The Securities and Exchange Commission this week released another round of guidance regarding the recently enacted Fixing America's Surface Transportation (FAST) Act. The new Compliance and Disclosure Interpretations from the Division of Corporation Finance use its standard question-and-answer format to address the filing of financial statements by emerging growth companies and requirements for savings and loan holding companies.

Issues addressed thus far by the CD&Is include:

May an EGC issuer omit interim financial statements from its filing or submission for a period that has financial information that will be included within required financial statements covering a longer interim or annual period at the time of the offering, even though the shorter period will not be presented separately at that time?

No. The FAST Act allows an issuer to omit financial information that "relates to a historical period that the issuer reasonably believes will not be required to be included…at the time of the contemplated offering." Interim financial information "relates" to both the interim period and to any longer period (either interim or annual) into which it has been or will be included.

Corp Fin gives the example of a a calendar year-end EGC that submits or files a registration statement in December 2015 and reasonably expects to commence its offering in April 2016 when annual financial statements for 2015 and 2014 will be required. This issuer may omit its 2013 annual financial statements from the December filing. However, the issuer may not omit its nine-month 2014 and 2015 interim financial statements because those statements include financial information that relates to annual financial statements that will be required at the time of the offering in April 2016.

May an EGC issuer omit financial statements of other entities from its filing or submission if it reasonably believes that those financial statements will not be required at the time of the offering?

Yes. Section 71003 of the FAST Act is not by its terms limited to financial statements of the issuer. The issuer could omit financial statements of, for example, an acquired business required by Rule 3-05 of Regulation S-X if the issuer reasonably believes those financial statements will not be required at the time of the offering.

How did the FAST Act affect Section 12(g) and Section 15(d) of the Exchange Act?

It amended Section 12(g) and Section 15(d) of the Exchange Act so that savings and loan holding companies are treated in a similar manner to bank holding companies for the purposes of registration, termination of registration or suspension of their Exchange Act reporting obligation.

Savings and loan holding companies will have a Section 12(g) registration obligation as of any fiscal year-end after Dec. 4, 2015 with respect to a class of equity security held of record by 2,000 or more persons.

The holders of record threshold for Section 12(g) deregistration for savings and loan holding companies has been increased from 300 to 1,200 persons.

The holders of record threshold for the suspension of reporting under Section 15(d) for savings and loan holding companies has been increased from 300 to 1,200 persons.

How do the amendments affect the obligations of savings and loan holding companies to register a class of equity security under Section 12(g) where such obligations were triggered as of a fiscal year-end on or before Dec. 4, 2015?

A savings and loan holding company will have a Section 12(g) registration obligation if, as of any fiscal year-end after Dec. 4, 2015, it has total assets of more than $10 million and a class of equity security held of record by 2,000 or more persons. The effect of this provision is to eliminate, for savings and loan holding companies, any Section 12(g) registration obligation with respect to a class of equity security as of a fiscal year-end on or before Dec. 4, 2015.

If a savings and loan holding company has filed an Exchange Act registration statement and the registration statement is not yet effective, it may withdraw the registration statement. If it has registered a class of equity security under Section 12(g), it would need to continue that registration unless it is eligible to deregister under Section 12(g) or current rules.

How can a savings and loan holding company terminate the registration of a class of equity security under Section 12(g)?

If the class of equity security is held of record by less than 1,200 persons, the savings and loan holding company may file a Form 15 to terminate the Section 12(g) registration of that class. Until rule amendments are made to reflect the change to Section 12(g)(4), the savings and loan holding company should include an explanatory note in its Form 15 indicating that it is relying on Exchange Act Section 12(g)(4) to terminate its duty to file reports with respect to that class of equity security.

Registration will be terminated 90 days after the savings and loan holding company files a Form 15. Until that date of termination, the savings and loan holding company is required to file all reports required by Exchange Act Sections 13(a), 14 and 16.

Alternatively, a savings and loan holding company could rely on Exchange Act Rule 12g-4, which permits the immediate suspension of Section 13(a) reporting obligations upon filing a Form 15, if it meets the requirements of that rule.

How can a savings and loan holding company suspend its reporting obligations under Section 15(d)?

For the current fiscal year, a savings and loan holding company can suspend its obligation to file reports under Section 15(d) with respect to a class of security that was sold pursuant to a Securities Act registration statement and that was held of record by less than 1,200 persons as of the first day of the current fiscal year.

If, during the current fiscal year, a savings and loan holding company has a registration statement that becomes effective or is updated pursuant to Securities Act Section 10(a)(3), it will have a Section 15(d) reporting obligation for the current fiscal year.

 

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