What Was Item 301 and Why Was It Eliminated?

Item 301 of Regulation S-K was a disclosure rule from the U.S. Securities and Exchange Commission (SEC) that required public companies to present a summary of financial numbers in a standardized table. This table provided a snapshot of a company’s performance over the previous five fiscal years. As part of an effort to modernize reporting obligations, the SEC eliminated the Item 301 requirement effective in 2021. Companies are no longer mandated to provide this specific five-year table in their annual reports and other registration statements.

Required Disclosures Under Former Item 301

When it was in effect, Item 301 mandated the disclosure of several high-level financial data points in a comparative columnar format for the last five fiscal years. The purpose was to give investors a quick way to view financial trends. The table began with a company’s top-line performance, requiring disclosure of net sales or revenues.

It then moved to profitability, mandating the inclusion of income or loss from continuing operations and the corresponding per-share amount. To provide insight into a company’s financial position, the rule required the disclosure of total assets. The table also included long-term obligations, including capital leases, and cash dividends declared per common share for companies that paid them.

Rationale for Elimination

The SEC’s decision to eliminate Item 301 was driven by a desire to modernize disclosure rules and reduce redundant reporting for public companies. A reason for the change was the recognition that the information in the five-year summary table was largely duplicative. Investors and analysts could already find this data within the audited financial statements that companies are required to file, and prior years’ reports are readily accessible.

The elimination was part of a broader initiative by the SEC to simplify Regulation S-K and shift toward a more principles-based approach to disclosure. This reduces compliance costs and allows companies to better tailor their disclosures to their unique circumstances and focus on information that is most relevant to understanding their business.

This change also acknowledged the evolution of information access. With corporate filings available through the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system, compiling five-year data is less burdensome for investors than it was in the past.

Locating Similar Financial Data Today

Although the five-year summary table from Item 301 is gone, all the underlying financial information remains available within a company’s SEC filings. The most direct substitute for the trend analysis offered by the old table is found in Item 303 of Regulation S-K, the Management’s Discussion and Analysis (MD&A) section. The MD&A requires management to discuss the company’s financial condition and results of operations, often including year-over-year comparisons and analysis of known trends.

For the raw numbers, investors must now look to the primary financial statements. The income statement will contain data on revenues and net income, while the balance sheet provides details on total assets and long-term obligations. The statement of cash flows and the statement of stockholders’ equity will contain information related to dividends paid, and reviewing these statements allows an investor to access the detailed data.