SEC Proposes Optional Semiannual Reporting
In Short
The Situation: On May 5, 2026, the U.S. Securities and Exchange Commission ("SEC") proposed what may be the most significant change to periodic reporting requirements in more than 50 years. The proposal would allow U.S. public companies to opt into semiannual interim reporting in lieu of quarterly filings on Form 10-Q.
The Result: This proposal demonstrates the SEC's commitment to fundamentally reshaping the reporting regime. The SEC also frames the proposal as part of a broader agenda to make public markets more attractive to private companies.
Looking Ahead: When the United Kingdom ended mandatory quarterly reporting in 2014, less than 10% of companies stopped issuing quarterly reports. Investor expectations, analyst demands, debt covenants, and competitive dynamics are some of the factors that will ultimately determine whether semiannual reporting is widely adopted and the timing and content of disclosures made by semiannual filers in between reports. For companies with an active analyst following and institutional shareholder base, the market may effectively continue to demand quarterly reporting, or substantially equivalent disclosures, even if no longer required by the SEC.
The Mechanics
A company will be able to elect semiannual reporting by checking a box on the cover page of its Form 10-K (or on a Securities Act or Exchange Act registration statement); if unchecked, the company defaults to the legacy quarterly reporting regime. The election must be renewed annually and applies for the entire fiscal year. Semiannual filers would file one interim report per year on a new Form 10-S, which is essentially a Form 10-Q covering a six-month period, with the same narrative disclosures, GAAP-compliant financials reviewed by independent auditors, and a 40- or 45-day filing deadline, depending on filer status. The proposal would amend Regulation S-X to prevent semiannual filers' financial statements from being deemed "stale" under existing rules tied to quarterly reporting cycles.
Strategic Considerations
The proposed rules suggest companies should make a straightforward cost-benefit analysis when determining their preferred disclosure regime. In practice, the decision is considerably more nuanced.
The SEC projects net annual savings of approximately $198,000 per company for those switching to semiannual reporting, with aggregate annual monetized benefits of $394 million across all switching companies and a 10-year present value of $2.87 billion–$3.41 billion.
These figures, however, measure only direct compliance costs. They do not capture the indirect costs of switching, which could include potential increases in cost of capital, reduced liquidity, diminished analyst coverage, investor dissatisfaction, and competitive signaling effects as well as potentially higher insider trading and Regulation FD compliance risks. The real analysis that companies must undertake involves assessing whether the compliance savings justify these indirect risks, which will vary significantly by company size, industry, maturity, investor base, and capital markets activity, as well as their disclosure practices (e.g., whether companies that opt for semiannual reporting will choose to issue supplemental disclosures between semiannual reports).
Other considerations include:
- Requirements included in debt covenants and lending agreements: Many credit agreements and indentures require quarterly financial statements. Will banks accept non-public quarterly financials? Will the switch to semiannual financials increase borrowing costs?
- Insider trading windows: Semiannual reporting companies will face longer continuous periods during which insiders possess material non-public information. Companies will need to reconsider their blackout periods and reassess the structure and timing of Rule 10b5-1 trading plans.
- Capital markets access and comfort letters: Under PCAOB standards, auditors can provide negative assurance in comfort letters, a standard documentary requirement in a securities offering, only for periods within 135 days of the last audit or interim review. Unless the standards are changed, semiannual filers could have more limited access to the capital markets.
- Signaling risk: Electing semiannual reporting when peers continue filing quarterly could be perceived negatively and reduce coverage of the company.
See our Commentary, "Navigating the SEC's Potential Shift to Semiannual Reporting: Key Considerations for Corporate Leaders," for additional discussion of key considerations.
The Hybrid Model: Earnings Releases Without Form 10-Qs
If the rules are adopted, companies could elect semiannual reporting but continue to issue quarterly earnings releases and host earnings calls, effectively maintaining the cadence of quarterly disclosure while shedding the formal Form 10-Q filing obligation. The proposal contemplates a category of "hybrid reporters" that would do exactly that. Whether the approach proves attractive in practice, however, raises important questions.
Companies will need to consider what costs are actually avoided. Projected savings from skipping Form 10-Q filings may be less than they first appear if a company continues to prepare quarterly earnings releases, host earnings calls and post related earnings decks on their websites, engage with analysts, and retain auditors to review quarterly financial statements. The fundamental cost drivers, which include the internal close process, legal and auditor review, and management time, remain.
The SEC has solicited comment on whether earnings releases by semiannual filers should be "filed" rather than "furnished" under Form 8-K. Currently, earnings releases are "furnished" under Item 2.02 and not subject to Section 18 strict liability. If the SEC requires semiannual filers to "file" their earnings releases, and those earnings releases include forward-looking guidance, the resulting litigation exposure could eliminate a key advantage of the hybrid approach.
Public Comment Period
The proposal is subject to a 60-day public comment period following its publication in the Federal Register.
Four Key Takeaways
- The proposal reflects the SEC's current focus on deregulation and represents perhaps the most significant change to periodic reporting requirements in more than 50 years. The proposal does not directly address the potential compounding effect of the switch to semiannual reporting when combined with the possibly substantial changes to Regulation S-K currently being considered, which may reduce or eliminate numerous required disclosures. Companies should consider the change to reporting frequency in conjunction with a possible significant decrease in the quantity of information disclosed by public companies in their periodic reports.
- Companies that elect to report semiannually should understand that the decision is complex and should weigh the unique attributes of their industry, peer practices (including consideration of consistency and market comparability matters), investor expectations, and capital needs to understand whether semiannual reporting is, on balance, in the best interests of their company, shareholders, and other stakeholders.
- Companies that prefer a hybrid approach in which they issue quarterly earnings without a Form 10-Q should consider the costs of semiannual reporting versus quarterly reporting. Will semiannual reporting save a meaningful amount of time and expense, or would the savings be de minimis?
- Companies should monitor what is expected to be a robust comment period for indications of how their various stakeholders view the potential shift to semiannual reporting.
