The Securities and Exchange Commission’s Division of Corporation Finance has issued new additional guidance for issuers on the `33 Act Reform, which took effect Dec. 1.
The sweeping reforms are expected to make the offering process faster and less expensive. Among other provisions, the reforms create a new class of "well-known seasoned issuers" presumed to be the most widely followed in the marketplace; loosen the “quiet period” rules that govern what companies can and can’t say before and during a registered offering; and permit greater communications by issuers before filing a registration statement without violating “gun-jumping” provisions.
The Nov. 30 guidance is the second list of "frequently asked questions" on the Securities Act Reform. As Compliance Week reported in September, the SEC issued answers to 14 questions on transition matters in response to issuer questions.
The new guidance includes 25 FAQs that cover issues related to filing requirements and the application of certain regulations to free writing prospectuses, which give issuers more liberty as to what they can say in writing outside of their prospectuses. Also covered in the FAQ is the definition of a well-known seasoned issuer, the eligibility of issuers, automatic shelf registrations, and related securities rules.
For example, the Commission staff clarified that convictions in foreign court of certain felonies or misdemeanors for determining eligibility would result in ineligibility under the definition of “ineligible issuer.”
Below are some excerpts from the SEC FAQ, but the complete document and related coverage is available from the box above, right:
Free Writing Perspectuses
QUESTION 4—After the filing of the registration statement for an offering, if the issuer’s CEO
participates in a live interview with unaffiliated and uncompensated media that is
broadcast on radio or television, would that interview be an issuer free writing
prospectus that the issuer must file?
ANSWER—Yes, if the interview constitutes an offer. In that case, the CEO’s interview on a
live television or radio program conducted by unaffiliated and uncompensated
media would be a written offer and would be treated the same as any other
unaffiliated, uncompensated media publication or broadcast. The issuer would
have to satisfy it’s filing obligation with regard to the interview within four
business days after the broadcast.
Well-Known Seasoned Issuer Definition
QUESTION 13—An issuer that has not previously filed a shelf registration statement believes that
it meets the test for well-known seasoned issuer status and decides to file an
automatic shelf registration statement. What is this issuer’s initial determination
date for well-known seasoned issuer status for purposes of determining its
eligibility to file an automatic shelf registration statement?
ANSWER—The issuer’s initial determination date for well-known seasoned issuer status will
be the time it files the automatic shelf registration statement.
Ineligible Issuers
QUESTION 17—The definition of “ineligible issuer” in Securities Act Rule 405 includes an issuer
where “[w]ithin the past three years, the issuer or any entity that at the time was a
subsidiary of the issuer was convicted of any felony or misdemeanor described in
paragraphs (i) through (v) of Section 15(b)(4)(B) of the Securities Exchange Act
of 1934.” How is a conviction by a foreign court treated under this provision?
FORMS
Revised Forms
As the Securities Act reform became effective Dec. 1, the SEC has posted revised forms for issuers. All forms are posted as "Updated Dec. 2005":
Form S-1: Registration Statement Under Securites Act Of 1933
Form 10-K: Annual Report Pursuant To Section 13 Or 15(d)
Form 10-KSB: Optional Form For Annual Reports Of Small Business Issuers
Form 10-Q: General Form For Quarterly Reports Under Section 13 Or 15(d)
Additional Forms Updated Dec. 2005, Including Form 20-F, S-3, More
ANSWER—A conviction by a foreign court as to the activities described in the relevant
clauses of Section 15(b)(4)(B) of the Exchange Act would trigger ineligibility
under the definition.
Automatic Shelf Registration Statements
QUESTION 21—If a well-known seasoned issuer files an automatic shelf registration statement and
during that year, before its Section 10(a)(3) update is due, the issuer loses its
status as a well-known seasoned issuer, what is the impact on the effectiveness
and use of that automatic registration statement?
ANSWER—An issuer’s loss of eligibility to use a registration form after effectiveness and
before its Section 10(a)(3) update will not affect its ability to use that registration
statement until the time of its Section 10(a)(3) update. If the issuer is no longer
eligible as a well-known seasoned issuer at the time of its Section 10(a)(3) update,
the rules would require the issuer to amend its automatic shelf registration
statement onto the form it is then eligible to use to sell the securities.
The complete FAQ and related coverage is available from the box above, right. In addition, the Commission has updated its forms to reflect the Securities Act reform—some of those revised forms can be found at right.
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