Last week, Corp Fin revised a CDI regarding disclosure about selling shareholder entities and withdrew another CDI on the same topic.
The revised CDI (140.02) expands on the nature of the disclosure required under Reg S-K Item 507 for selling shareholders that are entities, not natural persons. Item 507 requires disclosure of the nature of any position, office or other material relationship that the seller has had within the past three years with the company or any of its predecessors or affiliates.
The staff advises that, where the seller is an entity, in addition to disclosing any material relationships between the company and the seller, the company must also disclose that information about any persons (entities or natural persons) that have control over the selling entity and that have had a material relationship with the company or any of its predecessors or affiliates within the past three years, identifying each person or entity and describing the nature of any relationships. According to Practical Law, the question had previously been limited to requiring that selling shareholder entities identify the persons with voting or investment control over the company’s securities owned by the entity.
Corp Fin also withdrew Question 240.04 (issued in July 2008) of its Reg S-K CDIs. Practical Law also reports that the withdrawn CDI “had stated that an issuer with a resale registration statement naming several investment funds as selling shareholders must name the natural persons who have or share voting or investment power for each fund as part of its Item 507 disclosure, even if voting or investment power for any fund is controlled by an investment committee consisting of a large number of individuals who each have a vote to approve the exercise of such power and, therefore, no single person exclusively possesses the power to vote, acquire, or dispose of securities held by the fund.”