Proposed Release Supporting Statement.FinalSS

SUPPORTING STATEMENT FOR PROPOSED RULES RELATING TO SHARE
REPURCHASE DISCLOSURE MODERNIZATION
This supporting statement is part of a submission under the Paperwork Reduction Act of
1995, 44 U.S.C. §3501, et seq.
A.

JUSTIFICATION
1. CIRCUMSTANCES MAKING THE COLLECTION OF INFORMATION
NECESSARY

In Release No. 34-93783,1 the Commission proposed amendments to modernize and
improve the disclosure requirements for purchases of equity securities made by or on behalf of
an issuer or any affiliated purchaser. Issuers may repurchase their shares through, among other
means, open market purchases, tender offers, private negotiated transactions, and accelerated
share repurchases. Investors and other market participants normally do not become aware of an
issuer’s actual share repurchase-related trading activity until they are reported in an issuer’s
periodic reports, long after the trades have been executed.
The proposed amendments are intended to improve the quality, relevance, and timeliness
of information related to issuer share repurchases. The proposed amendments would require an
issuer to provide more timely disclosure on a new Form SR regarding purchases of its equity
securities for each day that it, or an affiliated purchaser, makes a share repurchase and enhance
the existing periodic disclosure requirements about share repurchases. More specifically, the
amendments would:
•
•
•

Require daily repurchase disclosure on a new Form SR, which would be furnished to the
Commission one business day after execution of an issuer's share repurchase order;
Amend Item 703 to require additional detail regarding the structure of an issuer's
repurchase program and its share repurchases; and
Require information disclosed pursuant to Item 703 of Regulation S-K and pursuant to
Form SR to be reported using a structured data language (specifically, Inline eXtensible
Business Reporting Language or "Inline XBRL")

The proposed amendments contain “collection of information” requirements within the
meaning of the Paperwork Reduction Act of 1995 (“PRA”). The titles of the collections of
information impacted by the amendments are:2
•
•
•

“Form 10-K” (OMB Control No. 3235-0063);
“Form 10-Q” (OMB Control No. 3235–0070);
“Form 20-F” (OMB Control No. 3235-0288); and

1

Share Repurchase Disclosure Modernization, Release No. 34-93783 (December 15, 2021), a copy of which is
attached.

2

The Commission’s Division of Investment Management will separately submit, pursuant to the Paperwork
Reduction Act of 1995, the supporting statement and related attachment for Form N-CSR.

•

“Form SR” (a proposed new collection of information).

2. PURPOSE AND USE OF THE INFORMATION COLLECTION
The forms listed above were adopted pursuant to the Securities Exchange Act of 1934
(Exchange Act) and we are proposing the new form pursuant to the Exchange Act. The forms
set forth the disclosure requirements for periodic reports filed by issuers. The disclosure
requirements are intended to help investors make informed investment and voting decisions.
The purpose of the proposed amendments is to improve the quality, relevance, and timeliness
of information related to issuer share repurchases. In particular, because issuers are repurchasing
their own securities, asymmetries may exist between issuers and affiliated purchasers and
investors with regard to information about the issuer and its future prospects which could
exacerbate some of the potential harms associated with issuer repurchases.
3. CONSIDERATION GIVEN TO INFORMATION TECHNOLOGY
The information that would be required by these rules would be filed electronically with
the Commission using the Commission’s Electronic Data Gathering, Analysis, and Retrieval
(EDGAR) system. We are additionally proposing the information be reported using a structured
data language (specifically, Inline eXtensible Business Reporting Language (Inline XBRL))
which would make the disclosures more readily available and easily accessible to investors,
market participants, and others for aggregation, comparison, filtering, and other analysis.
4. DUPLICATION OF INFORMATION
We believe that the proposed amendments would not duplicate, overlap, 3 or conflict with
other federal rules. As proposed, Form SR would require daily disclosure of issuer share
repurchases. Issuer periodic reports would also continue to provide monthly breakdowns of such
repurchase activity. We additionally note that in a separate release relating to Rule 10b5-1, the
Commission is proposing certain disclosure requirements for issuers regarding trading plans.4 In
connection with the potential adoption of these rules, we would plan to coordinate the two
releases to avoid any duplication, overlap or conflict between the rules.

