The Securities and Exchange Commission (the “SEC”) recently adopted interim final amendments to Forms S-1 and F-1 under the Securities Act of 1933 and Item 512 of Regulation S-K.1 These amendments implement Sections 71003 and 84001 of the Fixing America’s Surface Transportation (FAST) Act, which required that the SEC revise registration statement Forms S-1 and F-1 to permit emerging growth companies2 to omit financial information for certain historical periods and revise Form S- 1 to permit forward incorporation by reference for smaller reporting companies.3
The FAST Act included provisions designed to help facilitate capital raising transactions for public companies and secondary trading for private companies and modernize certain public company disclosure requirements. Those provisions, which were a follow-on to the significant changes to the capital formation process under the Jumpstart Our Business Startups (JOBS) Act of 2012, were discussed in more detail in our Memorandum to Clients and Friends of December 7, 2015 entitled “New Legislation Enacted to Further Assist Public and Private Companies in Capital Raising Transactions”. The interim final amendments effect necessary changes to implement these FAST Act provisions.
Disclosure Simplification for EGCs
The FAST Act amended the Jumpstart Our Business Startups (“JOBS”) Act to allow an emerging growth company that is filing a registration statement (or submitting a draft registration statement for confidential review) under Section 6 of the Securities Act on Form S-1 or Form F-1 to omit financial information for historical periods otherwise required to be included in the registration statement if it reasonably believes the omitted information will not be required to be included in the filing at the time of the contemplated offering, so long as the issuer amends the registration statement prior to distributing a preliminary prospectus to include all financial information required to be included in the registration statement at the time of the amendment. The SEC staff on December 10, 2015 issued an announcement and new Compliance and Disclosure Interpretations (C&DIs) indicating that in such circumstances an EGC issuer may omit financial statements of other entities (e.g., an acquired business) from its submission or filing and also indicating that an ECG issuer may not omit interim financial statements from its submission that will be included within required financial statements covering a longer interim or annual period at the time of its offering, even though the shorter period will not be required to be presented separately at that time. This was also discussed in our Memorandum to Clients and Friends of December 16, 2015 entitled ” FAST Follow-Up - SEC Issues Guidance for ECGs under New Legislation”.4
Forward Incorporation for SRCs
The FAST Act required the SEC to revise Form S-1 to permit a smaller reporting company to incorporate by reference into its registration statement any documents filed by the issuer subsequent to the effective date of the registration statement. Smaller reporting companies that benefit from this change must still meet each of the existing eligibility requirements and conditions to use forward incorporation by reference on Form S-1.5 In addition, the ability to forward incorporate by reference is conditioned on the smaller reporting company making its incorporated Exchange Act reports and other materials readily available and accessible on a web site maintained by or for the issuer and disclosing in the prospectus that such materials will be provided upon request. The undertakings in Item 512(b) of Regulation S-K will also be required in Form S-1 registration statements filed by smaller reporting companies that use forward incorporation by reference.
Effectiveness and comment period.
The interim final rules took effect on January 19, 2016 (the date of publication in the Federal Register) and the revised forms are effective for disclosure made on or after that date. The SEC invites general comments on the interim final rules, and in particular on whether the interim final rules should be extended to other registrants or forms. Comments should be received on or before February 18, 2016 (within 30 days after publication in the Federal Register).