Prescription drug costs Should the U.S. government regulate prescription drug prices? (more)

Prescription Drug Costs Should the U.S. Government Regulate Prescription Drug Prices? Ask the Chatbot a Question Ask the Chatbot a Question

Table of Contents

Table of Contents Ask the Chatbot

With 79 percent of Americans saying prescription drug costs are “unreasonable,” and 70 percent reporting lowering prescription drug costs as their highest healthcare priority, the popular debate over prescription drugs is not whether drug costs should be reduced but how they should be reduced. One consideration is whether the U.S. federal government should regulate prescription drug prices. [1] A prescription drug is a medication that may be obtained only with a medical professional’s recommendation and authorization. In some U.S. states physician assistants, nurse practitioners, pharmacists, clinical psychologists, and other medical professionals are permitted to write prescriptions in addition to doctors. Prescription drugs are generally divided into two categories: brand-name drugs and generic drugs. [2][3]

Drug Prices In the United States, drug companies (also called pharmaceutical companies) set prescription drug prices, which are largely unregulated by the federal government. Some drug companies will be familiar because their names have been attached to COVID-19 vaccines or other common products—Johnson & Johnson and Pfizer, for example. Others may not be household names but command large portions of the market nonetheless: Swiss companies Roche and Novartis, to name two. [4] In 2020 total global drug company revenue totaled more than $1.27 trillion, which included revenue from the manufacturers’ sale of drugs and other products (such as shampoo and baby products). Drug sales accounted for about $904 billion in revenue. Johnson & Johnson had $82.6 billion in total 2020 revenue, the highest for any drug company worldwide, $45.5 billion of which was from drug sales. Roche followed at a distant second, with $62.05 billion in total 2020 revenue, $49.5 of which was from drug sales. Global drug revenue is expected to continue to rise. [5][6][7] Although there is speculation about how drug companies price drugs—including consideration of competing drugs, medical uniqueness, and the overall market—drug companies are not required to reveal how or why a drug is priced as it is, why or when a drug price may be raised, or why drug costs sometimes exceed research and development (R&D) expenses for the drug. [4][8]

Patient Costs The cost to the patient is determined by three agents. The first is the drug company, which sets a price for a drug it has developed or purchased from another company. The second is pharmacy benefit managers, who negotiate rebates and savings on behalf of health insurance companies, Medicare Part D drug plans, large employers, and other groups. (These agreements, however, are generally not publicly disclosed, so actual cost savings to patients are unknown). The third agent is health insurance companies, which determine which drugs will be approved for their customers’ use, how much the insurance company will pay for the drugs, and how much patients will pay. Patients may not know their out-of-pocket cost for a drug until standing in line at the pharmacy, and, because of disparate insurance coverage, one patient may pay more than another for the same drug. [8][9][10] According to the Rand Corporation, prescription drug prices in the United States were 2.56 times higher on average than prices in 32 other Organisation for Economic Co-operation and Development (OECD) countries, with brand-name drugs coming in at 3.44 times higher. While generic drugs in the U.S. cost slightly less than the global average and accounted for 84 percent of drugs sold, they made up only 12 percent of total drug spending in the United States. Total drug spending in the countries included in the study was estimated to be $795 billion, and the U.S. accounted for 58 percent of sales and 24 percent of volume. [11]

Presidential Actions and Legislation In November 2020, the Trump Administration’s Department of Health and Human Services Centers for Medicare & Medicaid Services introduced the “Most Favored Nation (MFN) Model.” The rule would have tested whether matching Medicare Part B drug costs with international prices could control “unsustainable growth” in prices while not “adversely affecting quality of care for beneficiaries.” The rule was almost immediately challenged and was blocked in federal court in December 2020. [111][112] Two legislative efforts to reduce prescription drug prices then came before the U.S. Senate, having passed the House of Representatives in 2021 and 2022. The first was a provision in the Build Back Better Act, passed by the House on November 19, 2021, which died in the Senate in 2022. According to the Kaiser Family Foundation, the act would have done the following, among other things: “Allow the federal government to negotiate prices for some high-cost drugs covered under Medicare Part B and Part D

Require inflation rebates to limit annual increases in drug prices in Medicare and private insurance

Cap out-of-pocket spending for Medicare Part D enrollees and other Part D benefit design changes

Limit cost sharing for insulin for people with Medicare and private insurance

Eliminate cost sharing for adult vaccines covered under Part D

Repeal the Trump Administration’s drug rebate rule” [12] The second was a bill passed by the House on March 31, 2022, that would have limited the cost of insulin to $35 a month—25 percent of the insurance plan’s negotiated price, whichever was lower—but it, too, died in the Senate. [13][14] On May 12, 2025, President Donald Trump signed an executive order—“Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients”—that Trump said would “bring the prices Americans and taxpayers pay for prescription drugs in line with those paid by similar nations.” The executive order would slash drug prices by at least 50 percent and is described as a “more aggressive” version of Trump’s 2020 Most Favored Nation model that was blocked by a federal court. [113][114][114]

Drug Imports Section 804 of the U.S. Federal Food, Drug, and Cosmetic Act (FD&C Act) “allows importation of certain prescription drugs from Canada to: significantly reduce the cost of these drugs to the American consumer, without imposing additional risk to public health and safety.” [1][2][47] On January 5, 2024, the U.S. Food and Drug Administration (FDA) authorized Florida to import prescription drugs from Canada. The authorization was the first in the country but just the first step in the importation of prescription drugs to Florida. Canada has restrictions in place to prevent the export of drugs if doing so “will…cause or exacerbate a drug shortage in Canada.” The population of Florida is roughly half that of Canada, and Canada has had shortages of drugs, from cancer medications to weight-loss and diabetes medications, making export unlikely, according to experts. [44][45][46]

Pros and Cons at a Glance PROS CONS Pro 1: High drug costs can force people to choose between life-saving drugs and other essentials. Read More. Con 1: Revenue from prescription drug sales funds research and development of new drugs. Read More. Pro 2: Too many companies with too many private interests are involved in drug pricing, resulting in high prices and limited access to important drugs due to corporate greed. Read More. Con 2: Expanded access to affordable insurance that better serves customers by covering a larger percentage of prescription drug costs would more effectively lower drug costs for patients. Read More. Pro 3: Without regulation, drug costs are inconsistent and often hidden, leaving doctors struggling to provide appropriate care to their patients. Read More. Con 3: The U.S. government is already over-involved in health care and should leave prescription drugs to the free market. Read More.

Pro Arguments (Go to Con Arguments) Pro 1: High drug costs can force people to choose between life-saving drugs and other essentials. Some 24 percent of people taking prescription drugs in the U.S. reported difficulty affording the drugs, according to a Kaiser Family Foundation poll. Moreover, 58 percent of people whose drugs cost more than $100 a month, 49 percent of people in fair or poor health, 35 percent of those with annual incomes of less than $40,000, and 35 percent of those taking four or more drugs monthly all reported affordability issues. Additionally, 30 percent of people aged 50 to 64 reported cost issues because they generally take more drugs than younger people but are not old enough to qualify for Medicare drug benefits. [15] Tori Marsh, director of research at GoodRx, explained some of the consequences of having to buy expensive prescription drugs: “In 2020, 20.7 percent of people reported taking on debt or declaring bankruptcy due to the cost of their prescription medications. Borrowing from friends or family was the most common financial action (16.8 percent), followed by getting loans (5.0 percent), taking out another mortgage (1.2 percent), and filing for bankruptcy (1.0 percent).” [16] Because of high drug costs, 29 percent of adults surveyed in the Kaiser Family Foundation poll said they did not take their medication or medications as prescribed, 19 percent did not fill a prescription, 18 percent took an over-the-counter (OTC) drug instead, and 12 percent cut pills in half or skipped doses. Similar results were found among respondents to a Healio Internal Medicine poll. [15][17] As explained by Truth in Rx, an American Medical Association campaign for drug price transparency, “Prescription drug price increases can lead some patients to not be able to afford critical medicine….The result? Among this group, three in ten say their condition got worse.” [18] Pro 2: Too many companies with too many private interests are involved in drug pricing, resulting in high prices and limited access to important drugs due to corporate greed. Drug prices are first set by drug companies, which have an interest in recouping R&D costs and raising corporate revenues. Drug costs are then negotiated by pharmacy benefit managers (PBMs), which are private companies interested in profit. Pharmacy benefit managers keep a portion of rebates, which are negotiated without public disclosure, and some health insurance companies have reported seeing none of the rebates. Then consumer drug prices are set by insurance companies, which also want to increase their bottom lines. Without government regulation, drug prices can be increased by the drug companies, rebates can be withheld by the pharmacy benefit managers, and insurance companies can refuse to cover a drug, leaving patients with few options. [8][9][18] EpiPen, a life-saving drug for patients who experience severe allergic reactions, such as to bee stings or certain foods, contains about $1 worth of epinephrine and cost about $57 in 2007. The price jumped 400 percent when the drug company Mylan acquired the drug that same year, raising the cost to $500 or more. Even an insured patient could pay upward of $400. Raising the price allowed the drug to account for 40 percent of Mylan’s operating profits in 2015. [19][20][21] Millionaire Martin Shkreli was dubbed the “most hated man in America” for raising the price of Daraprim, an AIDS drug, from $13.50 a pill to $750. And other drugs have seen similar increases. Why did drug companies raise the costs of these drugs? As journalist Emily Willingham stated, “because they could.” Life-sustaining and life-saving medications should not be subject to the whims of corporations and millionaires. [20][22][23] In September 2024, the FTC sued top PBMs CVS Health’s Caremark Rx, Cigna’s Express Scripts, and United Health Group’s OptumRx (which represent 80 percent of the market) alleging that they had artificially inflated the cost of insulin using a “perverse drug rebate system” in which lower priced insulins were excluded in favor of high priced insulins. The system allowed the PBMs to collect billions in rebates and fees. [110] Pro 3: Without regulation, drug costs are inconsistent and often hidden, leaving doctors struggling to provide appropriate care to their patients. Doctors frequently do not know, and may not have access to, prescription drug costs for their patients. Because patients have a variety of insurance policies with varying prescription drug coverage, doctors are left to prescribe drugs without knowing whether the patients will be able to afford the drug at the pharmacy. [18] Among physicians, 74 percent believe considering patients’ medical benefits is important when choosing which drug to prescribe. And 59 percent want to be able to compare drug costs at the point of prescription. However, 29 percent of physicians do not trust the information they have access to about prescription drug costs. Additionally, 59 percent reported that knowledge of their patients’ out-of-pocket prescription drug costs is “high-priority,” but only 11 percent have easy access to that information. [24] Without prescription drug cost information, doctors are left to guess. In a survey of 371 primary care physicians, gastroenterologists, and rheumatologists who were given insurance information for a hypothetical patient, only 20 percent correctly determined the patient’s out-of-pocket costs for a drug that costs $1,000 per month. [10] Jules Lipoff, an assistant professor of clinical dermatology at the University of Pennsylvania, stated, “Patients appreciate it when doctors have a well-thought-out backup plan (for example, an over-the-counter or other prescription alternative) and bring up costs during an office visit. Patients do not like being told reflexively to call if there’s an issue filling the medication at the pharmacy—that puts the responsibility on them to figure out a complicated system.” [25] As Lipoff explained, “Doctors must remember our responsibility to consider the whole patient, including his or her financial livelihood, and make a point of bringing up the cost of care with each of our patients. If patients with limited means spend more money on medications, that expense means less money for the rest of their budget, with real consequences. With better transparency and advocacy on behalf of our patients, we as physicians must strive for the most cost-effective care.” [25] Robert Popovian, a pharmaceutical economist, asked, “We know that the correct data exist, so why don’t physicians have access to it when they are prescribing these medications?” [10] For doctors to be able to meet their patients’ needs, they must have accurate cost information. One way to ensure that they do is via congressional action to make costs transparent and drugs more affordable.

Pro Quotes Nicole Rapfogel, a research associate, and Thomas Waldrop, a policy analyst, for the Center for American Progress, stated, “The high cost of prescription drugs is a major concern for many Americans. Nearly 9 in 10 older adults take prescription medication, yet high drug prices are leading to soaring out-of-pocket costs, dangerous drug rationing, and a depletion of limited financial resources—especially for those with fixed incomes….In particular, the drug pricing provisions…would enable the federal government to finally negotiate drug prices—a policy supported by more than 80 percent of the public…. Congress has the opportunity to pass drug pricing legislation that would be life-changing for millions of older adults. More than 4 in 5 seniors think drug costs are unreasonable. Senators should take the overwhelmingly popular step of enabling the federal government to negotiate prices. Lowering drug prices through negotiation, inflationary rebates, and insulin and cost-sharing caps would allow people—especially those with chronic conditions and disabilities—to access the treatment they need. Senators have the power to meaningfully lower prices for some of the nation’s most expensive drugs—drugs that treat cancer, prevent blood clots, and treat autoimmune disorders. Passing drug price negotiations and other key drug reforms is a critical step toward lowering drug costs for millions of Americans.” —Nicole Rapfogel and Thomas Waldrop, “Congress Can Act Now to Lower Drug Costs by Allowing Medicare to Negotiate Prices,” americanprogress.org, February 1, 2022 Chuck Schumer, the Senate majority leader (D-NY), stated, “Fixing prescription drug pricing has consistently been a top issue for Americans year-after-year, including the vast majority of both Democrats and Republicans who want to see a change because they simply cannot afford their medications. We’ve heard this from people across the country who have serious illnesses and can’t afford their medicine. What a painstaking position to be in. It’s horrible.” —Chuck Schumer, “Schumer Remarks on Drug Price Negotiation Agreement,” democrats.senate.gov, November 2, 2021 David Blumenthal, the president of the Commonwealth Fund, Mark E. Miller, an executive vice president of health care for Arnold Ventures, and Lovisa Gustafsson, a vice president of the Commonwealth Fund, stated, “Legislation giving Medicare the ability to negotiate drug prices in the United States would make their life-saving potential immediately available to millions of Americans who cannot now afford them, thus extending lives and alleviating suffering. The pharmaceutical industry, however, has done a masterful job of arguing that these Americans must suffer in the short term since lower prices would gut long-term innovation in drug development. This is a false choice. We need not trade the certainty of saved lives now for the possibility of saved lives in the future. The reason: Large pharmaceutical companies are nowhere near as important to real drug innovation as they purport to be. Furthermore, smart policy changes can sustain and increase the pace of life-changing breakthroughs in biomedicine through increased funding of the National Institutes of Health (NIH), cutting the costs and accelerating the speed of clinical trials, and reforming patent law to stop innovation-blocking abuses used by Big Pharma to prevent new drugs from entering the market.” —David Blumenthal, Mark E. Miller, and Lovisa Gustafsson, “The U.S. Can Lower Drug Prices Without Sacrificing Innovation,” hbr.org, October 1, 2021 Ezekiel Emanuel, an oncologist and the chair of the department of medical ethics and health policy at the University of Pennsylvania, stated, “America is the undisputed global leader in drug research and development, and pharmaceutical companies warn that imposing controls on drug prices—like those currently being debated in Congress—will stifle that innovation. But many Americans, including the well insured, cannot afford the innovative drugs produced by that research…. Excessively high prescription drug prices are a substantial financial burden on Americans,…but they also raise insurance premiums and taxes for you and me by increasing costs for insurance companies, Medicare and Medicaid. Society will pay the other $200,000 through those higher premiums and taxes…. I’m an oncologist who has seen his patients reap huge benefits from the kind of high-priced innovation drug companies love to talk about. I’m also a health-policy specialist who has looked carefully at the long-term impact of drug company prices and profits. I’m convinced that we don’t have to choose between reasonable prices and innovation. The truth is, if Congress passes legislation to give Medicare negotiating power to make drugs more affordable, we will still have robust innovation.” —Ezekiel Emanuel, “Opinion: Why We Can Have Both Innovative Drugs and Lower Drug Prices,” politico.com, October 13, 2021

