DRAFTING TIPSHOW TO DRAFT MDA UNDER THE NEW SEC GUIDANCE监管新规下如何起草并购报告须知.pdfVIP

Reprinted by permission. Securities Regulatory Update, May 28, 2002. HOW TO DRAFT MDA UNDER THE NEW SEC GUIDANCE by Stephen Older, Ronald R. Adee and Yukiko Takeuchi The SEC has always emphasized the role the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MDA”) plays in providing investors with a clear understanding of a reporting company’s current and prospective financial position and operating results. The bankruptcy of Enron Corp. in December 2001 triggered a crisis of confidence in our financial markets and prompted the SEC to issue a number of releases1 aimed at providing guidance to improve the quality of disclosure in the MDA of reporting companies.2 This guidance applies to all companies subject to the periodic reporting requirements of the Securities Exchange Act of 1934, including small business issuers and foreign private issuers. In particular, the SEC has indicated that it will focus on monitoring the MDA of Fortune 500 companies. General Considerations Despite the SEC’s contention that it did not create new rules or requirements, much of its new guidance recommends disclosure that is not generally found in current MDA disclosure practice. As the SEC will be subjecting MDA to greater scrutiny than it has in the past, a reporting company should draft its MDA to specifically reflect the SEC’s guidance in a manner that would be evident to an SEC reviewer. Although not required, a reporting company might consider taking the following steps in order to demonstrate its responsiveness to the guidance issued by the SEC. Use “Plain English” Write the company’s MDA in simple, understandable English. The SEC is clearly seeking to make MDA more understandable and transparent to the investing public. The requirement for “plain English” does not apply to the MDA, but a company s