--- title: Sullivan Blogs | SEC Pulse | Rule 3-14 description: Rule 3-14 | Sullivan's SEC Pulse blog provides updates and commentary from our Capital Markets Group on issues affecting publicly traded and privately owned businesses, investment banks and foreign companies who trade or raise capital in the United States, and boards of directors and company officers in securities transactions and corporate governance matters. --- ![SEC Pulse Header NEW-1](https://blog.sullivanlaw.com/hs-fs/hubfs/SEC%20Pulse%20Header%20NEW-1.jpg?width=943&name=SEC%20Pulse%20Header%20NEW-1.jpg "SEC Pulse Header NEW-1") ## [SEC Proposes Changes to REG S-X](https://blog.sullivanlaw.com/secpulse/sec-proposes-changes-to-reg-s-x) Posted by [Howard Berkenblit](https://blog.sullivanlaw.com/secpulse/author/howard-berkenblit) on May 6, 2019 at 12:34 PM - [Tweet](https://twitter.com/share) The Securities and Exchange Commission proposed [amendments](https://www.sec.gov/rules/proposed/2019/33-10635.pdf) to the financial disclosure requirements in Rules 3-05, 3-14, and Article 11 of Regulation S-X, as well as related rules and forms, for financial statements of businesses acquired or to be acquired and for business dispositions. The proposed changes are intended to (1) improve for investors the financial information about acquired and disposed businesses; (2) facilitate more timely access to capital; and (3) reduce the complexity and cost to prepare the disclosure. The proposals will be subject to public comment, following which the SEC may make additional revisions before adopting any changes. The proposed changes would, among other things: - update the significance tests under these rules by revising the investment test and the income test, expanding the use of pro forma financial information in measuring significance, and conforming the significance threshold and tests for a disposed business; - require the financial statements of the acquired business to cover up to the two most recent fiscal years rather than up to the three most recent fiscal years; - permit disclosure of financial statements that omit certain expenses for certain acquisitions of a component of an entity; - clarify when financial statements and pro forma financial information are required; - permit the use in certain circumstances of, or reconciliation to, International Financial Reporting Standards as issued by the International Accounting Standards Board; - no longer require separate acquired business financial statements once the business has been included in the registrant’s post-acquisition financial statements for a complete fiscal year; - align Rule 3-14 with Rule 3-05 where no unique industry considerations exist; - clarify the application of Rule 3-14 regarding the determination of significance, the need for interim income statements, special provisions for blind pool offerings, and the scope of the rule’s requirements; - amend the pro forma financial information requirements to improve the content and relevance of such information; more specifically, these improvements would include disclosure of "Transaction Accounting Adjustments," reflecting the accounting for the transaction; and "Management’s Adjustments," reflecting reasonably estimable synergies and transaction effects; and - make corresponding changes to the smaller reporting company requirements in Article 8 of Regulation S-X. 0 Comments [Click here to read/write comments](https://blog.sullivanlaw.com/secpulse/sec-proposes-changes-to-reg-s-x#comments-listing) Topics: [Securities and Exchange Commission](https://blog.sullivanlaw.com/secpulse/topic/securities-and-exchange-commission), [Rule 3-14](https://blog.sullivanlaw.com/secpulse/topic/rule-3-14), [Regulation S-X](https://blog.sullivanlaw.com/secpulse/topic/regulation-s-x), [Rule 3-05](https://blog.sullivanlaw.com/secpulse/topic/rule-3-05) [All posts](https://blog.sullivanlaw.com/secpulse/all) [![Sullivan 4c](https://blog.sullivanlaw.com/hs-fs/hubfs/Sullivan%20logos/Sullivan%204c.png?width=220&name=Sullivan%204c.png "Sullivan 4c")](http://www.sandw.com) ### About the Blog --- The SEC Pulse provides updates and commentary from our Capital Markets Group on issues affecting publicly traded and privately owned businesses, investment banks and foreign companies who trade or raise capital in the United States, and boards of directors and company officers in securities transactions and corporate governance matters. *The material on this site is for general information only and is not legal advice. 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