The Securities and Exchange Commission voted to propose amendments to the financial disclosure requirements in Regulation S-K and streamline the Management’s Discussion and Analysis disclosures, including critical accounting estimates, off-balance sheet arrangements and key performance indicators.

The proposed amendments would eliminate Item 301 (selected financial data) and Item 302 (supplementary financial data), and amend Item 303 (management’s discussion and analysis) to reduce duplicative disclosures and focus on material information. The proposed amendments to Item 303 would add a new Item 303(a), Objective, to state the principal objectives of MDA; replace Item 303(a)(4), Off-balance sheet arrangements, with a principles-based instruction to prompt registrants to discuss off-balance sheet arrangements in the broader context of MDA; eliminate Item 303(a)(5), Tabular disclosure of contractual obligations; add a new disclosure requirement to Item 303, Critical accounting estimates; and revise the interim MDA requirement in Item 303(b) to give companies the flexibility to compare their most recently completed quarter to either the corresponding quarter of the prior year (as is currently required) or to the immediately preceding quarter. The proposal also includes some conforming amendments, including to Forms 20-F and 40-F.

Where companies disclose metrics, the guidance allows them to consider whether additional disclosures are necessary and includes some examples of those disclosures. The guidance also reminds companies of the requirements to maintain disclosure controls and procedures and that companies should consider these requirements when disclosing metrics. The proposal has a 60-day public comment period after it’s published in the Federal Register.

“The proposal and the guidance we are releasing today, which reflect the staff’s wealth of experience, would improve the quality and accessibility of registrants’ presentation of financial results and performance metrics,” said SEC Chairman Jay Clayton (pictured) in a statement last week. “The improved disclosures would allow investors to make better capital allocation decisions, while reducing compliance burdens and costs without in any way adversely affecting investor protection.”