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SEC Allows "Test the Waters" Communications for All Companies

Posted by Howard Berkenblit on September 26, 2019 at 3:25 PM

Yesterday the SEC adopted a new rule 163B (Final rule release can be found here) that extends a “test-the-waters” accommodation—currently a tool available to emerging growth companies or “EGCs”—to all issuers.

Under the new rule, all issuers will be allowed to engage in test-the-waters communications with qualified institutional buyers and institutional accredited investors regarding a contemplated registered securities offering prior to, or following, the filing of a registration statement related to such offering. These communications will be exempt from restrictions imposed by Section 5 of the Securities Act on written and oral offers prior to or after filing a registration statement. Under the rule there are no filing or legending requirements; the communications are deemed “offers”; and issuers subject to Regulation FD will need to consider whether any information in a test-the-waters communication would trigger disclosure obligations under Regulation FD or whether an exemption under Regulation FD would apply.

Topics: SEC Filings

Reminder: SEC fees to increase on October 1st

Posted by Howard Berkenblit on September 25, 2019 at 11:26 AM

As a reminder, effective on Tuesday, October 1st, the SEC’s registration fees will increase to $129.80/million dollars registered, an increase from $121.20/million dollars registered.

It is essential that companies pay the accurate registration fee prior to filing or else their registration statements may be rejected by the SEC.

Topics: SEC Filings

SEC Proposes Amendments to Accelerated and Large Accelerated Filer Definitions

Posted by Howard Berkenblit on May 9, 2019 at 12:48 PM

The SEC today voted to propose amendments to the definitions of "accelerated filer" and "large accelerated filer," which are used to determine, among other things, the filing deadlines for periodic reports and the requirement for providing an audit of internal control over financial reporting (ICFR). 

The proposed amendments would better align the definition of accelerated filer with recent changes to the definition of "smaller reporting company" (SRC). The amendments would:

  • Exclude from the accelerated and large accelerated filer definitions an issuer that is eligible to be an SRC and had no revenues or annual revenues of less than $100 million in the most recent fiscal year for which audited financial statements are available
  • Increase the transition thresholds for accelerated and large accelerated filers becoming a non-accelerated filer from $50 million to $60 million and for exiting large accelerated filer status from $500 million to $560 million
  • Add a revenue test to the transition thresholds for exiting both accelerated and large accelerated filer status

As a result of the proposed amendments, smaller reporting companies with less than $100 million in revenues would not be required to obtain an attestation of their ICFR from an independent outside auditor. 

The proposals will be subject to a 60-day public comment period, following which the SEC will determined its next steps.

Topics: SEC, SEC Filings, Securities and Exchange Commission, Accelerated Filing

Simplification of FAST Act Disclosure Requirements

Posted by Jeffrey Morlend on March 22, 2019 at 10:37 AM

The SEC recently adopted amendments pursuant to the Fixing America’s Surface Transportation Act (commonly referred to as the FAST Act) to modernize and simplify disclosure requirements in Regulation S-K, and related rules and forms, for public companies, investment advisers and investment companies. Such amendments include changes to, among others, Item 102 (Description of Property), Item 303 (Management’s Discussion and Analysis of Financial Condition and Results of Operations), Item 503 (Prospectus Summary and Risk Factors), Item 601 (Exhibits) and various rules related to incorporation by reference.

Among the most impactful changes are:

  1. Allowing companies to generally exclude discussion of the earliest of three years required by Item 303 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) if such discussion has already been included in a prior filing. 
  1. Limiting the disclosure required by Item 102 (Description of Property) to only those physical properties that are material.
  1. With respect to exhibits to SEC filings (Item 601):

(a) Allowing companies to omit attachments such as schedules and exhibits to their material contracts filed as exhibits to SEC filings if such attachments don't contain material information or were not otherwise disclosed.

(b) Eliminating the requirement (other than for newly reporting companies) to file as exhibits material contracts that were entered into less than two years before that filing.

(c) Permitting companies to omit from material contracts and certain other exhibits to SEC filings confidential information that is not material and would likely cause such companies competitive harm if made public, without requiring companies to first file confidential treatment requests.

(d) Eliminating the requirement to file as an exhibit to SEC filings any document that is incorporated by reference in such filing, but instead requiring companies to provide hyperlinks to documents incorporated by reference.

  1. Permitting companies to omit disclosure about Section 16 reports if all reports have been timely filed (and eliminating the box on the cover of Form 10-Ks regarding Section 16 disclosure).

The rules also add a few requirements regarding Inline XBRL tagging of cover pages, among others.

Registrants will be required to disclose on the cover page of Forms 8-K, 10-Q, 10-K, 20-F and 40-F the national exchange or principal U.S. market for their securities, their trading symbol and the title of each class of securities.

The final rules, which can be found here, are effective 30 days after publication in the federal register, except for the amendments to the rules governing the redaction of confidential information in material contracts referenced in Item 3(c) above, which are effective as of the date of publication in the federal register.

Topics: FAST Act, SEC Filings, Securities and Exchange Commission, Disclosure Agreements

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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. No liability is accepted for any loss or damage which may result from reliance on it. Always consult a qualified lawyer about a specific legal problem.

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