Introduction to Form 10 K
As per Section 13 or 15(d) of the Securities Exchange Act of 1934, Form 10 K is a comprehensive Corporation Annual report filed with the U.S. Securities and Exchange Commission (SEC) by all the companies listed on various stock exchanges registered with SEC under Section 6(a) of Exchange Act. This report provides detailed information about the company’s financial and current business conditions and contains annual audited Financial Statements and schedules. Form 10 K is a distinct document from ‘the annual report to shareholders and is shared with each shareholder before the annual meeting to elect directors.
Timelines for Submission of Form 10 K
Three different timelines are given by SEC based on the category of Filers:
- Large Accelerated Filers: Large Accelerated Filers are publicly listed companies with a public float of $ 700 Million or more. As per SEC, such companies have to file Form 10 K within 60 days after the completion of the fiscal year covered in the report.
- Accelerated Filers: Accelerated Filers are publicly listed companies with a public float of more than $ 75 Million and less than $ 700 Million. As per SEC, such companies have to file Form 10 K within 75 days after the completion of the fiscal year covered in the report.
- Non-Accelerated Filers: Non-Accelerated Filers are publicly listed companies with a public float of less than $ 75. As per SEC, such companies have to file Form 10 K within 90 days after the completion of the fiscal year covered in the report.
Components of Form 10 K
As above mentioned figure exhibits, Form 10 K consists of 4 main sections:
Part I: Business Details
Part I of Form 10 K gives a complete introduction to the Business. This has many sub-sections that are listed below:
This section captures the complete Introductory detail of the Business, what are the various segments of the business, the Details of Competition available in the Market, and the Regulations that are associated with this business.
- Risk Factor: Details of all the risks involved in the business. This section also explains the factors that can impact the Business.
- Unresolved Staff Comments: If the filer received written comment from SEC staff regarding any periodic report not less than 180 days before the end of fiscal relating, such comments remained unresolved. This section will disclose the details of any such unresolved comments and the position of filers on such comments.
It contains details of all the offices and assets held by the Business.
3. Legal Proceedings:
Details of all the judicial, regulatory, and arbitration proceedings concerning matters arising in connection with the conduct of businesses.
4. Mine Safety Disclosures:
It is a health and safety report that is submitted to SEC and generally contains details like Mining related fatalities, orders related to the identification of imminent danger, pending legal action before regulatory bodies, etc. If applicable, then only companies will provide this information.
Part II: Financial Details
5. Details of Sell and Purchase of Equity Securities:
This subsection covers details of all the equity securities of the registrant sold during the fiscal year covered in form 10 K, also; in the report, they furnish the information of any buyback made in a month within the fourth quarter of the fiscal year covered by the report.
6. Company’s Financial Data:
Provide financial information about the company for the last 5 years.
7. Management’s Discussion and Analysis of Financial Condition and Result of Operations:
In this section, the company gives its viewpoint on the past year’s financial and Business performances, Management Discussions on the various risk associated with business, and Details of critical accounting estimates and Judgements.
- Disclosures of Market Risk: All companies in this section give information about business exposure to Market Risk. In this section, all the strategy taken or to be taken by management is also mentioned.
8. Financial Statements and Other Supporting Data:
This section includes the Audited Financial Statement, Financial Schedule, and Exhibit of the last 3 Years.
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure:
It is a disclosure from the company in case of a change of Accountants, with all details of any disagreement between the management and accountants.
Part III: Management Details
10. Details of Board Members and Higher Management:
This section contains information related to the experience and qualification of the company’s director and Executive officers and complete professional details related to a member of the Board of the company.
11. Details of Compensation paid to Executives:
The company here discloses the details of Compensation paid to the CEO, CFO, and other highly compensated Executive officers. A also must highlight the process followed in taking decision-related on the compensation of executives.
12. Information on Security Holding Pattern:
Disclose the shareholding pattern with the details of shares held by the Promoters, FPIs, FIIs, and shares covered by an equity compensation plan.
13. Details of Relationships and Related Transactions, Director Independence:
Disclose information related to the professional and personal relationship between the company, its directors, officers, and their family members.
14. Fees paid to the Accountant and Details of the Services Taken:
In this Section, the company disclosed the compensation they paid to their accounting firm in the last two fiscal years.
Part IV: Financial Statement, Schedule, and Exhibit
15. The exhibit, Financial Statements, and Schedule:
Following Documents were filed as part of the Report under this part:
- Financial Statements
- Financial Schedules
- Separate financial statements of an associated entity whose securities are pledged as collateral
Benefits of Form 10 K
Given below are some benefits mentioned:
- Form 10 K explains the Company’s Finance, and Risk and gives an idea about the future prospect of Management.
- Form 10 K is a prospectus for potential investors to take their investment decisions.
- Form 10 K is an important document introduced by the SEC to ensure transparency for the investors and to ensure true information flow.
Form 10 K is an annual report which consists of information like background, Organization Structure, financial details, Management details, and any other relevant information and is the most detailed and important document available in the public domain that acts as a prospectus for investors. This annual report needs to be submitted to the US Security and Exchange Commission (SEC) by every publicly listed company.
This is a guide to Form 10 K. Here we discuss the introduction and components of form 10 K which includes, business and financial details, etc., along with the benefits of form 10 K. You may also look at the following articles to learn more –