SECがATMおよびS-3ベビーシェルフ規則に関するC&DIを公表
2026年3月19日、米国証券取引委員会（SEC）の企業財務局は、市場価格連動型（ATM）募集プログラムを利用する小型株発行体に対して重要な救済措置となる、コンプライアンスおよび開示に関する解釈（C&DI 116.26）を公表しました。本解釈は、フルフォームS-3登録届出書の適格性から「ベビーシェルフ」制限への移行に関する従来のスタッフ実務からの大きな転換を意味します。
本件の核心は、Form S-3の適格性に関する年次再判定と、「ベビーシェルフ」規則が既存の有効な目論見書補遺に与える影響にあります。フルシェルフに関する一般指示I.B.1およびベビーシェルフに関する一般指示I.B.6の違いを含む、Form S-3適格性の基本的な整理については、以前のブログ記事（こちら）をご参照ください。
背景：「ベビーシェルフ」と第10条(a)(3)項の最新情報
Form S-3は、非関連者が保有する議決権および無議決権の普通株式の市場価値が7,500万ドル以上である会社による主たる募集に利用することができます。この基準を下回った場合でも、発行体は一般指示I.B.6（いわゆる「ベビーシェルフ」）に基づきForm S-3を利用できる場合があります。ただし、そのためには、①全国的な証券取引所に議決権付および無議決権付の普通株式が上場していること、②シェルカンパニーでないこと、③過去12か月間における公衆浮動株の3分の1を超える売却を行わないこと、という条件を満たす必要があります。
証券法第10条(a)(3)に基づき、会社はForm 10-Kを提出することにより、登録届出書を毎年更新しなければなりません。この更新の時点で、発行体はForm S-3の適格性について再評価を行う必要があります。従来の実務では、Form 10-K提出時に一般指示I.B.1の適格性からI.B.6の「ベビーシェルフ」へ移行した場合、発行体は直ちにATMプログラムの規模を縮小し、制限された「3分の1」の発行枠を反映させるために新たな目論見書補遺を提出しなければならないと広く理解されていました。
C&DI 116.26
新たに公表されたC&DI 116.26は、既に有効なATMプログラムに関する目論見書補遺を提出済みの会社について、この制約的な実務運用を覆すものです。
質問：発行体が、予想される発行・売却額に基づき、特定の売出代理人との間で市場価格連動型（ATM）募集に関する販売契約を締結したケース。発行体は有効なForm S-3登録届出書を有しており、一般指示I.B.1に基づく募集・売却の適格性を満たしていたため、本募集に関する目論見書補遺を提出していた。その後、次回の証券法第10条(a)(3)に基づく更新時点で、同社はI.B.1の要件である7,500万ドルの公衆浮動株基準を満たさなくなったが、引き続き一般指示I.B.6（いわゆる「ベビーシェルフ」）に基づきForm S-3を利用する資格は有している。この場合、一般指示I.B.6に基づく発行上限を超える可能性があったとしても、当該目論見書補遺に記載された全額について引き続き募集・売却を行うことについて、スタッフは異議を唱えるか。
回答： 本件の状況においては、証券法第10条(a)(3)に基づく更新前に提出された当該目論見書補遺に基づき、発行体がその補遺に記載された全額の証券の募集・売却を継続することについて、スタッフは異議を唱えません。［2026年3月19日］
変更の意義： 従来のスタッフ実務では、第10条(a)(3)に基づく更新が発行能力に対する「強制的なリセット」として機能していました。例えば、ある会社が非関連者の浮動株が1億ドルの時点（I.B.1適格）で5,000万ドルのATM目論見書補遺を提出していた場合でも、その後の10-K提出時点で浮動株が6,000万ドルまで減少していれば、I.B.6の制限により、当該ATMでは最大2,000万ドル（浮動株の3分の1）しか売却できず、さらに過去12か月にS-3に基づき実施された他の売却分も考慮して制限されることになります。
これに対し、今回SECは、発行体がI.B.1適格であった時点で提出された目論見書補遺について、その発行枠を「既得権（グランドファーザー）」として扱う方針を示しています。すなわち、当該補遺が10-K更新前に有効に提出されている限り、発行体はその補遺に基づき残存する発行枠の全額について、ベビーシェルフの3分の1制限を超える場合であっても、引き続き募集・売却を行うことが可能となります。
パートナー向けアドバイザリー：ディールメーカーの戦略
本C&DIは、流動性計画における戦略的な機会を提供するものです。ディールを適切かつ円滑に完了させることが常に目的であり、本ガイダンスはATM管理にさらなる効率性の層を加えるものとなります。
- ATM目論見書補遺の戦略的タイミング： 非関連者浮動株が7,500万ドル付近で推移している場合、Form 10-K提出前にATM目論見書補遺を提出または増額しておくことには明確な「ディールメイカー」としての優位性があります。I.B.1適格の状態で発行枠を確保しておくことで、市場変動により10-K提出時点で「ベビーシェルフ」状態へ移行した場合でも、当該補遺に基づく全額の資金調達能力を維持することが可能となります。
