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SEC Updates Filing Fees And Payment Methods

During the busiest capital markets boom most practitioners, including myself, have ever experienced, on October 13, 2021, in a whopping 432-page release, the SEC amended and modernized the filing fee payment methods and disclosure requirements.  The amendments revise most fee-bearing forms, including Securities Act registration statements, schedules, and related rules to require companies and funds to include all required information for filing fee calculation in a structured format.  The amendments also add new payment methods including ACH and debit and credit card options while eliminating the antiquated paper checks and money orders as a payment option.

The amendments are generally effective January 31, 2022.  The changes in payment type options will be effective May 31, 2022.  Pursuant to the transition provision, large-accelerated filers will become subject to the structuring requirements for filings they submit on or after 30 months after the January 31, 2022, effective date.  Accelerated filers, certain investment companies that file registration statements on Forms N-2 and N-14, and all other filers will become subject to the structuring requirements for filings they submit on or after 42 months after the January 31, 2022 effective date. Compliance with the amended disclosure requirements other than the structuring requirements will be mandatory on the January 31, 2022 effective date.

Separately, effective October 1, 2021, the SEC lowered its filing fees from $109.10 per million dollars registered to $92.70 per million dollars.

Background

The SEC assesses filing fees on operating companies and investment companies (Funds) that engage in certain transactions involving publicly offered securities, including registered securities offerings, tender offers, and mergers and acquisitions.  In addition, Funds are assessed fees on an annual basis for open-end Funds and unit investment trusts.  The current methods to process and validate filing fee information are highly manual. The information generally is not machine-readable, and filers are not always required to report the underlying components of the fee calculation. Accordingly, calculations can be difficult and prone to error adding burdens on both the filer and SEC staff.

Currently the SEC staff conducts a manual review of the filing fee information for every fee-bearing filing that is filed with the SEC.  The amendments are intended to improve filing fee preparation and payment processing by facilitating both enhanced validation through filing fee structuring and lower-cost, easily routable payments through the ACH payment option.

Structured Reporting Format

The amendments create a structured reporting format for all filers across all fee-bearing forms.  In addition, the explanatory notes will now be required to include all information data points for the filing fee calculation.  The structured data will be required to use Inline XBRL (for more on Inline XBRL, see https://securities-law-blog.com/2018/08/21/sec-adopts-inline-xbrl/?hilite=%27inline%27%2C%27xbrl%27 ).  The new format is designed to allow the SEC staff to quickly identify and correct errors, and also adds a technological component such that the EDGAR system will automatically check the filing-fee-related information for internal consistency.  The new format also eliminates the filer’s need to enter duplicate filing fee information in the header and the body of the filing, thereby avoiding the possibility of entering inconsistent data.

The amendments streamline the presentation of filing fee-related information and potentially facilitate any future changes in the structuring technology applied to it, the amendments move the filing fee-related information to a separate exhibit document (“filing fee exhibit”) rather than requiring it on the filing’s cover page.  The majority of information must be presented in tabular format, including any offsets claimed by the registrant and explanations where one prospectus covers two or more registration statements.

The new required information includes, among other things, the type of security being newly registered or carried forward, the registration form type, file number, amount of securities being registered, proposed maximum aggregate offering price per unit, proposed maximum aggregate offering price, initial effective date of one or more previously filed registration statements associated with any unsold securities that the registrant is carrying forward; fees paid in connection with amendments; and entries for total offering amounts, the total amount of fee offsets and the total fee due net of fee offsets and any previously paid amounts. The new disclosures also add a fee rate column.

Related to Forms S-3 and F-3 the filing fee information must appear in a prospectus filed under Rule 424(b) or post-effective amendment rather than a periodic report that is incorporated by reference into the registration statement to avoid extending the filing fee structured information requirements to periodic and current reports.  Moreover, each post-effective amendment or final prospectus filed pursuant to Rule 424(b) must provide required information about a specific transaction that includes the maximum aggregate amount or maximum aggregate offering price of the securities to which the post-effective amendment or prospectus relates.  Further, each such prospectus must indicate that it is a final prospectus for the related offering to assist in calculation of the amount of securities sold.

Likewise, each post-effective amendment or final prospectus to Forms S-4 and F-4 must provide required information about a specific transaction and particular company being acquired that must include the maximum aggregate amount or maximum aggregate offering price of the securities to which the post-effective amendment or prospectus relates. Each such prospectus must indicate that it is a final prospectus for the related offering to assist in calculation of the amount of securities sol

As the form is rarely used, the amendments do not modify Form N-5, which is a Securities Act registration used by small business investment companies.

Filing Fee Payment Methods

Currently, filers may pay filing fees by wire transfer, paper check, or money order. Under the final amendments, filers will have four payment options including wire transfer, ACH, debit cards, and credit cards.  ACH payments will not be subject to a processing fee, unless imposed by the filer’s financial institution, and therefore typically will provide a lower cost alternative to wire transfer. ACH payments also will require fields—including the Central Index Key (CIK) field used to identify EDGAR filers—that will reduce the need for manual re-routing of filing fee payments.

The Author

Laura Anthony, Esq.
Founding Partner
Anthony L.G., PLLC
A Corporate Law Firm
LAnthony@AnthonyPLLC.com

Securities attorney Laura Anthony and her experienced legal team provide ongoing corporate counsel to small and mid-size private companies, OTC and exchange traded public companies as well as private companies going public on the Nasdaq, NYSE American or over-the-counter market, such as the OTCQB and OTCQX. For more than two decades Anthony L.G., PLLC has served clients providing fast, personalized, cutting-edge legal service.  The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker-dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions, securities token offerings and initial coin offerings, Regulation A/A+ offerings, as well as registration statements on Forms S-1, S-3, S-8 and merger registrations on Form S-4; compliance with the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers; applications to and compliance with the corporate governance requirements of securities exchanges including Nasdaq and NYSE American; general corporate; and general contract and business transactions. Ms. Anthony and her firm represent both target and acquiring companies in merger and acquisition transactions, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. The ALG legal team assists Pubcos in complying with the requirements of federal and state securities laws and SROs such as FINRA for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the small-cap and middle market’s top source for industry news, and the producer and host of LawCast.com, Corporate Finance in Focus. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.

Ms. Anthony is a member of various professional organizations including the Crowdfunding Professional Association (CfPA), Palm Beach County Bar Association, the Florida Bar Association, the American Bar Association and the ABA committees on Federal Securities Regulations and Private Equity and Venture Capital. She is a supporter of several community charities including siting on the board of directors of the American Red Cross for Palm Beach and Martin Counties, and providing financial support to the Susan Komen Foundation, Opportunity, Inc., New Hope Charities, the Society of the Four Arts, the Norton Museum of Art, Palm Beach County Zoo Society, the Kravis Center for the Performing Arts and several others. She is also a financial and hands-on supporter of Palm Beach Day Academy, one of Palm Beach’s oldest and most respected educational institutions. She currently resides in Palm Beach with her husband and daughter.

Ms. Anthony is an honors graduate from Florida State University College of Law and has been practicing law since 1993.

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