On May 5, 2026, the Securities and Exchange Commission (SEC) proposed rule and form amendments to permit public companies to file semiannual reports in lieu of quarterly reports. This proposed change is meant to provide greater flexibility in how companies meet their periodic reporting obligations under the federal securities laws. Companies considering whether to pivot to this option, if adopted by the SEC, should evaluate the potential implications on investor and other market participant expectations; existing policies and procedures, including insider trading policy open trading windows; reporting earnings guidance; contractual and regulatory constraints; potential cost savings; the overall process for preparing financial statements and audit committee oversight; the stock price; and the frequency of disclosing competitively sensitive information.
Key Considerations for Public Companies
Companies should begin evaluating the potential benefits and implications of a shift to semiannual reporting, including the following:
- Investor, Analyst, and Proxy Advisor Expectations. Consider whether a reduced reporting frequency aligns with the company’s business cycle and the information needs of its investors, which would be relevant in certain industries where investors are more focused on certain business, product, or regulatory developments, as opposed to interim financial results. If peer companies continue to report quarterly, investors and analysts may expect information symmetry. In addition, companies may wish to consider the views of proxy advisors; for instance, proxy advisors may negatively rate the governance attributes of companies that choose to report on a semiannual basis.
- Existing Policies and Procedures. Consider the impact on insider trading policies and 10b5-1 trading plans, including the potential for lengthier blackout periods and fewer open trading windows as a result of insiders’ possession of material non-public information that would have been disclosed within a Form 10-Q, which could impact insider liquidity. Companies should also assess whether existing disclosure controls and procedures and internal controls over financial reporting practices would need to be modified.
- Earnings Guidance. Consider whether the shift to semiannual reporting would impact the company’s existing practices surrounding delivery of earnings guidance.
- Contractual and Regulatory Constraints. Consider the impact on existing contractual obligations, such as debt covenants, that refer to quarterly filings or require the production of quarterly reports or financial statements. Companies should also consider the impact of any regulatory requirements, such as bank regulatory requirements, that may necessitate continued quarterly reporting.
- Potential Cost Savings. Consider the potential cost savings of semiannual reporting, including the ability to redirect management time and resources.
- Preparation of Financial Statements and Audit Committee Oversight. Consider whether semiannual reporting would impact the ability to identify accounting issues and internal control deficiencies as a result of less frequent interim auditor reviews. Companies should also consider whether the cadence of audit committee meetings and the subject matter addressed in those meetings should be maintained despite a shift to semiannual reporting.
- Stock Price. Consider the potential for a “transparency discount” on the stock price of companies that switch to semiannual reporting, resulting from market participants’ reduced visibility into financial performance, particularly for less-seasoned issuers.
- Disclosure of Competitive Information. Consider whether the quarterly disclosure of proprietary business information provides competitive benefits to a competitor that adopts semiannual reporting.
A Closer Look: The Proposed Amendments to Quarterly Reporting
The SEC’s proposed amendments to Exchange Act Rules 13a-13 and 15d-13 would allow public companies to elect to file semiannual reports on a new Form 10-S instead of quarterly reports on Form 10-Q. The new Form 10-S would require the same information as currently required by Form 10-Q, but it would cover the first semiannual period of the fiscal year instead of a quarter. Companies that elect to file semiannual reports would file a semiannual report and an annual report for each fiscal year, rather than three quarterly reports and one annual report. The election would be optional, allowing companies to continue to report on a quarterly basis if they choose.
Under the proposal, the filing deadline for semiannual reports on Form 10-S would be 40 or 45 days after the end of the first semiannual period of the fiscal year, depending on the company’s filer status. The second semiannual period of the fiscal year would be included in the annual report on Form 10-K, with no separate quarterly report.
The proposal would also amend Regulation S-X, which governs the financial statement requirements for periodic reports, registration statements, and proxy statements, to reflect the new semiannual reporting option and to simplify existing financial statement requirements as discussed in greater detail below.
How the Election Works
Under the proposal, a reporting company would elect semiannual reporting by checking a box on the cover page of its Form 10-K for the most recently completed fiscal year. That election would take effect for the fiscal year in which the Form 10-K is filed, and the company would then be committed to that reporting frequency for the remainder of that fiscal year. Companies that do not check the box would continue filing quarterly reports on Form 10-Q under the existing default rules.
For companies going public, the initial election would be made by checking a box on the cover page of the registration statement filed in connection with the offering, which would also determine what financial statements are required in the registration statement. Companies could change their reporting frequency from year to year, but only on an annual basis. Companies would not be permitted to switch once a fiscal year begins, other than to correct an error related to the check-box election. Companies would be allowed to amend their Form 10-K to correct a mistaken check-box election, provided the amendment is filed no later than the due date for the first Form 10-Q of that fiscal year.
Switching Between Reporting Frequencies
Companies should be aware that switching back from semiannual to quarterly reporting may require additional preparation. When a company reverts to quarterly reporting, it must present comparative quarterly financial statements from the prior year, periods that were previously subsumed within semiannual reports. This may require ensuring that an independent public accountant has reviewed the comparable quarterly periods.
