SEC Proposes Optional Semiannual Reporting for Public Companies: Key Takeaways and Practical Considerations

This alert summarizes the proposal, highlights the proposed key mechanical and structural changes, and identifies practical considerations that public companies, boards, and counsel should consider evaluating now—whether or not they ultimately expect to change their reporting cadence.

Background

Since 1970, public companies subject to the reporting requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) have been required to file quarterly reports on Form 10-Q covering each of the first three fiscal quarters, in addition to an annual report on Form 10-K. The SEC’s proposal would, for the first time in decades, offer reporting companies the flexibility to opt out of quarterly reporting in favor of a single semiannual interim report.

In announcing the proposal, SEC Chairman Paul Atkins stated that “[p]ublic 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.” Chairman Atkins also described the proposal as “just the first step of the larger, comprehensive effort to review and reshape the current SEC rules governing public companies.” Commissioner Mark Uyeda separately noted that the quarterly reporting model has roots in post-World War II industrial policy and observed that “[a]n established pharmaceutical company with a trillion-dollar market cap is different from a pre-revenue biotech pursuing approval of a single drug candidate,” underscoring the one-size-does-not-fit-all rationale animating the proposal.

Key Elements of the Proposal

The Semiannual Reporting Election
The proposed semiannual reporting framework is elective. Under the amendments, a reporting company would indicate its interim reporting cadence by checking (or leaving unchecked) a new cover page checkbox on its Form 10-K: “Indicate by check mark if the registrant has elected to file semiannual reports pursuant to Rule 13a-13(b) or Rule 15d-13(b) of the Act. ☐”.

The election would be made—and renewed—annually in connection with the Form 10-K filing. Once made, the election would be locked for the fiscal year; mid-year switches between quarterly and semiannual reporting would not be permitted. The SEC has proposed a narrow correction mechanism: A company that inadvertently checks (or fails to check) the box may amend its Form 10-K to correct the election, provided the amendment is filed no later than the due date of its first Form 10-Q for the fiscal year.

A parallel checkbox would appear on Securities Act registration statements (Forms S-1, S-3, S-4, and S-11) and on the Exchange Act registration Form 10, allowing newly registering companies to make the election at the time of registration.

The election would be available to all Exchange Act reporting companies—large accelerated filers, accelerated filers, non-accelerated filers, and smaller reporting companies—without regard to revenue, market capitalization, industry, or other criteria.

New Form 10-S
Semiannual filers would file a new Form 10-S in place of the first and second Forms 10-Q, and would not file a third-quarter Form 10-Q. Form 10-S is designed to parallel Form 10-Q, with the reporting period expanded from three months to six months. Form 10-S would:

• Require the same narrative items and interim financial information on Form 10-Q but covering a six-month period in lieu of a three-month quarterly period.
• Require interim financial statements prepared in accordance with U.S. GAAP, review of the interim financial statements by an independent public accountant, and Inline XBRL tagging, and reinstate a technical instruction regarding management adjustments that was inadvertently deleted in a prior update.
• Require the same disclosure controls and procedures, internal control over financial reporting framework, exhibits, and officer certifications as currently required on Form 10-Q.
• Allow smaller reporting companies to continue to avail themselves of scaled disclosure accommodations.
• Provide a filing deadline of 40 days after the end of the first fiscal year’s semiannual period for large accelerated filers and accelerated filers, and 45 days for all other filers (consistent with current filing deadlines for Form 10-Q).

Because Form 10-S carries over the substantive disclosure architecture of Form 10-Q, semiannual filers would continue to provide MD&A, quantitative and qualitative disclosures about market risk, legal proceedings, risk factor updates, and other customary Part II items, but on a six-month rather than three-month cadence.