3

The proposed amendments include a checkbox for registrants to indicate if any of their officers or directors
reporting pursuant to Section 16(a) of the Exchange Act purchased or sold shares or other units of the class of
the issuer’s equity securities that is the subject of an issuer share repurchase plan or program within 10 business
days before or after the issuer’s announcement of such repurchase plan or program. Investors and other
interested parties could conduct their own review of Section 16 reports to identify purchases or sales made by
officers or directors within the relevant time period, thereby making the checkbox unnecessary. This, however,
could be a burdensome exercise if a high volume of Section 16 reports have been filed. The checkbox is
intended to provide a more efficient means of making this information available.

4

Rule 10b5-1 and Insider Trading, Release No. 33-11013 (Jan. 13, 2022).

2

5. REDUCING THE BURDEN ON SMALL ENTITIES
The proposed amendments would affect some issuers that are small entities. The
proposed amendments are intended to improve disclosure about repurchases of an issuer’s equity
securities for investors to evaluate those activities and decrease any information asymmetry
between issuers and investors. The additional disclosure, which would be provided in a
machine-readable format, should permit investors to more quickly and efficiently evaluate
information relating to issuer share repurchases. We expect small entities to be less likely to
conduct share repurchases, and the amendments would place no burdens on small entities not
conducting share repurchases. Also, to the extent that small filers have relatively high
information asymmetries because of lower analyst and institutional coverage, the proposed
additional disclosure about their repurchases may be relatively more informative to investors.
Because small entities are less likely to conduct share repurchases and in the event that they do,
are more likely to have relatively high information asymmetries, we do not believe it would be
appropriate to provide simplified or consolidated reporting requirements, a delayed compliance
timetable, or an exemption for small entities from all or part of these requirements.
6. CONSEQUENCES OF NOT CONDUCTING COLLECTION
The forms listed above set forth filing and disclosure requirements associated with
periodic disclosure to help investors make informed investment and voting decisions. Failure to
conduct these collections of information would reduce the information available to investors to
make these decisions.
7. SPECIAL CIRCUMSTANCES
There are no special circumstances in connection with these amendments.
8. CONSULTATIONS WITH PERSONS OUTSIDE THE AGENCY
The proposed amendments result from an ongoing, comprehensive evaluation of our
disclosure requirements. As part of this evaluation, in April 2016, the Commission issued a
Concept Release on the business and financial disclosure required by Regulation S-K, including
disclosure pursuant to Item 703.5 The Commission requested comment on the current disclosure
requirements.6 In developing the proposed amendments, the staff considered input from
comment letters received in response to the Concept Release, as well as input from other
commentators and market participants.
9. PAYMENT OR GIFT TO RESPONDENTS
No payment or gift has been provided to any respondents.
5

See Business and Financial Disclosure Required by Regulation S-K, Release No. 33-10064 (Apr. 13, 2016) [81
FR 23915 (Apr. 22, 2016)] (Concept Release).

6

Comments on the Concept Release are available at https://www.sec.gov/comments/s7-06-16/s70616.htm.

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10. CONFIDENTIALITY
Documents submitted to the Commission are available to the public.
11. SENSITIVE QUESTIONS
No information of a sensitive nature will be required under these amendments. These
information collections collect basic Personally Identifiable Information (PII) that may include a
name and job title. However, the agency has determined that these information collections do
not constitute a system of record for purposes of the Privacy Act. Information is not retrieved by
a personal identifier. In accordance with Section 208 of the E-Government Act of 2002, the
agency has conducted a Privacy Impact Assessment (PIA) of the EDGAR system, in connection
with this collection of information. The EDGAR PIA, published on February 5, 2020, is
provided as a supplemental document and is also available at https://www.sec.gov/privacy.
12./13. ESTIMATES OF HOUR AND COST BURDENS
The estimated burden hours and cost burden are made solely for the purposes of the PRA
and represent the average burden for all issuers. The cost burden is not derived from a
comprehensive or even a representative survey of the costs of Commission rules and forms.
The following table summarizes the estimated paperwork burden associated with
proposed new Form SR that affected issuers of equity securities registered under Section 12 of
the Exchange Act would use to disclose a repurchase of their equity shares.
Table 1: Estimated Paperwork Burden of Proposed Form SR
Affected Form
New Form SR

Estimated Burden
A new burden of 1.5 hours for each
Form SR.

