The Securities and Exchange Commission has approved interim final rules needed to implement provisions of the Fixing America’s Surface Transportation Act that revise financial reporting forms for emerging growth companies and smaller reporting companies.
The FAST Act, a transportation spending bill approved by Congress last month, included several changes to securities regulations, including mandates to revise Forms S-1 and F-1 to provide that as long as emerging growth companies’ registration statements include all required financial information at the time of the offering, they will be allowed to omit certain historical period financial information prior to the offering.
The new rules revise Form S-1 to allow smaller reporting companies to use incorporation by reference for future filings the companies make under the federal securities laws after the registration statement becomes effective. The interim final rules also include a request for comment on whether the rules should be expanded to include other registrants or forms.
????Form S-1 is the form used by domestic issuers to register the offer and sale of securities under the Securities Act when no other form is authorized or prescribed; Form F-1 is the corresponding form used by foreign private issuers. An “emerging growth company” is broadly defined as an issuer with less than $1 billion in total annual gross revenues during its most recently completed fiscal year. EGCs must include two years of audited financial statements in a registration statement for an initial public offering of common equity securities.
The interim rules will become effective once published in the Federal Register and the public comment period will remain open for 30 days following their publication.
Other FAST Act requirements, yet to be supported with similar SEC rulemaking:
Rather than the current 21-day limitation, investor road shows may now begin 15 days after the confidential filing of an IPO registration statement is made public.
An issuer designated an emerging growth company at the time it submits a confidential registration statement or a public registration will continue to benefit from that status until it moves forward with an IPO or one year after it ceases to be an EGC.
Within 180 days of enactment of the FAST Act (that is, by mid-June), the SEC must issue regulations that permit issuers to submit a summary page on Form 10-K, cross-referenced to other disclosures in Form 10-K as needed.
The SEC is also tasked with a study of Regulation S-K that assesses ways to simplify and modernize disclosures, reducing the cost and burden on issuers. A company-specific approach that eliminates boilerplate language and static requirements should also be addressed. This report must be submitted to Congress within 360 days of the FAST Act’s enactment, accompanied by related rule proposals.