Regulation S-X Amendments
The proposal includes conforming and simplifying amendments to Regulation S-X:

• Rules 3-01 and 8-08 would be amended to simplify and consolidate the age-of-financial-statement requirements applicable to registration statements and proxy statements.
• Rule 3-12 (age of financial statements at the effective date of a registration statement or the mailing date of a proxy statement) would be consolidated into a revised Rule 3-01 and eliminated as a standalone rule. For example, proposed Rule 3-01(a) would require that the date of the most recent balance sheet included in a registration statement or proxy statement be updated to comply with that section’s requirement as if the effective date of the registration statement, or the proposed mailing date in the case of a proxy statement, were the filing date.
• “Staleness” of interim financial statements would be determined by reference to the end of the company’s most recently completed interim period reported—or due to be reported—on Form 10-Q or Form 10-S, as applicable, in lieu of the 130- or 135-day period (as applicable) following the date of the most recent balance sheet. Accordingly, registrants would need to include interim financial statements as of the end of the most recently completed semiannual period or fiscal quarter, as applicable, that has been filed, or is required to be filed on or before the filing date, in a Form 10-Q or Form 10-S, as applicable (a non-reporting registrant, such as an IPO issuer, would comply as if they were required to file the applicable form).
• Rules 10-01 and 8-03 would be amended to clarify that “interim period” means a fiscal quarterly period for quarterly filers and a fiscal semiannual period for semiannual filers, with corresponding treatment for smaller reporting companies under Article 8.

Conforming amendments to Exchange Act Rules 13a-10 and 15d-10 would integrate the semiannual option into the transition report framework applicable when a company changes its fiscal year.

Earnings Releases, Guidance, and Form 8-K
The proposal does not make substantive changes to the rules governing earnings releases or earnings guidance. The SEC reiterated that the federal securities laws do not impose a general duty on public companies to announce or publish earnings, to conduct earnings calls, or to issue guidance. The amendments to Item 2.02 of Form 8-K are technical in nature and simply add references to semiannual periods alongside the existing quarterly references.

The Commission has, however, requested comment on whether Item 2.02 Form 8-K disclosures should be treated as “filed” (rather than “furnished”) for semiannual filers—a change that would carry Section 18 liability consequences and merits close attention from issuers and counsel during the comment period.

Practical Takeaways for Public Companies

Although the proposed framework is permissive, reporting companies should evaluate whether to make the election and the potential impact thereof, communicate with its board, auditors, lenders, and IR teams, and consider the impact on other constituencies, including market analysts and investors. In the event the proposed rule is adopted, management teams and boards should undertake this strategic evaluation each year. Several structural and practical considerations are likely to shape that analysis:

• Investor and analyst expectations. Many institutional investors and sell-side analysts have built their coverage models around quarterly information, and companies should expect market scrutiny of any decision to reduce the frequency of interim reporting.
• Industry practice. In sectors where quarterly reporting is the norm, moving to semiannual may put a company out of alignment with comparable companies and competitors and with respect to peer benchmarking and valuation comparisons.
• Liquidity and capital markets access. Companies that access the capital markets frequently, or that expect to do so, may prefer or be required to provide interim financial information on a quarterly cadence.
• Contractual obligations. Many companies may be subject to contractual obligations, including pursuant to credit agreements, indentures, and joint venture agreements, which require delivery of quarterly financial statements, thus requiring continued quarterly updates absent consent or waiver or amendments to those contracts.
• Material non-public information and trading blackouts/insider trading policies. Under semiannual reporting, directors, officers, and other insiders may be privy to material non-public information for longer durations as they would have access to unreleased/non-public interim financial information for a longer period before each earnings release. This in turn would result in extended blackout periods and reduce the number of open trading windows in each year. Companies would need to review applicable governance and insider trading policies to assess the potential impact of moving to a semiannual reporting framework and make appropriate modifications.
• Registration statement/prospectus updates. Companies will need to be mindful of keeping effective registration statements current with respect to material information and may need to voluntarily update interim financial information to address market practice, contractual obligations, underwriter diligence, auditor comfort, and liability concerns.
• Auditor reviews and comfort letters. Many semiannual filers are likely to continue retaining their auditors to perform AS 4105 or “SAS 100” interim reviews of quarterly periods in order to support earnings releases, comfort letters in securities offerings, or a future transition back to quarterly reporting.
• Exchange and accounting standard changes. The SEC has acknowledged that conforming changes to stock exchange rules and to PCAOB auditing standards (including those governing comfort letters) may be necessary, and staff is expected to coordinate with standard setters and the exchanges.
• Current reporting of material developments. Companies that elect semiannual reporting would still be required to report material business developments on Form 8-K, and the SEC’s proposing release indicates that certain material information should continue to be disclosed between interim semiannual reports and annual reports.

