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PREVIOUS Part 13 Integrating '34 Act Reporting and '33 Act Registration NEXT |
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Registration of Securities under the Exchange ActThe Securities Act of 1933 mandated disclosure in connection with public offerings, but made no provision for continuous disclosure. The Securities Exchange Act of 1934, Section 12(b) of which required registration of securities listed on a national securities exchange, introduced the concept of continuous disclosure for companies listed on a national securities exchange. Section 15(d) of the Exchange Act also provided for continuous disclosure by companies that previously registered a public offering of securities under the Securities Act. The 1964 amendments to the Exchange Act closed the gap with respect to over the counter securities so as to require the registration under the Exchange Act and reporting under the Exchange Act of substantially all public companies. Section 12(g) added by the 1964 amendments (and Rule 12g-1) requires all companies with a class of equity securities with 500 record owners to register the class of securities (if not registered under Section 12(b)) if they have total assets of more than $10 million. A company with a class of securities registered under the Exchange Act becomes subject to the continuous reporting provisions of Section 13(a) of that Act, which is the principal focus of this Part.[1] In addition to the reporting requirements, companies registered under the Exchange Act become subject to the Commission’s proxy rules regulating proxy solicitations pertaining to a class of registered securities[2] and to tender offer regulation;[3] insiders of such companies are subject to provisions imposing liability on them to the registrant with respect to profits realized by them from short-swing trading in equity securities of the registrant.[4] Section 16(a) of the Exchange Act requires beneficial owners of more than ten percent of a class of equity securities registered under Section 12 of the Exchange Act, and officers and directors of the issuer of such securities, to disclose all equity security holdings of such issuer and any transaction in such securities. Section 16(a) as amended by the Sarbanes-Oxley Act of 2002[5] requires the filing of a Form 4 by officers, directors, and ten percent beneficial shareholders reporting current transactions in equity securities of a company registered under the Exchange Act by the end of the second business day after the day of the transaction. Form 4 and the other Section 16(a) forms (Form 3 and Form 5) must be filed electronically on EDGAR. Our interest in registration of securities under the Exchange Act is a limited but significant one. This is not a course in the Exchange Act and in several respects our coverage is superficial. Our focus is those aspects of the integrated disclosure system that specify substantially similar disclosure in reports filed under the Exchange Act and disclosure included in a Securities Act registration statement and the relevance of integrated disclosure in the context of registered offerings under the Securities Act. The relevance from our perspective is on the extent to which the prospectus included in a Securities Act registration statement can simplify the prospectus by incorporating by reference information from a report filed under the Exchange Act. The possibility of simplifying the prospectus in this manner exists primarily with respect to follow-on offerings as reporting companies are seldom making an IPO. We have to explore the continuous disclosure system under the Exchange Act in order to be familiar with the reports filed that include information that may be incorporated by reference under appropriate circumstances in the prospectus as part of the registration statement of a public company making a public offering. We do not, however, cover reporting under the Exchange Act in depth. Reporting companies and the reports filed under the Exchange Act were singled out for special treatment under Sarbanes-Oxley, which not only requires the principal executive and financial officers of the company to certify the periodic reports, but requires reporting company to establish disclosure controls and procedures and internal control over financial reporting. Management must annually assess to the effectiveness of the company’s internal control over financial reporting and that assessment must be attested to by the auditors auditing the financial statements. In order to attest to management’s assessment, the auditors must audit and report on the company’s internal control over financial reporting. Sarbanes-Oxley certification provision (Section 302) and internal control over financial reporting (Section 404) and the rules implementing these provisions by the SEC and by the Public Company Accounting Oversight Board (PCAOB) relating to the Section 404(b) attestation as to detail are beyond the scope of this course. If you are curious about the PCAOB, you may link to its excellent website by clicking on ON LINE LINKS. There is no single once‑and‑for‑all registration for securities of an issuer under the federal securities laws. Registration under the Securities Act does not constitute registration under the Exchange Act. Registration of a class of equity securities under Section 12(g) is not registration of the same or another class under Section 12(b). The fact that the issuer has a class of listed securities registered under Section 12(b) does not eliminate the necessity to register another class of equity securities if the corporation also has 500 shareholders of record in another class of equity securities. No filing fee is payable in connection with registration of a class of securities under Section 12.[6] We previously discussed Exchange Act registration on Form 8-A concurrently with registration of an IPO under the Securities Act. See Part 11. We start with the assumption that our company (AnimatEase) completed its public offering and concurrently registered its common stock under the Exchange Act on Form 8-A. We should note, however, that registration of securities to be listed on a national securities exchange is a two‑step procedure involving a listing application filed with the exchange and the registration statement on Form 10 (or 8-A, if appropriate) filed with both the exchange and the Commission simultaneously with the listing application. Registration cannot become effective until after the exchange authorities certify to the Commission that the security has been approved for listing. Reporting companies and '34 Act Periodic ReportsCompanies become reporting companies as a result of either of the following: (1) Registration of a class of equity securities under the Exchange Act. Exchange Act, Section 13(a). (2) Registration of an offering of securities pursuant to the Securities Act. Exchange Act, Section 15(d).
