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Maintain the Materiality Standard for Public Company Disclosure

In a new white paper published today, America’s business leaders underscore the importance of upholding a cornerstone of the U.S. securities laws: the “materiality standard” for public company disclosure. This standard helps to ensure investors receive the important and relevant information needed for making investment and voting decisions.

“The Materiality Standard for Public Company Disclosure: Maintain What Works” explains how a growing number of disclosure requirements and proposals, such as whether a company’s products have even a trace amount of minerals from the Democratic Republic of the Congo, threaten to overload investors with immaterial or misleading information and undermine the core mission of the U.S. Securities and Exchange Commission.   

“Despite the undeniable benefit to investors of the materiality standard, some recently adopted laws and rules have deviated from this time-tested principle,” said John Hayes, Chairman, President and CEO of Ball Corporation, and Chair of the Business Roundtable Corporate Governance Committee. “U.S. investors will face a rising tide of confusing and immaterial information. The federal securities laws and policymakers should focus on disclosing information that is material to investors and not be used as a backdoor to address societal concerns unrelated to investor protection.”

As the report details, since the concept was introduced in the Securities Act of 1933, the materiality standard has governed public company disclosure and effectively served investors, markets, capital formation and the broader economy. It has successfully filtered out irrelevant and immaterial information and constantly evolves to recognize the changing conditions and the unique circumstances of each public company.

Click here to read the paper and learn about the need to preserve the materiality standard.  

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