SECTION 2
Forms
Title 2
Title 3
Title 4

SECTION 3
Securities Act
Exchange Act
Sarbanes-Oxley Act
SOX TABLE
Title 5

SECTION 4
33 ACT Reg
'34 ACT Reg
Reg. S-K
Reg. S-X
Title 6

The Preliminary Prospectus

Prior to SOR the principal device for making information available concerning the offering during the waiting period was the preliminary prospectus, which, as provided in Rule 430,[1] is a prospectus meeting the requirements of Section 10 of the Act and hence may be delivered during the waiting period without violating Section 5(b) of the Act. A preliminary prospectus is simply the prospectus portion of the registration statement as filed, containing substantially the information required to be included in the final definitive prospectus. Rule 430 expressly allows the omission of information with respect to the offering price, underwriters’ and dealers’ discounts and commissions, amount of proceeds, conversion rates, call prices, “or other matters depending upon the offering price.”[2]  In the case of a non-reporting company (an IPO) the preliminary prospectus, if circulated, must include “A bona fide estimate of the range of the maximum offering price and the maximum number of securities offered.”[3] A preliminary prospectus (and a Rule 430A prospectus) must contain the date of issuance, and a “Subject to Completion” legend traditionally printed in red. The legend must set forth the information called for by Regulation S-K, Item 501(b)(3), Instruction 10, which allows that “[t]he legend may be in the following or other clear, plain language:”

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Historically, the subject to completion statement and the legend had to be printed in red ink, and the preliminary prospectus was often referred to as the “red herring” prospectus. The red herring met its demise in 1996 Release 7300, which eliminates the familiar red ink requirement for the caption “Subject to Completion” and related legend.[4] Registrants, nonetheless, persist in printing the subject to completion statement in red.W

We have introduced you to the SOR free-writing prospectus, which provides a means for making information available during the waiting period without all the limitations of a preliminary prospectus. Before we get into additional conditions on the use of a free writing prospectus we need to get a better understanding of what the preliminary prospectus consists of and how it is prepared and the requirements relating to delivery. Although SOR adds new circumstances under which a preliminary prospectus may or may not have to be delivered the old regimen for delivery of a preliminary prospectus remains.

The Securities Act does not provide for prescribed situations in which the preliminary prospectus must be delivered as was the case with the definitive prospectus after the registration statement is effective, but as is discussed immediately below the Commission adopted various devices designed to assure that the preliminary prospectus was widely distributed and generally available during the waiting period. This has not been changed by SOR, although when we get back to the free-writing prospectus we will discover there are additional circumstances under which a preliminary prospectus has to be delivered.

Distribution of the preliminary prospectus

The Commission has used its power to grant or withhold acceleration of the effective date of a registration statement[5] as a means of compelling the distribution of the preliminary prospectus during the waiting period.[6] In most firm underwritings, the preliminary prospectus is distributed in any event almost immediately after the filing of the registration statement as part of the process of putting together an underwriting syndicate. To send out the preliminary prospectus as originally filed, however, runs the risk of distributing a prospectus that is deficient, or that the staff may regard as deficient, in which event it may be necessary to recirculate a corrected preliminary prospectus to those previously sent a preliminary prospectus. Accordingly, registrants in some instances, do not circulate until receiving the staff's comments and filing an amended registration statement taking those comments into account. The request for acceleration sets forth pertinent information concerning the extent to which the preliminary prospectus has been distributed, which is a critical factor in the Commission’s determination of whether or not to grant acceleration.[7] The distribution of a preliminary summary prospectus will not satisfy the requirements for acceleration.[8]

The disclosure function of the prospectus depends upon the effective distribution of the preliminary prospectus during the waiting period as once the registration statement becomes effective, realistically, the opportunity to examine the final prospectus does not come until the completion of the transaction. Rule 15c2-8 under the Exchange Act is designed to require the widespread dis­tribu­tion of the preliminary prospectus by those involved in the distribution process.[9] This was accomplished by providing that broker-dealers participating in a distribution will be deemed engaged in fraudulent or manipulative practices if they fail to take reasonable steps to assure that any person desiring a preliminary of final prospectus receives a copy of same. Further, each salesman of the broker-dealer participating in the offering must receive a preliminary and definitive prospectus. The managing underwriter has the responsibility under the rule of assuring that participating broker-dealers receive an adequate supply of the prospectus (prelimi­nary and final) — including prospectuses subject to completion and term sheets or abbreviated term sheets contemplated by Rule 434, discussed BELOW.[10] Rule 15c2-8 has not been changed by SOR.

In the case of issuers not subject to the reporting requirements of the Exchange Act at the time of the filing of the registration statement (an IPO), broker-dealers participating in a distribution must deliver a copy of the preliminary prospectus to every person to whom it expects to send a confirmation upon the registration statement becoming effective at least 48 hours prior to the mailing of that confirmation.[11] This is generally not burdensome from a timing standpoint if the preliminary prospectus used shortly after the filing of the registration statement is not so deficient that it becomes necessary, through staff insistence or otherwise, to distribute a corrected preliminary prospectus. If, however, it is necessary to recirculate a corrected prospectus, mailing the preliminary prospectus so that it can reasonably be expected to reach those to whom confirmations are to be sent 48 hours prior to the mailing of the final prospectus may necessitate a delay in commencement of the offering.

Registration Statement of Salesforce.Com  (Use bookmarks to navigate)

MUST READ:

§ 1:18          Delivery of a preliminary prospectus after SOR