The SEC published its semi-annual Fall 2023 regulatory agenda on December 6, 2023, providing a roadmap of the agency's priorities for the coming year. As always, the agenda is divided into three categories: Proposed Rule Stage, Final Rule Stage, and Long-term Actions. This article breaks down the notable highlights, ongoing rulemaking efforts, and new developments that corporate and securities law practitioners should keep on their radar.

Proposed Rule Stage

The Fall 2023 agenda outlines 14 proposed rules, down from 18 in the Spring 2023 agenda. Among the key items still under consideration are:

1. Corporate Board Diversity and Human Capital Disclosure: The SEC continues to focus on enhancing corporate governance standards. In the ESG category, corporate board diversity remains a priority, as the SEC considers further steps beyond Nasdaq’s board diversity rules, which became effective in August 2021. Similarly, amendments to human capital disclosure, particularly around workforce-related data, remain in development.
2. EDGAR Filing System Revisions: Proposed changes to the requirements for filer validation and access to the EDGAR filing system are still on the agenda. These revisions, introduced in September 2023, aim to simplify EDGAR filings and enhance system access security.
3. Regulation D and Form D Updates: The SEC is also revisiting Regulation D and Form D, particularly regarding accredited investor financial thresholds. These changes are intended to enhance investor protections and adapt to the evolving financial landscape.
4. Rule 144 Holding Period Amendments: The SEC has also kept amendments to Rule 144 on the agenda, which include potentially prohibiting tacking of holding periods upon conversion of variably priced securities—a proposal that has faced widespread opposition from stakeholders.

Final Rule Stage

In the Final Rule Stage, there are 29 items, a reduction from 37 in the Spring 2023 agenda. The following are some of the most significant rules expected to be finalized soon:

1. Climate Change Disclosures: Perhaps the most anticipated rule in this category is the SEC’s climate change disclosure framework. Proposed in March 2022, the rule would require companies to include climate-related disclosures in their filings, aiming to provide transparency on environmental impacts and risks.
2. SPAC Reform: Rules relating to Special Purpose Acquisition Companies (SPACs) also remain in the final rule stage. These proposed rules would tighten disclosure requirements associated with SPAC IPOs and de-SPAC transactions, targeting increased transparency and investor protection in these high-profile deals.
3. Cybersecurity Disclosure: The agenda includes amendments to cybersecurity disclosure rules, requiring public companies and investment advisers to report cybersecurity incidents and the risks they pose to investors.
4. Digital Engagement Practices: A new addition to the final rule stage, this item addresses digital engagement practices by broker-dealers and investment advisers, including the “gamification” of trading platforms—a practice the SEC has scrutinized as potentially leading to conflicted investment decisions.

Long-term Actions

The SEC’s long-term agenda, which focuses on items beyond the 12-month horizon, features seven actions. Key items include:

1. Transfer Agent Rules: The agenda continues to list amendments to the transfer agent rules, a much-delayed regulatory initiative that remains critical for ensuring market integrity.
2. Proxy Process Amendments: Updates to the proxy process, including further amendments to enhance shareholder engagement and streamline corporate governance practices, remain on the long-term agenda.

Conclusion

The SEC’s Fall 2023 agenda offers a clear indication of the agency’s focus on ESG, digital asset regulation, cybersecurity, and corporate governance. While many of these rules have been in development for several years, the upcoming year may see significant progress, particularly in the areas of climate-related disclosures and SPAC reform. Businesses and legal practitioners should remain vigilant, as these changes are likely to have profound impacts on compliance and reporting obligations.