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Chapter 8 — Reporting Considerations for SEC Registrants

8.4 Form 8-K Reporting Obligations

8.4 Form 8-K Reporting Obligations

SEC registrants are required to periodically file current reports on Form 8-K to inform investors of certain events. Form 8-K, Item 2.01, requires a registrant to file a Form 8-K within four business days after a consummated5 disposition of (1) a significant amount of assets or (2) a business that is significant. In accordance with Instruction 2 of Item 2.01 of Form 8-K, “[t]he term disposition includes every sale, disposition by lease, exchange, merger, consolidation, mortgage, assignment or hypothecation of assets, whether for the benefit of creditors or otherwise, abandonment, destruction, or other disposition.” In addition, a registrant must also consider the Form 8-K reporting obligations when it contributes assets or a business in exchange for an equity interest in a joint venture. (For more information, see Deloitte’s Roadmap SEC Reporting Considerations for Business Acquisitions.) Further, when either a subsidiary is deconsolidated or a group of assets is derecognized, SEC registrants may be required to report the deconsolidation or derecognition on a Form 8-K and provide pro forma financial information that gives effect to the deconsolidation or derecognition. (For more information, see paragraph 2110.1 of the FRM and Section F.4 of Deloitte’s Roadmap Consolidation — Identifying a Controlling Financial Interest).

Footnotes

5
A Form 8-K may also be required by Item 1.01 when a registrant has entered into a material definitive agreement for a disposition (e.g., when it executes a contract to dispose of the assets or business). An Item 1.01 Form 8-K is generally filed earlier than the Item 2.01 Form 8-K, which a registrant is not required to file until the disposition is consummated. Since Item 2.01 triggers a requirement to provide financial statements in accordance with Item 9.01 (typically pro forma financial statements for a disposition), such financial statements are not required in an Item 1.01 Form 8-K. Registrants should consult with their legal advisers regarding these requirements.
6
See footnote 5.
7
The definition of a business for SEC purposes is outlined in SEC Regulation S-X, Rule 11-01(d). This definition can differ from the definition in accounting literature, including that in ASC 805-10.
8
Under Rule 11-01(b), a disposed-of business is significant if the business to be disposed of exceeds the 20 percent level of significance for any of the significance tests in Regulation S-X, Rule 1-02(w).
9
Instruction 4 of Item 2.01 indicates that if either of the following exceeds 10 percent of the registrant’s consolidated assets, the disposition of assets would be considered significant: (1) the equity in the net book value of the assets or (2) the amount received for the assets upon disposition.