- コンプライアンスおよび開示： スタッフは売却金額自体には異議を唱えないものの、発行体は引き続き適時かつ適切な開示を行う必要があります。浮動株の減少およびI.B.6への移行は重要事象であり、その後の提出書類において明確に開示されるべき事項です。
- 効率性およびコスト削減： 本変更により、従来I.B.1適格性喪失時に必要とされていたATMプログラムの縮小に伴う「修正的」目論見書補遺の提出、およびそれに関連する法務・会計コストが不要となり、ATM運用の効率性が向上します。
著者
ローラ・アンソニー弁護士
設立パートナー
アンソニー、リンダー＆カコマノリス
企業法務および証券法務事務所
証券弁護士ローラ・アンソニー氏とその経験豊富な法律チームは、中小規模の非公開企業、上場企業、そして上場予定の非公開企業に対して継続的な企業顧問サービスを提供しています。ナスダック、NYSEアメリカン、または店頭市場（例えばOTCQBやOTCQX）で上場を目指す企業も対象です。20年以上にわたり、Anthony, Linder & Cacomanolis, PLLC（ALC）は、迅速でパーソナライズされた最先端の法的サービスをクライアントに提供してきました。当事務所の評判と人脈は、投資銀行、証券会社、機関投資家、その他の戦略的提携先への紹介など、クライアントにとって非常に貴重なリソースとなっています。当事務所の専門分野には、1933年証券法の募集・販売および登録要件の遵守（レギュレーションDおよびレギュレーションSに基づく私募取引、PIPE取引、証券トークン・オファリング、イニシャル・コイン・オファリングを含む）が含まれますが、これに限定されません。規制A/A+オファリング、S-1、S-3、S-8フォームの登録申請、S-4フォームによる合併登録、1934年証券取引法の遵守（フォーム10による登録、フォーム10-Q、10-K、8-Kおよび14C情報・14A委任状報告書）、あらゆる形態の株式公開取引、合併・買収（リバースマージャーおよびフォワードマージャーを含む）、ナスダックやNYSEアメリカンを含む証券取引所のコーポレートガバナンス要件への申請および遵守、一般企業取引、一般契約および事業取引が含まれます。アンソニー氏と当事務所は、合併・買収取引において、買収対象企業と買収企業の双方を代理し、合併契約、株式交換契約、株式購入契約、資産購入契約、組織再編契約などの取引文書を作成します。ALC法務チームは、公開企業が連邦および州の証券法やSROs要件に準拠することを支援しており、15c2-11申請、社名変更、リバース・フォワードスプリット、本拠地変更などにも対応しています。アンソニー氏はまた、中堅・中小企業向けの業界ニュースのトップ情報源であるSecuritiesLawBlog.comの著者であり、企業財務に特化したポッドキャスト『LawCast.com: Corporate Finance in Focus』のプロデューサー兼ホストでもあります。当事務所は、ニューヨーク、ロサンゼルス、マイアミ、ボカラトン、ウェストパームビーチ、アトランタ、フェニックス、スコッツデール、シャーロット、シンシナティ、クリーブランド、ワシントンD.C.、デンバー、タンパ、デトロイト、ダラスなど、多くの主要都市でクライアントを代理しています。
アンソニー氏は、Crowdfunding Professional Association（CfPA）、パームビーチ郡弁護士会、フロリダ州弁護士会、アメリカ弁護士会（ABA）および連邦証券規制やプライベート・エクイティ・ベンチャーキャピタルに関するABA委員会など、さまざまな専門団体のメンバーです。パームビーチ郡およびマーティン郡のアメリカ赤十字社、スーザン・コーメン財団、オポチュニティ社（Opportunity, Inc.）、ニュー・ホープ・チャリティーズ、フォー・アーツ協会（Society of the Four Arts）、ノートン美術館、パームビーチ郡動物園協会、クラヴィス・パフォーミング・アーツ・センターなど、複数の地域社会慈善団体を支援しています。
アンソニー氏はフロリダ州立大学ロースクールを優秀な成績で卒業しており、1993年から弁護士として活動しています。
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SEC Publishes C&DI On ATMs And The S-3 Baby Shelf Rule
On March 19, 2026, the SEC’s Division of Corporation Finance issued a pivotal new Compliance and Disclosure Interpretation (C&DI 116.26) that provides substantial relief to small-cap issuers utilizing at-the-market (ATM) offering programs. This interpretation represents a significant departure from previous staff practice regarding the transition from full Form S-3 eligibility to “baby shelf” limitations.
