US SEC iXBRL mandate for Form 11-K – Employee Stock Purchase and Savings Plans

US SEC iXBRL mandate for Form 11-K – Employee Stock Purchase and Savings Plans

By Ez-XBRL 27 July, 2022

In 2009, the SEC adopted rules requiring issuers to submit information from the financial statements, including certain registration statements and periodic and current reports in a structured, machine-readable data language using XBRL. In 2018, the SEC modified the existing rules by requiring issuers to use Inline XBRL to improve the quality and usability of XBRL data for investors. Since then, the Commission has completed phasing-in the adopted Inline XBRL requirements and has expanded the scope of disclosures that must be tagged using Inline XBRL

The Securities and Exchange Commission (SEC) in June 2022, proposed a final rule for digital inline XBRL reporting requirements for Employee stock purchase and savings plans, to provide transparency about insiders’ trades and simplify access to information that can help users understand internal sentiment.

What is Form 11-K?

Form 11-K is a Securities and Exchanges Commission (SEC) form that publicly traded companies are required to file yearly. The form includes information about stock purchases made by employees, as well as any savings plans or similar plans that own interests in any securities that are registered under the Securities Act of 1933, such as employee stock ownership plans (ESOPs).

Who is required to file an 11-K?

Where an employee benefit plan (Plan) registers Plan interests as separate securities from the issuer’s securities offered under the Plan, the Plan incurs a separate reporting obligation under §15(d) of the Exchange Act. This obligation requires the Plan to file an annual report on Form 11-K.

What is the iXBRL requirement for Form 11-K

The amendments will require Inline XBRL tagging of financial statements and accompanying schedules required by Form 11-K. This will apply whether the financial information is prepared in accordance with Regulation S-X or the financial reporting requirements of ERISA. The new tagging requirements mirror those for financial information contained in Form 10-Ks.

What needs to be tagged in the Form 11-K?

The SEC mandates the use of Inline XBRL for the filing of the audited financial statements and accompanying notes to the financial statements required by Form 11-K. Further, in the case of narrative disclosures (e.g., notes to the financial statements), registrants would be required to apply block tags to the narrative disclosures and detailed tags to any numeric amounts presented in the narrative text like other Forms 10-K, 20-F, and 40-F. The corporate financial data of Form 11-K must be tagged using the US GAAP taxonomy.

Below face financials that appear in Form 11-K needs to be captured in iXBRL.

SEC proposes iXBRL for Form 11-K - Employee Stock Purchase and Savings Plans statements of net assets available for benefits

SEC proposes iXBRL for Form 11-K - Employee Stock Purchase and Savings Plans statements of changes in net assets available for benefitsTransition period timeline

Form 11-K filers have a three-year transition period after the effective date of publication in the Federal Register to comply with the SEC Inline XBRL requirements.

Conclusion

Fortunately, the three-year transition period provides ample time to prepare and get ready for the inline XBRL mandate and filers should plan well ahead of time to implement appropriate measures to submit 11-Ks by the effective date.

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