The principal reports required to be filed with the SEC by reporting companies are: (1) The annual report on Form 10‑K , which must be filed within 90 days after the end of the company's last fiscal year. Accelerated filers must file the Form 10-K within 75 days and large accelerated filers within 60 days after the end of the fiscal year See Part 11. (2) The quarterly report on Form 10‑Q filed within 45 days of the end of the appropriate quarter for each quarter other than the year‑end quarter. Accelerated and large accelerated filers must file the10-Q within 40 days after the end of the quarter.. See Part 11. (3) Current reports on Form 8‑K filed within four business days of the event that requires the Form 8‑K report. For convenience of exposition we are going to focus on the annual report filed on Form 10-K and in the process fail to give appropriate attention to the glossy annual report to shareholders. The content of the glossy annual report is specified by Exchange Act Rule 14a-3(b)(1)-(10 and includes the basic audited financial statements required to be included in the Form 10-K, the Reg. S-K Item 303 Management Discussion and Analysis, selected financial information required by Reg. S-K Item 301, segmental financial information and other specified information relating to registrant's business. It may include such other information the issuer elects to include and typically includes a letter to shareholders from the CEO, graphs and charts featuring various aspects of the company's business. In practice, a reporting company with a class of securities registered under the Exchange Act has the alternative of incorporating by reference into its Form 10-K information included in its glossy annual report to shareholders and certain information from its proxy statement. A substantial number of companies do one or both. Since our ultimate goal is to consider incorporating '34 Act information into the prospectus of a registration statement filed on Form S-3 or S-1, whether incorporated from the glossy annual report and/or the proxy statement the information incorporated into the Form 10-K is part of the Form 10-K. The annual report on Form 10-K includes the standardized financial statements and the remaining Regulation S‑K items constituting the basic information package, both of which we have previously considered. The Form 10‑K also includes Regulation S-K items that we previously described as part of the in-depth disclosure, including Item 401 (officers and directors), item 402 (management remuneration and transactions), and item 403 (security holders of management and five percent beneficial owners). Like Securities Act registration forms, the Items included in Form 10-K reference Regulation S-X as to financial statements and items of Regulation S-K as to other items. SOR makes one significant change in the Form 10-K for all reporting companies. A new Item 1A requires the inclusion of Risk Factors in accordance with Item 503(c) of Regulation S-K, which are the risk factors that are part of the standard registration items included in Securities Act registration statement. The amended Form 10-K also requires accelerated and lare accelerated filers to disclose the substance of unresolved comments regarding its periodic filings on Form 10-K and Form 10-Q. Substantially all reporting companies must file with the Commission and appropriate exchanges a report on Form 10‑Q within 45 (40 for accelerated or large accelerated filers) days after the end of each of its first three fiscal quarters. No report is filed on Form 10‑Q for the fourth quarter. Accelerated and large accelerated filers must file within 40 days from the end of the fiscal period. Form 10‑Q requires the basic financial statements (balance sheet, statement of income and statement of changes in financial condition) except they may be presented in a condensed form and are unaudited. The balance sheet is to be as of the end of the most recent fiscal quarter and as of the end of the preceding year. An interim balance sheet as of the comparative quarter of the preceding year need be included only if necessary for an understanding of the impact of seasonal fluctuations. The statement of income is to be presented for the most recent fiscal quarter on a comparative basis with the prior year and for the year to date (that is, for the period since the end of the preceding fiscal year to the end of the most recent fiscal quarter) also on a comparative basis with the prior year. SOR makes one significant change in the Form 10-Q. See OPLINK. A new Item 1A requires disclosure of any material changes in risk factors from those disclosed in the Form 10-K. Recal the Integrated Disclosure Table in Part 11. We include it below, adding Form 10-K specific disclosure requirements
