Learn something new every day
More Info... by email
Disclosure regulations are laws that require an individual or an entity to reveal factual information to outside individuals or entities. In other words, pursuant to disclosure laws, individuals and entities may be compelled to divulge what was previously considered private information. For example, a property seller may be obliged in some jurisdictions to provide a potential buyer with a statement detailing any defects the seller knows exist on the property. Most governments have enacted disclosure regulations that cover multiple areas of law, including corporate law, real estate law, and banking law. Manufacturing, retail sales, and gaming are examples of other industries that are often governed by disclosure regulations.
In the corporate context, disclosure laws often require companies to report detailed financial and operating information as well as management compensation structures to government agencies. In the United States, for example, the Securities and Exchange Commission (SEC) is the agency responsible for monitoring and implementing disclosure regulations. The SEC requires companies to follow these laws in order to be listed on major United States stock exchanges. If the SEC finds that a company has engaged in disclosure fraud, the company and its directors and officers may face significant criminal and civil penalties.
The amount of information that a company is required to disclose generally depends on whether the company is privately or publicly owned. Publicly owned companies usually must provide more detailed information than privately owned companies. Smaller, privately owned companies may, however, be subject to additional disclosure regulations if they sell shares to investors in order to raise capital.
Many real estate transactions are governed by disclosure regulations. Some states, provinces, and countries require sellers to reveal physical conditions to potential buyers, such as whether a piece of property is situated in a flood plain. Other real estate disclosure laws require sellers to divulge any defects that would impact a property’s value. Generally, these laws are intended to protect innocent buyers from purchasing a property that contains material defects, which are unknown to the buyer at the time of the transaction. Real estate disclosure regulations can be difficult to interpret in some cases, and debates over what constitutes a material defect often arise between buyers and sellers.
Banking disclosure laws usually require banks or other financial lending institutions to divulge credit and lending information to their customers. For example, if an individual takes out a car loan from a bank, the bank is usually required by law to disclose the terms and conditions of the loan. Although credit and lending disclosure laws vary from country to country, information subject to disclosure often includes minimum monthly payments, finance charges, interest rate computation, and the process for handling billing dispute.
One of our editors will review your suggestion and make changes if warranted. Note that depending on the number of suggestions we receive, this can take anywhere from a few hours to a few days. Thank you for helping to improve wiseGEEK!