The core of the issue involves the annual re-testing of Form S-3 eligibility and the impact of the “baby shelf” rules on existing, effective prospectus supplements. For a comprehensive review of foundational Form S-3 eligibility, including the distinction between full shelf general instruction I.B.1 and baby shelf general instruction I.B.6, see my previous blog HERE.
Background: The “Baby Shelf” and Section 10(a)(3) Updates
Form S-3 can be used for primary offerings of a company whose market value of voting and non-voting common equity held by non-affiliates is $75 million or more. If an issuer’s float falls below this threshold, it may still use Form
SEC Publishes CD&I On Form S-3, Regulation S-K, Form 20-F, And Section 13
On March 20, 2025, the SEC published several updates to its compliance and disclosure interpretations (“CD&I”) related to Forms S-3 and 20-F, and Regulation S-K. The new CD&I importantly allow all issuers, not just well-known seasoned issuers (“WKSIs”) to go effective on Form S-3 registration statements between the filing of a Form 10-K and the filing of the proxy statement containing Form 10-K Part III disclosures.
Earlier, on February 11, 2025, the SEC published one revised and one new CD&I related to Section 13 filings on Schedules 13D and 13G.
Form S-3/Securities Act Rules
Revised CD&Is 114.05 and 198.05 confirm that a Form S-3 ASR and a non-automatically effective Form S-3 may be filed and declared effective after a company files its Form 10-K but prior to filing its Part III information in either a proxy statement or amended Form 10-K. However, the SEC notes that companies are responsible for ensuring that any prospectus used in connection with
The New 10-K Requirements For Annual Report Season
As 2023 has come to a close it is time to prepare for the upcoming annual report season and this year there are multiple new requirements to be cognizant of. With annual reports being followed by proxies and first quarter 10-Q’s in rapid succession, it is important to get ahead of all the new disclosures. This blog will summarize each of the new disclosures and include some practice tips.
