by Cydney Posner
The SEC has approved interim final rules implementing two provisions of the Fixing America’s Surface Transportation (FAST) Act. As you may recall, the FAST Act was signed into law in early December and contained several measures that modified the JOBS Act or otherwise related to capital raising for emerging growth companies, disclosure modernization, the development of secondary markets and the registration process for smaller companies. (See this PubCo post.)
The interim final rules implement the provision of the Fast Act that amended Section 102 of the JOBS Act. That amendment required the SEC to revise Forms S-1 and F-1 to indicate that EGCs may omit from their pre-IPO registration statements (whether filed or submitted for confidential review) financial information for historical periods otherwise required by Reg S-X so long as the omitted financial information relates to a historical period that the issuer reasonably believes will not be required to be included at the time of the contemplated offering and, prior to distribution of the prelim, the registration statement is amended to include all financial information required by Reg S-X at the date of the amendment. As a result, for example, a company would not have to audit a fiscal year that would otherwise have been required at the time it submitted its confidential filing if it reasonably believed that those financial statements would not be required to be included at the time of the offering. The release also notes that an emerging growth company may also omit the historical financial statements of an acquired business from its filing or submission if the company reasonably believes those financial statements will not be required at the time of the offering. Under the Act, EGCs were entitled to rely on the provision and omit the same financial information from their S-1 (or F-1) registration statements beginning 30 days after enactment. However, Corp Fin indicated that it would not object if EGCs applied that provision immediately.
In addition, the interim final rules revise Form S-1 to allow smaller reporting companies to elect to incorporate by reference information filed after the effective date of the registration statement. A smaller reporting company making this election must state in the prospectus “that all documents subsequently filed by the registrant pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the offering shall be deemed to be incorporated by reference into the prospectus.” The current eligibility requirements (e.g., the requirement to be current in filings) for any issuer to use historical incorporation by reference on Form S-1 for documents filed before the effective date of the registration statement will continue in place and will now also apply to smaller reporting companies that elect to use forward incorporation by reference on Form S-1. The use of forward incorporation by reference by a smaller reporting company will be also conditioned on the company’s making its incorporated Exchange Act reports and other materials readily available and accessible on its company website and disclosing in the prospectus that these materials will be provided on request. The rules also make a conforming change to the undertakings in Item 512(a) of Reg S-K to provide for forward incorporation on Form S-1. Smaller reporting companies that use forward incorporation will also need to include the undertakings in Item 512(b).
The interim final rules also include a request for comment on whether the rules should be expanded to include other registrants or other forms. The press release indicates that the rules will become effective when published in the Federal Register and that the public comment period will remain open for 30 days following their publication.
