SEC adopts rule requiring Exhibit Index items must hyperlink to referenced source

Yesterday, the SEC held an open meeting to discuss a few topics that created “action items” for most all issuers (and their SEC filing agents). One discussion, now moved into the comment phase, is the complete adoption of inline XBRL. That is still not settled, although likely to pass.

What IS settled is the new rule and form amendment mandate that the Exhibit Index in registration statements and reports contain hyperlinks to those exact referenced exhibits listed. Adjunct to this is a ruling that all filings are to be made in HTML format. (Logical, as you cannot link in ASCII.)

Adding hyperlinks will eliminate the arduous and manual research process investors currently endure to dig deeper into the exhibits.

The new amendments would apply to forms:

  • S-1
  • S-3
  • S-4
  • S-8
  • S-11
  • F-1
  • F-3
  • F-4
  • F-10
  • SF-1
  • SF-3
  • 10
  • 10-K
  • 10-Q
  • 8-K
  • 10-D
  • 20-F

These exhibit items ain’t gonna link themselves!

Depending on the depth of your Exhibit Index, the tactical labor of creating these links will be work for issuers and Vintage  This varies by company and by sector… as this REIT client (below) understands. They have 39 pages of exhibits to research, link and QA check. Fortunately, they have us. The silver lining to this “transparency act” is that, like many compliance tasks, the first time set-up is the most time-consuming. Many of the linked references will roll from one document into the next – similar to XBRL tags.

links

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This ruling is considered a common sense mandate to help investors and web-technologically overdue. SEC Commissioner Kara Stein stated, “In many cases, exhibits are incorporated by reference, meaning that they are not attached to a current filing. In order to find an exhibit, an individual would need to embark on a time-consuming search.”

Acting SEC Chair Michael Piwowar remarked that the new rules will “harness technology,“focus the light of disclosure in ways that empower investors” as well as stimulate “efficient regulation.”

The effective date for most issuers will be September 1, 2017. Read the formal ruling here and the SEC news release here.   Hyperlinked to ease your research.

 

 

 

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