First, though is what is suddenly not a new requirement and in particular the share repurchase disclosures. Adopted on May 3, 2023 (see HERE) the new disclosure requirements would have taken effect for inclusion in the upcoming 10-K season. Following a successful court challenge, on November 22, 2023, the SEC issued an order postponing the effective date of the new rules pending further SEC action (see HERE). However, the SEC may not get the opportunity to resurrect the rules. The U.S. Chamber of Commerce is doubling down and
SEC Publishes New C&DI On Rule 10b5-1
On August 25, 2023, the SEC published five new Compliance and Disclosure Interpretations (C&DI) on the recently effective Rule 10b5-1 amendments. The new rules were adopted on December 14, 2022 (see HERE) to enhance disclosure requirements and investor protections against insider trading. The amendments include updates to Rule 10b5-1(c)(1), which provides an affirmative defense to insider trading liability under Section 10(b) and Rule 10b-5. This is the second time the SEC has published guidance on the rules having issued three C&DI in May – see HERE.
The rule amendments updated the conditions to satisfy the 10b5-1 affirmative defense, including adding cooling-off periods before trading can commence under a Rule 10b5-1 plan and a condition that all persons entering into a Rule 10b5-1 plan must act in good faith with respect to the plan. The amendments also require directors and officers to include representations in their plans certifying at the time of the adoption of
Furnish VS. Filed
Over the years I’ve noted that information required pursuant to various disclosure obligations, or new or amended rules, may be “furnished” versus “filed” with the SEC, but I realize in a “let’s get back to basics” moment, I have not yet (until now) provided a detailed explanation of what that means. In summary, information that is “filed” with the SEC carries Section 18 liability, only “filed” information can be incorporated by reference into other filings, such as an S-3 registration statement, and only “filed” SEC reports affect S-3 eligibility.
Section 18
Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”) imposes liability on any person that makes or causes to be made any statement in any application, report or document “filed” pursuant to the Exchange Act or any rule thereunder which statement was at the time and in the light of the circumstances under which it was made false or misleading with
China Based Companies Continue To Face US Capital Market Scrutiny
On March 24, 2021, the SEC adopted interim final amendments to implement the congressionally mandated submission and disclosure requirements of the Holding Foreign Companies Accountable Act (HFCA Act). Following adoption of the HFCA, on July 30, 2021, SEC Chairman Gary Gensler issued a statement warning of risks associated with investing in companies based in China. Although the statement has a different angle, it joins the core continued concerns of the SEC top brass and Nasdaq expressed over the years.
In June 2020 Nasdaq published proposed rules which would make it more difficult for a company to list or continue to list based on the quality of its audit, which could have a direct effect on companies based in China (see HERE). In September 2020, the SEC instituted proceedings as to whether to approve or deny the proposed rule change. As of the date of this blog, the proposal has not been ruled upon by the SEC.
However, the
SEC Issues Transitional FAQ On Regulation S-K Amendments
The recent amendments to Items 101, 103 and 105 of Regulation S-K (see HERE) went into effect on November 9, 2020, raising many questions as to the transition to the new requirements. In response to what I am sure were many inquiries to the Division of Corporation Finance, the SEC has issued three transitional FAQs.
The amendments made changes to Item 101 – description of business, Item 103 – legal proceedings, and Item 105 – Risk Factors of Regulation S-K.
FAQ – Form S-3 Prospectus Supplement
The first question relates to the impact on Form S-3 and in particular the current use of prospectus supplements for an S-3 that went into effect prior to November 9, 2020. In general, a Form S-3 is used as a shelf registration statement and a company files a prospectus supplement each time it takes shares down off that shelf (see HERE).
The prospectus supplement must meet the requirements of Securities Act Rule
SEC Adopts Amendments To Business Descriptions, Risk Factors And Legal Proceedings
Just eight months following the rule proposal (see HERE), on August 26, 2020, the SEC adopted final amendments to Item 101 – description of business, Item 103 – legal proceedings, and Item 105 – Risk Factors of Regulation S-K. The amendments make a more principles-based approach to business descriptions and risk factors, recognizing the significant changes in business models since the rule was adopted 30 years ago. The amendments to disclosures related to legal proceedings continue the current prescriptive approach. In addition, the rule changes are intended to improve the readability of disclosure documents, as well as discourage repetition and disclosure of information that is not material.