Con Arguments (Go to Pro Arguments) Con 1: Revenue from prescription drug sales funds research and development of new drugs. R&D of a new drug costs between almost $1 billion and more than $2 billion. Considering that only approximately 12 percent of drugs tested are approved by the FDA, the average R&D cost per approved drug is significantly higher (about $12.5 billion). [26] The Congressional Budget Office (CBO) reported, “In 2019, the pharmaceutical industry spent $83 billion dollars on R&D. Adjusted for inflation, that amount is about 10 times what the industry spent per year in the 1980s. Between 2010 and 2019, the number of new drugs approved for sale increased by 60 percent compared with the previous decade, with a peak of 59 new drugs approved in 2018.” [26] Drug companies can more reliably fund R&D for new drugs with revenue from drug sales than they could with venture capital or other outside investments. Studies have shown that cuts in drug companies’ revenue result in drops in future research and the number of new drugs. [26][27] Furthermore, R&D is attached to drug companies’ long-term growth strategy, not only in terms of revenue but also in terms of copyrights, patents, and trademarks. Without R&D and new drugs, the companies could fail to produce the growth and revenue needed to keep older drugs on the market. [28] Drug companies spent about 25 percent of revenues on R&D in 2018 and 2019 and were outpaced in R&D spending only by the semiconductor (an electronic component) industry As Investopedia editors summarized, “R&D is the pharmaceutical industry’s lifeblood. The success of major drug companies almost wholly depends upon the discovery and development of new medicines.” [28] Con 2: Expanded access to affordable insurance that better serves customers by covering a larger percentage of prescription drug costs would more effectively lower drug costs for patients. David A. Ricks, CEO of drug company Eli Lilly, explained that drug companies negotiate lower prices for government programs including Medicare and for private insurance companies. [29] However, Ricks stated, “What the US system does poorly is sharing these negotiated savings with patients who use the medicines. In fact, patient costs for medicines are increasing even while net drug manufacturer prices are decreasing. This paradox exists because no matter how much of a discount an insurer or provider negotiates, most [insurance] plans don’t pass the discount to patients.” [29] “Policy makers,” suggests Ricks, “need to focus on fixing broken health [insurance] plan designs that shift too much cost to the sick in order to lower premiums for the healthy.” [29] A 2021 study found that while drug companies offered rebates to health insurance companies, those rebates did not translate into lower out-of-pocket drug costs for customers. The rebates were tied to higher costs for consumers per prescription drug: $6 for those with commercial insurance, $13 for those with Medicare, and $39 for people without insurance. [30][31] The study’s authors emphasized that “uninsured individuals were more likely to be in racial minority groups, amplifying pre-existing disparities in healthcare access,” and people who were “uninsured were younger, in poorer health, and…had lower personal income compared with our overall sample.” [30][31] If Congress were to expand affordable, quality insurance with appropriate prescription drug coverage, the drug cost problem could be alleviated, if not eliminated, while providing better health care for everyone. [27] Con 3: The U.S. government is already over-involved in health care and should leave prescription drugs to the free market. Under the Affordable Care Act, insurance companies are required to cover at least one drug from every United States Pharmacopeia (USP) category and class. [32][33] Because of this requirement, patients should be able to find a drug, covered by insurance, that will treat most conditions. The cost debate is largely over relatively few name-brand drugs. [32][33] Tom Coburn, a late former U.S. senator (R-OK), explained, “The problem with drug prices…is not that they start out expensive, but that they stay expensive for years after they have been on the market. The main culprit here is the regulatory environment that limits the creation of a free, functioning and competitive market for prescription drugs….Rather than doubling down on government regulation, we should rely on the free market, which is the best way to allocate these scarce resources, increase competition, lower prices and continue to foster medical innovation for years to come.” [34] Other free-market options include making more drugs available over the counter (OTC), such as birth control pills and statins, which are available OTC in other countries and would lower costs if available OTC in the United States, and deregulating the ban on marketing or sharing information about drugs in research with insurers and doctors, which would lower advertising costs after FDA approval. [35] Furthermore, most Americans support allowing drug imports from Canada: 79 percent of Independents, 78 percent of Democrats, and 76 percent of Republicans. [15] Americans should be able to import drugs from Canada and Mexico. Drug companies lobbied to ban drug imports to prevent competition that would force American companies to reduce their prices. [36][37][38][39] A 2019 Vice investigation found that patients were crossing the border into Mexico to buy Novolog insulin pens for $17 each because the cost in the United States jumped from $289 in 2013 to $540 in 2019. Other insulin prices also rose: Humalog went up from $35 in 2001 to $234 in 2015, and Lantus from $244 to $431. [36][37][38][39] Allowing Americans to use the global free market without more government interference is the most effective way to force American drug companies to lower prices.

Con Quotes Christopher Holt, the director of health care policy, and Douglas Holtz-Eakin, the president, of the American Action Forum, stated, “There are better ways to lower drug prices:… Congress should…focus on pursuing bipartisan reforms to Medicare Part D.…

Legislative changes to drug rebates, like those pursued through rulemaking under the Trump Administration, would ensure that patients with high drug costs receive meaningful assistance.

The single best way to bring down prices is to increase supply and competition; policymakers should remove regulatory barriers to new therapies and follow-on products coming to market, while also working to ensure enforcement of laws targeting anticompetitive practices.” —Christopher Holt and Douglas Holtz-Eakin, “The Potential Impacts of the Build Back Better Act’s Drug Policies,” americanactionforum.org, January 13, 2022 Edmund F. Haislmaier, a senior research fellow for the Heritage Foundation, stated, “Congressional Democrats have released their latest version of a drug-pricing proposal that would expand government’s role by setting prices for prescription drugs for the first time. Specifically, in HR 5376 [the Build Back Better Act], the government would set prices in Medicare for a limited number of drugs that account for substantial spending in Medicare. Such policies go in the wrong direction. They would hurt access to drugs and innovation, undermine the ability of private plans to negotiate further price discounts for enrollees, and discourage future generic drugs—which often cost less—from coming to market. In addition, the bill’s approach would overturn a decades long bipartisan consensus that the government should create a climate for innovation and lower costs in prescription drugs—without setting prices…. A fundamentally different approach is needed. Rather than layering on more counterproductive government regulation, Congress should address government policies driving up prescription drug costs and making it harder to get drugs to market effectively.” —Edmund F. Haislmaier, “Rx for Disaster: Democrats’ Bill Shows How Not to Get Affordable, Innovative Prescription Drugs,” heritage.org, November 9, 2021 David A. Ricks, the CEO of drug maker Eli Lilly and Company, stated, “Critics argue that the United States is the only developed country where the federal government doesn’t negotiate prescription drug prices and that a 40 percent cut to the pharmaceutical industry’s size will have limited or no impact on future cures or pandemic preparedness. If it all sounds too good to be true, that’s because it is. Under the guise of Medicare “negotiations,” the US House of Representatives is considering a measure that would mandate the government to set prices on some of the most widely used drugs. These price controls would shrink the sector by 40 percent or $100 billion per year in revenue. Our entire industry invests about $100 billion per year in research and development. Worse, government negotiation to set drug prices won’t address the root cause of the problem America’s seniors have when they buy medicine. Instead, policy makers need to focus on fixing broken health plan designs that shift too much cost to the sick in order to lower premiums for the healthy…. The most pressing needs for policy change are not federal price mandates but rather common-sense adjustments to Medicare Part D and commercial plans. If Congress focuses on capping annual drug spending for Medicare enrollees, ensuring low monthly cost sharing amounts that are predictable each month, and implementing cost-sharing based on what a health plan saved from drug company discounts—millions of patients will see an immediate and dramatic reduction in what they pay at the pharmacy counter.” —David A. Ricks, “The Risks of Government Negotiation of Drug Prices,” bostonglobe.com, October 25, 2021 Jake Novak, a political and economic analyst and a former CNBC TV producer, stated, “When it comes to prescription drugs, I believe that reducing government intrusion, rather than increasing it, is the best way to get prices down and expand access to lifesaving treatments…. There are many other free market options that Big Pharma would probably support that would boost supplies of drugs and improve access to them. Chief among them is getting more drugs available over the counter. Birth control medication and most heart disease-fighting statins are over-the-counter drugs in most of the world’s developed countries, but not the U.S. Even if making those drugs OTC doesn’t immediately drop sticker prices, at least it reduces the costs connected with having to go to the doctor every time you need a prescription. OTC drugs also keep third-party insurance companies out the process entirely, also reducing costs and barriers to access. The drug industry would surely like a deregulatory push when it comes to the ban on drug companies sharing information about new drugs with insurers, hospitals and private practice doctors. That ban forces drug companies to spend a lot of money to get the word out about new drugs once they do gain approval…. Removing the ban would allow the drugmakers to provide easier to digest updates along the way, thereby reducing and spreading the costs of informing medical professionals over a longer period.” —Jake Novack, “Trump’s Losses in Drug Pricing Battle Should Be a Free Market Wake-Up Call to Him,” cnbc.com, July 11, 2019

This memorandum outlines key considerations from White & Case’s Public Company Advisory Group for foreign private issuers (“FPIs'”) during the 2024 annual reporting season, divided into two sections: Form 20-F Housekeeping Considerations in Part I below, and Disclosure Considerations in Part II below.

With the inauguration of US President Trump on January 20, 2025, public companies await the impact of the new administration on the US Securities and Exchange Commission (“SEC”). President Trump’s pick for the next SEC Chair, Paul Atkins, is an experienced appointee, having previously served as SEC Commissioner from August 2002 to 2008 as an appointee of former President George W. Bush.1 Atkins will assume office following an unprecedented period of SEC rulemaking impacting public companies, with approximately 50 new substantive SEC rules adopted over the past four years, including three rules that were subsequently vacated by courts holding that the SEC had overreached its authority.2 Despite an expected change in approach by the new administration away from prescriptive rulemaking and towards a more principles-based approach, it is important to note that the SEC’s recent rule changes and guidance remain in effect and public companies remain subject to them, absent further action by the SEC.

The First 100 Days Legal insights for a new era “The First 100 Days” is a podcast that explores the legal, regulatory and policy implications that the new US administration may have on global businesses across industries. The series features our lawyers’ views on the topics that matter most to our clients. Listen to our podcast

Part I: Top Housekeeping Considerations

As in our prior annual alerts, we begin with our top housekeeping reminders for preparing your Annual Report on Form 20-F, as follows:

1. New Exhibit: File your insider trading policy as Exhibit 11 to the Form 20-F. Under new Item 16J of Form 20-F, insider trading policies must be filed as exhibits to upcoming Form 20-Fs for the 2024 fiscal year filed in 2025.3 Companies must file their insider trading policy as Exhibit 11 to the 2024 Form 20-F,4 and this new exhibit is required for all public companies, including emerging growth companies (“EGCs”).

Disclosure Beyond the Exhibit. In addition to the exhibit requirement, companies are also required to disclose whether they have adopted insider trading policies “governing the purchase, sale, and other dispositions of the registrant’s securities by directors, senior management, and employees that are reasonably designed to promote compliance with applicable insider trading laws,” 5 and to tag this disclosure in inline XBRL. 6

and to tag this disclosure in inline XBRL. Importance of Reviewing Insider Trading Policy Before Public Filing. Companies should review their insider trading policies before disclosing them publicly in their 20-F exhibit and consider whether any updates should be made in advance of their initial public filing. These updates can include, for example, removing any personal contact information of personnel identified in the policy, as well as any substantive revisions to update the policy in light of recent SEC rule changes and emerging market trends. For more information on insider trading policies and market practices on key policy provisions, see our recent client alert “Insider Trading Policies: A Survey of Recent Filings.”

2. Exhibit Housekeeping. Beyond the Insider Trading Policy exhibit, remember to review your exhibit list including the following steps: (1) confirm that all required exhibits are included in accordance with Item 19 of Form 20-F, including for example: (i) exhibits filed since last year’s Form 20-F on Form 6-K (to the extent required to be filed on Form 20-F), and (ii) the required clawback policy under Instruction 97 to Item 19 of Form 20-F,7 which was new last year; (2) remove outdated exhibits no longer required to be filed, such as material contracts that have been fully performed; and (3) confirm permissible redactions and omissions in filed exhibits under Item 19 of Form 20-F (see our 2023 Annual Memo’s Housekeeping Considerations for further information on these permissible redactions and omissions for exhibits).

3. Confirm your Filing Status for 2025. It is important to confirm your filing status in order to appropriately complete the checkboxes on your Form 20-F cover page. For an FPI, filing status will also impact (i) to the extent applicable, whether it continues to qualify as an EGC (i.e., until the first fiscal year where an issuer becomes a “large accelerated filer”), and (ii) whether it is subject to SOX 404(b) auditor attestation requirements (which apply once an issuer becomes an “accelerated filer” or a “large accelerated filer”).

Filing status does not affect the Form 20-F filing deadline for FPIs. This year’s Form 20-F is due on April 30, 2025, for all calendar year-end FPIs, regardless of filing status. However, where a calendar year-end FPI has an effective shelf registration statement on Form F-1 or F-3 (e.g., for resales by selling shareholders) and plans to allow uninterrupted sales of securities from its registration statement, SEC rules require that the company file its audited FYE 2024 financial statements by March 31, 2025, which may push up the Form 20-F deadline to such earlier deadline. For more information, see “2. Considerations for Outstanding Registration Statements” in Appendix A.

To confirm your filing status, keep in mind that:

i. Determining Public Float: Public float is central to calculating your filing status and is computed as of the last business day of the company’s most recently completed second fiscal quarter (June 30, 2024, for calendar year end companies) by multiplying (a) the number of shares of common stock on that day held by non-affiliates8 by (b) the closing stock price on that day. As a result, confirming the identity and holdings of affiliates and subtracting out their shares is critical for an accurate calculation of “public float.”

ii. Large Accelerated, Accelerated and Non-Accelerated Thresholds: The public float thresholds for initial qualifications are set forth in Rule 12b-2 of the Exchange Act, but if your company previously qualified as a “large accelerated filer” or an “accelerated filer,” the thresholds to now move into accelerated or non-accelerated status are lower than those required for the initial qualification (e.g., less than $560 million as opposed to $700 million for accelerated filer status, less than $60 million as opposed to $75 million for non-accelerated filer status).9

iii. Emerging Growth Company (EGC) Status Check. If your company is an EGC, remember to annually assess whether you have ceased to qualify as an EGC based on: (1) having total annual gross revenues of $1.235 billion or more, (2) the passage of time beyond the fifth anniversary of the first date common equity was sold pursuant to an effective registration statement, (3) the issuance of more than $1 billion in non-convertible debt in the previous three years, or (4) becoming a large accelerated filer. See the definition of “emerging growth company” in Rule 12b-2.

Outstanding Share Data: Companies should also confirm that their outstanding share data is used and presented consistently throughout their Form 20-F. In September 2023, the SEC published a sample comment letter to companies regarding their XBRL disclosures, which included a sample comment that “the common shares outstanding reported on the cover page and on your balance sheet are tagged with materially different values. It appears that you present the same data using different scales (presenting the whole amount in one instance and the same amount in thousands in the second).”

4. Clawback checkboxes (new last year): Starting December 1, 2023, public companies were required to have in place a clawback policy compliant with stock exchange listing standards adopted pursuant to the SEC’s new clawback rules. As set forth in the Form 20-F and explained in SEC C&DI 104.19, companies must now have the two additional checkbox disclosures shown below on the cover page of their Form 20-Fs. For guidance on when to check these boxes, see our 2024 Annual Memo.

Check Box #1: If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Check Box #2: Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

Beyond the cover page checkboxes, clawback disclosure is also required under new Item 6.F of Form 20-F if your company was required to prepare an accounting restatement that required a clawback (or if there is an outstanding balance of unrecovered compensation related to a prior restatement).10

5. D&O Questionnaire Update: Given the SEC’s recent enforcement action related to director independence, D&O questions for assessing director independence under the general independence test for purposes of stock exchange rules have become a focal point for public companies. The general independence test generally requires the Board to affirmatively determine that there are no relationships between the director and the listed company’s management that impact the director’s independence. As a result, companies should consider clarifying to directors that close business or personal relationships with management may need to be disclosed in their responses to D&O Questionnaires, and, as an illustration, providing examples of the types of relationships that could impair independence under the general independence test.11 A company’s D&O Questionnaire should also make clear that a director’s responses to D&O Questionnaires are important and form the basis for disclosures made by the company in its SEC filings.

Appendix A of this client alert provides additional housekeeping reminders for preparing Form 20-Fs this year, including (1) additional D&O questionnaire reminders and (2) considerations for outstanding registration statements.

