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Form 8-K: Things You Need to Know About Companies Whose Stock You Own

By Bradley Seth McNew – Updated Oct 10, 2018 at 12:59PM

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SEC filings can be tricky. Here's what you need to know about Form 8-K.

One way to keep up with what's going on with the companies you own stock in is to check out the forms they are required to file with the U.S. Securities and Exchange Commission. (Company filings can be found through the SEC's EDGAR database.) An 8-K is a filing that companies use to relate important but irregular corporate events to the public. The form has many components investors need to know about.   

The Securities and Exchange Commission requires all companies publicly traded on a U.S. stock exchange to regularly report certain events that are relevant to investors. These include the main annual (10-K) and quarterly (10-Q) earnings reports. Publicly traded companies must file an 8-K in the event of any material event (other than those that occur regularly, such as earnings) that would be important to investors.

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What is a "material event"?
There are many reasons a company would file an 8-K, making it one of the required forms most commonly submitted to the SEC. These material events could be anything from changes in corporate management to acquisitions to an updated fiscal year end date.

An 8-K is sometimes called a "current report" as it provides a snapshot of a material event and must be filed with the SEC within four business days of the event. (Compare that to a 10-K, which often is released months after the end of the fiscal year.)

What to look for in 8-K filings
Here are most of the main material events that you might find listed in an 8-K, and what investors need to know about them. You can see the full SEC rundown on how to read an 8-K at Investor.gov.

  • Entry into a Material Definitive Agreement
    • This could be something like taking out a major loan with a bank or leasing land from another company. A company must also file an 8-K when terminating this kind of agreement, as well as when events happen (such as loan defaults) that speed up or increase a financial obligation.
  • Bankruptcy
    • Bankruptcy filings under Chapter 11 (reorganization) or Chapter 7 (liquidation) must be reported via an 8-K. The 8-K will disclose the action being taken, but investors might need to dig deeper to determine if the company's common stock is being canceled in the process.
  • Completion of Acquisition or Disposition of Assets
    • This includes the completion of a merger, one company buying another, or a company disposing of a significant amount of assets through a deal similar to a merger. The company also must report any costs associated with that disposal of assets.
  • Material Impairments
    • A material impairment, or writedown, doesn't always make it to an 8-K because companies can include it in their periodic reports. Writedowns reported via an 8-K usually occur when a single event significantly lowers the estimated value of certain company asset immediately. 
  • Unregistered Sales of Equity Securities
    • This is the private sale of securities exceeding 1% of the company's outstanding shares (of that class of shares). Public offerings aren't reported in an 8-K.
  • Material Modification to Rights of Security Holders
    • Shareholders have certain voting rights and other rights. When a company changes these rules and rights, such as by issuing a new class of shares that has more rights than common shareholders, it must be reported in an 8-K.
  • Changes in Control of Registrant; Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
    • A change in the control of the company (by percentage of stock owned, etc.), a change in directors or officers, and changes in compensation for high-level officers must be disclosed via an 8-K.
  • Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
    • This filing is required when the company changes its articles of incorporation, bylaws, or fiscal year dates.

Reading 8-Ks is just one step to being a knowledgeable investor. If you're looking for more help on the road to investing, check out The Motley Fool's 13 Steps to Investing Foolishly.

Bradley Seth McNew owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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