The Item 101 and Item 103 amendments only apply to domestic companies and foreign private issuer that elect to file using domestic company forms. The forms generally used by foreign private issuers (F-1, F-3, 20-F, etc.) do not have references to Items 101 and 103 of Regulation S-K but rather refer
SEC Publishes FAQ On COVID-19 Effect On S-3 Registration Statements
The SEC has issued FAQ on Covid-19 issues, including the impact on S-3 shelf registration statements. The SEC issued 4 questions and answers consisting of one question related to disclosure and three questions related to S-3 shelf registrations.
SEC FAQ
Disclosure
Confirming prior guidance, the SEC FAQ sets forth the required disclosures in the Form 8-K or 6-K filed by a company to take advantage of a Covid-19 extension for the filing of periodic reports. In particular, in the Form 8-K or Form 6-K, the company must disclose (i) that it is relying on the COVID-19 Order (for more information on the Order, see HERE); (ii) a brief description of the reasons why the company could not file the subject report, schedule or form on a timely basis; (iii) the estimated date by which the report, schedule or form is expected to be filed; and (iv) a company-specific risk factor or factors explaining the impact, if material, of
SEC Rules For Disclosure Of Hedging Policies
In December 2018, the SEC approved final rules to require companies to disclose practices or policies regarding the ability of employees or directors to engage in certain hedging transactions, in proxy and information statements for the election of directors. The new rules implement Section 14(j) of the Securities Exchange Act of 1934 (“Exchange Act”) as mandated by the Dodd-Frank Act and will require the robust disclosure on hedging policies and practices including a description of any hedging transactions that are specifically permitted or disallowed. The proposed rules had initially been published on February 9, 2015 – see HERE.
Smaller reporting companies and emerging growth companies must comply with the new disclosure requirements in their proxy and information statements during fiscal years beginning on or after July 1, 2020. All other companies must comply in fiscal years beginning July 1, 2019. As foreign private issuers (FPI) are not subject to the proxy statement requirements under Section 14 of the Exchange Act,
The SEC Has Issued New Guidance Related To Foreign Private Issuers
On December 8, 2016, the SEC issued 35 new compliance and disclosure interpretations (C&DI) including five related to the use of Form 20-F by foreign private issuers and seven related to the definition of a foreign private issuer.
C&DI Related to use of Form 20-F
In the first of the five new C&DI, the SEC confirms that under certain circumstances the subsidiary of a foreign private issuer may use an F-series registration statement to register securities that are guaranteed by the parent company, even if the subsidiary itself does not qualify as a foreign private issuer. In addition, the subsidiary may use Form 20-F for its annual report. To qualify, the parent and subsidiary must file consolidated financial statements or be eligible to present narrative disclosure under Rule 3-10 of Regulation S-X.
Likewise in the second of the new C&DI, the SEC confirms that an F-series registration statement may be used to register securities to be issued by the
Changes In India’s Laws Related To Foreign Direct Investments- A U.S. Opportunity; Brief Overview For Foreign Private Issuers
In June 2016, the Indian government announced new rules allowing for foreign direct investments into Indian owned and domiciled companies. The new rules continue a trend in laws supporting India as an open world economy. A large portion of the U.S. public marketplace is actually the trading of securities of foreign owned or held businesses. Foreign businesses may register and trade directly on U.S. public markets as foreign private issuers, or they may operate as partial or wholly owned subsidiaries of U.S. parent companies that in turn quote and trade on either the OTC Markets or a U.S. exchange.
