The Securities and Exchange Commission proposed a rule on Tuesday that would permit public companies to switch from quarterly to semiannual financial reporting, a change President Donald Trump has pushed for since his first term.
Currently, companies must file SEC Form 10-Q each quarter. The proposal would amend the Securities Exchange Act of 1934 to permit companies to elect filing on a semiannual Form 10-S, a move the SEC stated would provide flexibility and benefit companies and investors.
“Public companies have an obligation under the federal securities laws to provide information that is material to investors. Yet, the rigidity of the SEC’s rules has prevented companies and their investors from determining for themselves the interim reporting frequency that best serves their business needs and investors,” SEC Chair Paul Atkins, who has repeatedly called for fewer company disclosures, said in a statement. “Today’s proposed amendments, if ultimately adopted, would provide companies with increased regulatory flexibility in this regard.”
The deadline for filing semiannual reports would be 40 to 45 days after the end of the semiannual period. The proposal would also update Regulation S-X, which sets the financial statement requirements for periodic reports, registration statements and proxy statements, by incorporating the new semiannual reporting option and by streamlining existing financial statement requirements.
In the announcement, Atkins said the proposal is part of his “make IPOs Great Again agenda that is aimed at incentivizing companies to go and stay public.”
The number of publicly traded companies in the U.S. was approximately 4,700 in 2024, down from 6,500 in 1994 but up from a low of about 3,800 companies in 2012, according to a 2024 report from Meketa Investment Group. The report cited numerous factors—including regulatory burdens, the availability of private capital and market concentration—among the reasons for the decline. The report stated factors that “simultaneously improved investor rights and corporate transparency, while at the same time supporting more robust, though fewer, publicly traded companies,” were behind the drop.
The SEC joined the Commodity Futures Trading Commission last month in reducing the reporting requirements for private funds, undoing a Biden-era rule.
Congress has also joined in the attempts to limit disclosures. The Incentivizing New Ventures and Economic Strength Through Capital Formation Act, which passed the House and has not yet been voted on by the Senate, would, among other things, reduce requirements for financial statements and other disclosures.
Quarterly reporting has been required in the U.S. since 1970.
According to Jay Dubow, a partner in Troutman Pepper Locke’s securities investigations and enforcement practice group, an optional approach to quarterly reporting could be disruptive for professional investors, since they have grown used to quarterly filings and to companies being on the same schedule. The proposed new approach could, for example, leave companies in the same sector reporting on different schedules.
Dubow also says implementing the proposed change by updating an SEC rule, rather than by statute, could be complicated, since the SEC could revert to quarterly filings under different leadership. Despite the risk of complications, Dubow noted semiannual reporting could provide cost savings, especially for smaller companies.
“It’ll be more confusing if some companies opt for semiannual reporting and some remain quarterly,” he says.
Tags: financial disclosure, SEC