Part II: Key Disclosure Considerations

1. Cybersecurity: For the second year, public companies are now required to include in Form 20-Fs (under Part III, Item 16K) mandatory cybersecurity disclosure. For a detailed discussion of the SEC’s requirements on this cybersecurity disclosure, including guiding principles for preparing the disclosure, see our 2024 Annual Memo. As a reminder, all registrants must begin tagging responsive disclosure in inline XBRL beginning with annual reports for fiscal years ending on or after December 15, 2024.12

Since the filing of last year’s Form 20-Fs, SEC Staff has issued comments on the new cybersecurity disclosure in annual reports on Form 10-Ks (which are filed by U.S. domestic issuers) that may provide guidance for Form 20-F disclosures. In particular, these comments focused on the following:

Inconsistent statements regarding the use of third parties in cybersecurity risk management (e.g., one company stated that it “does not currently engage any third-party service providers” but went on to disclose that the Audit Committee receives updates from third party support specialists); 13

regarding the use of third parties in cybersecurity risk management (e.g., one company stated that it “does not currently engage any third-party service providers” but went on to disclose that the Audit Committee receives updates from third party support specialists); Inadequate disclosure regarding the relevant expertise of members of the management or management committees (e.g., one company failed to sufficiently identify which management positions or teams are responsible for managing material risks from cybersecurity threats, and failed to provide the required information on their expertise, as is required under Item 16K(c)(2)(i) of Form 20-F); and 14

of members of the management or management committees (e.g., one company failed to sufficiently identify which management positions or teams are responsible for managing material risks from cybersecurity threats, and failed to provide the required information on their expertise, as is required under Item 16K(c)(2)(i) of Form 20-F); and Whether and how the company’s process for assessing, identifying and managing material risks from cybersecurity threats has been integrated into its overall risk management system or processes (e.g., one company noted that it had a comprehensive and layered auditing approach to evaluate the effectiveness of existing controls, but did not explain how this was integrated into its overall risk management system or processes).15

During 2024, the SEC’s Division of Enforcement continued its focus on cybersecurity disclosure. For example, in October 2024, the SEC announced settled charges against four technology companies that had been impacted by the 2020 SUNBURST cyberattack for making misleading disclosures regarding cybersecurity incidents and risks, and in December 2024, the SEC charged yet another company for misleading disclosure following a cybersecurity breach, including for describing cyber risks hypothetically (e.g., cybersecurity attacks “may interrupt our business or compromise sensitive customer data…”), despite the fact that the company had already experienced a cyberattack that did exfiltrate sensitive customer data and did disrupt operations.

Although the new administration is expected to change the SEC’s enforcement approach on cybersecurity, public companies should still take away important reminders from recent actions that reiterate lessons from prior court decisions and underscore bedrock disclosure principles of materiality and accuracy, including:16

Do not disclose a risk as hypothetical when in fact that risk has already materialized , and do not describe specific, known risks in only generic terms.

, and do not describe specific, known risks in only generic terms. Evaluate and update existing disclosures to reflect changing circumstances and the company’s changed risk profile as a result of any recent cybersecurity incident.

to reflect changing circumstances and the company’s changed risk profile as a result of any recent cybersecurity incident. Describe fully and accurately any cybersecurity incidents that are disclosed; quantifying certain aspects of an incident without disclosing other material information on its scope and impact may be materially misleading. Nonetheless, any disclosures should be balanced against the need for the company to avoid revealing critical information about its cybersecurity controls or risk to protect against future cyberattacks.

2. Artificial Intelligence Considerations for your Annual Report. New artificial intelligence (“AI”) technologies present both significant opportunities and risks for companies. In addition to risk factor disclosure,17 companies should consider whether it is necessary or advisable to make disclosures about the ways in which AI might impact their strategy, productivity, competition or product demand, which, depending on the nature of the issuer’s business and its particular facts and circumstances, might be appropriately included in the “Business” section (Item 4 of Form 20-F) or trend disclosure in the MD&A (Item 5 of Form 20-F). To the extent the potential impact of AI is in fact discussed, it is important not to “AI” wash, or mislead investors as to your true artificial intelligence capabilities, which SEC Chair Gary Gensler cautioned companies against in a statement late last year.

3. Remember to Review and Update Risk Factors. Risk factor disclosure is a critical part of the Form 20-F, and companies should consider developments in 2024 as they draft their risk factors. These considerations include developments with respect to (1) cybersecurity, (2) artificial intelligence, (3) international geopolitics, (4) climate (including the potential application of sustainability accounting standards, discussed in “Section 6., Climate Change” below), (5) supply chain considerations and (6) human capital management and labor. These risks can also become factors related to known trends and uncertainties for discussion in the MD&A (see below). For a discussion of these developments and important tips for drafting risk factors, see our forthcoming client alert dedicated to risk factor updates.

4. MD&A Considerations. As in prior years, MD&A has remained one of the top targets of SEC Staff comments, with most recent comments focused on the following:

the discussion and analysis of results of operations , including the description and quantification of each material factor, unusual or infrequent events, and economic developments causing changes in results between periods (including a condensed labor market, wage inflation, global supply chain issues and inflation affecting revenues and underwriting); 18

, including the description and quantification of each material factor, unusual or infrequent events, and economic developments causing changes in results between periods (including a condensed labor market, wage inflation, global supply chain issues and inflation affecting revenues and underwriting); the discussion of known trends or uncertainties that are reasonably expected to impact near and long-term results (e.g., the impact of supply chain disruptions, inflation, increases in interest rates); 19

that are reasonably expected to impact near and long-term results (e.g., the impact of supply chain disruptions, inflation, increases in interest rates); metrics used by management in assessing performance , including how they are calculated and period over period changes; 20

, including how they are calculated and period over period changes; critical accounting estimates , including the judgments made in the application of significant accounting policies and the likelihood of materially different reported results if different assumptions were used; 21 and

, including the judgments made in the application of significant accounting policies and the likelihood of materially different reported results if different assumptions were used; and liquidity and capital resources, including requests for a clearer discussion of the drivers of cash flows and the trends and uncertainties related to meeting known or reasonably likely future cash requirements.22

In particular, the Staff has continued to focus on key performance indicators (“KPIs”) and has requested disclosure by companies on how KPIs are defined and calculated and how they are used by management. In addition, the Staff has asked companies why KPIs are useful for investors and why KPIs or other performance metrics are discussed in earnings releases or investor presentations if they are not also discussed in their periodic reports or are presented inconsistently.

Companies should keep in mind these areas of focus and review their MD&A disclosure to confirm they provide investors with key information on the company’s financial performance and future outlook through the eyes of management, allowing readers to have a deeper understanding of the company’s financial condition from the perspective of company leadership. As the MD&A is crucial to an understanding of the company’s current performance and future trends that will impact operations, companies should review their MD&A disclosures to confirm that the provide sufficiently specific and thorough analyses.

5. Mind the Non-GAAP/Non-IFRS. The SEC Staff continues to focus on non-GAAP/non-IFRS financial measures in its comment letters, following the release of updated non-GAAP/non-IFRS C&DIs in December 202223 (for a summary of these updates, see “Non-GAAP/Non-IFRS Compliance – Five Key Reminders” in our 2023 Annual Memo). In 2024, many of the Staff’s comment letters focused on:

the prominence of the most directly comparable GAAP/IFRS measure when compared to the non-GAAP/non-IFRS financial measure;

reconciliations of the non-GAAP/non-IFRS financial measure to the most directly comparable GAAP/IFRS financial measure;

the appropriateness of adjustments;

the use of individually tailored accounting principles; and

the lack of disclosure as to why management believes the non-GAAP/non-IFRS financial measure provides useful information to investors.

SEC Staff comments also focused on compliance with the C&DIs. For example, the Staff asked registrants whether operating expenses are “normal” or “recurring” and, therefore, whether their exclusion from a non-GAAP/IFRS financial measure could be misleading based on C&DI Question 100.01.24 The Staff has also commented on non-GAAP/non-IFRS adjustments to revenue and expenses that could have the effect of changing the recognition and measurement principles required by GAAP/IFRS, thereby rendering them “individually tailored” and potentially resulting in a misleading measure, based on C&DI Question 100.04.25 It is important that companies review any non-GAAP/non-IFRS disclosures against SEC requirements (i.e., Item 10(e) of Regulation S-K and Regulation G for any non-GAAP/non-IFRS disclosures included in Form 20-Fs/registration statements or Form 6-Ks incorporated by reference into Form 20-F/registration statements, and Regulation G only for all other disclosures), and guidance to ensure that non-GAAP/non-IFRS measures are appropriately used and compliant with regulatory requirements.

6. Climate Change Disclosure. Momentum may have shifted away from ESG overall, but climate change remains a key focus for many public companies and investors. Although the SEC’s extensive climate-related disclosure requirements have been voluntarily stayed pending the resolution of legal challenges, companies should continue to consider their existing climate-related disclosure in light of the SEC’s 2010 climate change disclosure guidance and the SEC’s 2021 sample comment letter on climate disclosure.

While climate-related comments from the SEC decreased in 2024 when compared with 2023, companies should still pay attention to known areas of Staff focus, depending on the nature of the company’s business and its particular facts and circumstances. These known areas of Staff focus include:

Direct and indirect impacts of climate-related business trends , such as decreased demand for goods or services that produce significant greenhouse gas emissions and increased demand for energy from alternative sources; 26

, such as decreased demand for goods or services that produce significant greenhouse gas emissions and increased demand for energy from alternative sources; Physical effects of climate change on operations and results; 27

of climate change on operations and results; Material expenditures for climate-related projects and compliance costs; 28 and

for climate-related projects and compliance costs; and Whether information contained in sustainability reports is material and therefore required to be included in the Form 20-F.29

In addition to comment letters, a recent SEC enforcement action targeted a company’s sustainability disclosures, arguing that Keurig’s disclosures regarding the recyclability of its coffee pods were inaccurate, because two of the nation’s largest recycling companies had given negative feedback on a recycling plan and did not intend to accept pods for recycling, which was not disclosed in the company’s filings.30 This action highlights the continued importance of ensuring that disclosures on sustainability-related topics are complete and not misleading due to the omission of information, and emphasizes the SEC’s willingness to review non-filed materials, such as sustainability reports, when assessing the accuracy and completeness of disclosure.31

IFRS Sustainability Standards: FPIs may also be required to comply with new IFRS sustainability standards requiring financial statement disclosures—IFRS S1 (sustainability-related risks and opportunities) and IFRS S2 (climate-related risks and opportunities)—that were adopted in 2023, depending on their home country.32 FPIs should consult with home country auditors on whether they need to include any disclosures under these standards in their financial statements to be included in annual reports on Form 20-F this year, or whether they should begin to prepare for the implementation of these standards in future disclosures.

7. Consider your Human Capital Management (HCM) Disclosures. The HCM disclosures required in the “Business” section of U.S. domestic issuers’ Form 10-Ks are not required for FPIs, and FPIs generally are not adopting such disclosures voluntarily. However, given institutional investor focus on the area, suggest this could also be a focus area for Form 20-F readers, so it is important for FPIs to consider any appropriate risk factor disclosure on this topic, depending on their investor base (subject to any limitations imposed by the laws of the jurisdiction under which the registrant is organized). Companies should assess what, if any, material issues their company faces with respect to human capital resources. This could include risks related to the ability to attract and retain skilled employees, employee health and safety issues, increases in labor costs and increased employee turnover.

Based on White & Case survey information of Fortune 50 companies’ Form 10-K disclosure in recent years, companies have covered a broad range of topics in their HCM disclosure, including employee engagement and culture initiatives, talent development and retention, employee health and wellness, flexible work arrangements, pay equity and diversity, equity and inclusion (DEI). Given the increased scrutiny on DEI programs and reports of a retreat on DEI at US public companies,33 FPIs should carefully consider whether to include HCM disclosures specifically addressing DEI, if any at all. To the extent they will include these disclosures, companies should consider which human capital measures or objectives the board and senior management focused on during fiscal 2024, and how these should be discussed in the company’s disclosure.

8. Diversity Considerations: Nasdaq Board Diversity Disclosure Rules No Longer in Effect. In December 2024, the United States Court of Appeals for the Fifth Circuit, in a 9-8 vote, struck down The Nasdaq Stock Market’s (“Nasdaq”) board diversity rules, holding that the SEC exceeded its statutory authority when it approved the rules. As a result of the ruling, effective immediately, public companies listed on Nasdaq no longer need to comply with Nasdaq’s board diversity rule requirements, including providing the board diversity matrix required by Nasdaq and having the specified number of directors, or explaining why they do not. Companies may choose to remove their board diversity matrix and related disclosure from their annual meeting proxy statement on Form 6-K, website or Form 20-F, as applicable. They should also consider whether any other updates are necessary in light of this decision (for example, companies should also remove references to Nasdaq’s diversity rule from their D&O questionnaires and consider whether any other changes are appropriate).

When deciding what, if any, diversity disclosure to provide, companies should continue to be mindful of the diversity disclosure and board composition policies of proxy advisory firms and institutional investors. Both ISS and Glass Lewis, as well as many institutional investors, including BlackRock, Vanguard and State Street, have their own diversity policies, including various definitions of what diversity means. See Appendix B. Depending on a company’s investor base, these policies may be a reason, among others, for continuing to publicly disclose certain aspects of board diversity and/or to seek diverse board composition.

Appendix A: Additional Housekeeping Reminders

1. The following Form 20-F form check items are not new this year, but were recently added in the past three years and should therefore be confirmed for your upcoming filing:

(a) Confirm that Item 3.A states “Item 3.A [Reserved]” (instead of “Item 3.A Selected Financial Data” as may have been included in prior Form 20-Fs) due to the SEC’s elimination of the disclosure requirement for selected financial data in 2021.34

(b) Confirm “Item 10J: Annual Report to Security Holders.” Item 10J was added to Form 20-F in 2022. While the SEC has not released formal guidance on how to respond to Item 10J, including whether it needs to be included in Form 20-F, we believe that issuers should address it as follows:

If an issuer is not required under home country law to furnish, or does not otherwise furnish, to its security holders an annual report separate from the Form 20-F, then the issuer should write: “Not applicable.”

If an issuer is required under home country law to furnish, or otherwise furnishes, to its security holders an annual report separate from the Form 20-F, then it should write: “If we are required to provide an annual report to security holders in response to the requirements of Form 6-K, we will submit the annual report to security holders in electronic format in accordance with the EDGAR Filer Manual.”

(c) Confirm the inclusion of “Item 16I” of the Form 20-F with the caption “Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.” New Item 16I was added to the Form 20-F in 2022 pursuant to the Holding Foreign Companies Accountable Act (HFCAA) (as explained in our prior alert) in order to identify any issuers that retain auditors that the PCAOB is unable to inspect completely. Given the SEC’s recent statement that “the PCAOB has been able to fulfill its oversight responsibilities as it relates to audit firms in China and Hong Kong,” this year, companies should not have any disclosure (beyond “Not applicable” or “None”) under this item in their upcoming Form 20-Fs.

(d) As in the past, tag in inline XBRL the independent auditor’s: (i) name; (ii) location (i.e., city and state, province or country); and (iii) PCAOB ID number.35 Companies should coordinate this tagging with the financial printer.

(e) For companies with mining operations,36 consider whether expanded Regulation S-K 1300 requirements, which became mandatory for Form 20-Fs filed in 2022 for the fiscal year ended December 31, 2021, apply. If a company’s current mining operations, in the aggregate, are material to its business, Regulation S-K 1300 disclosures would be required in its Form 20-F.37 In addition, companies with property that is individually material to their business must obtain a technical report summary,38 which must be signed by a “qualified person” (as defined in Regulation S-K 1300) and filed as Exhibit 96.1 to the Form 20-F.39

See Appendix B for a summary of key investor and proxy advisory firm policies on board diversity.

It is also important to keep track of the number of boards on which each of your directors sits, bearing in mind key investor and proxy advisory firm policies on over boarding, which tend to be country/region-specific. See Appendix C for a discussion of overboarding policies.

2. Considerations for Outstanding Registration Statements: Consider how the filing of the Form 20-F may impact any outstanding registration statements.

(a) All Effective Registration Statements: Remember to update your auditor consent attached as an exhibit to the Form 20-F to include any newly filed registration statements and remove any registration statements that are no longer effective.

(b) Effective Shelf Form F-1s:

(i) Post-Effective Amendment and Timing of Form 20-F: You must file a post-effective amendment to the Form F-1 in order to incorporate the audited annual financial statements and other information from the Form 20-F into the Form F-1. If you plan to allow uninterrupted sales (e.g., by selling stockholders) off of that Form F-1, you must file and have the SEC declare effective this post-effective amendment by the end of the third month after your fiscal year end (for calendar-year end FPIs, March 31, 2025). For the sake of efficiency, you may want to consider filing your Form 20-F before this three-month deadline (for calendar-year-end FPIs, March 31, 2025) and then immediately preparing and filing a post-effective amendment on Form F-1, all with enough time to ensure the SEC declares the post-amendment effective by the three-month deadline.

(ii) Potential Form F-3 Eligibility: You should also consider if you have become Form F-3 eligible, so that you can convert the Form F-1 into a Form F-3 and avoid future post-effective amendments for as long as you remain F-3 eligible.

(c) Effective Shelf Form F-3s:

(i) Timing of Form 20-F: You are not required to file a post-effective amendment with audited annual financial statements and can instead update the registration statement merely by filing the Form 20-F. However, if you plan to allow uninterrupted sales off of that Form F-3, you must file your audited annual financial statements by the last day of the third month after your fiscal year end (March 31, 2025, for calendar-year end FPIs). You should consider filing the Form 20-F by the three-month deadline, ahead of the normal 120-day deadline for filing an annual report on Form 20-F, or, if your Form 20-F is not ready by such date, filing by such deadline a current report on Form 6-K with the audited financial statements (incorporated by reference into the Form F-3).

