Securities Regulation Daily Wrap Up, PUBLIC COMPANY REPORTING AND DISCLOSURE—Rulemaking petitions seek disclosure of China supply chains, recission of diversity disclosure mandates, (Jun 17, 2026)
New petitions urge the SEC to make changes to diversity nomination disclosures and act on expanding China risk guidance.
Two new rulemaking petitions ask the SEC to address disclosure issues regarding China and board diversity. The petitions are unrelated and brought by separate parties, and one asks that the Commission rescind the diversity disclosure mandates in Item 407 of regulation S-K and replace them with a certification that diversity was not considered in the director nomination process. The other asks for guidance on disclosing risks associated with this country's dependence on China as a supplier of crucial materials and goods.
Diversity disclosure. A petition brought by America First Legal looks to rescind and amend Item 407(c)(2)(vi) of Regulation S-K (17 C.F.R. § 229.407(c)(2)(vi)) and related items to eliminate the current diversity and disclosure mandates. Amendments implemented in 2009 require disclosure about how “diversity” is considered in the director nomination process. The petition argues that these disclosures conflict with federal civil rights law and current executive policy and exceed the Commission's authority by compelling corporate speech to advance social policy goals.
The petition asks the Commission to initiate rulemaking to rescind the diversity disclosure mandates in Item 407(c)(2)(vi) and replace them with a certification requirement. The proposed certification would attest that:
"neither the nominating committee nor the board of directors, nor any person acting on their behalf, considered race, sex, gender, ethnicity, religion, nationality, disability, sexual orientation, cultural background, socio-economic or demographic characteristics, or proxies for these characteristics, directly or indirectly, in any aspect of identifying, evaluating, recruiting, nominating, or selecting any candidate for election to the board of directors." Item 407 currently requires a description of whether and how the nominating committee considers diversity in identifying nominees.
The petition also asks that Forms S-1, S-11, F-1, and F-10 be amended to cross reference the revised Item 407(c)(2)(vi). C&DIs touching on the issue, specifically Item 401 Question 116.11 and Item 407 Question 133.13, will also need to be rescinded. Finally, the petition asks that all SROs be directed to remove all similar rules mandating consideration of diversity characteristics in board nominations, selections, or proxy disclosures.
China disclosure. A petition by the Free Enterprise Project of the National Center for Public Policy Research asks the Commission to issue guidance about disclosing possible supply chain risks caused by a break in relations between the U.S. and China. American companies—and the economy as a whole—are entangled with and reliant upon China, the petition says, and a break in relations could catastrophically affect US companies and the US as a nation.
The petition says that Communist China has chosen to fight the U.S. with trade, rather than a risky and unpredictable war, and has become a key supplier of many raw and processed materials and finished goods that are vital to the U.S. economy and society. If relations with China sour, the U.S. risks losing access to, among other necessities: rare earth elements and refined minerals; pharmaceutical ingredients; electronics and components; lithium-ion batteries; chemicals and plastics; and affordable consumer goods.
The petition points out that China has already increased the use of export controls and, in the event of a total break in relations, there could be a significant, even catastrophic, impact on companies. For example, China has a near-monopoly on metals critical to modern warfare and dominates vital material processing. The petitioner also cites examples of what it sees as China's ambition to become the world's leading power by 2049.
Current disclosures of the risks of relying on China are vague and inadequate, the petition asserts. And, while the Commission has issued previous guidance about doing business in China, the guidance did not address the scenario that the petition contemplates. The petition asks that the Commission, using existing regulatory powers, remedy this situation and issue guidance regarding disclosure of the risks from supply chain disruptions that may be caused by an abrupt break in relations between the US and Communist China.
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