On May 25, 2023, the staff of the Division of Corporation Finance (the “Staff") of the Securities and Exchange Commission (the “SEC") issued three new Compliance and Disclosure Interpretations (“C&DIs") on the SEC's recent Rule 10b5-1 amendments. The new C&DIs re-affirm prior statements made by Staff members regarding effective dates for required new disclosures and the operation of the cooling-off period when entering into back-to-back trading plans. We summarize below the C&DI and the compliance dates for new rules relating to Rule 10b5-1, Section 16 and share repurchases.

Questions 120.26 and 120.27 – Compliance Dates for New Disclosure Requirements

The SEC's Rule 10b5-1 amendments require:

Quarterly disclosure in Forms 10-Q and 10-K (for the fourth quarter) regarding executive officers' and directors' adoption, modification, or termination of Rule 10b5-1 and “non-Rule 10b5-1" trading arrangements, and the material terms thereof, under Item 408(a) of Regulation S-K; and

Annual disclosure in Form 10-K and proxy statements regarding (1) whether a company has adopted insider trading policies and procedures, any of which must be filed as exhibits, under Item 408(b) of Regulation S-K, and (2) the company's policies and practices regarding the timing of stock option awards, as well as additional disclosures regarding options awarded to named executive officers near the time of filings disclosing material non-public information, under Item 402(x) of Regulation S-K (or Item 16J of Form 20-F).

Companies are required to tag the disclosures required under new Items 402(x), 408(a), and 408(b) of Regulation S-K, and new Item 16J(a) of Form 20-F, in Inline XBRL.

The C&DIs confirm that the annual disclosures described above are not required until completion of the first full fiscal year beginning after April 1, 2023, even though the quarterly disclosures begin in 2023. The C&DIs provide the following examples of compliance dates for the new disclosure and tagging requirements:

Filer Type	Fiscal Year-End	Quarterly Disclosure in Periodic Reports First Required	Annual Disclosure in Periodic Reports First Required	Annual Disclosure in Proxy or Information Statements First Required
Large Accelerated Filer; Accelerated Filer; Non-Accelerated Filer	December 31	Form 10-Q for the period ended June 30, 2023 (and every quarter thereafter, including -- for the fourth quarter -- in the company's Form 10-K)	Form 10-K or 20-F for the fiscal year ended December 31, 2024	Proxy or information statement for the first annual meeting involving the election of directors occurring after completion of the first full fiscal year that begins on or after April 1, 2023 (the 2025 annual meeting for December 31 fiscal year companies and the 2024 annual meeting for June 30 fiscal year companies)
	June 30	Form 10-K for the fiscal year ended June 30, 2023 to provide Item 408(a) disclosure for the fourth quarter (and every quarter thereafter)	Form 10-K or 20-F for the fiscal year ended June 30, 2024
Smaller Reporting Company	December 31	Form 10-K for the fiscal year ended December 31, 2023	Form 10-K or 20-F for the fiscal year ended December 31, 2024	Proxy or information statement for the first annual meeting involving the election of directors occurring after completion of the first full fiscal year beginning on or after October 1, 2023 (the 2025 annual meeting for December 31 fiscal year companies and June 30 fiscal year companies)
	June 30	Form 10-Q for the period ended December 31, 2023	Form 10-K or 20-F for the fiscal year ended June 30, 2025

Question 120.28 – Back-to-Back Trading Plans

Under the new conditions for Rule 10b5-1(c) trading plans, persons other than issuers, with limited exceptions, may not have more than one open market Rule 10b5-1 trading plan in operation at the same time. However, the new rules permit a person to enter into a later-commencing open market Rule 10b5-1 trading plan at the same time or subsequent to the time the person enters into an earlier-commencing open market Rule 10b5-1 trading plan so long as trading pursuant to the later-commencing plan is not authorized to begin until after (1) all trades under the earlier-commencing plan are completed or have expired without execution, and (2) the applicable cooling off period (typically, 90 days for executives and directors and 30 days for everyone else except the issuer) for the later-commencing plan is satisfied.

The C&DI clarifies that the applicable cooling-off period for a later-commencing plan will begin when that later-commencing plan is entered into if the earlier-commencing plan ends by its terms without being terminated by the individual. As a result, depending on when the later-commencing plan was adopted, the first trade under the later-commencing plan may occur as soon as immediately after the earlier-commencing plan ends according to its original terms. As a result, the C&DI confirms that it is possible to structure back-to-back trading plans that satisfy the conditions of Rule 10b5-1(c). However, the C&DI confirms that if the earlier-commencing plan was terminated by the individual who had entered into the trading plan, the later-commencing plan will be subject to an “effective cooling-off period" under the rules, which begins on the termination date of the earlier-commencing plan. This means that when an existing trading plan is early-terminated (including any modification or change to the amount, price, or timing of purchases or sales under an existing trading plan, which is treated as termination of the plan), a new cooling off period will apply before any trades can occur under the new trading instructions.

Compliance Timeline for Rule Changes

As a reminder, the substantive conditions for a trading plan to satisfy the new conditions under Rule 10b5-1(c) apply to plans entered into on or after February 27, 2023. Our client alert regarding the Rule 10b5-1 rule amendments, including related disclosure requirements applicable to companies and Section 16 filers, is available here. Additional disclosure requirements applicable to company share repurchases and Rule 10b5-1 trading plans also were recently adopted, as discussed in our client alert available here. A summary of the compliance timelines for the new disclosure requirements under these rules is set forth below:

Forms 10-Q and 10-K Disclosure Requirements:

	Effective Date	Relevant Filing (Assuming Fiscal Year-End of December 31)
Quarterly disclosure of executives' or directors' adoption, modification, or termination of, and material terms of, Rule 10b5-1 and “non-Rule 10b5-1" trading plans	First filing that covers the first full quarter that begins on or after April 1, 2023	Form 10-Q for the period ended June 30, 2023
Annual disclosure of insider trading policies and procedures	First filing that covers the first full fiscal year that begins on or after April 1, 2023	Proxy Statement for the 2025 Annual Meeting and Form 10-K* or 20-F for the fiscal year ended December 31, 2024 (Policy Filed as Exhibit to Form 10-K/Form 20-F)
Annual disclosure of company policies on award timing & option awards made close to release of material information	First filing that covers the first full fiscal year that begins on or after April 1, 2023	Proxy Statement for the 2025 Annual Meeting and Form 10-K* for the fiscal year ended December 31, 2024
Quarterly disclosure of company's daily share repurchase activity and company's adoption, modification, or termination of, and material terms of, Rule 10b5-1 trading plans	First filing that covers the first full fiscal quarter that begins on or after October 1, 2023 (for foreign private issuers, first filing that covers the first full fiscal period that begins on or after April 1, 2024)	Form 10-K for the fiscal year ended December 31, 2023 (for foreign private issuers, Form F-SR), reporting information for the fourth quarter

*Form 10-K can incorporate this information from proxy statements by reference (similar to other Part III information).

Section 16 Reporting Requirements:

	Effective Date
Report Gifts on Form 4	February 27, 2023
Identify Form 4 transactions under plans intended to satisfy the conditions of amended Rule 10b5-1(c)	Filings made on or after April 1, 2023

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We would like to thank Natalie Abshez and David Korvin in our Washington, D.C. office for their work on this post.

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