SEC Postpones Effective Date of Share Repurchase Disclosure Rule

The Securities and Exchange Commission’s (“SEC”) adopted a final share repurchase disclosure rule on May 3, 2023. The rule was intended to go into effect for the first periodic report that covered the first full fiscal quarter beginning on or after October 1, 2023 (for calendar-year companies, this would be the first Form 10-K filed in early 2024 for fiscal year 2023).

On October 31, 2023, a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit (the “Fifth Circuit”) held that the rule was arbitrary and capricious and in violation of the Administrative Procedure Act (“APA”). The Fifth Circuit remanded the rule back to the SEC to “correct the defects” within 30 days. The Court did not stay the rule or change the compliance deadline.

In light of the Fifth Circuit’s ruling, the SEC announced on November 22, 2023, an order that the share repurchase disclosure rule be stayed pending further SEC action. This means that, pending further SEC action, issuers will not need to comply with the previous share repurchase disclosure rule compliance deadline.

The SEC did not specify a new effectiveness of the share repurchase disclosure rule, and it is unclear whether or when it will do so. Nevertheless, companies should still implement appropriate measures for compliance with the rule in the interim, because the rule may become effective at a later date. Companies are encouraged to work with counsel to monitor the changing status of the rule. For more information on the share repurchase disclosure rule and preparing for compliance therewith, please see our event recap of the Third Annual Navigating the Annual Meeting and Reporting Season Program.

Please contact the V&E Team to discuss these developments and their implications.