(ii) Form F-3 Eligibility: You should also ensure that you continue to meet the eligibility requirements for using the Form F-3 when filing your Form 20-F: (i) if you previously filed as a well-known seasoned issuer (WKSI), confirm that you are still a WKSI in order to use that registration statement (otherwise, it will need to be re-filed (if eligible) as a non-WKSI shelf); or (ii) if you previously filed a non-WKSI shelf registration statement, confirm that you still meet the requirements to use that registration statement. Otherwise, you will need to re-file as a Form F-1.

While it does not affect the Form 20-F, all FPIs with outstanding registration statements should also bear in mind the requirement to file a Form 6-K by the date that is nine months after the end of their fiscal year, including six-months consolidated interim financial statements (which may be unaudited), containing explanatory notes.40 This Form 6-K should be incorporated by reference into any effective Form F-3s and would trigger a prospectus supplement for any effective Form F-1.

3. D&O Questionnaires. Ahead of your Form 20-F filing, review and update your D&O questionnaires, which provide backup and support for the disclosures to be included in your Form 20-F. In addition to the updates discussed in Part I, Section 5, companies should:

(i) If you plan to voluntarily disclose the diversity of your directors in proxy statement, website or other public disclosure (such as the Form 20-F), include a question to elicit information on your directors’ diversity characteristics that covers the potential diversity categories that you may want to disclose (under investor policies) and to obtain their consent to disclose this information;41

(ii) Consider adding a question to elicit information from directors on their expertise with respect to AI, cybersecurity, climate change and human capital, as applicable, in light of investor focus on board qualifications in these areas;

(iii) Consider adding or refining questions on outside directorships or officerships to identify any potential antitrust concerns, given the Department of Justice’s focus on potential violations of Section 8 of the Clayton Act; and

(iv) Consider building out (or adding) Iran-related activities questions to cover potentially problematic transactions with Russian entities.42

Appendix B: Board Diversity Policies

Gender and Racial/Ethnic Diversity Policies of Proxy Advisory Firms:

FPIs in US Tax Havens

ISS’s policy for FPIs in US tax havens requires at least one female director (see America’s regional voting guidelines).

Israeli FPIs

ISS : ISS does not have specific policies on gender and racial/ethnic diversity for Israeli companies. See here for its policies for Israeli companies.

: ISS does not have specific policies on gender and racial/ethnic diversity for Israeli companies. See here for its policies for Israeli companies. Glass Lewis : Gender Diversity: Glass Lewis defaults to US requirements, and as such, will generally recommend voting against the nominating committee chair of a board that has fewer than two female directors, except for boards of six or fewer total directors. See here for Glass Lewis’s policies on Israeli companies. Racial/Ethnic Diversity: Glass Lewis encourages ethnic/racial diversity, and specifically notes the relatively low percentage of Israeli Arabs serving on boards but will not make a voting recommendation on it except in a contested election. Glass Lewis states that it “believes that the composition of a board should be representative of a company’s workforce, the jurisdictions in which it principally conducts its business activities, and its other key stakeholders” and that Israeli FPIs “should consider including diversity of ethnicity and/or national origin as attributes in their composition profiles, whether defined targets for diversity of ethnicity and national origin should be set, and the manner and extent to which the ethnic and national backgrounds of directors and board nominees is publicly disclosed.”

:

FPIs in Other Countries

ISS and Glass Lewis policies on board diversity are region and/or country specific. For the currently applicable policies, see ISS’s current voting policies and Glass Lewis’s current voting policies.

Diversity Policies of Institutional Investors:

BlackRock: BlackRock maintains region/country-specific market guidelines:

EMEA: In its EMEA voting guidelines, BlackRock notes that, “to ensure there is appropriate diversity of perspectives, we look to boards to be representative of the company’s key stakeholders, with an approach to diversity that is aligned with any market-level standards or initiatives designed to support diversity (particularly gender and ethnic diversity) among board members.” BlackRock also notes its “general view” that, subject to market-specific standards, it is looking for “all boards to be taking steps towards at least 30 percent of their members being comprised of the under-represented gender (which should be read in conjunction with applicable country-specific guidelines).” BlackRock asks companies, consistent with local law, “to provide sufficient information on each director/candidate and in aggregate so that shareholders can understand how diversity (covering professional characteristics, such as a director’s industry experience, specialist areas of expertise, and geographic location; as well as demographic characteristics such as gender, ethnicity, and age) has been accounted for within the proposed board composition. These disclosures should cover how diversity has been accounted for in the appointment of members to key leadership roles, such as board chair, senior/lead independent director and committee chairs.”43

Latin America: To the extent that a company’s board is an outlier and does not have a mix of professional and personal characteristics that is comparable to local requirements and/or market norms, BlackRock may vote on case-by-case basis against relevant director(s).44 Personal characteristics may include, but are not limited to, gender; race/ethnicity; disability; veteran status; LGBTQ+; and national, Indigenous, religious or cultural identity.

Israel: While BlackRock is looking for companies in this region to make progress towards having greater female representation at board level in line with its general guidelines, BlackRock is likely to take voting action if the board has failed to appoint at least directors from the underrepresented gender. See BlackRock’s Israel-specific voting guidelines here.

Vanguard : For European and UK companies, Vanguard “expects disclosure of tenure, skills, and experience at the director level (sometimes referred to as a “skills matrix”) … [and asks] companies to meet local market standards intended to support gender and ethnic diversity, and at a minimum to demonstrate progress toward at least 30% gender diversity at board level (to be read in conjunction with country-specific guidelines below) and, where necessary, disclose plans to align with any current or upcoming local requirements.” Vanguard will consider applicable market regulations and expectations, along with additional company-specific context. Generally, “Boards should reflect diversity of attributes including tenure, skills, and experience and … should also, at a minimum, represent diversity of personal characteristics, inclusive of at least diversity in gender, race, and ethnicity on the board. Boards should take action to reflect a board composition that is appropriately representative, relative to their markets and to the needs of their long-term strategies. Disclosure of directors’ personal characteristics (such as gender, ethnicity, or nationality) should occur on a self-identified basis and may occur on an aggregate level or individual director level. Disclosure of skills and experience at the director level is preferred. Companies should provide disclosure regarding their process for evaluating the composition and effectiveness of their board on a regular basis, the identification of gaps and opportunities to be addressed through board refreshment and evolution, and a robust nomination (and renomination) process to ensure the right mix of skills, experience, perspective, and personal characteristics into the future.”

: For European and UK companies, Vanguard “expects disclosure of tenure, skills, and experience at the director level (sometimes referred to as a “skills matrix”) … [and asks] companies to meet local market standards intended to support gender and ethnic diversity, and at a minimum to demonstrate progress toward at least 30% gender diversity at board level (to be read in conjunction with country-specific guidelines below) and, where necessary, disclose plans to align with any current or upcoming local requirements.” Vanguard will consider applicable market regulations and expectations, along with additional company-specific context. Generally, “Boards should reflect diversity of attributes including tenure, skills, and experience and … should also, at a minimum, represent diversity of personal characteristics, inclusive of at least diversity in gender, race, and ethnicity on the board. Boards should take action to reflect a board composition that is appropriately representative, relative to their markets and to the needs of their long-term strategies. Disclosure of directors’ personal characteristics (such as gender, ethnicity, or nationality) should occur on a self-identified basis and may occur on an aggregate level or individual director level. Disclosure of skills and experience at the director level is preferred. Companies should provide disclosure regarding their process for evaluating the composition and effectiveness of their board on a regular basis, the identification of gaps and opportunities to be addressed through board refreshment and evolution, and a robust nomination (and renomination) process to ensure the right mix of skills, experience, perspective, and personal characteristics into the future.” State Street: State Street’s published guidelines state that it expects boards of companies in all markets and indices to have at least one female board member. It may waive the policy if a company engages with State Street and provides a specific, timebound plan for adding at least one woman to the board. State Street also expects companies in the Russell 3000, TSX, FTSE 350, STOXX 600 and ASX 300 indices to have boards composed of at least 30 percent women directors. State Street may waive the policy if a company engages with SSGA and provides a specific, timebound plan for reaching 30 percent representation of women directors. If a company fails to meet any of these expectations outlined above, State Street may vote against the Chair of the Nominating Committee or the board leader in the absence of a Nominating Committee, if necessary. Additionally, if a company fails to meet this expectation for three consecutive years, State Street may vote against all incumbent members of the Nominating Committee, or those persons deemed responsible for the nomination process. For more information, see State Street’s State Street’s Global Proxy Voting and Engagement Policy.

Appendix C: Director Overboarding Policies

While most stakeholders support limits on the number of outside directorships a director can hold, the overboarding policies of proxy advisory firms and institutional investors are generally country or region-specific and therefore companies are advised to carefully consider the specific policies of the relevant firms when considering whether their directors may be considered “overboarded.” See the country-specific policies of ISS and Glass Lewis. In addition, while issuers should always check for country-specific guidance, the general policies of major institutional investors are discussed below:

BlackRock : “The role of a director is becoming increasingly demanding and therefore requires appropriate time to commit and engage effectively on board and committee matters. Given the nature of the role, it is important that a director has sufficient flexibility to respond to unforeseen events and therefore only takes on a maximum number of non-executive mandates that provides this flexibility. To give shareholders a sense of directors’ ability to be engaged and the board to function effectively, we appreciate when companies disclose board and committee members’ attendance , as well as the time commitment required from directors . Shareholders would benefit from additional transparency over how nomination committees assess their directors’ time commitments and with what frequency these reviews take place. However, in BIS’s experience, the assessment of whether a director is over-committed is not just based on their attendance record but also their ability to provide appropriate time to meet all responsibilities when one of the companies on whose board they serve faces exceptional circumstances.” EMEA: For companies in EMEA, BlackRock will ordinarily consider there to be a significant risk that a board candidate has insufficient capacity, and therefore consider voting against his/her (re)election, where the candidate would (if elected) be: (i) serving as a non-executive director (but not the board chair) on more than four total public company boards; (ii) serving as a non-executive board chair on one public company board and as a non-executive director (but not the board chair) on more than two other public company boards; (iii) serving as a non-executive board chair on two public company boards and as a non-executive director on at least one other public company board; or (iv) serving as a non-executive director (but not the board chair) on more than one public company board while also serving as an executive officer at one public company. 46 In case of an executive officer, Blackrock would vote against his/her (re)election only to boards where he/she serves as a non-executive director. In assessing whether to support a (re)election in these circumstances, through BlackRock’s engagement with the board it will consider any perceived progress in the candidate’s response to concerns about capacity, the circumstances in which the candidate will remain in all of his/her different roles and the time frame over which changes will be made. 47 Latin America: For companies in Latin America, BlackRock’s policy is that: (i) a public company executive can sit on a total of three public company boards , and (ii) non-executive directors can sit on a total of five public company boards . In addition, where a director maintains a Chair role of a publicly listed company in European markets, BlackRock may consider that responsibility as equal to two board commitments, consistent with its EMEA Proxy Voting Guidelines, and will take the total number of board commitments across its global policies into account for director elections. 48

: “The role of a director is becoming increasingly demanding and therefore requires appropriate time to commit and engage effectively on board and committee matters. Given the nature of the role, it is important that a director has sufficient flexibility to respond to unforeseen events and therefore only takes on a maximum number of non-executive mandates that provides this flexibility. To give shareholders a sense of directors’ ability to be engaged and the board to function effectively, we appreciate when , as well as the . Shareholders would benefit from additional transparency over how nomination committees assess their directors’ time commitments and with what frequency these reviews take place. However, in BIS’s experience, the assessment of whether a director is over-committed is not just based on their attendance record but also their ability to provide appropriate time to meet all responsibilities when one of the companies on whose board they serve faces exceptional circumstances.”

For companies in other regions, BlackRock’s Global Engagement and Voting Guidelines note that BlackRock “will take local norms and practices into consideration when making … voting determinations across markets” and that they “may vote against the election of directors who do not seem to have sufficient capacity to effectively fulfil their duties to the board and company.”49

State Street: State Street may take voting action against directors who exceed the following number of board mandates: (i) named executive officers (NEOs) (a term which applies to insiders of US domestic issuers) who sit on more than two public company boards; (ii) non-executive board chairs or lead independent directors who sit on more than three public company boards; or (iii) non-executive directors who sit on more than four public company boards. 50 State Street may consider waiving its policy and voting in support of a director (other than an NEO) if the company discloses its director commitment policy in a publicly available manner (e.g., corporate governance guidelines, proxy statement, company website). This policy or associated disclosure must include: (i) description of an annual policy review process undertaken by the Nominating Committee to evaluate outside director time commitments, and (ii) a numerical limit on public company board seats a director can serve on. 51

State Street may take voting action against directors who exceed the following number of board mandates: (i) named executive officers (NEOs) (a term which applies to insiders of US domestic issuers) who sit on more than two public company boards; (ii) non-executive board chairs or lead independent directors who sit on more than three public company boards; or (iii) non-executive directors who sit on more than four public company boards. State Street may consider waiving its policy and voting in support of a director (other than an NEO) if the company discloses its director commitment policy in a publicly available manner (e.g., corporate governance guidelines, proxy statement, company website). This policy or associated disclosure must include: (i) description of an annual policy review process undertaken by the Nominating Committee to evaluate outside director time commitments, and (ii) a numerical limit on public company board seats a director can serve on. Vanguard: For European and UK companies, Vanguard believes that “[d]irectors’ responsibilities are complex and time-consuming. Therefore, the funds seek to understand whether the number of directorship positions held by a director makes it challenging to dedicate the requisite time and attention to effectively fulfill their responsibilities at each company (sometimes referred to as being “overboarded”). While no two boards are identical and time commitments may vary, the funds believe the limitations on the number of board positions held by individual directors are appropriate, absent compelling evidence to the contrary.” A fund will generally vote against: (i) any director who holds an executive role of any public company and serves on two or more additional outside public company boards; and (ii) any director who serves on more than four public company boards. “In certain instances, will consider voting for a director who would otherwise be considered overboarded if: (i) the director has committed to stepping down from a/the directorship(s) necessary to fall within the thresholds listed above by the following year’s annual general meeting; (ii) the director becomes overboarded as a result of becoming an interim executive officer or has become an executive officer within the last 12 months; and/or (iii) the company provides specific, verifiable information confirming that (a) the director devotes significantly less than an average amount of time to one or more of the boards on which they sit and (b) that the reduced workload is appropriate based on the nature of the company’s board (e.g., the company’s business model or governance structure) and the relevant director continues to fulfill their obligations to that company, irrespective of their diminished hours of service.”52

Israeli FPIs

ISS : Under extraordinary circumstances, will vote against individual directors, members of a committee or the entire board, due to “[e]gregious actions related to a director’s service on other boards that raise substantial doubt about his or her ability to effectively oversee management and serve the best interests of shareholders at any company.”

: Under extraordinary circumstances, will vote against individual directors, members of a committee or the entire board, due to “[e]gregious actions related to a director’s service on other boards that raise substantial doubt about his or her ability to effectively oversee management and serve the best interests of shareholders at any company.” Glass Lewis : Generally recommend against a director who: (i) serves as an executive officer of a public company while serving on more than one additional public company board, (ii) serves as an executive chair/vice chair of a public company while serving on more than two additional external public company boards; and (iii) any other director who serves on more than five public company boards. However, Glass Lewis also takes the following into consideration: When determining whether a director’s service on an excessive number of boards may limit the ability of the director to devote sufficient time to board duties, may consider relevant factors, such as the size and location of the other companies where the director serves on the board, the director’s board roles at the companies in question, whether the director serves on the board of any large privately-held companies, the director’s tenure on the boards in question and the director’s attendance record at all companies and the director’s attendance record at all companies. May not recommend that shareholders vote against overcommitted directors at the companies where they serve an executive function. Will generally refrain from recommending against a director who serves on an excessive number of boards within a consolidated group of companies or a director that represents a firm whose sole purpose is to manage a portfolio of investments which include the company. May refrain from recommending against the director if the company provides a sufficiently compelling explanation regarding his or her significant position on the board, specialized knowledge of the company’s industry, strategic role (such as adding expertise in regional markets or other countries), etc. 53

: Generally recommend against a director who: (i) serves as an executive officer of a public company while serving on public company board, (ii) serves as an executive chair/vice chair of a public company while serving on external public company boards; and (iii) any other director who serves on public company boards. However, Glass Lewis also takes the following into consideration:

The following White & Case attorneys authored this alert: Maia Gez, Karen Katri, Scott Levi, Michelle Rutta, Melinda Anderson, Danielle Herrick.

1 Mr. Atkins also served as a member of the staff of two former SEC Chairmen, Richard C. Breeden and Arthur Levitt. For more information, see: SEC.gov | Paul S. Atkins .

