In a move that had been expected for several weeks, the SEC on Tuesday formally issued a proposed rule that would allow public companies to file earnings reports twice a year rather than quarterly. The proposal would make quarterly reporting voluntary for domestic public companies that currently file Form 10-Q.
The commission also proposes to simplify the “age of financial statements” rules governing registration statements, a change Bracewell’s Troy Harder told Corporate Compliance Insights was a welcome surprise. The existing rules, he said, are “notoriously complex.”
But if companies are still expected to issue quarterly earnings releases to satisfy investor expectations, and if lenders require quarterly financials under credit agreements, they may find themselves doing most of the substantive work anyway – without the SEC filing attached.
“If companies are expected to continue to report earnings on a quarterly basis and to have their external accountants review their quarterly financial statements, how much would they really save?” Harder said.