Brief Explanation of Estimated
Burden
This burden is the estimated effect of
compiling the data elements, tagging the
data using Inline XBRL, and preparing and
submitting the Form SR.

We estimate a burden of approximately 1.5 hours for each Form SR. The burden
includes the effect of compiling the six required data elements for each date that the form is
required, tagging the data using Inline XBRL, and preparing and submitting the Form SR. Our
proposed 1.5 hour estimate is for the average burden over the first three years of reporting. We
acknowledge that preparation of Form SR may initially entail a higher burden as issuers get
accustomed to collecting data for, and preparing the new form, but we believe that the burden
would be reduced with subsequent filings.
Based on data from Compustat and EDGAR filings for fiscal year 2020, we estimate that
approximately 3,400 issuers that conducted share repurchases during fiscal year 2020 would be
affected by the proposed new Form SR requirement (among them, approximately 250 foreign
4

private issuers who reported share repurchases on Form 20-F). We additionally note that most
issuers that conduct share repurchases do so over a period of time, rather than by making a single
purchase or a few isolated purchases during the year. We conservatively estimate that issuers
conducting share repurchases would purchase shares one day a week for the entire year, resulting
in 52 Form SR filings per year. Based on the staff’s findings relating to the number of issuers
conducting share repurchases and the estimate of the frequency of repurchases, we estimate
176,800 Form SR filings per year.
The following table summarizes the estimated paperwork burdens associated with the
proposed amendments to the affected forms filed by issuers of equity securities registered under
Section 12 of the Exchange Act.
Table 2: Estimated Paperwork Burden of Proposed Amendments to Periodic Reports
Amendments to Reg. S-K
Estimated Burden Increase
Item 703, Form 20-F, Reg. ST Rule 405 and Proposed New
Exchange Act Rule 13a-21
•

•

•

Require additional disclosure
regarding the structure of an
issuer’s repurchase program
and its share repurchases;
Require new checkbox to
indicate if any of the issuer’s
officers or directors subject
to the reporting requirements
under Section 16(a) of the
Exchange Act purchased or
sold shares or other units of
the class of the issuer’s equity
securities that is the subject
of an issuer share repurchase
plan or program within 10
business days before or after
the announcement of an
issuer purchase plan or
program; and
Require information to be
reported using a structured
data language.

An increase of 3 burden hours for each
of the affected forms: Form 10-K,
Form 10-Q, and Form 20-F.

Brief Explanation of Estimated
Burden Increase

This increase is the estimated effect on the
affected forms by the proposed
amendments to include additional share
repurchase disclosures, clarify the rules,
and require the use of structured data for
this information.

Considering the various revisions outlined in the Proposing Release, we estimate that
proposed new Rule 13a-21, Item 703 of Regulation S-K, Item 16E of Form 20-F, and Rule 405
of Regulation S-T (interactive data file submission requirements) would increase the paperwork
burden for filings on the affected forms that include share repurchase disclosure. However, not
all filings on the affected forms include these disclosures because they are provided only when
an issuer conducts share repurchases that trigger the disclosure requirement. Therefore, to
estimate the increase in overall paperwork burden from the proposed amendments, we first
estimated the number of filings that include share repurchase information. As indicated above,
5

we estimate that approximately 3,300 operating companies (among them, approximately 250
foreign private issuers filing on Form 20-F) during fiscal year 2020 would be affected by the
amendments. Based on the staff’s findings, the table below sets forth our estimates of the
number of filings on these forms that included share repurchase disclosure. We used this data to
extrapolate the effect of these changes on the paperwork burden for the listed periodic reports.7
Table 3: Estimated Number of Affected Filings
Form

Current Annual
Responses in PRA
Inventory

10-K
10-Q
20-F

8,292
22,925
729

Number of Filings
that Include Share
Repurchase
Disclosure
3,050
9,150
250

Below we estimate the incremental and aggregate changes in paperwork burden as a
result of the proposed amendments. These estimates represent the average burden for all issuers,
both large and small. In deriving our estimates, we recognize that the burdens will likely vary
among individual issuers. The proposed amendments would create a new required collection of
information and change the burden per response of existing collections of information, if
adopted.
We calculated the burden estimates by adding the estimated additional burden to the
existing estimated responses and multiplying the estimated number of responses by the estimated
average amount of time it would take an issuer to prepare and review disclosure required under
the proposed amendments. For purposes of the PRA, the burden is to be allocated between
internal burden hours and outside professional costs. Table 4 below sets forth the percentage
estimates we typically use for the burden allocation for each collection of information and the
estimated burden allocation for the proposed new collection of information. We also estimate
that the average cost of retaining outside professionals is $400 per hour.8

7

The OMB PRA filing inventories represent a three-year average. Averages may not align with the actual
number of filings in any given year.