2 For example, the US Court of Appeals for the Fifth Circuit held that the SEC acted arbitrarily and capriciously, in violation of the Administrative Procedure Act, in adopting the share repurchase disclosure rule, which was officially vacated on December 19, 2023. In addition to the three vacated rules, the SEC’s climate disclosure rules remain voluntarily stayed pending judicial review of consolidated petitions challenging the rule on many fronts, including that the SEC exceeded its authority. For those recent rule changes in effect, any amendments would require the issuance of a new proposed rule, allowing for a comment period, followed by issuing an adopting release. As opposed to rules, recent guidance issued by the SEC in Compliance and Disclosure Interpretations (“C&Dis”), SEC staff comments and “Dear Issuer” letters to public companies, as well as staff bulletins are expected to be more readily changed by the new administration. However, absent additional guidance from the SEC, public companies should continue to follow current SEC guidance.

3 Under Release Nos. 33-11138; 34-96492, Insider Trading Arrangements and Related Disclosures , the requirement began for 20-Fs covering a full fiscal period on or after April 1, 2023, meaning the Form 20-F for the 2024 fiscal year filed in 2025. See also, the Small Entity Compliance Guide and C&DIs 120.26-120.28 .

4 See Item 16J of Form 20-F . If a company’s insider trading policies are contained in a code of ethics compliant with Item 16B of Form 20-F and the code of ethics is filed as an exhibit, a hyperlink to that exhibit accompanying the company’s disclosure as to whether it has insider trading policies and procedures will satisfy this requirement.

5 See Item 16J(a) of Form 20-F. A straightforward example of this disclosure is the following: “Policy Prohibiting Insider Trading and Related Procedures. We have adopted an insider trading policy governing the purchase, sale, and other dispositions of the registrant’s securities by directors, senior management, and employees. A copy of the insider trading policy is filed as an exhibit to this Annual Report.”

6 See Item 16J(c) of Form 20-F.

7 For the Form 20-F exhibit list, companies can use a description aligned with Instruction 97 to Item 19 of Form 20-F, “Policy relating to recovery of erroneously awarded compensation, as required by applicable listing standards adopted pursuant to 17 CFR 240.10D-1.”

8 “Holdings” only includes shares of common stock that are outstanding. Thus, “holdings” excludes shares of common stock that have not yet been issued but are still considered “beneficially owned” under Rule 13d-3 insofar as they can be acquired within 60 days (e.g., shares underlying exercisable options). The term “affiliate” is defined under Rule 12b-2 of the Exchange Act as “a person that directly, or indirectly through one or more intermediaries, controls , or is controlled by, or is under common control with, the person specified.” An individual or entity’s status as an “affiliate” is a fact-specific inquiry which must be determined by considering all relevant facts and circumstances; however, the SEC has indicated that status as an officer, director or 10 percent stockholder is one fact which must be taken into consideration in such inquiry. See American-Standard, SEC No-Action Letter (October 11, 1972).

9 See Rule 12b-2 of the Exchange Act for the definitions of “large accelerated filer,” and “accelerated filer” and the SEC’s helpful guides for determining filing status . Each issuer should run this calculation as facts and circumstances vary depending on prior qualifications. For example, if a company had previously been a large, accelerated filer, the subsequent qualification thresholds to become an accelerated filer are less than $560 million but $60 million or more, or to become a non-accelerated filer, less than $60 million, in each case, in public float. An FPI filing on Form 20-F may not qualify as a smaller reporting company.

10 Under Item 6.F, companies are also required to disclose if there was an outstanding balance of unrecovered excess incentive-based compensation relating to a prior restatement.

11 For example, in the SEC’s recent action , the relationship at issue involved a director with a close friendship with one of the company’s executives, which included regular, luxury vacations together with their respective spouses, paid for by the director.

12 See Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure, SEC Release No. 34-97989 (July 26, 2023) . The inline XBRL tagging must include block text tagging narrative disclosures and detail tagging quantitative amounts. The SEC has stated that companies must use the ” Cybersecurity Disclosure Taxonomy ” tags within inline XBRL to tag these disclosures, which includes a specific flag for “Cybersecurity Risk Materially Affected or Reasonably Likely to Materially Affect Registrant.”

13 For example, “We note the following statements … ‘We have not currently engaged any third party service providers to support, manage, or supplement our cybersecurity processes,’ ‘The Audit Committee periodically receives updates from management and our third party IT support specialists of our cybersecurity threat risk management and mitigation strategies…’ and ‘In such sessions, the Audit Committee … discusses such matters with our third party IT support specialists and other members of senior management.’ These statements appear inconsistent. Please revise future filings to clarify whether you engage assessors, consultants, auditors or other third parties in connection with your processes for assessing, identifying and managing material risks from cybersecurity threats as required by Item 106(b)(1)(ii) of Regulation S-K.” Comment letter to Wilhelmina International, Inc. (August 21, 2024).

14 For example, “We note that leaders from your executive management team oversee cybersecurity risk management. Please confirm that in future filings you will identify which management positions or teams are responsible for assessing and managing material risks from cybersecurity threats, and provide the relevant detail of all such persons or members in such detail as is necessary to fully describe the nature of the expertise as required by Item 106(c)(2)(i) of Regulation S-K.” Comment letter to TNF Pharmaceuticals, Inc. (September 23, 2024). There were eight comment letters to this effect in 2024.

One comment letter specifically called on the company to describe the relevant expertise of the senior leadership team responsible for risk management, in addition to the expertise of the CISO, which had already been disclosed. See comment letter to Equifax Inc. (September 16, 2024). In its response , Equifax noted that “[w]hile our senior leadership team … has responsibility for risk management at the managerial level and overall managerial responsibility for the various programs of the Company, including information security, our Chief Information Security Officer (“CISO”) is the management position responsible for assessing and managing material risks from cybersecurity threats under Item 106(c)(2)(i) of Regulation S-K. In future filings, we will clarify that the CISO is the management position responsible for assessing and managing material risks from cybersecurity threats.”

The SEC made a similar comment to First Merchants Corp., noting that the company “describe[s] the relevant expertise of [its] CISO but not of the other members” of the information security committee that “assists executive management and the Board of Directors in their oversight of responsibilities related to information security.”

15 For example, “We note the statement … that your internal audit executes a ‘comprehensive and layered auditing approach’ to evaluate the effectiveness of existing controls and ‘ensure that cybersecurity risk has been adequately mitigated within [y]our institution.’ Please revise future filings to disclose whether your processes for assessing, identifying, and managing material risks from cybersecurity threats have been integrated into your overall risk management system or processes. See Item 106(b)(1)(i) of Regulation S-K.” Comment letter to Community Trust Bancorp Inc. (August 29, 2024).

16 Including: (i) Mylan N.V., a major pharmaceutical company that agreed to pay a $30 million penalty to the SEC for using hypothetical language to discuss risks related to potential misclassification of its most profitable product as a generic drug because the company knew at the time that a government agency had in fact already taken a contrary position; (ii) Yahoo, Inc., where the SEC found that Yahoo’s risk factor disclosures in its annual and quarterly reports were materially misleading in that they claimed the company only faced the “risk of potential future data breaches” that might expose the company to loss and liability “without disclosing that a massive data breach had in fact already occurred”; and (iii) First American Financial Corporation, a real estate settlement services company that settled an enforcement action for its alleged failure to adequately disclose a security vulnerability that could be used to compromise the company’s computer systems, which the company’s information security personnel had been aware of for several months.

17 For information on addressing AI in risk factors, see our upcoming client alert dedicated to risk factor updates.

18 For example, see the following SEC Staff comment: “Please provide a more comprehensive discussion and analysis of your operating results at both the consolidated and segment levels, including the segment profit measure used by the CODM, gross profit, that includes specific, material factors positively and negatively impacting each material line item along with an analysis of those material factors … When multiple factors positively and/or negatively impact a line item, ensure you quantify the impact of each factor. Refer to Item 303(b)(2) of Regulation S-K and Section 501.12.b. of the Financial Reporting Codification (i.e., Release 33-8350, Section III.B.) for guidance.” See comment letter to Bioceres Crop Solutions Corp., (February 1, 2024).

19 For example, “When discussing the decrease in your sales and marketing expenses, your disclosure focuses on the effect of share-based compensation expense and the impact it had on your period over period comparisons. We note on a year-over-year basis, your revenue increased by 2% and your sales and marketing expenses excluding share-based compensation decreased by 15%. Please revise to discuss material factors impacting your results for the periods presented, and any known trends which are anticipated to have a material effect on the company’s results of operations in future periods. Refer to Item 5 of Form 20-F.” See comment letter to Alibaba Group Holding Ltd. (September 27, 2023).

20 For example, “Although we note the metrics information … we note no discussion of your changes in revenues period over period or linkage to changes in your key metrics. Please provide us proposed revised disclosure to be added in future Forms 20-F that discusses the changes in revenues with linkage to your underlying metrics and the causes for the changes in both the metrics and your revenue recognized.” See comment letter to INX Ltd. (September 1, 2023).

21 For example, “We note your disclosure of critical accounting policies and estimates only cross-references to your summary of significant accounting policies disclosures within the financial statement footnotes. In future filings, please enhance your disclosure to provide qualitative and quantitative information necessary to understand the estimation uncertainty and the impact your critical accounting estimates have had or are reasonably likely to have on your financial condition and results of operations. In addition, discuss how much each estimate and/or assumption has changed over a relevant period and the sensitivity of reported amounts to the underlying methods, assumptions and estimates used. The disclosures should supplement, not duplicate, the description of accounting policies or other disclosures in the notes to the financial statements. Refer to Item 303(b)(3) of Regulation S-K and SEC Release No. 33-8350.” See comment letter to Bancolombia S.A. (November 28, 2023).

22 For example, “We note your proposed cash flow disclosures in response to prior comment[s] … appear to be a recitation of changes evident from the financial statements. As previously requested, please explain in sufficient detail the underlying reasons and implications of material changes between periods to provide investors with an understanding of trends and variability in cash flows. Ensure your revised disclosures materially satisfy the requirements of Item 303(a)-(b) of Regulation S-K and the three principal objectives of MD&A, as noted in SEC Release No. 33-8350.” See comment letter to Audiocodes Ltd. (July 12, 2024).

23 Specifically, the SEC updated Non-GAAP Financial Measures C&DIs Questions 100.01, 100.04-100.06, and 102.10(a), (b) and (c), which can be found here .

24 For example: “We note that your reconciliation of proforma adjusted EBITDA to net loss … includes adjustments related to provision for onerous contracts, write-down on inventories, and reclassification of R&D funding. As these costs appear to be normal recurring operating expenses, please remove these adjustments. Refer to Question 100.01 of the SEC Staff’s C&DI on Non-GAAP Financial Measures.” See comment letter to Ads-Tec Energy Public Ltd. Co. (September 3, 2024).

25 For example: “Please revise future filings to quantify the amounts added back for ‘returns on equity invested in certain variable interest entities’ and ‘your share of adjusted earnings from your investments in certain associates’ for 2023 and 2024. If material, please tell us in detail how these items are accounted for in your financial statements and explain in more detail why you add them back. Additionally, please tell us how you considered the guidance in Question 100.04 of the C&DIs on Non-GAAP Financial Measures in determining that the adjustments were appropriate. Please provide us your proposed revised disclosure.” See comment letter to Brookfield Wealth Solutions Ltd. (September 9, 2024).

26 For example: “To the extent material, discuss the indirect consequences of climate-related regulation or business trends, such as the following: decreased demand for goods or services that produce significant greenhouse gas emission or are related to carbon-based energy sources; increased demand for goods that result in lower emissions than competing products; increased competition to develop innovative new products that result in lower emissions; increased demand for generation and transmission of energy from alternative energy sources; and any anticipated reputational risks resulting from operations or products that produce material greenhouse gas emissions.”

27 For example: “We note [your] disclosure … that climate change may increase the frequency and severity of natural catastrophes and the resulting losses in the future and impact your risk modeling assumptions. We further note [your] disclosure … that insured losses due to extreme weather events are increasing over time, and as climate change worsens, these losses will continue to grow. Please discuss the physical effects of climate change on your operations and results. This disclosure may include the following: severity of weather, such as floods, hurricanes, sea levels, arability of farmland, extreme fires, and water availability and quality; quantification of material weather-related damages to your property or operations; potential for indirect weather-related impacts that have affected or may affect your major customers or insured locations; and any weather-related impacts on the cost or availability of (re)insurance. Include quantitative information for each of the periods covered … and explain whether increased amounts are expected in future periods.”

28 For example: “We note your disclosure … stating that you are taking certain steps to address climate change. Revise your disclosure to identify any past and/or future capital expenditures for climate-related projects. As part of your response, provide quantitative information for these types of expenditures for each of the periods for which financial statements are presented … and for any future periods.”

29 For example: “We note that you provided more expansive disclosure in your corporate social responsibility report (CSR report) than you provided in your SEC filings.Please advise us what consideration you gave to providing the same type of climate-related disclosure in your SEC filings as you provided in your CSR report.”

30 It is worth noting that the SEC charged Keurig with violating Section 13(a) of the Securities and Exchange Act of 1934 and Rule 13a-1 thereunder, which require accurate and complete reports be filed with the SEC, rather than alleging that the company had made any materially misleading statements or omissions or violated anti-fraud provisions.

31 Although the SEC did not claim inaccurate or incomplete statements in Keurig’s sustainability reports, it included the Company’s inclusion of a recyclability goal in an older sustainability report as part of the factual record.

32 The standards were issued by the IFRS Foundation on June 26, 2023, and countries are at different stages of adopting these standards. For example, the United Kingdom, South Africa, Singapore, Turkey and Nigeria have adopted or completed consultations, while others, including Canada, Mexico, Brazil, Japan and South Korea, are conducting ongoing consultations. Australia, the Philippines and India completed consultations in 2024, with adoption timelines pending.

33 See ” From Ford to Walmart, Corporate America Drew Back From DEI. The Upheaval Isn’t Over. – WSJ ” (noting that “Ford Motor said it would stop providing workplace data to a gay-rights lobbying group. UBS stopped giving out $25,000 grants directed at businesses led by women of color. Walmart said it wouldn’t renew funding for a charity it created to address racial disparities.”)

34 For more information, see ” Key Considerations for the 2022 Annual Reporting Season: Form 20-F and Other FPI-Specific Considerations: in 2022: Mandatory Compliance with SEC’s Amendments to Part I of Form 20-F, Item 3.A and Item 5Items 301, 302 and 303 ” in our prior memo.

35 This requirement is a result of the SEC’s December 2021 amendments implementing the HFCAA for all auditors that provide their opinions related to financial statements, in accordance with Section 6.5.54 of the EDGAR Filing Manual. Practices vary as to the location of this tagging in annual reports, but a commonly used option is to tag the auditor’s name and PCAOB ID number in the Index to the Financial Statements and the auditor’s location at the end of the audit report.

36 The SEC’s comment letter practices indicate that this inquiry should be conducted both by companies that sell mineral extractions and vertically integrated companies that do not sell their mineral extractions but whose mining operations supply raw materials.

37 These disclosures include: (i) summary property disclosure on overall mining operations, mineral resources and mineral reserves; (ii) individual property disclosure for any property that is individually material to their business; and (iii) a description of the internal controls that the company uses in its exploration and mineral resource and reserve estimation efforts, including quality control/quality assurance programs, verification of analytical procedures and a discussion of comprehensive risk inherent in the estimation.

38 The technical report summary must describe the information reviewed and conclusions reached by the qualified person about the company’s mineral resources and/or reserves on each material property (or, optionally, exploration results).

39 The technical report summary must be filed as Exhibit 96.1 to the Form 20-F the first time the company discloses mineral reserves or mineral resources in its Form 20-F. In addition, it must be filed as an exhibit in subsequent Form 20-Fs under either of the following circumstances: (i) there is a material change in the mineral reserves or mineral resources, as disclosed in the Form 20-F, from the last technical report summary filed for the property; or (ii) the company has previously filed a technical report summary supporting the disclosure of exploration results and there is a material change in the exploration results from the last technical report summary filed for the property.

40 This is based on the following requirement from Item 8.A.5 of Form 20-F, as follows: “The interim financial statements should include a balance sheet, statement of comprehensive income (either in a single continuous financial statement or in two separate but consecutive financial statements; or a statement of net income if there was no other comprehensive income), cash flow statement, and a statement showing either (i) changes in equity other than those arising from capital transactions with owners and distributions to owners, or (ii) all changes in equity (including a subtotal of all non-owner items recognized directly in equity). Each of these statements may be in condensed form as long as it contains the major line items from the latest audited financial statements and includes the major components of assets, liabilities and equity (in the case of the balance sheet); income and expenses (in the case of the statement of comprehensive income) and the major subtotals of cash flows (in the case of the cash flow statement). The interim financial statements should include comparative statements for the same period in the prior financial year, except that the requirement for comparative balance sheet information may be satisfied by presenting the year end balance sheet. If not included in the primary financial statements, a note should be provided analyzing the changes in each caption of shareholders’ equity presented in the balance sheet. The interim financial statements should include selected note disclosures that will provide an explanation of events and changes that are significant to an understanding of the changes in financial position and performance of the enterprise since the last annual reporting date. If, at the date of the document, the company has published interim financial information that covers a more current period than those otherwise required by this standard, the more current interim financial information must be included in the document. Companies are encouraged, but not required, to have any interim financial statements in the document reviewed by an independent auditor. If such a review has been performed and is referred to in the document, a copy of the auditor’s interim review report must be provided in the document.”

