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Reporting and Disclosure Requirements Under 1934 Act

41. What disclosures are required of registered companies under the ’34 Act?

A reporting company must make routine disclosures to the public by filing reports with the SEC. The information required to be disclosed is substantially as follows:

•    Reporting Company Initial Statement – Similar to the registration statement required under the ’33 Act, a company initially registering as a reporting company under the ’34 Act must make an initial disclosure of information. This information primarily concerns the operations, equity structure, and securities issued by the company.

•    Annual Reporting – Reporting companies are required to make detailed annual reports to the SEC, which are also provided to security holders. The disclosure takes place on Form 10-K and it contains all relevant operational data, an explanation of company performance, audited financial statement, and detailed information about corporate officers and directors.

•    Quarterly Reports – The reporting company must file and disclose to shareholders a quarterly report on Form 10-Q. The quarterly report contains similar information to that contained in the annual report, but it only covers the most recent quarter of the fiscal year. Also, the financial statement included in the quarterly report is not audited.

•    Special Reports – The reporting company must disclose to the SEC and shareholders via Form 8-K any major operational, structural, financial, or ownership changes in the company within a reasonable time of the occurrence. Major occurrences include: new security issuances, changes in corporate control (officer and directors), mergers, acquisitions, changes in auditor, etc.

The information disclosed in each of the above reports must be certified as accurate by corporate executives (including the company’s CEO and CFO). These individuals must also attest to the operable status of controls over internal affairs and finances. This includes attesting that the company has in place an audit committee to examine the efficiency of internal controls.

•    Discussion: Why do you think the SEC requires such extensive, recurring disclosures for reporting companies? Do you think these reporting requirements serve the intended purpose?

•    Practice Question: What are the reporting requirements of companies that registered pursuant to The Securities Exchange Act of 1934?

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