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On May 3, 2023, the SEC adopted <a href="https://www.sec.gov/rules/final/2023/34-97424.pdf" target="_blank" rel="noreferrer noopener">final rules</a> relating to company stock repurchase (or buyback) disclosures, which differ in some significant ways from the initial proposals issued in December 2021, most significantly by requiring quarterly reporting of daily repurchase transactions as opposed to proposed Form SR reports within one business day of each transaction under the company’s stock repurchase program. Nevertheless, the new rules require more detailed disclosures regarding stock buybacks than is required under the SEC’s current rules, as well as iXBRL tagging. This alert describes the requirements for companies that file Annual Reports Form 10-K and Quarterly Reports on Form 10-Q and does not cover foreign private issuers.

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Companies will be required to include the new disclosures (including applicable iXBRL tagging) in the first filing that covers the first full fiscal quarter that begins on or after October 1, 2023, which for many companies will be the Annual Report on Form 10-K for the year ending December 31, 2023.

The new rules require quarterly disclosures in Form 10-K and Form 10-Q filings relating to the following:

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Table column headers are: Execution date; Class of Shares (or Units); Total Number of Shares (or Units) Purchased; Average Price Paid per Share (or Unit)*; Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs; Aggregate Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Publicly Announced Plans or Programs; Total Number of Shares (or Units) Purchased on the Open Market; Total Number of Shares (or Units) Purchased that are Intended to Qualify for the Safe Harbor in Rule 10b18; Total Number of Shares (or Units) Purchased Pursuant to a Plan that is Intended to Satisfy the Affirmative Defense Conditions of Rule 10b5-1(c)

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All of the disclosures described above are required to be tagged in iXBRL.

In light of these changes, companies should incorporate the new requirements into their disclosure committee practices and controls and procedures relating to company stock repurchases. Some coordination with brokers administering the company’s stock repurchase program will be needed. Companies should also confirm that the board meeting minutes describe the discussion of the objectives of their stock repurchase programs and the process used to determine the amount of repurchases, and ensure that all public disclosures are consistent with the minutes and any other internal documentation and communications. Companies should further consider revising their insider trading policies to include restrictions regarding trading before or after the announcement of repurchase programs. The turnaround times for quarterly and annual reports may also be somewhat impacted by the structured data requirements, and companies should coordinate with financial printers or other providers earlier in the filing timelines. Finally, companies suspending their stock repurchase programs in connection with mergers and acquisitions and other significant transactions should be prepared for the increased likelihood of speculation and stock price fluctuations, potentially triggering required disclosure of the transaction earlier than it would otherwise be required.

https://admin.thompsonhine.com/wp-content/uploads/2023/05/Securities-Update-SEC-Issues-New-Rules-Regarding-Company-Stock-Repurchase-Disclosures.pdf

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<em>This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel. This document may be considered attorney advertising in some jurisdictions.</em>

SEC Issues New Rules Regarding Company Stock Repurchase Disclosures

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