8

We recognize that the costs of retaining outside professionals may vary depending on the nature of the
professional services, but for purposes of this PRA analysis, we estimate that such costs would be an average of
$400 per hour. This estimate is based on consultations with several issuers, law firms, and other persons who
regularly assist issuers in preparing and filing reports with the Commission.

6

Table 4. Estimated Burden Allocation for the Affected Collections of Information
Collection of Information

Internal

Outside Professionals

Forms 10-K, 10-Q, SR

75%

25%

Form 20-F

25%

75%

Table 5 below illustrates the incremental change to the total annual compliance burden of
affected forms, in hours and in costs, as a result of the proposed amendments’ estimated effect on
the paperwork burden per response.
Table 5. Calculation of the Incremental Change in Burden Estimates of Current Responses
Resulting from the Proposed Amendments
Collection
Number of
of
Estimated
Information Affected
Responses
(A)a

Burden
Hour
Increase
per
Response
(B)

Change in
Burden
Hours
(C)
= (A) x (B)

Change in
Company
Hours
(D)
= (C) x 0.75
or 0.25

Change in
Professional
Hours
(E)
= (C) x 0.25
or 0.75

Change in
Professional
Costs
(F)
= (E) x $400

10-K
10-Q
20-F
Total

3
3
3

9,150
27,450
750

6,862.5
20,587.5
187.5
27,637.5

2,287.5
6,862.5
562.5

$915,000
$2,745,000
$225,000
$3,885,000

3,050
9,150
250

The following tables summarize the requested paperwork burden, including the estimated
total reporting burdens and costs, under the proposed amendments.
Table 6. Requested Paperwork Burden under the Proposed Amendments9
Current Burden

Program Change

Requested Change in Burden

Form

Current
Annual
Responses
(A)

Current
Burden
Hours
(B)

Current Cost
Burden
(C)

Number of
Affected
Responses
(D)

Change in
Company
Hours
(E)

Change in
Professional
Costs
(F)

Annual
Responses
(G)

Burden
Hours
(H) =
(B) + (E)

Cost Burden
(I) =
(C) + (F)

Form
10-K
Form
10-Q
Form
20-F

8,292

13,988,811

$1,835,594,519

3,050

6,862.5

$915,000

8,292

13,995,674

$1,836,509,519

22,925

3,098,084

$410,257,154

9,150

20,587.5

$2,745,000

22,925

3,118,672

$413,002,154

729

479,303

$576,533,425

250

187.5

$225,000

729

479,491

$576,758,425

Table 7 summarizes the requested paperwork burden for the new Form SR collection of
9

For purposes of the PRA, the requested change in burden hours (column H) is rounded to the nearest whole
number.

7

information, including the estimated total reporting burdens and costs, under the proposed
amendments. For purposes of the PRA, we estimate that new Form SR will entail a 1.5 hour
compliance burden per response with 176,800 annual responses.
PRA Table 7. Requested Paperwork Burden for the new Collection of Information
Collection of
Information
Form SR
14.

Requested Paperwork Burden
Annual Responses
Burden Hours
Cost Burden
(A)
(A) x 1.5 x (0.75) (A) x 1.5 x (0.25) x $400
176,800

198,900

$26,520,000

COSTS TO FEDERAL GOVERNMENT

The annual cost of reviewing and processing disclosure documents, including registration
statements, post-effective amendments, proxy statements, annual reports and other filings of
operating companies amounted to $125,800,170 in fiscal year 2021 based on the Commission’s
computation of the value of staff time devoted to this activity and related overhead.10
15.

REASON FOR CHANGE IN BURDEN

As explained in further detail in Items 1, 12 and 13 above, changes in burden for Form 10-K,
Form 10-Q, and Form 20-F would result from the proposed amendments to those rules. Similarly,
the new burden for Form SR would result from the burden required to implement the new form.
These amendments were proposed in order to improve the quality, relevance, and timeliness of
information related to issuer share repurchases.

