On February 6, the Securities and Exchange Commission released a final rule mandating the electronic filing of Form D through the Internet (after a phase-in period during which electronic filing will be voluntary), revising the requirements of Form D and revising Regulation D (promulgated under the Securities Act of 1933) to address general solicitation concerns raised by the advent of electronic filing and greater public availability of Form D information. Between September 15, 2008 and March 16, 2009 issuers may file Form D either electronically or on paper; after March 16, 2009 electronic filing of Form D will become mandatory.
Among other things, the revisions to Form D:
- will make Form D information available in electronic form over the Internet;
- permit filers to identify all issuers in a multiple-issuer offering in one Form D filing;
- delete the current requirement to identify owners of 10 percent or more of an issuer’s equity securities as “related persons”;
- replace the current requirement for a business description of the issuer with a requirement to classify the issuer by industry from a standardized industry list;
- require revenue range information (or, subject to an option to decline to disclose, net asset value range information for hedge funds);
- require more specific information on the exemptions from registration claimed under the Securities Act and the Investment Company Act of 1940;
- require reporting of the date of first sale in the offering and whether it is expected to last over one year;
- require CRD numbers for individual recipients of sales compensation and affiliated broker-dealers;
- replacing current requirements on disclosure of expenses and application of proceeds with requirements only to disclose amounts paid for sales commissions and finders’ fees and use of proceeds used to make payments to executive officers, directors and promoters; and
- permit a limited amount of free writing in “clarification” fields to the extent necessary to clarify certain information provided.
In addition, Rule 502(c) of Regulation D has been amended to clarify that the filing of a Form D electronically will not, in itself, violate the rule’s prohibition on general solicitations and general advertising, so long as the information is provided in good faith and the issuer makes reasonable efforts to comply with the requirements of Form D.