Brief Overview for Foreign Private Issuers
Definition of Foreign Private Issuer
Both the Securities Act of 1933, as amended (“Securities Act”) and the Securities Exchange Act of 1934, as amended (“Exchange Act”) contain definitions of a “foreign private issuer.” Generally, if a company does not meet the definition of a foreign private issuer, it is subject to the same registration and
SEC Requests Comment On Changes To Subpart 400 To Regulation S-K
On August 25, 2016, the SEC requested public comment on possible changes to the disclosure requirements in Subpart 400 of Regulation S-K. Subpart 400 encompasses disclosures related to management, certain security holders and corporate governance. The request for comment is part of the ongoing SEC Division of Corporation Finance’s Disclosure Effectiveness Initiative and as required by Section 72003 of the FAST Act.
Background
The topic of disclosure requirements under Regulations S-K and S-X as pertains to financial statements and disclosures made in reports and registration statements filed under the Exchange Act of 1934 (“Exchange Act”) and Securities Act of 1933 (“Securities Act”) has come to the forefront over the past couple of years. The purpose of the Disclosure Effectiveness Initiative is to assess whether the business and financial disclosure requirements continue to provide the information investors need to make informed investment and voting decisions.
Regulation S-K, as amended over the years, was adopted as part of a uniform disclosure initiative
SEC Small Business Advisory Committee Public Company Disclosure Recommendations
On September 23, 2015, the SEC Advisory Committee on Small and Emerging Companies (the “Advisory Committee”) met and finalized its recommendation to the SEC regarding changes to the disclosure requirements for smaller publicly traded companies.
By way of reminder, the Committee was organized by the SEC to provide advice on SEC rules, regulations and policies regarding “its mission of protecting investors, maintaining fair, orderly and efficient markets and facilitating capital formation” as related to “(i) capital raising by emerging privately held small businesses and publicly traded companies with less than $250 million in public market capitalization; (ii) trading in the securities of such businesses and companies; and (iii) public reporting and corporate governance requirements to which such businesses and companies are subject.”
The topic of disclosure requirements for smaller public companies under the Securities Exchange Act of 1934 (“Exchange Act”) has come to the forefront over the past year. In early December the House passed the Disclosure Modernization and
SEC Proposed Pay Versus Performance
On April 29, 2015, the SEC published the anticipated pay versus performance proposed rules. The rules are in the comment period and will not be effective until the SEC publishes final rules. Although timing is unclear, some commentators believe the new rules will be implemented as soon as the 2016 proxy season.
The proposed rules require companies to clearly and concisely disclose the relationship between executive compensation actually paid and the financial performance of the company, taking into account any change in the value of the shares of stock and dividends of the registrant and any distributions. The new proposed disclosure requirements will not apply to emerging growth companies or foreign private issuers. In addition, smaller public companies will have a scaled back disclosure requirement.
The proposed new rules implement Section 14(i) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) and as added by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”)
Will the Disclosure Modernization and Simplification Act of 2014 Simplify Reporting Requirements for ECG’s and Smaller Reporting Companies?
ABA Journal’s 10th Annual Blawg 100
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In early December the House passed the Disclosure Modernization and Simplification Act of 2014, which will now go to the Senate for action—or inaction, as the case may be.
The bill joins a string of legislative and political pressure on the SEC to review and modernize Regulation S-K to eliminate burdensome, unnecessary disclosure with the dual purpose of reducing the costs to the disclosing issuer and ensure readable, material information for the investing public.
The Disclosure Modernization and Simplification Act of 2014, if passed, would require the SEC to adopt or amend rules to: (i) allow issuers to include a summary page to Form 10-K; and (ii) scale or eliminate duplicative, antiquated or unnecessary requirements in Regulation S-K. In addition, the SEC would be required to conduct yet another study on all Regulation S-K disclosure requirements to determine how best to amend and modernize the rules to reduce costs and burdens while
CEO and CFO Certifications for Forms 10-Q and 10-K
ABA Journal’s 10th Annual Blawg 100
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A public company with a class of securities registered under Section 12 or which is subject to Section 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) must file reports with the SEC. The underlying basis of the reporting requirements is to keep shareholders and the markets informed on a regular basis in a transparent manner. Reports filed with the SEC can be viewed by the public on the SEC EDGAR website. The required reports include an annual Form 10-K, quarterly Form 10Q’s and current periodic Form 8-K as well as proxy reports and certain shareholder and affiliate reporting requirements.