Frequently Asked Questions

Q. Will most public companies actually switch to semiannual reporting?

A. Our expectation is that near-term adoption will be modest. Institutional investors, sell-side analysts, and rating agencies have long expected quarterly information, and many U.S. public companies already voluntarily supplement required disclosures with quarterly earnings calls and guidance. Adoption may be most attractive to smaller reporting companies, early-stage biotech and life sciences issuers, and companies with concentrated shareholder bases where quarterly reporting imposes disproportionate cost relative to informational benefit. Larger issuers and frequent capital-markets participants are likely to move more cautiously.

Q. Why might companies continue to report quarterly?

A. We anticipate that many companies may opt to continue quarterly reporting in some form, even if they elect semiannual reporting, to meet investor and analyst expectations, to comply with disclosure obligations or to keep registration statements and prospectuses “current,” to avoid extended blackout periods or limited trading windows, or to comply with other contractual or regulatory obligations to provide quarterly information. Other purposes may include: adhering to industry-standard disclosure practices; maintaining the ability to readily access the capital markets; and to meet contractual obligations under credit agreements and indentures that require quarterly financial statements.

Q. How does this affect insider trading policies and blackout windows?

A. If a company elects semiannual reporting and does not otherwise continue quarterly reporting in some form, the period during which insiders are presumed to possess material non-public information regarding unreleased/non-public interim financial information would increase substantially. Trading windows and blackout periods between each earnings release would be extended absent more frequent reporting, and open trading windows may be reduced to two per year rather than four, and, depending on policy design, may potentially be shorter in duration. Companies should review their insider trading policies, Rule 10b5-1 plan practices, and related training and communications in connection with any election to move to semiannual reporting. We anticipate that this topic may generate significant comment during the comment period.

Q. What about securities offerings and registration statements?

A. Depending on when a registration statement is declared effective, investors in an offering by a semiannual filer may receive interim financial information that is less current than would be available today. For example, a calendar-year non-reporting registrant that elects semiannual reporting could, under the proposed age-of-financial-statement rules, file a registration statement as late as mid-August without including first-half interim financial statements, assuming no other disclosure issue requires an update. However, we anticipate that many issuers are likely to voluntarily include quarterly or more recent interim financial information in registration statements to satisfy market expectations and to mitigate Section 11 and Section 12(a)(2) exposure.

Q. Will semiannual reporting impact comfort letters in securities offerings?

A. The SEC has requested comment on the impact of semiannual reporting on the delivery of auditor comfort letters in connection with securities offerings. Current audit firm practices and applicable PCAOB guidance generally limit auditors’ ability to provide negative assurance on subsequent changes or certain unaudited interim financial information when more than 135 days have elapsed since the end of the most recent period for which the accountants have performed an audit or interim review. If the proposal is adopted in its current form, absent changes in audit practices or guidance, semiannual filers, underwriters, and audit firms will need to address how to provide sufficient comfort letter coverage for any gap between that 135-day period and the offering, such as for offerings conducted in the middle of the year. As noted above, some semiannual filers may choose to voluntarily provide quarterly or more recent interim financial information, or to have their auditors perform interim reviews of quarterly periods, in order to support comfort letters in securities offerings.