41 See above discussion in Section 8 “Diversity Considerations: Nasdaq Board Diversity Disclosure Rules No Longer in Effect.

42 Since February 2022, the US has imposed sweeping sanctions on Russia, bringing a number of high-net-worth individuals and companies with substantial investments in the US within scope of the of the Iran Threat Reduction and Syria Human Rights Act of 2012 (ITRA). Companies should undertake diligence to determine whether any sanctioned individuals or entities may be involved in their activities to assess compliance and potential disclosure requirements, as the ITRA requires Form 20-F disclosure if the company (or any affiliate) knowingly engaged in certain sanctionable activities. In addition, Section 219 ITRA added Section 13(r) to the Exchange Act, which requires FPIs to disclose contracts, transactions and “dealings” with Iranian and certain other entities in their Form 20-F. If an FPI includes such disclosure, it must also separately file with the SEC, at the same time it files its Form 20-F, a notice (IRANNOTICE) that such disclosure is contained in the report.

43 See BlackRock Investment Stewardship Proxy voting guidelines for European, Middle Eastern, and African securities .

44 See BlackRock’s Proxy voting guidelines for Benchmark Policies – Latin American securities .

45 See Vanguard’s Proxy voting policy for European and UK portfolio companies . Vanguard’s voting policies for other regions can be found at: Investment Stewardship reports and policies .

46 Under BlackRock’s EMEA guidelines, the executive officer consists of the executive chair, the chief executive officer (CEO), the deputy chief executive officer, the chief financial officer, the chief operating officer and other similar level executives who are members of the management leadership team or executive committee (e.g., Chief Information Officer, Chief Technology Officer, Chief Risk Officer, Chief People Officer, etc.) or members of the management board of listed companies with a two-tier system

47 See BlackRock Responsible Investment Guidelines EMEA . There may also be country-specific nuances that companies should consider in BlackRock’s guidelines.

48 See BlackRock’s Proxy voting guidelines for Benchmark Policies – Latin American securities .

49 For BlackRock’s specific voting policies for other regions, see its region/country specific guidelines, for example, Proxy voting guidelines for Benchmark Policies – Southeast Asia, South Korea and Taiwan securities and Proxy voting guidelines for Japan securities .

50 Service on mutual fund boards, UK investment trusts or Special Purpose Acquisition Company boards is not considered when evaluating directors for excessive commitments.

51 See State Street Global Advisors Global Proxy Voting and Engagement Policy .

52 See Vanguard’s Proxy voting policy for European and UK portfolio companies . Vanguard’s voting policies for other regions (including certain countries that have standalone guidelines) can be found at: Investment Stewardship reports and policies .

White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.

This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.

Most U.S. adults want to require presidents to disclose medical records after former President Joe Biden dropped out of the 2024 presidential race over his apparent cognitive decline, a new poll shows.

Seventy-four percent of Americans and majorities of Democrats, Republicans and independents believe releasing health information should be legally required for presidents, according to an Axios/Ipsos survey released Friday. The poll aligns with others as early as 2021 that indicated the voting public had widespread doubt about his physical and mental acuity, which led White House aides to try to conceal his condition from public view. (RELATED: White House Aides Finally Reveal Who Really Ran The Country As Biden Slid Into Mental Incompetence)

A stronger majority of U.S. adults surveyed in the poll — 81% — said presidents should be legally required to undergo disease screenings and cognitive tests and share the results publicly.

Biden’s personal office announced in May that the former president had been diagnosed with an aggressive form of prostate cancer. Doctors and cancer experts told the Daily Caller said the announcement indicated that Biden likely had the cancer in secret throughout his presidency.

Concerns about gaffe- and stutter-prone Biden came to a head in June 2024, when he struggled to form coherent sentences during a televised debate with President Donald Trump. Biden eventually granted the wishes of others in his party in July 2024 by dropping out of the presidential race and endorsing former Vice President Kamala Harris.

In the waning months of his term, White House aides took on more of Biden’s daily responsibilities, increasingly insulating him from the public. Staffers had to give the president “basic instructions” for things like exiting a stage at an event, The Wall Street Journal reported.

CNN’s Jake Tapper and Axios’ Alex Thompson reported in a book released in May that Biden’s aides even considered putting him in a wheelchair due to his declining condition. Journalists Amie Parnes and Jonathan Allen wrote in their own book on the 2024 campaign that Biden’s allies were even preparing for his possible death ahead of the 2024 election.

President Donald Trump, 79, was found to be in “excellent cognitive and physical health,” according to an April memo from a White House physician. The memo said Trump scored 30 out of 30 on a cognitive test.

The White House referred the Daily Caller News Foundation to a February 2024 Truth Social post from Trump in which he advocated for mandatory cognitive testing for presidents and presidential candidates.

All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.

Each year in our Annual Memo, White & Case’s Public Company Advisory Group provides practical insights on preparing Annual Reports on Form 10-Ks, Annual Meeting Proxy Statements and, for FPIs, the Annual Report on Form 20-F. This installment of our Annual Memo will focus on preparations for your Form 10-K, divided into two sections: Annual Report on Form 10-K Housekeeping Considerations in Part I below, and Disclosure Considerations in Part II below.

The First 100 Days Legal insights for a new era “The First 100 Days” is a podcast that explores the legal, regulatory and policy implications that the new US administration may have on global businesses across industries. The series features our lawyers’ views on the topics that matter most to our clients. Listen to our podcast

With the inauguration of President Trump on January 20, 2025, public companies await the impact of the new administration on the SEC. President Trump’s pick for the next SEC Chair, Paul Atkins, is an experienced appointee, having previously served as SEC Commissioner from August 2002 until 2008 as an appointee of former President George W. Bush.1 Atkins will assume office following an unprecedented period of SEC rulemaking impacting public companies, with approximately 50 new substantive SEC rules adopted over the past four years, including three rules that were subsequently vacated by courts holding that the SEC had overreached its authority.2 Despite an expected change in approach by the new administration away from prescriptive rulemaking and towards a more principles based approach, it is important to note that the SEC’s recent rule changes and guidance remain in effect and public companies remain subject to them, absent further action by the SEC.

Part I: Top Housekeeping Considerations

As in our prior annual alerts, we begin with our top housekeeping reminders for preparing your Annual Report on Form 10-K, as follows:

1. New Exhibit: File your insider trading policy as Exhibit 19 to the Form 10-K. Under new Item 408(b) of Regulation S-K, insider trading policies must be filed as exhibits to upcoming Form 10-Ks for the 2024 fiscal year filed in 2025.3 Companies must file their insider trading policy as Exhibit 19 to the 2024 Form 10-K,4 and this new exhibit is required for all public companies, including smaller reporting companies (SRCs) and emerging growth companies.

Disclosure Beyond the Exhibit. In addition to the exhibit requirement, companies are also required to disclose whether they have adopted insider trading policies “governing the purchase, sale, and/or other dispositions of the registrant’s securities by directors, officers and employees, or the registrant itself, that are reasonably designed to promote compliance with insider trading laws,” 5 and to tag this disclosure in inline XBRL. 6 However, pursuant to Instruction G(3) of the Form 10-K, this information may be included in the annual meeting proxy statement and simply incorporated by reference into the Form 10-K from the proxy statement, as companies typically do for most of the other information required by Part III of the Form 10-K. 7 In order to incorporate information by reference in accordance with SEC requirements, companies should refer to the specific section of the proxy statement that they are incorporating by reference. 8

In addition to the exhibit requirement, companies are also required to disclose whether they have adopted insider trading policies “governing the purchase, sale, and/or other dispositions of the registrant’s securities by directors, officers and employees, or the registrant itself, that are reasonably designed to promote compliance with insider trading laws,” and to tag this disclosure in inline XBRL. However, pursuant to Instruction G(3) of the Form 10-K, this information may be included in the annual meeting proxy statement and simply incorporated by reference into the Form 10-K from the proxy statement, as companies typically do for most of the other information required by Part III of the Form 10-K. In order to incorporate information by reference in accordance with SEC requirements, companies should refer to the specific section of the proxy statement that they are incorporating by reference. Importance of Reviewing Insider Trading Policy Before Public Filing. Companies should review their insider trading policies before disclosing them publicly in their 10-K exhibit and consider whether any updates should be made in advance of their initial public filing. These updates can include, for example, removing any personal contact information of personnel identified in the policy, as well as any substantive revisions to update the policy in light of recent SEC rule changes and emerging market trends. For more information on insider trading policies and market practices on key policy provisions, see our recent client alert “Insider Trading Policies: A Survey of Recent Filings.”

2. Exhibit Housekeeping. Beyond the Insider Trading Policy exhibit, remember to review your exhibit list including the following steps: (1) confirm that all required exhibits are filed under Item 601 of Regulation S-K, including for example: (i) exhibits filed since last year’s annual report on Forms 8-K and 10-Q, (ii) the required clawback policy under Item 601(b)(97) of Regulation S-K,9 which was new last year, and (iii) the consent of the auditors under Item 601(b)(23)(ii) to incorporate the financial statements from the Form 10-K into the list of the company’s current registration statements, which must be updated to include any newly filed registration statements and remove any registration statements that are no longer effective.;10 (2) remove outdated exhibits no longer required to be filed, such as material contracts that have been fully performed; and (3) confirm permissible redactions and omissions in filed exhibits under Item 601 of Regulation S-K (see our 2023 Annual Memo’s Housekeeping Considerations for further information on these permissible redactions and omissions for exhibits).

3. Confirm your Filing Status for 2025. It is important to confirm your filing status and filing deadline. This year’s Form 10-K is due on Monday, March 3, 2025 for large, accelerated filers, Monday, March 17, 2025 for accelerated filers, and Monday, March 31, 2025 for non-accelerated filers.11 To confirm your filing status, keep in mind that:

Determining Public Float: Public float is central to calculating your filing status and is computed as of the last business day of the company’s most recently completed second fiscal quarter (June 30, 2024 for calendar year end companies) by multiplying (a) the number of shares of common stock on that day held by non-affiliates 12 by (b) the closing stock price on that day. As a result, confirming the identity and holdings of affiliates and subtracting out their shares is critical for an accurate calculation of “public float.”

Public float is central to calculating your filing status and is computed as of the last business day of the company’s most recently completed second fiscal quarter (June 30, 2024 for calendar year end companies) by multiplying (a) the number of shares of common stock on that day held by non-affiliates by (b) the closing stock price on that day. As a result, confirming the identity and holdings of affiliates and subtracting out their shares is critical for an accurate calculation of “public float.” Large Accelerated, Accelerated and Smaller Reporting Thresholds: The public float thresholds for initial qualifications are set forth in Rule 12b-2 of the Exchange Act, but if your company previously qualified as a “large accelerated filer” or an “accelerated filer,” or did not qualify as a “smaller reporting company,” the thresholds to now move into each respective status are lower than those required for the initial qualification (e.g., less than $560 million as opposed to $700 million for accelerated filer status, less than $60 million as opposed to $75 million for non-accelerated filer status, or for the SRC public float test, less than $200 million as opposed to $250 million). 13

The public float thresholds for initial qualifications are set forth in Rule 12b-2 of the Exchange Act, but if your company previously qualified as a “large accelerated filer” or an “accelerated filer,” or did not qualify as a “smaller reporting company,” the thresholds to now move into each respective status are lower than those required for the initial qualification (e.g., less than $560 million as opposed to $700 million for accelerated filer status, less than $60 million as opposed to $75 million for non-accelerated filer status, or for the SRC public float test, less than $200 million as opposed to $250 million). Emerging Growth Company (EGC) Status Check: If your company is an EGC, remember to annually assess whether you have ceased to qualify as an EGC based on: (1) having total annual gross revenues of $1.235 billion or more, (2) the passage of time beyond the fifth anniversary of the first date common equity was sold pursuant to an effective registration statement, (3) the issuance of more than $1 billion in non-convertible debt in the previous three years, or (4) becoming a large accelerated filer. See the definition of “emerging growth company” in Rule 12b-2.

Outstanding Share Data: Companies should also confirm that their outstanding share data is used and presented consistently throughout their Form 10-K. In September 2023, the SEC published a sample comment letter to companies regarding their XBRL disclosures, which included a sample comment that “the common shares outstanding reported on the cover page and on your balance sheet are tagged with materially different values. It appears that you present the same data using different scales (presenting the whole amount in one instance and the same amount in thousands in the second).”

4. Clawback checkboxes (new last year): Starting December 1, 2023, public companies were required to have in place a clawback policy compliant with stock exchange listing standards adopted pursuant to the SEC’s new clawback rules. As set forth in the Form 10-K and explained in SEC C&DI 104.19, companies must now have the two additional check box disclosures shown below on the cover page of their Form 10-Ks. For guidance on when to check these boxes, see our 2024 Annual Memo.

Check Box #1: If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Check Box #2: Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

Beyond the cover page checkboxes, clawback disclosure is also required under new Item 402(w) of Regulation S-K if your company was required to prepare an accounting restatement that required a clawback (or if there is an outstanding balance of unrecovered compensation related to a prior restatement). This disclosure can be included in the proxy statement and incorporated by reference into the Form 10-K under Part III, Item 11.14

5. D&O Questionnaire Update: Given the SEC’s recent enforcement action related to director independence, D&O questions for assessing director independence under the general independence test for purposes of stock exchange rules have become a focal point for public companies. The general independence test generally requires the Board to affirmatively determine that there are no relationships between the director and the listed company’s management that impact the director’s independence. As a result, companies should consider clarifying to directors that close business or personal relationships with management may need to be disclosed in their responses to D&O Questionnaires, and, as an illustration, providing examples of the types of relationships that could impair independence under the general independence test.15 A company’s D&O Questionnaire should also make clear that a director’s responses to D&O Questionnaires are important and form the basis for disclosures made by the company in its SEC filings.

Appendix A of this client alert provides additional housekeeping reminders for preparing Form 10-Ks this year, including (1) additional D&O questionnaire reminders and (2) considerations for outstanding registration statements.

Part II: Key Disclosure Considerations

1. Cybersecurity: For the second year, public companies are now required to include in Form 10-Ks (under Part I, Item 1C) mandatory cybersecurity disclosure. For a detailed discussion of the SEC’s requirements on this cybersecurity disclosure, including guiding principles for preparing the disclosure, see our 2024 Annual Memo. As a reminder, all registrants must begin tagging responsive disclosure in Inline XBRL beginning with annual reports for fiscal years ending on or after December 15, 2024.16

Since the filing of last year’s Form 10-Ks, SEC Staff has issued comments on the new 10-K cybersecurity disclosure that may provide guidance moving forward. In particular, these comments focused on the following:

Inconsistent statements regarding the use of third parties in cybersecurity risk management (e.g., one company stated that it “does not currently engage any third-party service providers” but went on to disclose that the Audit Committee receives updates from third party support specialists); 17

regarding the use of third parties in cybersecurity risk management (e.g., one company stated that it “does not currently engage any third-party service providers” but went on to disclose that the Audit Committee receives updates from third party support specialists); Inadequate disclosure regarding the relevant expertise of members of the management or management committees (e.g., one company failed to sufficiently identify which management positions or teams are responsible for managing material risks from cybersecurity threats, and failed to provide the required information on their expertise under Item 106(c)(2)(i) of Regulation S-K); 18

of members of the management or management committees (e.g., one company failed to sufficiently identify which management positions or teams are responsible for managing material risks from cybersecurity threats, and failed to provide the required information on their expertise under Item 106(c)(2)(i) of Regulation S-K); Whether and how the company’s process for assessing, identifying, and managing material risks from cybersecurity threats has been integrated into its overall risk management system or processes (e.g., one company noted that it had a comprehensive and layered auditing approach to evaluate the effectiveness of existing controls, but did not explain how this was integrated into its overall risk management system or processes).19

During 2024, the SEC’s Division of Enforcement continued its focus on cybersecurity disclosure. For example, in October 2024, the SEC announced settled charges against four technology companies that had been impacted by the 2020 SUNBURST cyber-attack for making misleading disclosures regarding cybersecurity incidents and risks, and in December 2024, the SEC charged yet another company for misleading disclosure following a cybersecurity breach, including for describing cyber risks hypothetically (e.g., cybersecurity attacks “may interrupt our business or compromise sensitive customer data…”), despite the fact that the company had already experienced a cyberattack that did exfiltrate sensitive customer data and did disrupt operations.