16.

INFORMATION COLLECTION PLANNED FOR STATISTICAL PURPOSES
The information collections do not employ statistical methods.

17.

APPROVAL TO OMIT OMB EXPIRATION DATE

We request authorization to omit the expiration date on the electronic version of the
forms and schedule. Including the expiration date on the electronic version of the form and
schedule will result in increased costs, because the need to make changes to the form and
schedule may not follow the application’s scheduled version release dates. The OMB control
number will be displayed.

10

The paperwork burdens for Regulation S-K that are imposed for Regulation S-K are imposed through the forms
that are subject to the requirements in these regulations and are reflected in the analysis of those forms. OMB
has discontinued the OMB Control Number for this regulation so that the PRA inventory would not reflect
duplicative burdens.

8

18.

EXCEPTIONS TO CERTIFICATION FOR PAPERWORK REDUCTION ACT
SUBMISSIONS
There are no exceptions for the Paperwork Reduction Act submissions.

B.

STATISTICAL METHODS
The information collections do not employ statistical methods.

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Form 10-K Short Statement
Form 10-K is an annual report filed by registrants that have a class of securities registered
pursuant to Section 12 of the Exchange Act or have an Exchange Act Section 15(d) reporting
obligation in connection with an effective Securities Act registration statement. The annual
report on Form 10-K provides a comprehensive overview of the company’s business and
financial condition and includes audited financial statements. The proposed rule amendments
would require additional disclosure regarding the structure of an issuer’s repurchase program and
its share repurchases; require a new checkbox to indicate if certain of the issuer’s officers or
directors purchased or sold the issuer’s equity securities within 10 business days of the
announcement of a related issuer repurchase program; and require share repurchase information
to be reported using a structured data language As a result of these proposed amendments, for
purposes of the PRA, we estimate that, for Form 10-K, the proposed amendments would result in
an increase of 6,862.5 burden hours and $915,000 for the services of outside professionals.

10

Form 10-Q Short Statement
Form 10-Q is a quarterly report filed by registrants that have a reporting obligation under
Section 13 of the Exchange Act in connection with a class of securities registered under Section
12 of the Exchange Act, or have a reporting obligation pursuant to Section 15(d) of the Exchange
Act in connection with an effective Securities Act registration statement. The Form 10-Q
includes unaudited financial statements and provides a continuing view of the company's
financial position during the year. The proposed rule amendments would require additional
disclosure regarding the structure of an issuer’s repurchase program and its share repurchases;
require a new checkbox to indicate if certain of the issuer’s officers or directors purchased or
sold the issuer’s equity securities within 10 business days of the announcement of a related issuer
repurchase program; and require share repurchase information to be reported using a structured
data language. As a result of these proposed amendments, for purposes of the PRA, we estimate
that, for Form 10-Q, the proposed amendments would result in an increase of 20,587.5 burden
hours and $2,745,000 for the services of outside professionals.

11

Form 20-F Short Statement
Form 20-F is an annual report filed by foreign private issuers that have a class of
securities registered pursuant to Section 12 of the Exchange Act or have an Exchange Act
Section 15(d) reporting obligation in connection with an effective Securities Act registration
statement. The annual report on Form 20-F provides a comprehensive overview of the foreign
private issuer’s business and financial condition and includes audited financial statements. The
proposed rule amendments would require additional disclosure regarding the structure of an
issuer’s repurchase program and its share repurchases; require a new checkbox to indicate if
certain of the issuer’s officers or directors purchased or sold the issuer’s equity securities within
10 business days of the announcement of a related issuer repurchase program; and require share
repurchase information to be reported using a structured data language. As a result of these
proposed amendments, for purposes of the PRA, we estimate that, for Form 20-F, the proposed
amendments would result in an increase of 187.5 burden hours and $225,000 for the services of
outside professionals.

12

Form SR Short Statement
The proposed new form would require registrants conducting share repurchase activity to
provide a compilation of six required data elements relating to that activity for each date that the
form is required, tagging the data using Inline XBRL, and preparing and submitting the Form.
As a result, for purposes of the PRA, we estimate that, for proposed Form SR, the proposed
amendments would result in 198,900 burden hours and $26,520,000 for the services of outside
professionals.

13