The U.S. Securities and Exchange Commission on Wednesday voted to give companies more flexibility in disclosing risk factors and legal proceedings in their financial statements. The SEC approved an amendment to Regulation S-K, which serves as the basis of disclosure requirements for U.S. public companies. Regulation S-K hasn’t undergone significant changes in more than 30 years, the SEC said. The regulator had proposed the revisions a year ago. The move is part of a wider regulatory shift from strict guidance toward principles-based disclosure that aims to simplify information for companies and investors.

Under the new rule, companies must provide a summary of no more than two pages if their risk factor section exceeds 15 pages. Including many general risks to that section tends to add to the complexity of statements without providing investors much additional insight, the regulator said. Wednesday’s changes also alter disclosure requirements on environmental legal proceedings. Companies currently have to disclose information on those proceedings involving the U.S. government if monetary sanctions in the case exceed $100,000. The new rule raises that threshold to $300,000.

SEC to Allow Businesses More Flexibility in Disclosing Risk, Legal Information – WSJ