Although the new administration is expected to change the SEC’s enforcement approach on cybersecurity, public companies should still take away important reminders from recent actions that reiterate lessons from prior court decisions and underscore bedrock disclosure principles of materiality and accuracy, including:20

Do not disclose a risk as hypothetical when in fact that risk has already materialized , and do not describe specific, known risks in only generic terms.

, and do not describe specific, known risks in only generic terms. Evaluate and update existing disclosures to reflect changing circumstances and the company’s changed risk profile as a result of any recent cybersecurity incident.

to reflect changing circumstances and the company’s changed risk profile as a result of any recent cybersecurity incident. Describe fully and accurately any cybersecurity incidents that are disclosed; quantifying certain aspects of an incident without disclosing other material information on its scope and impact may be materially misleading. Nonetheless, any disclosures should be balanced against the need for the company to avoid revealing critical information about its cybersecurity controls or risk to protect against future cyberattacks.

2. Artificial Intelligence Considerations for your Annual Report. New artificial intelligence (“AI”) technologies present both significant opportunities and risks for companies. In addition to risk factor disclosure,21 companies should consider whether it is necessary or advisable to make disclosures about the ways in which AI might impact their strategy, productivity, competition or product demand, which, depending on the nature of the issuer’s business and its particular facts and circumstances, might be appropriately included in the “Business” section of their Annual Report on Form 10-K or trend disclosure in the MD&A. To the extent the potential impact of AI is in fact discussed, it is important not to “AI” wash, or mislead investors as to your true artificial intelligence capabilities, which SEC Chair Gary Gensler cautioned companies against in a statement late last year.

3. Remember to Review and Update Risk Factors. Risk factor disclosure is a critical part of the Form 10-K, and companies should consider developments in 2024 as they draft their risk factors. These considerations include developments with respect to (1) cybersecurity, (2) artificial intelligence, (3) political conditions in the US, (4) international geopolitics and the risks of political engagement, (5) climate, (6) supply chain considerations and (7) human capital management and labor. These risks can also become factors related to known trends and uncertainties for discussion in the MD&A (see below). For a discussion of these developments and important tips for drafting risk factors, see our forthcoming client alert dedicated to risk factor updates.

4. MD&A Considerations. As in prior years, MD&A has remained one of the top targets of SEC Staff comments, with most comments in 2024 focused on the requirements in Item 303 of Regulation S-K, including:

the discussion and analysis of results of operations , including the description and quantification of each material factor, unusual or infrequent events, and economic developments causing changes in results between periods (including a condensed labor market, wage inflation, global supply chain issues and inflation affecting revenues and underwriting); 22

, including the description and quantification of each material factor, unusual or infrequent events, and economic developments causing changes in results between periods (including a condensed labor market, wage inflation, global supply chain issues and inflation affecting revenues and underwriting); the discussion of known trends or uncertainties that are reasonably expected to impact near and long-term results (e.g., the impact of supply chain disruptions, inflation, increases in interest rates); 23

that are reasonably expected to impact near and long-term results (e.g., the impact of supply chain disruptions, inflation, increases in interest rates); metrics used by management in assessing performance, including how they are calculated and period over period changes; 24

including how they are calculated and period over period changes; critical accounting estimates , including the judgments made in the application of significant accounting policies and the likelihood of materially different reported results if different assumptions were used; 25 and

, including the judgments made in the application of significant accounting policies and the likelihood of materially different reported results if different assumptions were used; and liquidity and capital resources, including requests for a clearer discussion of the drivers of cash flows and the trends and uncertainties related to meeting known or reasonably likely future cash requirements.26

In particular, the Staff has continued to focus on key performance indicators (“KPIs”) and has requested disclosure by companies on how KPIs are defined and calculated and how they are used by management. In addition, the Staff has asked companies why KPIs are useful for investors and why KPIs or other performance metrics are discussed in earnings releases or investor presentations if they are not also discussed in their periodic reports or are presented inconsistently.

Companies should keep in mind these areas of focus and review their MD&A disclosure to confirm they provide investors with key information on the company’s financial performance and future outlook through the eyes of management, allowing readers to have a deeper understanding of the company’s financial condition from the perspective of company leadership. As the MD&A is crucial to an understanding of the company’s current performance and future trends that will impact operations, companies should review their MD&A disclosures to confirm that the provide sufficiently specific and thorough analyses.

5. Mind the Non-GAAP. The SEC Staff continues to focus on non-GAAP financial measures in its comment letters, following the release of updated non-GAAP C&DIs in December 202227 (for a summary of these updates, see “Five Key Reminders on Non-GAAP Compliance” in our 2023 Annual Memo). In 2024, many of the Staff’s comment letters focused on:

the prominence of the most directly comparable GAAP measure when compared to the non-GAAP financial measure;

reconciliations of the non-GAAP financial measure to the most directly comparable GAAP financial measure;

the appropriateness of adjustments;

the use of individually tailored accounting principles; and

the lack of disclosure as to why management believes the non-GAAP financial measure provides useful information to investors.

SEC Staff comments also focused on compliance with the C&DIs. For example, the Staff asked registrants whether operating expenses are “normal” or “recurring” and, therefore, whether their exclusion from a non-GAAP financial measure could be misleading based on C&DI Question 100.01.28 The Staff has also commented on non-GAAP adjustments to revenue and expenses that could have the effect of changing the recognition and measurement principles required by GAAP, thereby rendering them “individually tailored” and potentially resulting in a misleading measure, based on C&DI Question 100.04.29 It is important that companies review any non-GAAP disclosures against SEC requirements and guidance to ensure that non-GAAP measures are appropriately used and compliant with regulatory requirements

6. Climate Change Disclosure. Momentum may have shifted away from ESG overall, but climate change remains a key focus for many public companies and investors. Although the SEC’s extensive climate-related disclosure requirements have been voluntarily stayed pending the resolution of legal challenges, companies should continue to consider their existing climate-related disclosure in light of the SEC’s 2010 climate change disclosure guidance and the SEC’s 2021 sample comment letter on climate disclosure.

While climate-related comments from the SEC decreased in 2024 when compared with 2023, companies should still pay attention to known areas of Staff focus, depending on the nature of the company’s business and its particular facts and circumstances. These known areas of Staff focus include:

Direct and indirect impacts of climate-related business trends, such as decreased demand for goods or services that produce significant greenhouse gas emissions and increased demand for energy from alternative sources; 30

of climate-related business trends, such as decreased demand for goods or services that produce significant greenhouse gas emissions and increased demand for energy from alternative sources; Physical effects of climate change on operations and results; 31

of climate change on operations and results; Material expenditures for climate-related projects and compliance costs; 32 and

for climate-related projects and compliance costs; and Whether information contained in sustainability reports is material and therefore required to be included in the Form 10-K.33

In addition to comment letters, a recent SEC enforcement action targeted a company’s sustainability disclosures, arguing that Keurig’s disclosures regarding the recyclability of its coffee pods were inaccurate, because two of the nation’s largest recycling companies had given negative feedback on a recycling plan and did not intend to accept pods for recycling, which was not disclosed in the company’s filings.34 This action highlights the continued importance of ensuring that disclosures on sustainability-related topics are complete and not misleading due to the omission of information, and emphasizes the SEC’s willingness to review non-filed materials, such as sustainability reports, when assessing the accuracy and completeness of disclosure.35

7. Consider your Human Capital Management (HCM) Disclosures. The fiscal year 2024 Form 10-K is the fifth annual report in which US public companies must comply with amended Item 101 of Regulation S-K, which requires a description of human capital resources and human capital measures or objectives that the company focuses on in managing its business, to the extent material to the company as whole.36 Based on White & Case survey information of Fortune 50 companies’ disclosure in recent years, companies have covered a broad range of topics in their HCM disclosure, including employee engagement and culture initiatives, talent development and retention, employee health and wellness, flexible work arrangements, pay equity and diversity, equity and inclusion (DEI). Given the increased scrutiny on DEI programs, reports of a retreat on DEI in corporate America37 and indications that the Trump administration will seek to end DEI programs in the federal government,38 companies should carefully consider their HCM disclosures, including on DEI programs, initiatives and any DEI metrics, in order to ensure their disclosure is updated and aligned with their companies’ current priorities and policies.

8. Director and Officer Rule 10b5-1 Plan Adoption and Termination Disclosure. As a reminder, under recently added Item 408(a) of Regulation S-K, companies must now disclose for each fiscal quarter in Form 10-Qs and for the fourth quarter in Form 10-Ks (1) whether any director or officer has adopted or terminated any Rule 10b5-1 plan or any other written trading arrangement that meets the requirements of a “non-Rule 10b5-1 trading arrangement,”39 and (2) the material terms of the Rule 10b5-1 or non-Rule 10b5-1 trading arrangement. The “material” terms required to be disclosed include: (i) the name and title of the director or officer, (ii) the date of adoption or termination of the plan and its duration, (iii) the aggregate number of securities to be sold or purchased under the plan and (iv) whether the plan is a 10b5-1 plan or a non-Rule 10b5-1 trading arrangement. Pricing terms are not required to be disclosed. Although there is no requirement to affirmatively indicate if no plans were adopted for a particular quarter, S&P 500 companies have generally been affirmatively stating that “During the quarter ended [date], no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements” or otherwise simply affirmatively stating “None” under a subheading for the relevant Part II item.

Appendix A: Additional Housekeeping Reminders

1. The following Form 10-K form check items are not new this year, but were recently added in the past three years and should therefore be confirmed for your upcoming filing:

Update Item 6 in Part II to state “Item 6. [Reserved]” (instead of “Item 6. Selected Financial Data” from the prior Form 10-K) due to the SEC’s elimination of the disclosure requirement for selected financial data in 2021. 40

Add new “Item 9C” in Part II of the Form 10-K with the caption “Disclosure Regarding Foreign Jurisdictions that Prevent Inspections”. 41

Tag in inline XBRL the independent auditor’s: (i) name, (ii) location (i.e., city and state, province or country) and (iii) PCAOB ID number. 42 Companies should coordinate this tagging with the financial printer.

Companies should coordinate this tagging with the financial printer. For companies with mining operations,43 consider whether expanded Regulation S-K 1300 requirements, which became mandatory for Form 10-Ks filed in 2022 for the fiscal year ended December 31, 2021, apply. If a company’s current mining operations, in the aggregate, are material to its business, Regulation S-K 1300 disclosures would be required in its Form 10-K.44 In addition, companies with property that is individually material to their business must obtain a technical report summary,45 which must be signed by a “qualified person” (as defined in Regulation S-K 1300) and filed as Exhibit 96.1 to the Form 10-K.46

2. Considerations for Outstanding Registration Statements: Consider how the filing of the Form 10-K may impact any outstanding registration statements. Specifically, if you have an outstanding registration statement on Form S-1, a post-effective amendment to the Form S-1 must be filed in order to incorporate the annual financial statements and other information from the Form 10-K into the Form S-1. You should also consider if you have become Form S-3 eligible, so that you can convert the Form S-1 into a Form S-3 and avoid future post-effective amendments for as long as you remain S-3 eligible. If you have an outstanding registration statement on Form S-3, ensure that you continue to meet the eligibility requirements for using the Form S-3 when filing your Form 10-K by taking the following steps: (i) if you previously filed as a well-known seasoned issuer (WKSI), confirm that you are still a WKSI in order to use that registration statement (otherwise, it will need to be re-filed as a non-WKSI shelf); or (ii) if you previously filed a non-WKSI shelf registration statement, confirm that you still meet the requirements to use that registration statement; otherwise, you will need to re-file as a Form S-1. In addition, remember to update your auditor consent to include any newly filed registration statements and remove any registration statements that are no longer effective.

3. D&O Questionnaires: Ahead of your Form 10-K filing, review and update your D&O questionnaires, which provide back-up and support for the disclosures to be included in your Form 10-K and proxy statement. In addition to the updates discussed in Part I, Section 5, companies should:

Consider updates to state that a director nominee consents to being named in the proxy statements of both the company and of any dissident shareholder, in order to comply with the new universal proxy rules;

If you plan to voluntarily disclose the diversity of your directors, include a question to elicit information on your directors’ diversity characteristics that covers the potential diversity categories that you may want to disclose (under investor policies) and to obtain their consent to disclose this information; 47

Consider adding a question to elicit information from directors on their expertise with respect to AI, cybersecurity, climate change and human capital, as applicable, in light of both SEC and investor focus on board qualifications in these areas;

Consider adding or refining questions on outside directorships or officerships to identify any potential antitrust concerns, given the Department of Justice’s focus on potential violations of Section 8 of the Clayton Act; and

Consider building out (or adding) Iran-related activities questions to cover potentially problematic transactions with Russian entities.48

The following White & Case attorneys authored this alert: Maia Gez, Scott Levi, Michelle Rutta, Melinda Anderson, Danielle Herrick.

1 Mr. Atkins also served as a member of the staff of two former SEC Chairmen, Richard C. Breeden and Arthur Levitt. For more information, see: SEC.gov | Paul S. Atkins .

2 For example, the U.S. Court of Appeals for the Fifth Circuit held that the SEC acted arbitrarily and capriciously, in violation of the Administrative Procedure Act, in adopting the share repurchase disclosure rule, which was officially vacated on December 19, 2023. In addition to the three vacated rules, the SEC’s climate disclosure rules remain voluntarily stayed pending judicial review of consolidated petitions challenging the rule on many fronts, including that the SEC exceeded its authority. For those recent rule changes in effect, any amendments would require the issuance of a new proposed rule, allowing for a comment period, followed by issuing an adopting release. As opposed to rules, recent guidance issued by the SEC in Compliance and Disclosure Interpretations (C&DIs), SEC staff comments and “Dear Issuer” letters to public companies, as well as staff bulletins are expected to be more readily changed by the new administration. However, absent additional guidance from the SEC, public companies should continue to follow current SEC guidance.

3 Under Release Nos. 33-11138; 34-96492, Insider Trading Arrangements and Related Disclosures , the requirement began for 10-Ks covering a full fiscal period on or after April 1, 2023, meaning the Form 10-K for the 2024 fiscal year filed in 2025. For SRCs, the requirement applies to the first filing covering a full fiscal period on or after October 1, 2023. See also, the Small Entity Compliance Guide and C&DIs 120.26-120.28 .

4 See Item 601 of Regulation S-K . If a company’s insider trading policies are contained in a code of ethics compliant with Item 406 of Regulation S-K and the code of ethics is filed as an exhibit, a hyperlink to that exhibit accompanying the company’s disclosure as to whether it has insider trading policies and procedures will satisfy this requirement.

5 See Item 408(b) of Regulation S-K. A straightforward example of this disclosure is the following: “Policy Prohibiting Insider Trading and Related Procedures. We have adopted an insider trading policy governing the purchase, sale, and other dispositions of the registrant’s securities by directors, senior management, and employees. A copy of the insider trading policy is filed as an exhibit to this Annual Report.”

6 See Item 408(b)(3) of Regulation S-K.

7 Instruction G(3) permits the information required by Part III (Items 10, 11, 12, 13 and 14) to be incorporated by reference from a company’s annual meeting proxy statement, if such proxy statement is filed not later than 120 days after the end of the fiscal year covered by the Form 10-K.

8 See Rule 12b-23 of the Exchange Act, which requires that companies “include an express statement clearly describing the specific location of the information you are incorporating by reference. The statement must identify the document…and the location of the information within that document.”

9 For the Form 10-K exhibit list, companies can use a description aligned with Item 601(b)(97), “Policy relating to recovery of erroneously awarded compensation, as required by applicable listing standards adopted pursuant to 17 CFR 240.10D-1.”

10 This includes the description of securities for securities registered under Section 12 of the Exchange Act. See Item 601(b)(4)(iv) of Regulation S-K.

11 See the SEC’s helpful information on filing deadlines .

12 “Holdings” only includes shares of common stock that are outstanding. Thus, “holdings” excludes shares of common stock that have not yet been issued but are still considered “beneficially owned” under Rule 13d-3 insofar as they can be acquired within 60 days (e.g., shares underlying exercisable options). The term “affiliate” is defined under Rule 12b-2 of the Exchange Act as “a person that directly, or indirectly through one or more intermediaries, controls , or is controlled by, or is under common control with, the person specified.” An individual or entity’s status as an “affiliate” is a fact-specific inquiry which must be determined by considering all relevant facts and circumstances; however, the Commission has indicated that status as an officer, director or 10% stockholder is one fact which must be taken into consideration in such inquiry. See American-Standard, SEC No-Action Letter (October 11, 1972).