Q. What about credit agreement covenants requiring quarterly financials?

A. Most credit agreements require delivery of quarterly financial statements within a specified period after the end of each of the first three fiscal quarters, often accompanied by compliance certificates and covenant calculations. A company must therefore determine whether to remain in the quarterly reporting regime or discuss amending its credit facilities and indentures before making the election. Lenders may resist relaxing quarterly reporting requirements, particularly for leveraged or covenant-heavy facilities, and may require additional reporting or monitoring in exchange for accommodating a company’s transition to semiannual reporting status.

Q. Do companies still need to hold quarterly earnings calls?

A. No. The federal securities laws do not impose a general duty to hold earnings calls, issue guidance, or publish earnings releases, and the proposal does not change that. A semiannual filer could choose to continue holding quarterly earnings calls and issuing quarterly earnings releases on a voluntary basis. As a practical matter, we anticipate that many semiannual filers are likely to continue voluntary quarterly communications to meet investor and analyst expectations, particularly in early years following adoption.

Q. How does this affect Form 8-K obligations?

A. Current Form 8-K obligations—including those triggered by material events, material agreements, and material impairments—would continue to apply to semiannual filers on the same real-time basis as for quarterly filers. As noted above, the SEC’s proposing release indicates that certain material information should continue to be disclosed between interim semiannual reports and annual reports. The proposal makes only technical amendments to Item 2.02 of Form 8-K to add references to semiannual periods. The SEC has, however, requested comment on whether Item 2.02 disclosures should be treated as “filed” rather than “furnished” for semiannual filers, which would expose such disclosures to Section 18 liability.

Q. When would this take effect, and what is the comment deadline?

A. The comment period closes 60 days after publication of the proposing release in the Federal Register (on or about July 6, 2026). Final rules would take effect on a schedule to be specified in the adopting release. Given the breadth of the comment request and the range of conforming changes that would be needed to exchange rules, PCAOB standards, and contractual arrangements, we anticipate that many companies may decide not to make an election until at least one full reporting cycle after any final rule is adopted.

Q. Can a company switch back to quarterly after electing semiannual?

A. Yes. The election is made annually on the Form 10-K, and a company may change its election in any subsequent year. However, switching from semiannual back to quarterly may require additional preparation—including ensuring that comparable prior-year quarterly periods have been reviewed by the company’s independent public accountant so that the company is in a position to file compliant Forms 10-Q with required comparative information. Companies contemplating a potential future switch back should consider retaining their auditors to perform quarterly reviews even while reporting semiannually.

Q. What about foreign private issuers?

A. Foreign private issuers (FPIs) report on Form 20-F and furnish interim and other current information on Form 6-K. The proposal would not substantively change the FPI reporting regime (including on Forms 6-K and 20-F) or the reporting cadence, and the proposal would not substantively affect investment companies (other than conforming changes applicable to business development companies). Conforming amendments would update FPI forms and rules to recognize references to new Form 10-S where relevant (including for FPIs that voluntarily file on forms for domestic issuers).

Conclusion

Public companies may wish to begin engaging their audit committees, disclosure committees, auditors, lenders, and investor relations teams on whether a semiannual election would be appropriate, and what infrastructure would be needed to support such a change. Companies should also review and update, as appropriate, their Inline XBRL processes, internal review and certification processes, and disclosure controls and internal controls to accommodate a potential semiannual reporting cadence. In addition, companies should review any current or contemplated offering transactions, pending or effective registration statements, credit facilities, governance policies (including codes of conduct, insider trading policies, and disclosure committee charters), 10b5-1 trading plans, compensation practices, and similar matters to assess implications of a transition to semiannual reporting. Companies may wish to consider submitting comment letters on the aspects of the proposal most relevant to their businesses, particularly on the “filed” vs. “furnished” question for Item 2.02 Form 8-K, on the proposed age-of-financial-statement framework, and on the impact of a longer interim period on insider trading policies.

Our Capital Markets and Public Companies team is actively advising clients on the proposal. For more information, please contact us for assistance.

Contacts
Davina K. Kaile | Partner, Securities & Capital Markets
dkaile@pillsburylaw.com

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