December 28, 2023
Regulatory Disclosures: 2023 Year in Review
It’s been another busy year for the SEC. From Tailored Shareholder Reports to N-PX Amendments to major cybersecurity-related developments, 2023 set the stage for what could be an even busier 2024.
As we looked back on 2023, there were a handful of items that stood out:
Tailored Shareholder Reports
On October 26, 2022, the SEC adopted a new rule that requires open-end mutual funds and most ETFs to send annual and semi-annual tailored summary shareholder reports to all shareholders. The final rule requires reports to include structured data (iXBRL tagging) for TSRs, an updated Form N-CSR, and more.
This past year, those involved in regulatory disclosures focused on preparing for this change, which is a significant switch from previous requirements. At FilePoint, we advised clients to use Q1 2023 to understand the details of the rule; Q2 to assess data sources, workflow, timelines, and outstanding data; and Q3 to review and refine data mapping, output, and workflow design. Tailored Shareholder Reporting requires individuals and departments who have not previously worked together to coordinate very closely. Those who spent significant time and attention refining their workflow in 2023 should be poised for a more fluid reporting process in 2024.
Implementation is required by July 24, 2024
Form N-PX Amendments
On November 2, 2022, the SEC adopted amendments to Form N-PX filings to make proxy voting disclosures more useful and informative for investors. The compliance date is August 31, 2024, but managers began recordkeeping on July 1, 2023. The main changes associated with these amendments are that managers will be required to file a report on Form N-PX with:
Additionally, the amendment specifies that Form N-PX must be filed in XML format.
Here are some related materials that may be helpful:
Investment Company Names (the “Names Rule”)
On October 27, 2023, the final amendments to rule 35d-1 under the Investment Company Act of 1940, also known as the “Names Rule” were published to the Federal Register. These amendments aim to increase shareholder protection by increasing the scope of funds required to adopt a policy to invest at least 80% of its assets based on the investment approach suggested by the fund name, as well as notice and recordkeeping requirements relating to these policies.
For a full overview of the rule, including a comparison of the current rule, proposal, and final amendments, view our full post here.
Amendments to Form 13F
In 2022, the SEC adopted amendments to Form 13F, and the changes went into effect on January 3, 2023. The amendments include the following:
For more details on 13F amendments, click our full post here.
Cyber Risk Management Rule for Public Companies
On July 26th, 2023, the SEC adopted rules requiring public companies “to disclose material cybersecurity incidents they experience and to disclose on an annual basis material information regarding their cybersecurity risk management, strategy, and governance”.
Public companies will be required to disclose any cybersecurity incident, deemed material, and the nature, scope, timing, and impact under an Item 1.05 Form 8-K within four business days of determining the incident is material.
The compliance dates vary by the type of disclosure, with smaller reporting companies (“SRCs”) being afforded a longer compliance period for incident reporting:
Click here to view the full update from the SEC.
If you have any questions about these updates, or any other SEC-related items, we can help. Contact us today to speak with one of our regulatory experts.