The SEC has proposed a new amendment that would require public filers to include hyperlinks to exhibits (or documents) in their filings.
Currently, if people are seeking to retrieve and access a company’s exhibit they must determine which filing it is in, then search for the filing and then for the exhibit, a process the SEC describes as ‘cumbersome’.
‘Under the current system, someone seeking to retrieve and access an exhibit that has been incorporated by reference must review the exhibit index to determine the filing in which the exhibit is included, and then must search through the registrant’s filings to locate the relevant filing to review for the particular exhibit,’ the regulator says. ‘This process can be both time-consuming and cumbersome.’
The SEC is hoping the changes would make it easier for investors and others to access information. ‘The proposed changes should make it significantly easier to locate documents attached to company filings,’ explains SEC chair Mary Jo White. ‘This enhanced capability will benefit both investors and companies.’
The hyperlinks proposal makes practical sense, says Loren Mortman, president of the Equity Group, an investor relations firm. The requirements suggested by the SEC ‘don’t seem like a real ‘heavy lift’ for filers,’ she observes. ‘It would help speed up access to documents for computer users and those accessing information from phones/tablets ‒ an increasingly large segment of the population, investor or otherwise.’
Other options
The SEC has also asked for comments, the session for which is open for 45 days. In particular, it is looking for suggestions on other ways it can improve access to documents filed as exhibits. ‘As an alternative to the proposed amendments, should we require registrants to file and update a compilation of exhibits separately from the Form 10K or other forms?’ it asks.
If yes, the regulator seeks further feedback on which exhibits should be included and how frequently the registrants would need to update them.
Separately, the SEC is also curious about its exhibit-numbering scheme and whether that could be revised to improve investors’ access to information. But Mortman warns that ‘more is not always better’.
‘It would be helpful to include a small description next to Form 8K filings indicating what the actual event is, such as board resignation, amended credit facility, change in executive compensation plan, and so on,’ she explains. ‘As it is, 8Ks are simply labeled as ‘current report’ because they cover a broad array of events, but a short description would be useful.’
