SEC Publishes Draft 2023 Share Repurchase (SHR) Taxonomy for Public Review

SEC Publishes Draft 2023 Share Repurchase (SHR) Taxonomy for Public Review

By Karishma 31 January, 2024
SEC Publishes Draft 2023 Share Repurchase (SHR) Taxonomy for Public Review

I. Introduction
A. Brief Overview of Share Repurchase (SHR)

Share repurchase, often referred to as a “buyback”, is a corporate action in which a company buys back its own shares from the marketplace. The effect of a share repurchase is to reduce the number of outstanding shares on the market, which increases the proportion of shares owned by the investors who did not sell back to the company. This corporate strategy is often used when management believes the company’s shares are undervalued and wishes to return capital to shareholders.

B. Importance of SEC’s Draft 2023 SHR Taxonomy

The Securities and Exchange Commission’s (SEC) draft 2023 SHR Taxonomy is a significant development in the financial world. This taxonomy provides a standardised framework for reporting share repurchase activities, making it easier for investors to understand and compare buyback activities across different companies. By publishing this draft, the SEC is inviting public review and comment, ensuring a comprehensive and robust final taxonomy that takes into account a wide range of perspectives and expertise. This initiative underscores the SEC’s commitment to transparency and accountability in the financial markets.

II. SEC’s Role in Share Repurchases
A. Regulatory Landscape

The Securities and Exchange Commission (SEC) plays a pivotal role in the regulatory landscape of share repurchases. The SEC oversees and regulates all share repurchase activities to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. It ensures that companies disclose key information about their share repurchase programs, including the number of shares purchased, the average price paid per share, the total amount spent on purchases, and the maximum number or value of shares that may yet be purchased under the plans or programs.

B. SEC’s Historical Approach to Share Repurchase Oversight

Historically, the SEC has adopted a balanced approach to overseeing share repurchases. On one hand, it recognizes the potential benefits of share repurchases, such as returning excess capital to shareholders and signalling management’s confidence in the company’s future. On the other hand, it is aware of the potential risks and abuses associated with share repurchases, such as manipulating the company’s stock price or earnings per share. Therefore, the SEC has implemented rules and regulations to govern share repurchases, and it continually monitors and reviews these rules to ensure they remain effective and relevant. The publication of the Draft 2023 SHR Taxonomy is part of the SEC’s ongoing efforts to enhance the transparency and accountability of share repurchase activities.

III. Draft 2023 SHR Taxonomy Unveiled
A. Key Objectives and Features

The Draft 2023 SHR Taxonomy, unveiled by the SEC, aims to standardise the reporting of share repurchase activities. The key objectives of this taxonomy are to enhance transparency, facilitate comparability, and improve the overall quality of financial reporting. The taxonomy features a structured framework that categorises share repurchase data into various elements, each with its own definition, attributes, and relationships. This structured approach allows for more precise reporting and better data analysis.

B. Implications for Corporations and Investors

The introduction of the Draft 2023 SHR Taxonomy has significant implications for both corporations and investors. For corporations, it means they will need to align their reporting practices with the new taxonomy, which may require changes to their data collection and reporting systems. However, this alignment can lead to more efficient reporting processes and improved data quality.

For investors, the taxonomy provides a more transparent view of a company’s share repurchase activities. It allows investors to better understand and compare the share repurchase practices of different companies, which can inform their investment decisions. Overall, the Draft 2023 SHR Taxonomy represents a step forward in promoting transparency and accountability in the financial markets.

Check out the document below that outlines the adopted changes to disclosure requirements regarding share repurchases.

IV. Enhanced Transparency and Standardization
A. Addressing Ambiguities in Share Repurchase Reporting

The Draft 2023 SHR Taxonomy is a significant step towards addressing the ambiguities in share repurchase reporting. By providing a standardised framework for reporting share repurchase activities, it eliminates the inconsistencies and discrepancies that often arise in financial reporting. This standardisation allows for a more accurate and comprehensive understanding of a company’s share repurchase activities, thereby enhancing transparency and accountability.

B. Aligning with Global Reporting Standards

The Draft 2023 SHR Taxonomy also aligns with global reporting standards, ensuring that the financial reporting practices of U.S. companies are consistent with those of their international counterparts. This alignment facilitates cross-border investment and financial analysis, as investors and analysts can easily compare the financial data of companies from different countries. Moreover, it underscores the SEC’s commitment to promoting global financial transparency and standardisation.