These reports are signed by company officers and directors. Moreover, the Sarbanes-Oxley Act of 2002 (“SOX”) implemented a requirement that the company principal executive officer or officers and principal financial officer or officers execute certain personal certifications included with each Form 10-Q and 10-K. Certifications are not required on a
An Overview of MD&A
Management’s discussion and analysis of financial condition and results of operation, commonly referred to as MD&A, is an integral part of annual (Form 10-K) and quarterly (Form 10-Q) reports filed with the Securities and Exchange Commission (SEC). MD&A is also included in registration statements filed under both the Securities Exchange Act of 1934 (Form 10) and Securities Act of 1933 (Form S-1). MD&A requires the most input and effort from officers and directors of a company and, due to the many components of required information, often generates SEC review and comments. Item 303 of Regulation S-K sets forth the required content for MD&A. This discussion will be limited to the requirements for small public companies (i.e., those with revenues of less than $75 million).
A MD&A discussion for quarterly reports on Form 10-Q is abbreviated from the requirements for annual reports on Form 10-K and registration statements and should concentrate on updating and supplementing the annual report discussion. Although
Public Company SEC Reporting Requirements
A public company with a class of securities registered under either Section 12 or which is subject to Section 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) must file reports with the SEC (“Reporting Requirements”). The underlying basis of the Reporting Requirements is to keep shareholders and the markets informed on a regular basis in a transparent manner. Reports filed with the SEC can be viewed by the public on the SEC EDGAR website. The required reports include an annual Form 10-K, quarterly Form 10Q’s and current periodic Form 8-K as well as proxy reports and certain shareholder and affiliate reporting requirements.
A company becomes subject to the Reporting Requirements by filing an
SEC Guidance On Social Media And Websites For Company Announcements And Communications- Part I
On April 2, 2013, the Securities Exchange Commission (“SEC”) issued a report confirming that companies can use social media, such as Facebook and Twitter, to make company announcements in compliance with Regulation Fair Disclosure (Regulation FD) as long as investors are alerted as to which social media outlet is being used by the company. The report was issued following an investigation into a Facebook posting made by Reed Hastings, CEO of Netflix. In the report the SEC stated that previously published guidance on the use of Company websites was applicable to the use of social media. Accordingly, a review of the SEC guidance on the use of company websites is in order.
Background
Regulation FD requires that companies take steps to ensure that material information is disclosed to the general public in a fair and fully accessible manner such that the public as a whole has simultaneous access to the information. Regulation FD is designed to ensure that
How To Bring A Delinquent Exchange Act Reporting Company Current
SEC Delinquent Filers Program
In 2004 the Securities and Exchange Commission (“SEC”) instituted the Delinquent Filers Program and created the Delinquent Filers Branch as part of its Division of Enforcement. The Delinquent Filers Branch was instituted to encourage publicly traded companies that are delinquent in the filing of their required periodic reports (Forms 10-K and 10-Q) under the Securities Exchange Act of 1934 (“Exchange Act”) to provide investors with accurate financial information upon which to make informed investment decisions. The securities registrations of issuers that fail to make their required periodic filings are subject to suspension or revocation by the SEC and other enforcement proceedings.
