Many private investment funds, including private equity funds and hedge funds, that offer fund interests in “private placements” commonly rely on a safe harbor provided in Regulation D promulgated under the U.S. Securities Act of 1933, as amended (the “Securities Act”), to avoid registration with the U.S. Securities and Exchange Commission (the “SEC”). Form D serves as the official notice of an offering of securities made without registration under the Securities Act in reliance upon Regulation D.1
In 2008, the SEC issued a final rule2 adopting a revised Form D and mandating electronic filing of Form Ds through the SEC’s Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”) starting March 16, 2009. (Electronic filing of Form Ds has been optional since September 15, 2008.) Form Ds filed through the EDGAR system will be publicly available online in an interactive and searchable format.
What You Need to Do to Prepare
To file a Form D electronically, a fund3 will use the same Central Index Key (“CIK”) number and CIK Confirmation Code (“CCC”) that it currently uses in connection with the EDGAR system for Schedule 13D/G or Form 3, 4 or 5 filings. In addition, a fund that has previously filed a paper Form D may previously have been assigned a CIK number and CCC. A fund can confirm whether it has been assigned a CIK number by visiting the SEC’s website. If a fund already has a CIK number as a “paper” filer, it will still need to apply to obtain EDGAR access codes. To apply for EDGAR access codes, a fund must provide the SEC with its CIK number and create a passphrase using the selection “Convert Paper Only Filer to Electronic Filer” on the SEC website.
If a fund does not have a CIK number and CCC, it will need to request the codes by electronically filing a Form ID on the SEC’s website and filing a notarized authenticating document by fax within two business days before or after filing the Form ID. The SEC typically assigns a CIK and CCC to a new EDGAR filer within 24-48 hours; however, there may be a significant increase in applications around March 16. Accordingly, it is prudent to obtain a CIK and CCC in advance of the March 16 changeover.
Electronic Form D
Changes in Information Required in New Form D. While much of the basic information required by the paper Form D will also be required in the new electronic version, there are some significant new disclosures that will be required, including: (i) notice of the date of first sale;4 (ii) the Central Registration Depository number of any U.S.- registered broker dealers that are paid a commission or other fee for selling securities in the offer; and (iii) disclosure of what exclusion, if applicable, from investment company registration is being relied upon. The Form D must be filed with the SEC no later than 15 days after the date of first sale.
Required Amendments. On an ongoing basis, the new Form D must be amended:
- to correct a material mistake of fact or error, as soon as practicable after discovery of the mistake or error;
- to reflect a change in the information previously provided, as soon as practicable after the change, except with respect to changes that fall within certain specified exceptions (see below); and
- annually, on or before the first anniversary of the most recent previously filed notice, if the offering is continuing at that time.
Timing of Annual Amendment. The requirement to file an annual amendment to a Form D is a significant change and will apply to all funds with offerings lasting more than one year, including those who made their initial Form D filings on paper under the old regime.
- If a fund is engaged in an ongoing offering (including all hedge funds accepting new subscriptions and private equity funds that have not had a final close) and its most recent Form D (including any amendment thereto) was filed prior to March 16, 2008, it must file an amendment on or before the March 16th mandatory electronic filing date. Accordingly, all funds engaged in ongoing offerings should consider filing paper amendments to their Form Ds prior to March 16 to reset the clock on when their first electronic filing will be due.
- If a fund is engaged in an ongoing offering and its most recent Form D (including any amendment thereto) was filed between March 16, 2008 and March 16, 2009, it must file an amendment on or before the first anniversary of such filing.
When an Amendment is Not Required. Importantly, a previously filed Form D is not required to be amended to reflect a change that occurs after the offering terminates or certain changes specifically enumerated in the rule, including a change reflecting: (i) a fund’s revenues or aggregate net asset value; (ii) the total offering amount, if the change is a decrease, or if the change, together with all other changes in that amount since the previously filed notice, does not result in an increase of more than 10%; (iii) the amount of securities sold in the offering or the amount remaining to be sold; and (iv) the total number of investors who have invested in the offering.
State “Blue Sky” Filings Unaffected
Many states require the filing of a Form D with the applicable state regulator to preempt state “blue sky” laws with respect to a sale of securities to investors in that state. Until state regulators update their filing systems, paper Form D filings will continue to be filed in most states. The SEC and the North American Securities Administrators Association are exploring a “one-stop filing” approach that would allow funds to file Form D information with the SEC and with states designated by them in a single electronic filing.
- To Apply for a CIK: https://www.filermanagement.edgarfiling.sec.gov/
- To Search for an Existing CIK: http://www.sec.gov/edgar/searchedgar/companysearch.html
- For Guidance on the New Form D Filing Process: http://www.sec.gov/divisions/corpfin/formdfiling.htm