securities Act and proxy statements.
The proposal does not change other key disclosure requirements. For example, semiannual filers will not be restricted from continuing to issue earnings releases and conducting earnings calls on a quarterly basis. Furthermore, such filers will continue to be subject to the requirements of Form 8-K, including with respect to earnings releases under Item 2.02, and Regulation FD will continue to govern the selective disclosure of material nonpublic information.
As proposed, companies will decide annually whether they will report on a semiannual or quarterly basis. Companies will check a box on the cover page of their Form 10-K to indicate that they will report on a semiannual basis for the current fiscal year (i.e., the fiscal year during which the Form 10-K is filed). Leaving this box unchecked indicates that the company will report quarterly. The proposal permits companies to correct an inadvertent error in the Form 10-K checkbox by filing an amendment to the Form 10-K, but this amendment would need to be filed no later than the date the first Form 10-Q would be due following the Form 10-K if the company was a quarterly filer.
Once an election is made, the election would apply for the entire fiscal year and could not be changed mid-year. The SEC’s rationale in proposing this approach is to avoid potential investor confusion associated with mid-cycle changes in reporting frequency. A company desiring to change its reporting cadence would need to wait until its next Form 10-K filing. For example, a semiannual filer could elect to become a quarterly filer by unchecking the box on its Form 10-K and would then file its first Form 10-Q for the first fiscal quarter of the year in which the Form 10-K is filed. The SEC points out that, in this instance, the company would need to be prepared to present prior fiscal year comparative periods in the financial statements and MD&A included in its Form 10-Qs.
Under the proposal, companies that are not yet subject to periodic reporting obligations under the Exchange Act, such as those conducting initial public offerings, could make an initial election to use semiannual reporting by checking a box on the cover page of the S-1 or other Securities Act registration statement (or, as applicable, the Form 10 registration statement under the Exchange Act). This election would govern what financial statements are required in the registration statement and would also indicate the company’s intentions with regard to the frequency of its periodic reporting after it has gone public.
For companies in the IPO process or planning to go public in the future, the semiannual reporting option provides significantly greater flexibility to strategize around timing and potentially extend execution windows by eliminating the need for quarterly updates.
An election by a public company to shift to semiannual reporting could bring a range of benefits, but companies may determine to continue reporting quarterly due to a number of factors. Below are several considerations.
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Semiannual Reporting
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Quarterly Reporting
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- Enables management to focus on longer term reporting cycle
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- Investors and analysts may expect a quarterly reporting cadence for certain public companies
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- Potentially reduced audit fees and compliance costs, although savings potentially offset by transition costs for current issuers
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- May create more flexibility with open trading windows, share repurchases and 10b5-1 plans for insiders
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- May be attractive where quarterly reporting is less central to investor decision-making (e.g., pre-revenue companies, companies going public)
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- Well-established processes for capital raising and controls and procedures
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- May increase cadence of Form 8-K and press release “updates”
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- May be required under covenants in debt documents
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- Implications for disclosure controls, internal control over financial reporting and related governance
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- Syncs with regulatory reporting requirements for financial institutions
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- Implications for capital raising and comfort letters
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- Implications for trading windows, repurchase programs and timing of compensation awards and vesting
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- Implications for financial and operational guidance
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The SEC requested public comment on most aspects of the proposed framework, including eligibility, the mechanics of the election process and implications for quarterly earnings releases and calls, including whether Item 2.02 Form 8-Ks should be deemed to be “filed.” The SEC also called on securities exchanges, the Public Company Accounting Oversight Board (PCAOB) and accounting standard setters to review and update their requirements in anticipation of a semiannual reporting option, including with respect to comfort letters. Comments are due 60 days after publication in the Federal Register.
If you have any questions concerning the material discussed in this client alert, please contact the members of our Securities and Capital Markets practice.
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