An 8-K, or Form 8-K, is a report intended for shareholders and the Securities and Exchange Commission (SEC), outlining any unscheduled or unplanned material events or corporate changes in a company. Some examples of these events or changes include acquisitions, bankruptcy, changes in leadership, or changes in finances for the year.
Companies are legally required to submit an 8-K to the SEC if there are any major changes relevant to shareholders. For items in the 8-K, companies have four days to file the form so that the information is always timely. The SEC then makes the form publicly available through the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) platform.
On the SEC website, you can find a list of requirements for and reasons to file Form 8-K.
What Is the Purpose of Form 8-K?
For shareholders, an 8-K is essential as it gives a timely idea of what changes are occurring in a company. For instance, if you are an investor in a large retail property and that retail property suddenly goes bankrupt, as an investor, you have a right to know that.
Even in non-emergency situations, though, an 8-K is essentially a way for companies to communicate directly with investors, passing on noteworthy information, like, perhaps, a new real estate acquisition, or a significant increase in property value. This is an easy way for investors to learn about their investments without having to find out important information later in the news or through word of mouth.
Form 8-K is also a good way to keep a record of changes, which might help with research on future investments.
Downsides of a Form 8-K
The main downside of filing an 8-K is that they require ample company time and money. The forms are often complicated and take a while to prepare and submit, and if a company files late, they can incur penalties.
Sometimes, requirements like an 8-K can even deter a small company from going public at all — simply because they don’t have the resources to complete and file the necessary SEC forms.