Companies are facing more attacks on their information systems. And, as their cyber risk skyrockets, the SEC has stepped in with new regulations, telling businesses what to disclose about these incidents — and requiring detailed disclosures on cyber risk management more broadly. With the deadline for compliance fast approaching, businesses are scrambling to mitigate their legal risk and comply with regulations that some say may be an overreach.
On July 26, 2023, the U.S. Securities and Exchange Commission finalized its rule on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies (the Final Rule), which will become effective 30 days following publication in the Federal Register. The Final Rule applies to all public companies subject to the reporting requirements of the Securities Exchange Act of 1934, including foreign private issuers, smaller reporting companies, and business development companies, and will require disclosure of material cybersecurity incidents on Form 8-K and Form 20-F and periodic disclosure of cybersecurity risk management, strategy, and governance in annual reports on Form 10-K and Form 20-F.
On March 9, 2022, the U.S. Securities and Exchange Commission (SEC) proposed new cybersecurity rules to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance, and incident reporting by public companies. The text of the proposed rules is available here. The SEC proposal would continue to ratchet up cybersecurity as an increasingly critical dimension of corporate governance.
Key takeaways from the SEC’s release include the following: (more…)