SEC Issues New Compliance and Disclosure Interpretations

Published on: 03 Jun 2013

The SEC’s Division of Corporation Finance recently issued new Compliance and Disclosure Interpretations (C&DIs) on various topics, including (1) Exchange Act Form 8-K, (2) Securities Act Rules, (3) Securities Act Forms, (4) Securities Act Sections, (5) Regulation S-K, and (6) Oil and Gas Rules.  

One of the more notable C&DIs is Question 110.01 in the Exchange Act Form 8-K section, which presents the staff’s view on the Item 2.061 filing requirements. Specifically, the C&DI clarifies that a registrant would not be required to file an Item 2.06 Form 8-K when its impairment conclusion is coincidental to, but not in connection with, the preparation, review, or audit of financial statements that are required to be included in its next periodic filing under the Exchange Act.

The following table provides a summary of the other C&DIs that were issued:

C&DI Section



Securities Act Rules


Clarifies a recipient’s (i.e., “donee’s”) classification of bona fide gifts of stock and related holding period requirements for transfers of such stock in Rule 1442 offerings.

Securities Act Rules


Confirms that an affiliate of a security issuer would not include securities it sold back to the security issuer in a nonpublic transaction to calculate the amount of securities that the affiliate may sell pursuant to Rule 144.

Securities Act Rules


Verifies that a registrant may add to Form S-3 (through a posteffective amendment) additional securities of the same class that were previously registered.

Securities Act Rules


Highlights that within its prospectus for a nonautomatic shelf registration statement, an issuer must disclose the aggregate number of shares being resold, regardless of whether it qualifies for omission of such disclosure in accordance with Rule 430B(b).

Securities Act Rules


Specifies that to obtain approval of a business combination (i.e., written consent) from a target’s shareholders that include nonaccredited investors, a registrant must provide such nonaccredited investors “a reasonable amount of time prior to obtaining any written consent.”

Securities Act Forms


Clarifies that registrants must include the market value of warrants that are exercisable after 12 calendar months when determining whether it exceeds the one-third cap specified in the instructions to Form S-3.

Securities Act Forms


Confirms that a registrant qualified to use Form S-3 may incorporate by reference in an offering on Form S-4 the risk factors that were disclosed in its most recent Form 10-K.

Securities Act Sections


Provides guidance on when a company is able to file a registration statement for the resale of securities by investors that were sold in a private equity line financing.

Regulation S-K


Notes that Instruction 5 to Regulation S-K, Item 402(b), requires disclosure about target levels that are non-GAAP financial measures — even though such measures are not subject to Regulation G or Regulation S-X, Item 10(e) — and extends such disclosures to actual non-GAAP results used as targets.

Regulation S-K


Clarifies that a registrant should include equity or other noncash compensation amounts that were foregone at the election of the listed executive officer in the “Salary” or “Bonus” columns of the Summary Compensation Table (i.e., not in any other columns).

Regulation S-K


Discusses constraints to the bona fide estimate of the range of maximum offering price range for nondebt securities that are required to be disclosed in the preliminary prospectus for an initial public offering.

Regulation S-K


Explains that unless financial statements are incorporated by reference into a registration statement, an issuer that reports under Regulation
S-K is subject to the XBRL interactive data requirements for shelf offerings, at-the-market offerings, exchange offers, and secondary market offerings.

Oil and Gas Rules


Clarifies that despite using all funds allotted to implement improved recovery techniques (but without reaching production status), oil and gas registrants can classify such amounts as proved reserves or developed reserves if such registrants otherwise meet the criteria in Regulation S-X, Rules 4-10(a)(22) and 4-10(a)(6), respectively.


[1]    Exchange Act Form 8-K, Item 2.06, Material Impairments.

[2]    Rule 144, Persons Deemed Not to Be Engaged in a Distribution and Therefore Not Underwriters — General Guidance.

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