13 See Rule 12b-2 of the Exchange Act for the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and the SEC’s helpful guides for determining filing status and smaller reporting company status . Each issuer should run this calculation as facts and circumstances vary depending on prior qualifications. For example, if a company had previously been a large, accelerated filer, the subsequent qualification thresholds to become an accelerated filer are less than $560 million but $60 million or more, or to become a non-accelerated filer, less than $60 million, in each case, in public float. In addition, for the revenue test to qualify as an SRC, as opposed to the public float test, the lower thresholds also differ and are 80 percent of the prior thresholds under which it failed to qualify as an SRC (i.e., less than $560 million in public float (if it previously had more than $700 million in public float under the public float prong of the revenue test) and less than $80 million in revenue (if it previously had more than $100 million in revenue under the revenue prong of the revenue test)). As a reminder, for SRCs, the revenue test is based on revenues in the most recent fiscal year completed before the last day of the second fiscal quarter. See Section 5110.3 of the Division of Corporation Finance Financial Reporting Manual .

14 Under Item 402(w), companies are also required to disclose if there was an outstanding balance of unrecovered excess incentive-based compensation relating to a prior restatement. This information may also be included in proxy statements and incorporated by reference into the Form 10-K.

15 For example, in the SEC’s recent action, the relationship at issue involved a director with a close friendship with one of the company’s executives, which included regular, luxury vacations together with their respective spouses, paid for by the director.

16 See Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure, SEC Release No. 34-97989 (July 26, 2023). The inline XBRL tagging must include block text tagging narrative disclosures and detail tagging quantitative amounts. The SEC has stated that companies must use the “Cybersecurity Disclosure Taxonomy” tags within iXBRL to tag these disclosures, which includes a specific flag for “Cybersecurity Risk Materially Affected or Reasonably Likely to Materially Affect Registrant.”

17 For example, “We note the following statements…’We have not currently engaged any third party service providers to support, manage, or supplement our cybersecurity processes,’ ‘The Audit Committee periodically receives updates from management and our third party IT support specialists of our cybersecurity threat risk management and mitigation strategies…’ and ‘In such sessions, the Audit Committee …discusses such matters with our third party IT support specialists and other members of senior management.’ These statements appear inconsistent. Please revise future filings to clarify whether you engage assessors, consultants, auditors or other third parties in connection with your processes for assessing, identifying and managing material risks from cybersecurity threats as required by Item 106(b)(1)(ii) of Regulation S-K.” Comment letter to Wilhelmina International, Inc. (August 21, 2024).

18 For example, “We note that leaders from your executive management team oversee cybersecurity risk management. Please confirm that in future filings you will identify which management positions or teams are responsible for assessing and managing material risks from cybersecurity threats, and provide the relevant detail of all such persons or members in such detail as is necessary to fully describe the nature of the expertise as required by Item 106(c)(2)(i) of Regulation S-K.” Comment letter to TNF Pharmaceuticals, Inc. (September 23, 2024). There were eight comment letters to this effect in 2024.

One comment letter specifically called on the company to describe the relevant expertise of the senior leadership team responsible for risk management, in addition to the expertise of the CISO, which had already been disclosed. See comment letter to Equifax Inc. (September 16, 2024). In its response, Equifax noted that “[w]hile our senior leadership team… has responsibility for risk management at the managerial level and overall managerial responsibility for the various programs of the Company, including information security, our Chief Information Security Officer (“CISO”) is the management position responsible for assessing and managing material risks from cybersecurity threats under Item 106(c)(2)(i) of Regulation S-K. In future filings, we will clarify that the CISO is the management position responsible for assessing and managing material risks from cybersecurity threats.”

The SEC made a similar comment to First Merchants Corp., noting that the company “describe[s] the relevant expertise of [its] CISO but not of the other members” of the information security committee that “assists executive management and the Board of Directors in their oversight of responsibilities related to information security.”

19 For example, “We note the statement…that your internal audit executes a ‘comprehensive and layered auditing approach’ to evaluate the effectiveness of existing controls and ‘ensure that cybersecurity risk has been adequately mitigated within [y]our institution.’ Please revise future filings to disclose whether your processes for assessing, identifying, and managing material risks from cybersecurity threats have been integrated into your overall risk management system or processes. See Item 106(b)(1)(i) of Regulation S-K.” Comment letter to Community Trust Bancorp Inc. (August 29, 2024).

20 Including: (i) Mylan N.V., a major pharmaceutical company that agreed to pay a $30 million penalty to the SEC for using hypothetical language to discuss risks related to potential misclassification of its most profitable product as a generic drug because the company knew at the time that a government agency had in fact already taken a contrary position; (ii) Yahoo, Inc., where the SEC found that Yahoo’s risk factor disclosures in its annual and quarterly reports were materially misleading in that they claimed the company only faced the “risk of potential future data breaches” that might expose the company to loss and liability “without disclosing that a massive data breach had in fact already occurred”; and (iii) First American Financial Corporation, a real estate settlement services company that settled an enforcement action for its alleged failure to adequately disclose a security vulnerability that could be used to compromise the company’s computer systems, which the company’s information security personnel had been aware of for several months.

21 For information on addressing AI in risk factors, see our upcoming client alert dedicated to risk factor updates.

22 For example, see the following SEC Staff comment: “Where a material change in a line item is attributed to two or more factors, including any offsetting factors, the contribution of each identified factor should be described in quantified terms, if reasonably practicable. Please revise your disclosures in future filings accordingly. Similar revisions should be considered throughout your results of operations disclosures, such as in your discussion of the change in research and development and selling, general and administrative expenses. Refer to Item 303(a) of Regulation S-K and Section III.D of SEC Release No. 33-6835.”

23 For example, “Please discuss in future filings whether supply chain disruptions or inflation have materially affected your outlook or business goals. Specify whether these challenges have materially impacted your results of operations or capital resources and quantify, to the extent possible, how your sales, profits, and or liquidity have been impacted. Revise also to discuss in future filings any known trends or uncertainties resulting from mitigation efforts undertaken, if any. Explain whether any mitigation efforts introduce new material risks, including those related to product quality, reliability, or regulatory approval of products.”

24 For example, “We note in your earnings calls that you discuss net revenue per client and inventory turnover. If these metrics are used by management to manage the business, and promote an understanding of the company’s operating performance, they should be identified as key performance indicators and discussed pursuant to Item 303(a) or Regulation S-K and Section III.B.1 of SEC Release No. 33-8350. Please tell us your consideration of disclosing these metrics, or other key performance indicators used.”

25 For example, “We note your disclosure which refers the reader to the Notes to the Consolidated Financial Statements for information regarding the recognition of revenue. Please revise future critical accounting estimates disclosures to provide insight into the judgments that are made in your revenue recognition process. The accounting estimate disclosures are designed to supplement the description of accounting policies in the notes to the financial statements and provide greater insight into the quality and variability of information regarding financial condition and operating performance. Typical disclosures discuss the types of assumptions underlying the most significant and subjective estimates, provide a sensitivity analysis of those assumptions to deviations of actual results, and disclose the circumstances that have resulted in revised assumptions in the past. As an example, we note that significant judgment is used in determining total contract cost for revenue that is recorded over time using the cost-to-cost method.”

26 For example, “We note that you raised capital in financing transactions and had significant negative cash flows from operations for both the fiscal years presented. Please expand your Liquidity and Capital Resources section to identify any material liquidity deficiencies. Address any known trends or any known demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in liquidity increasing or decreasing in any material way. Your discussion should analyze your ability to meet your liquidity needs both on a long-term and short-term basis. Also, tell us how you considered the going concern guidance in ASC 205-40. Provide us with your proposed future disclosure.”

27 Specifically, the SEC updated Non-GAAP Financial Measures C&DIs Questions 100.01, 100.04-100.06, and 102.10(a), (b) and (c), which can be found here.

28 For example: “We see that Contribution Margin is adjusted to exclude costs in geographies that are in implementation and are not yet generating revenue. Please also revise future filings to remove the adjustment since the costs relate to normal recurring costs to grow your business. Reference Question 100.01 of the CD&I related to non-GAAP Financial Measure Updated December 13, 2022.”

29 For example: “We note you include adjustments in arriving at net operating profit after taxes that appear to remove your operating lease rent expense under GAAP and replace it with estimated depreciation and include lease adjustments in arriving at average invested capital. As this appears to be an individually tailored method, please remove from your filing or advise. Refer to Question 100.04 of the Non-GAAP Financial Measures Compliance and Disclosure Interpretations.”

30 For example: “To the extent material, discuss the indirect consequences of climate-related regulation or business trends, such as the following: decreased demand for goods or services that produce significant greenhouse gas emission or are related to carbon-based energy sources; increased demand for goods that result in lower emissions than competing products; increased competition to develop innovative new products that result in lower emissions; increased demand for generation and transmission of energy from alternative energy sources; and any anticipated reputational risks resulting from operations or products that produce material greenhouse gas emissions.”

31 For example: “We note disclosure in your Form 10-K that climate change may increase the frequency and severity of natural catastrophes and the resulting losses in the future and impact your risk modeling assumptions. We further note disclosure in your Proxy Statement…that insured losses due to extreme weather events are increasing over time, and as climate change worsens, these losses will continue to grow. Please discuss the physical effects of climate change on your operations and results. This disclosure may include the following: severity of weather, such as floods, hurricanes, sea levels, arability of farmland, extreme fires, and water availability and quality; quantification of material weather-related damages to your property or operations; potential for indirect weather-related impacts that have affected or may affect your major customers or insured locations; and any weather-related impacts on the cost or availability of (re)insurance. Include quantitative information for each of the periods covered by your Form 10-K and explain whether increased amounts are expected in future periods.”

32 For example: “We note your disclosure…stating that you are taking certain steps to address climate change. Revise your disclosure to identify any past and/or future capital expenditures for climate-related projects. As part of your response, provide quantitative information for these types of expenditures for each of the periods for which financial statements are presented in your Form 10-K and for any future periods.”

33 For example: “We note that you provided more expansive disclosure in your corporate social responsibility report (CSR report) than you provided in your SEC filings. Please advise us what consideration you gave to providing the same type of climate-related disclosure in your SEC filings as you provided in your CSR report.”

34 It is worth noting that the SEC charged Keurig with violating Section 13(a) of the Securities and Exchange Act of 1934 and Rule 13a-1 thereunder, which require accurate and complete reports be filed with the SEC, rather than alleging that the company had made any materially misleading statements or omissions or violated anti-fraud provisions.

35 Although the SEC did not claim inaccurate or incomplete statements in Keurig’s sustainability reports, it included the Company’s inclusion of a recyclability goal in an older sustainability report as part of the factual record.

36 In light of affirmative action and other DEI-related litigation and activism, including the Students for Fair Admissions Supreme Court cases and suits brought by non-profit conservative groups against DEI policies at public companies, companies should carefully review their HCM disclosures, including those on DEI programs and initiatives.

37 See “From Ford to Walmart, Corporate America Drew Back From DEI. The Upheaval Isn’t Over. – WSJ” (noting that “Ford Motor said it would stop providing workplace data to a gay-rights lobbying group. UBS stopped giving out $25,000 grants directed at businesses led by women of color. Walmart said it wouldn’t renew funding for a charity it created to address racial disparities.”)

38 See “Christopher Rufo Has Trump’s Ear and Wants to End DEI for Good – WSJ.”

39 A “non-Rule 10b5-1 trading arrangement” is defined under the rule as an arrangement where the director or officer asserts that: (i) at a time when they were not aware of MNPI about the security or the issuer of the security, they adopted a written arrangement for trading the securities; and (ii) the trading arrangement: (a) specified the amount of securities to be purchased or sold and the price at which and the date on which the securities were to be subsequently purchased or sold; (b) included a written formula/algorithm for determining the amount of securities to be purchased or sold and the price at which the securities were to be purchased or sold; or (c) did not permit the covered person to exercise any subsequent influence over how, when, or whether to effect purchases or sales (and any other person who, pursuant to the trading arrangement did exercise such influence must not have been aware of MNPI when doing so). This requirement is intended to capture disclosure of plans that may be viewed by corporate insiders as reducing the likelihood of insider trading, but that do not follow all of the requirements of Rule 10b5-1(c) (including the cooling off period), so that insiders do not purposely enter into these plans solely to avoid disclosure of them.

40 For more information, see “Considerations for the Form 10-K in 2022: Mandatory Compliance with SEC’s Rule Amendments to Items 301, 302 and 303” in our prior memo.

41 New Item 9C was added to the Form 10-K in 2021 pursuant to the Holding Foreign Companies Accountable Act (HFCAA) (as explained in our prior alert) in order to identify any issuers that retain auditors that the PCAOB is unable to inspect completely. Given the SEC’s recent statement that “the PCAOB has been able to fulfill its oversight responsibilities as it relates to audit firms in China and Hong Kong,” this year companies should not have any disclosure (beyond “Not applicable” or “None”) under this item in their upcoming Form 10-Ks.

42 This requirement is a result of the SEC’s December 2021 amendments implementing the HFCAA for all auditors that provide their opinions related to financial statements, in accordance with Section 6.5.54 of the EDGAR Filing Manual. Practices vary as to the location of this tagging in annual reports, but a commonly used option is to tag the auditor’s name and PCAOB ID number in the Index to the Financial Statements and the auditor’s location at the end of the audit report.

43 The SEC’s comment letter practices indicate that this inquiry should be conducted both by companies that sell mineral extractions and vertically integrated companies that do not sell their mineral extractions but whose mining operations supply raw materials.

44 These disclosures include: (i) summary property disclosure on overall mining operations, mineral resources and mineral reserves; (ii) individual property disclosure for any property that is individually material to their business; and (iii) a description of the internal controls that the company uses in its exploration and mineral resource and reserve estimation efforts, including quality control/quality assurance programs, verification of analytical procedures, and a discussion of comprehensive risk inherent in the estimation.

45 The technical report summary must describe the information reviewed and conclusions reached by the qualified person about the company’s mineral resources and/or reserves on each material property (or, optionally, exploration results).

46 The technical report summary must be filed as Exhibit 96.1 to the Form 10-K the first time the company discloses mineral reserves or mineral resources in its Form 10-K. In addition, it must be filed as an exhibit in subsequent Form 10-Ks if: (i) there is a material change in the mineral reserves or mineral resources, as disclosed in the Form 10-F, from the last technical report summary filed for the property; or (ii) the company has previously filed a technical report summary supporting the disclosure of exploration results and there is a material change in the exploration results from the last technical report summary filed for the property.

47 As a reminder, on December 11, 2024, the United States Court of Appeals for the Fifth Circuit struck down The Nasdaq Stock Market’s board diversity rules, holding that the SEC exceeded its statutory authority when it approved the rules. As a result of the ruling, public companies no longer need to comply with Nasdaq’s board diversity rule requirements.

48 Since February 2022, the US has imposed sweeping sanctions on Russia, bringing a number of high-net-worth individuals and companies with substantial investments in the US within scope of the of the Iran Threat Reduction and Syria Human Rights Act of 2012 (ITRA). Companies should undertake diligence to determine whether any sanctioned individuals or entities may be involved in their activities to assess compliance and potential disclosure requirements, as the ITRA requires Form 10-K and Form 10-Q disclosure if the company (or any affiliate) knowingly engaged in certain sanctionable activities.

White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.

This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.

What do Americans think about policy proposals from the two leading presidential candidates — Joe Biden and Donald Trump? A recent survey asked whether Americans support or oppose more than two dozen policies suggested by each candidate — without specifying which one proposed them.

Of the policies included in the survey, the average share of Americans who support the 28 policies proposed by Biden is higher than the average share supporting the 28 policies proposed by Trump. All but one of Biden’s policy proposals — pledging 10 years of U.S. military support for Ukraine — are supported by more people than oppose them. That is true of just nine of the 28 Trump-proposed policies — the only ones to receive net positive support. This result depends somewhat on the policies included and the wording used, but the contrast — between 27 of 28 and 9 of 28 — is so big that it would be unlikely to change with small revisions to the survey.

The most popular of Biden’s policies asked about — by total support — are instituting universal gun background checks, funding two years of free community college, requiring presidential candidates to release tax returns, increasing funding for research in women’s health, and capping out-of-pocket costs for prescription drugs. The policies proposed by Biden that are most likely to be opposed are pledging 10 years of support to Ukraine for its war against Russia, canceling up to $10,000 in student loan debt, banning the manufacture and sale of assault rifles, increasing grants for use at historically Black colleges, reducing tax breaks for oil and gas companies, and incentivizing states to restore voting rights to felons. However, all of these policies besides Ukraine support are supported by more than oppose them.

Trump’s most popular policies — among those asked about — are phasing out imports of essential goods from China, banning hormonal or surgical treatment for transgender minors, requiring asylum seekers to wait in their home countries, arresting and deporting illegal immigrants, and building a border wall. The policies proposed by Trump that receive the highest amount of opposition are ending the Affordable Care Act, sending U.S. troops into Mexico to battle drug cartels, sending U.S. troops into large cities to enforce public order, allowing the death penalty as a punishment for drug dealers, and eliminating most mail-in voting. All of the policies listed in the previous sentence are opposed by more people than support them — as are many other Trump proposals included in the poll.