Since it was instituted, the SEC Delinquent Filers Branch has suspended the trading and/or revoked the registration of hundreds of companies, often in sweeps of large groups of filers in a single day. Generally, a delinquent filer would receive a letter from the SEC giving the Company 10 days in which to make the
Form 10 Registration Statements
A Form 10 Registration Statement is a registration statement used to register a class of securities pursuant to Section 12(g) of the Securities Exchange Act of 1934 (“Exchange Act”). To explain a Form 10 registration statement, let’s start with what it isn’t. It is not used to register specific securities for sale or re-sale and does not change the transferability of any securities. That is, a Form 10 registration statement does not register a security for the purposes of Section 5[1] of the Securities Act of 1933 (“Securities Act”) . Following the effectiveness of a Form 10 registration statement, restricted securities remain restricted and free trading securities remain free trading.
The Purpose of Form 10 Registration Statements
Now onto what a Form 10 registration is. As indicated above a Form 10 registration statement is used to register a class of securities. Any Company with in excess of $10,000,000 in total assets and 750 or more record shareholders
Section 3(a)(9) Exchanges Evaluated
Section 3(a)(9) of the Securities Act of 1933, provides an exemption from the registration requirements for “[E]xcept with respect to a security exchanged in a case under title 11 of the United States Code, any security exchanged by the issuer with its existing security holders exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange.” Generally, in an exchange offer, the issuer offers to exchange new debt or equity securities for its outstanding debt or equity securities.
Since Section 3(a)(9) is a transactional exemption, the new securities issued are subject to the same restrictions on transferability, if any, of the old securities, and any subsequent transfer of the newly issued securities will require registration or another exemption from registration. However, since the new securities take on the character of the old securities, tacking of a holding period is generally permitted allowing for subsequent resales under Rule 144 (assuming all other conditions have
Transparency in the Financial Markets and the Materiality Standards
The disclosure requirements at the heart of the federal securities laws involve a delicate and complex balancing act. Too little information provides an inadequate basis for investment decisions; too much can muddle and diffuse disclosure and thereby lessen its usefulness. The legal concept of materiality provides the dividing line between what information companies must disclose, and must disclose correctly, and everything else. Materiality, however, is a highly judgmental standard, often colored by a variety of factual presumptions.
Transparency in Financial Markets
The guiding purpose of the many and complex disclosure provisions of the federal securities laws is to promote “transparency” in the financial markets. However, the task of winnowing out the irrelevant, redundant and trivial from the potentially meaningful material falls on corporate executives and their professional advisors in the creation of corporate disclosure, and on investment advisors, stock analysts and individual investors in its interpretation. The concept of materiality represents the dividing line between information reasonably likely to influence
SEC Rule 144: Pledged Securities, Holding Periods and Subscriptions Agreements
Securities which are bona fide pledged may be tacked to the holding period of the pledgor as long as the pledge has full recourse against the pledgor. Gifted securities may be tacked with the holding period of the donor. Securities transferred to a trust may be tacked with the holding period of the settlor. Likewise securities transferred to a 401(k) or other individual retirement account will tack to the original issuance date. Securities obtained by beneficiaries of an estate may be tacked with the holding period of the deceased.
Securities acquired solely by the cashless exercise of an option or warrant are deemed to have been issued on the date of issuance of the underlying option or warrant; provided however, that the payment of any consideration, even a de minimus amount of cash, for the newly issued securities will restart the holding period. Accordingly, securities issued upon exercise of options or warrants in a stock option plan are deemed issued
SEC Rule 144: Current Public Information and Reporting Requirements
The current public information requirement is measured at the time of each sale of securities. That is, the Issuer, whether reporting or non-reporting, must satisfy the current public information requirements as set forth in Rule 144(c) at the time that each resale of securities is made in reliance on Rule 144. Most attorney opinion letters and Forms 144 cover a three month period and many Sellers sell securities over that three month period. However, the Seller (or person selling on behalf of Seller such as the broker dealer) is required to make a determination that current public information is available at the time of each sale.
Accordingly, if a reporting issuer does not file a required Q or K during this period, or 15c2-11 information lapses for a non-reporting issuer, sales must cease until the current public information requirement is again satisfied. Moreover, Sellers are taking a risk by selling during the 5-day or 15-day period following the filing of
