The Securities and Exchange Commission (the “SEC”) adopted rule amendments mandating the electronic filing of Form D after an initial transition period. Form D is required to be filed by companies relying on Regulation D, which permits the sale of securities by an issuer of such securities without registration under the Securities Act of 1933, and is currently filed on paper with the SEC. A Form D must be filed within 15 days after the first sale of securities in an offering relying on Regulation D. Hedge and private equity funds generally rely on Regulation D in connection with the sale of interests in their funds to investors.

The amended rules revise the information required to be filed on Form D and also clarify Form D to address when, how and why amendments to Form D must be filed. The new electronic filing system became available on Sept. 15, 2008, and companies will be required to file electronically starting on March 16, 2009.

New Form D.

The information required to be included on new Form D generally covers the same basic identifying information as the old Form D but also includes certain new information about the issuer and the offering. Some of the changes include: 

  • Replacing the requirement to provide a business description with a requirement to classify the issuer by industry from a pre-established list; 
  • Requiring revenue range information or, in the case of hedge funds, net asset value range (with an option to decline to disclose); 
  • Requiring more specific information on the registration exemption claimed by the issuer and information on any exclusion claimed under the Investment Company Act of 1940; 
  • Requiring reporting of the date of first sale for the offering and whether the offering is expected to last over a year; 
  • Replacing the requirement to disclose information on a wide variety of expenses and the application of proceeds with a requirement to report expenses only as to amounts paid for sales commissions, and use of proceeds only as to amounts to be used to make payments to executive officers, directors and promoters; 
  • Deleting the requirement to identify as “related persons” owners of 10% or more of a class of the issuer’s equity securities; and
  •  Requiring CRD numbers for both individual recipients of sales compensation and associated broker-dealers.

Amendment Requirements.

The SEC has revised Rule 503 of Regulation D and the instructions of Form D to require that amendments be filed annually, on or before the first anniversary of the filing of Form D. The SEC has also specified that amendments will be required to (i) correct a material mistake of fact or error (as soon as practicable after discovery of the mistake or error) and (ii) reflect a change in the information provided in a previous filing (as soon as practicable after the change). However, the SEC has also provided that changes in certain itemized information will not necessitate an amendment to a previously filed Form D. An issuer will be required to update all information in its Form D each time an amendment is filed regardless of the reason for the filing.

Electronic Filing.

To file electronically with the SEC, issuers will need to obtain the codes that are currently required in order to file on EDGAR. You can obtain them by filing an electronic Form ID followed by faxing a notarized authenticating document.1 Unlike the old Form Ds, which can only be reviewed by visiting the SEC’s Public Reference Room, the filed information on the new Form D will be available to the public on the SEC’s website.2 The information will be searchable and will increase information available to the public about the issuers filing a Form D.

State Filings.

Certain states currently require manually signed copies of Form D to be filed with such state in connection with an offering relying on Regulation D. While the SEC is working with the North American Securities Administrators Association, Inc. to make the new electronic filing of Form D a “one-stop filing,” those state requirements are still in effect. Accordingly, issuers must still make such manual filings in states that require them.

Summary.

New Form D may be used as of Sept. 15, 2008 and will be required to be used on and after March 16, 2009. A copy of new Form D can be found at http://www.sec.gov/about/forms/formd.pdf.