Impact on Earnings Releases and Voluntary Disclosure
The proposal does not change the regulatory framework for voluntary earnings releases and guidance. Companies that elect semiannual reporting could continue to provide quarterly financial information voluntarily through earnings releases, conference calls, or even within the Form 10-S itself; however, such voluntary quarterly disclosures will differ from Form 10-Q filings in terms of scope and associated litigation risk, given that earnings releases are typically “furnished” rather than “filed,” and are subject to different liability standards, which could impact their value and credibility to investors.
Potential Implications on Existing Contracts
Companies considering the switch should review existing contractual arrangements, including debt covenants, commercial agreements, and executive compensation agreements, that may rely on quarterly financial metrics or require the production of monthly or quarterly financial reports or financial statements, as renegotiation may be necessary. It is important to keep in mind that certain amendment requirements to these instruments may be burdensome, particularly in the context of debt covenants.
Market Considerations
Market dynamics may also play a role, as investors, analysts, and underwriters may still demand quarterly financial disclosure, particularly for companies that frequently access the capital markets. Less frequent disclosures may make it difficult for investors to make informed decisions, which could lead to a “transparency discount” on the stock price. Companies that continue quarterly reporting may benefit from signaling a commitment to transparency.
Although semiannual reporting will result in a reduction in the frequency of interim reporting, it is important to note that companies may still elect to issue quarterly earnings releases. In addition, the SEC did flag that companies will continue to be required to report certain material information on Form 8-K and will continue to be subject to Regulation FD, which may offset the less-frequent interim reports.
Impact on Securities Offerings, Transactions, and Comfort Letter Considerations
In a securities offering, companies may face demand for quarterly financial information to have more recent or granular information. This may also be the case for companies planning to undertake or participate in a merger or acquisition transaction.
In addition, in securities offerings, underwriters generally request a comfort letter from an independent public accountant. Under existing PCAOB Auditing Standard 6101, to provide negative assurance in a comfort letter regarding interim financial information, an auditor’s comfort letter cannot include negative assurance regarding subsequent changes in specified financial statement items as of a date 135 days or more after the end of the most recent period audited or reviewed. With semiannual reporting, there may be periods where auditors are not able to provide negative assurance comfort on such subsequent changes. The SEC has asked for comments on whether changes are needed to PCAOB Auditing Standard 6101 to avoid this issue.
Estimated Cost Savings and Impact on Prospective IPOs
There are many costs associated with preparing Form 10-Qs, including internal time spent, external accounting fees, legal counsel fees, and costs of preparing the filing, including XBRL tagging. Based on a variety of assumptions, the SEC estimates that the annual direct compliance cost of filing three Form 10-Q reports is approximately $330,000 per issuer, while the cost of filing one Form 10-S would be approximately $132,000, for estimated net savings of roughly $198,000 per fiscal year for each company that switches. Beyond direct cost savings, companies may benefit from reduced management distraction and the ability to redirect time and resources to running the day-to-day business, including focusing more on the long-term goals and strategies of the company.
The SEC also acknowledged that reduced compliance costs associated with quarterly reporting may encourage private companies to enter the public markets, along with encouraging existing public companies to remain public. For companies considering an IPO, the adoption of semiannual reporting may be viewed as a significant benefit, given the reduction of costs associated with quarterly reporting. This would give new public companies greater flexibility to focus their resources on the business, including strategy, operations, growth, product development, and exploring synergistic opportunities. Companies going through the IPO process should also discuss investor expectations with their underwriters as it relates to reporting cadence, as investors may expect to see greater reporting cadence for newly public companies as opposed to more seasoned issuers.
Regulation S-X Amendments: Financial Statement Requirements
The SEC is proposing conforming amendments to Regulation S-X to ensure that the financial statement requirements applicable to registration statements, proxy statements, and other filings would encapsulate semiannual filers.
In addition, the SEC is proposing to remove Rule 3-12 of Regulation S-X, which includes the current age of financial statement requirements, and consolidate those requirements into Rule 3-01 of Regulation S-X, to help ensure that, when semiannual filers file registration statements, their financial statements in those registration statements are not considered stale under rules originally designed around a quarterly reporting framework. Under the amended Rule 3-01, semiannual filers would be permitted to include interim financial statements as of the end of the most recent semiannual period that has been filed or is required to be filed on or before the filing date. This would provide a calendar-year semiannual filer with greater flexibility to go effective on a registration statement, including in connection with an IPO, later in the year, without including interim financial statements.
Comment Period and Next Steps
The public comment period on the proposing release will remain open until 60 days after the date of publication in the Federal Register. Interested parties may submit comments through the SEC’s public comment portal.
The SEC’s proposal could potentially shift the periodic reporting framework for U.S. public companies. While the proposal remains subject to the notice-and-comment rulemaking process, companies should consider whether semiannual reporting would serve their interests and those of their investors. If the proposal is adopted, the SEC expects to coordinate with accounting and auditing standard-setters, stock exchanges, and other market participants to facilitate the changes outlined in the SEC’s proposal.
We will continue to monitor developments related to this rulemaking and will provide updates as appropriate.