Current Reports on Form 8-KCurrent reports on Form 8-K was dramatically changed as of August 23, 2004. Notwithstanding the dramatic changes, the new Form 8-K continues the practice of specifying the events that trigger the requirement for disclosure. The list of triggering events of amended Form 8-K, nonetheless, are extensive and broad in scope, requiring on a real time basis disclosure of information relating to a multitude of corporate developments. The triggering approach to whether a filing has to be made also eliminates in large part issues that might otherwise arise as to whether a particular development has to be disclosed. Further, the Form 8-K triggering events, except with respect to the Regulation FD item which has its own mechanism and other events the filing of which are optional, require the Form 8-K be filed and reported on within four business days after the occurrence of the event. The application of this provision appears clear and a footnote in the Adopting Release includes the example of a reportable event that occurs on Wednesday, noting that “the Form 8-K filing deadline would typically be the following Tuesday.”[7] If the event occurs on a Saturday, Sunday or holiday on which the Commission is not open for business, then the four business day begins to run on, and includes the first business day thereafter.[8] The eight sections are as follows: Section 1 – Registrant’s Business and Operations Section 2 – Financial Information Section 3 – Securities and Trading Markets Section 4 – Matters Related to Accountants and Financial Statements Section 5 – Corporate Governance and Management Section 6 - Asset-Backed Securities Section 7 – Regulation FD Item 7.01 Regulation FD Disclosure Section 8 – Other Events Section 9 – Financial Statements and Exhibits
Sections 7 through 9 each have only one Item and the title of the section is also descriptive of the Item. Sections 1 through 5, however, each include more than one Item. In conjunction with the amendment to Form 8-K the Commission adopted a limited safe-harbor from Rule 10b-5 in the event failure to file a Form 8-K, which is applicable to specified Items. The Commission also adopted amendments to Form S-3 moderating the impact of the failure to file those same items timely on the availability of those forms. The Commission also amended Form 10-K and Forms 10-Q to take into account the moving of certain items from those forms to Form 8-K. The safe harbor provides that “[n]o failure to file a report on Form 8-K that is required solely pursuant to Item 1.01, 1.02, 2.03, 2.04, 2.05, 2.06 4.02(a), 6.01, 6.03, 6.05 of Form 8-K shall be deemed to be a violation of” Section 10(b) of the Exchange Act or Rule 10b-5.[9] The safe harbor is limited to the failure to file and is not applicable to the content of any disclosure included in a Form 8-K filing. One of the eligibility requirements for Form S-3 registration statements under the Securities Act, which allows incorporation of information into the prospectus of information filed in a ’34 Act report, requires that the registrant have filed timely all reports required during the prior 12 months. The relevant instructions were amended so that eligibility is not destroyed by the failure to file timely a report on Form 8-K that is required solely pursuant to Item 1.01, 1.02, 2.03, 2.04, 2.05, 2.06 4.02(a) 6.01, 6.03, 6.05 .[10] All delinquent reports, however, would have to have been filed prior to the filing of the registration statement as to be eligible to use Form S-3 all reports required to be filed under the Exchange Act have to have been filed for a period of at least 12 months preceding the filing of the registration statement and there is no exception under this eligibility requirement for the failure to file a Form 8-K
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