The Challenge
On September 16, 2026, the SEC proposed amendments to eliminate the Annual Report to Shareholders (ARS) requirement for issuers with a Form 10-K on file. For decades, public companies have maintained parallel disclosure tracks: the Form 10-K filed with the SEC and an ARS distributed alongside proxy statements. These documents contain substantially identical information, yet compliance teams have managed them as separate production cycles with different formatting, review processes, and distribution timelines.
This duplication created unnecessary friction. Companies prepared glossy annual reports, Form 10-K wraps, or submitted the Form 10-K itself as an ARS filing on EDGAR. Each approach required legal review, financial statement reconciliation, and coordination between investor relations, corporate communications, and outside counsel. The only unique items in the ARS were the Item 201(e) stock performance graph and certain disclosures about changes in certifying accountants under Item 304(a) of Regulation S-K, information already available through Form 8-K Item 4.01 filings.
The SEC's proposal targets this redundancy. Under the proposed rules, an issuer satisfies Rule 14a-3(b) by filing its Form 10-K for the most recent fiscal year on EDGAR before sending the proxy statement. No separate ARS would need preparation, submission, or delivery.
The Environment and Constraints
The regulatory framework supporting the ARS requirement dates to an era when EDGAR didn't exist and shareholders received paper documents by mail. Rule 14a-3(b) currently requires that proxy statements for director elections be accompanied or preceded by an annual report, assuming shareholders needed a comprehensive annual disclosure document separate from the proxy materials.
Three developments have eroded that rationale. First, EDGAR made all filed documents available electronically, searchable, and hyperlinked. Second, electronic communication became the norm, with shareholders accessing materials online. Third, market practice shifted toward streamlined disclosure, with most issuers already treating the Form 10-K as their primary annual disclosure vehicle.
The SEC estimates roughly 90% of filers would rely on the Form 10-K under the new rules, eliminating the ARS entirely. The remaining 10% would furnish a conforming annual report on EDGAR as a Form ARS but wouldn't have to deliver it to shareholders. Investment companies face different requirements and would retain certain disclosures, but for operating companies, the path forward is clear: one annual disclosure document, not two.
The proposal preserves optionality. Issuers can continue to send a Rule 14a-3 annual report voluntarily, including glossy reports for investor relations purposes. Such reports would still be submitted on EDGAR as a Form ARS separate from the Form 10-K and would remain furnished rather than filed, staying outside Section 18 liability under the Securities Exchange Act of 1934.
The Approach Taken
The SEC structured the proposal to eliminate duplication without creating disclosure gaps. For the Item 201(e) stock performance graph, the proposal removes the requirement for all registrants except investment companies. Business development companies and face-amount certificate companies would keep it but move it to the Form 10-K, preserving parity with other regulated funds. This aligns with the SEC's pending filer status simplification proposal, which would relieve most registrants of the graph while retaining it for investment companies.
For disclosure of changes in certifying accountants under Item 304(a) of Regulation S-K, the information remains available through Item 4.01 of Form 8-K. Investors don't lose access to the disclosure; they simply find it in a different, already-mandated filing.
The proposal also relocates the undertaking currently in Rule 14a-3(b)(10) to Note F of Schedule 14A. This preserves the obligation for issuers other than registered investment companies to provide the Form 10-K without charge on request, maintaining investor access while eliminating the separate ARS production cycle.
Parallel changes would apply to information statements under Rule 14c-3, extending the streamlining to written consents and other corporate actions taken without a meeting.
Results and Metrics
The SEC hasn't published final cost-benefit analyses pending the comment period, but the proposal identifies several measurable impacts. Commissioner Mark Uyeda stated that "eliminating duplicative or outdated requirements reduces unnecessary compliance costs for issuers and intermediaries." The SEC's estimate that roughly 90% of filers would rely on the Form 10-K quantifies the scope of change.
For compliance teams, the practical effect is one fewer document in the proxy production cycle. This reduces legal review hours, printing and distribution costs for issuers that still mail materials, and coordination overhead between departments. It also compresses timelines, since teams no longer need to synchronize ARS preparation with proxy statement drafting.
The proposal doesn't eliminate all flexibility. Issuers that value a glossy annual report for investor relations or branding purposes can continue producing one, but they do so as a voluntary choice rather than a regulatory mandate. The difference is that compliance teams can now allocate resources based on strategic value rather than checkbox requirements.
Considerations for Future Changes
The SEC's proposal doesn't include a retrospective on what it would change, but the structure of the amendments reveals lessons about regulatory design. The 20-business-day incorporation-by-reference deadline, which the proposal also eliminates, serves as an example. That requirement applied principally to transactional proxy statements rather than routine annual meeting materials, creating calendar constraints in mergers and business combinations. The SEC now proposes eliminating the period entirely, reasoning that incorporated documents are available on EDGAR, hyperlinked in the incorporating filing, and can be sent electronically on request.
The SEC acknowledges that a compressed schedule could leave some shareholders, particularly retail investors, less time to locate and review incorporated information. It asks whether a shorter fixed period, such as ten business days, should be retained instead. This reflects a tension between flexibility for issuers and protection for shareholders who may not actively monitor EDGAR.
Takeaways for Your Organization
If the SEC adopts these amendments, your proxy production process will change. Start by mapping your current ARS workflow: who drafts it, who reviews it, how it's formatted, and when it's distributed. Identify which elements would move to the Form 10-K and which you'd retain voluntarily.
Consider whether your organization benefits from a voluntary annual report. If your investor base values glossy reports or if you use the ARS for marketing to analysts and institutional investors, you can continue producing one. The difference is that it becomes a strategic choice, not a compliance requirement.
Review your incorporation-by-reference practices. If you're planning a merger or business combination, the elimination of the 20-business-day minimum could compress your transaction timeline. Coordinate with your legal team to understand how this affects your calendar flexibility and whether you need to adjust shareholder communication strategies.
Finally, update your internal controls. If you eliminate the ARS, your Form 10-K becomes the sole annual disclosure document for proxy purposes. Ensure your disclosure controls and procedures reflect that shift, and confirm that your investor relations team understands where shareholders will find information previously included in the ARS.
