Form 8-K is the report under the Securities Exchange Act of 1934, as amended, which is utilized to furnish up to date financial and other information. However, the existing Form 8-K permits a company to delay disclosure of many significant events and, thus, the market for the securities does not promptly reflect all significant events. It is a supplement to the quarterly, year-end and other reports required under the 1934 Act.
 
As of now a company is only required to file an 8-K when one of the following events occurred:

• changes in control; 
• acquisition or disposition of a significant amount of assets;
• bankruptcy or receivership;
• changes in certifying accountant;
• resignation of directors;
• changes in Code of Ethics.

Effective August 23, 2004, the SEC will add eight new disclosure items which will trigger an 8-K filing:

1. entry into a material agreement that is not in the ordinary course of business;
2. termination of such a material non-ordinary course agreement;
3. creation of a material direct financial obligation or a material obligation under an off-balance sheet arrangement;
4. triggering events that accelerate or decrease a material direct financial obligation or a material obligation under an off-balance sheet arrangement;
5. material costs associated with exit or disposal activities;
6. material impairments;
7. notice of the listing or failure to satisfy a continued listing rule or standard; and
8. non-reliance on or restatements of previously issued financial statements or a related audit report or completed interim review.

In addition, disclosures as to the sale of unregistered securities, modifications of shareholder's rights, departure or the election of directors or principal officers and amendments to the corporate charter or by-laws were transferred from other periodic reports to trigger an 8-K filing.

Of the items above, 3, 4, 5, 6 and 8 obviously involve the financial professionals. In addition, item 7 often involves financial professionals, because falling below the net tangible book value listing requirement is what most often triggers the failure to continue to qualify for listing on a particular exchange or market. In view of the complexity of some of the issues and computations involved in the new requirements, the SEC's proposed requirement to file an 8-K within two days was changed to four days.
 
The underlying purpose of this amendment and the movements of certain disclosures from other forms to Form 8-K is to ensure more current meaningful information available to the market. The new four-day time limit may pose a very real hardship on the financial professional where there are complex transactions and/or complex compilations. An example would be the computation of costs associates with exit or disposal activities to determine if these costs are material, and, if so, the disclosure of the amount. Another example would be doing the appropriate analysis and computations to determine whether or not a "triggering event" is about to occur. When do you determine when a material impairment has occurred? Also, what happens if there is a week-end in between?

Life for the financial professional involved with public companies just became more intense.

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CHARLES HECHT has been a principal of his own law firm specializing in securities law since 1971. He was previously on the staff of the Division of Corporate Finance of the Securities and Exchange Commission at its headquarters in Washington, DC.