SEC makes life easier for registrants

✍ Scribed by Robert W. Rouse

• Book ID: 102299128
• Publisher: John Wiley and Sons
• Year: 1997
• Tongue: English
• Weight: 266 KB
• Volume: 8
• Category: Article
• ISSN: 1044-8136
• DOI: 10.1002/jcaf.3970080215

✦ Synopsis

Robert W. Rouse

,he staff of the Securities and Exchange Commission (SEC) continue to wrestle with accounting and auditing issues. While the long-awaited proposed release on S-X and S-K disclosures for derivatives has not been finalized, and the revised Staff Training Manual of the Division of Corporation Finance has not yet been published, a final rule has been issued which will make the lives of registrants which are involved in acquisition(s) more palatable.

Registrants can now-in most circumstances-provide information in a Securities Act (1933) registration on the same basis as required by the Exchange Act (1934). What does all this mean? In the past, a 1933 Act filing to register securities had to provide audited financial statements of "significant" acquisitions which were probable but not consummated. Provision of the same information was-and still isrequired via an 8-K filing when these "significant" acquisitions are consummated.

No More "Deal Killers"

These past requirements were considered onerous by registrants who may have been unable to provide audited financial statements of entities deemed significant acquisitions as defined by Rule 3-05 of Regulation S-X. The inability to meet these S-X disclosures may have proven to be "deal billers" or may have driven registrants to forgo public offerings and to undertake private or offshore financing.

The amendments eliminate in many situations the requirement to provide in 1933 Act filings audited financial statements for probable business acquisitions or for acquisitions that were consummated 74 or fewer days before a registration of securities. The disclosure requirements still remain for "blank check" registrant filings, and for those significant acquisitions above the 50-percent asset, investment, or income test level. These latter acquisitions are deemed so large relative to the registrant that the investing community would desire audited financial statements for evaluation purposes.