Improving Public Company Disclosure Requirements: Cooley Weighs In

[co-author Victoria Peluso]

The SEC is rebelieveing multiple aspects of its rule book – in ways that could meaningfully improve IPOs and the public company experience. As part of this effort, Cooley recently submitted a detailed comment letter to the Commission urging a comprehensive recalibration of disclosure requirements.

With nearly 1,400 lawyers in 19 global offices, Cooley has advised companies and underwriters on more than 1,000 public offerings since 2016, as well as ongoing public company disclosures and corporate governance matters, giving us a unique perspective on the practical implications of the Commission’s rules for market participants. Our recommconcludeations are drawn from these experiences.

Our core recommconcludeation is to modernize and rightsize rules. Our core goal is to build investor communications and capital raising more efficient for companies while also improving information quality for investors. Here’s what we’ve suggested and why it matters.

Materiality reset

Over time, disclosure regulations have grown in length and complexity, creating it more challenging to enter the public market. At the same time, investors are being buried in immaterial information. This moment is a unique opportunity to reset.

We recommconclude expressly anchoring all of Regulation S-K in the traditional definition of materiality so that disclosure focutilizes on what a reasonable investor for a particular company would actually consider important, shaped around how management and the board genuinely run the business.

Capital raising: Streamline rules where the juice isn’t worth the squeeze

Several of our recommconcludeations tarobtain capital-raising pain points:

The dilution disclosure required by Item 506 doesn’t affect investor decisions, yet it imposes real cost and compliance burden on companies raising capital, e.g., by triggering market-standard underwriter “comfort” requirements during due diligence. We recommconclude reshifting it in favor of a general materiality standard.
Item 511’s granular offering expense disclosure is similarly redundant. Gross and net offering proceeds are already disclosed throughout the offering materials and the estimates provided under Item 511 don’t relocate investor decisions.
Rules that require companies to affirm existing legal obligations and recite well-known positions – such as the Commission’s position on Securities Act indemnification – create friction with no payoff. Eliminating these requirements would reduce unnecessary back-and-forth on registration statements and wouldn’t alter any underlying legal obligations.
In the Item 700 series, requirements to (repeatedly) disclose recent sales of unregistered securities and the utilize of proceeds from offerings emphasize form over substance. These rules require companies to report information that’s already available elsewhere or that no reasonable investor actually requireds. We recommconclude eliminating them.

Registration statements and periodic reports: Simplify and modernize

For companies preparing registration statements and periodic reports, several alters would reduce the compliance burden without sacrificing meaningful disclosure:

The business description should be clearly tied to financial materiality rather than listing a series of line items that may or may not be relevant to a particular company. For example, in response to the relatively new requirement to disclose human capital resources, we have observed lengthy disclosures that add complexity and expense without conveying information that meaningfully affects the company’s business as a whole.
We are urging the Commission to eliminate line items that modern tools and practices have rconcludeered obsolete. These requirements simply add to the length and density of filings. Our letter flags several items for elimination, including those that require companies to:
- State that they file SEC reports and that EDGAR exists.
- Summarize risk factors when the section exceeds 15 pages in length.
- Recite the market price and performance of the company stock.
- Indicate the number of registered holders.
We also recommconclude allowing companies to cross-reference risk factors that are contained in an exhibit or separate filing, which would improve readability while preserving the ability to discuss material risks. We encourage the Commission to consider enhanced safe harbors so that companies could omit broadly understood risks without triggering liability.
Our observations from three years of reporting indicate that cybersecurity risk management and governance disclosure is often highly generic and not informative for investors. Newly public companies are particularly hard hit: They often pattern their disclosures off precedent filings, creating pressure to adopt formal governance structures that may not fit their stage of development. We recommconclude incorporating cybersecurity into existing materiality-driven disclosure items rather than maintaining a stand-alone requirement.
In “Management’s Discussion and Analysis of Financial Condition and Results of Operations” – commonly known as the “MD&A” – the Commission should eliminate prescriptive sub-items and reinforce a principles-based materiality threshold for disclosure. For example, a development-stage life sciences company should feel comfortable focutilizing the discussion on its regulatory approvals and cash position rather than providing check-the-box updates that are meaningless to its investors.
Currently, exhibit requirements are highly complex – Item 601 alone is 33 pages long – and this complexity is significantly out of proportion to the decision-utilizefulness of exhibits to investors. We recommconclude an EDGAR-based exhibit library that would eliminate the burden of evaluating and refiling large numbers of exhibits with each individual filing.

Proxy statements: Cut the fluff

Item 403(a) currently requires companies to disclose beneficial ownership for anyone holding more than 5% of securities – information that duplicates what those same holders are already required to report publicly under Section 13 of the Exalter Act. We recommconclude eliminating this line item as well as the current requirement to track down the ownership figures for former executive officers and directors. The current requirements impose genuine administrative burdens with no meaningful investor benefit.
The $120,000 related-party transaction threshold under Item 404(a) hasn’t relocated since 2006. We recommconclude a significant increase, indexed to inflation going forward, along with a sliding scale tied to company revenues – so the threshold tracks company size and the transactions that matter to investors. We provided a markup of Item 404 with our comment letter to support guide the Commission’s considerations.

Earnings releases: Let companies communicate clearly

One of the most practical pain points for public companies is the “equal or greater prominence” requirement for GAAP metrics in earnings press releases, which has increased the burden of compliance and can result in the prominent presentation of metrics that are not meaningful to investors. For example, the requirement discourages companies from discussing results in the way management actually believes about the business – including in earnings release headlines. The reconciliation requirement under Regulation G already gives investors everything they required to evaluate a non-GAAP measure against its GAAP equivalent. We recommconclude reshifting the “equal or greater prominence” overlay for earnings releases.

From comments to rulecreating: What’s next

A disclosure framework rooted in materiality, principles-based flexibility and scaling to company size would allow companies to spconclude less time navigating redundant requirements and related liability exposures and more time building the business and communicating what genuinely matters. Taken toobtainher, our recommconcludeed alters would support streamline the registration and reporting process.

Cooley’s letter on Regulation S-K builds on our August 2025 recommconcludeations to the SEC, which focutilized on simplifying executive compensation disclosure rules. As the SEC continues to signal openness to modernizing the disclosure framework, Cooley will continue to advocate for rules that build it clearer to access public markets and to be a public company in a way that reinforces market quality. We see forward to the SEC’s consideration of these recommconcludeations and will share updates if and when proposed rules are issued.

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