V. Potential Impact on Market Dynamics
A. Analysing Market Reactions

The introduction of the Draft 2023 SHR Taxonomy could have a significant impact on market dynamics. Market reactions to this development can be analysed by observing changes in stock prices, trading volumes, and other market indicators. For instance, if the market perceives the new taxonomy as a positive development, it could lead to increased investor confidence and potentially higher stock prices for companies with transparent and favourable share repurchase practices. Conversely, companies with less transparent practices may face market scrutiny, which could negatively impact their stock prices.

B. Influence on Corporate Behaviour and Investor Confidence

The Draft 2023 SHR Taxonomy could also influence corporate behaviour . Companies may become more cautious and transparent in their share repurchase activities to comply with the new reporting requirements. This increased transparency could, in turn, boost investor confidence, as investors would have a clearer understanding of a company’s share repurchase practices. Moreover, the standardised reporting could facilitate better comparison across companies, enabling investors to make more informed investment decisions. Overall, the Draft 2023 SHR Taxonomy could play a crucial role in shaping market dynamics by influencing corporate behaviour and investor confidence.

VI. XBRL requirement of SHR taxonomy

The Securities and Exchange Commission adopted amendments to modernise and improve disclosure about repurchases of an issuer’s equity securities that are registered under the Securities Exchange Act of 1934.

The amendments require additional detail regarding the structure of an issuer’s repurchase program and its share repurchases, require the filing of daily quantitative repurchase data either quarterly or semi-annually, and eliminate the requirement to file monthly repurchase data in an issuer’s periodic reports.

As part of the adopted amendments, the Commission is requiring issuers to tag the information disclosed pursuant to Items 601 and 703 of Regulation S-K (Regulation S-K is a Securities and Exchange Commission (SEC) regulation that outlines how registrants should disclose material qualitative descriptors of their business on registration statements, periodic reports, and any other filings. The text of Regulation S-K can be found in 17 CFR Part 229.), Item 16E of Form 20-F, Item 14 of Form N-CSR, and Form F-SR in Inline eXtensible Business Reporting Language (XBRL).

The SHR taxonomy covers all the relevant disclosures, although their corresponding XBRL data items depend both on the Form (10-K, 10-Q, 20-F, N-CSR and F-SR) and whether the disclosures must appear in the primary document of the corresponding EDGAR submission type, or in an exhibit to such a submission.

There are three parts of disclosure encompassed by the SHR taxonomy. These separate parts are organised as XBRL taxonomy entry points :

– Main entry point: a narrative disclosure concerning repurchase policies.
It appears in the four financial statement form types 10-K, 10-Q, 20-F, and N-CSR.
– 10b51 entry point: A narrative disclosure concerning repurchases as part of Rule
10b5-1 trading plans. It appears only in forms 10-K and 10-Q.
– exhibit entry point: a tabular disclosure of actual share repurchases that appears in a
separately attached exhibit to forms 10-K and 10-Q for each quarter, in Form N-CSR biannually, or in a quarterly Form F-SR for Foreign Private Issuers.


The SEC’s Draft 2023 SHR Taxonomy for share repurchases represents a significant advancement in financial reporting standards. By standardising the reporting of share repurchase activities, it enhances transparency, facilitates comparability, and improves the overall quality of financial reporting. This initiative not only aligns with global reporting standards but also addresses ambiguities in share repurchase reporting, thereby influencing corporate behaviour and boosting investor confidence.

However, the successful implementation of this taxonomy requires active engagement from all stakeholders, including corporations, investors, and industry experts. Their feedback is crucial in refining the taxonomy and ensuring its relevance and effectiveness. Looking ahead, the Draft 2023 SHR Taxonomy could have profound implications for corporate governance and market dynamics, underscoring the importance of continuous refinement and improvement.

In conclusion, the Draft 2023 SHR Taxonomy is a testament to the SEC’s commitment to promoting transparency and accountability in the financial markets. It is a step forward in the right direction, paving the way for more informed decision-making by investors and more responsible corporate behaviour . As we move forward, it is essential to continue this momentum and strive for even greater transparency and standardisation in financial reporting.