The staff of the Division of Corporation Finance of the Securities and Exchange Commission today published interpretive guidance in the form of questions and answers relating to the securities offering reform that becomes effective December 1, 2005. These Q&As supplement the Transition Q&As issued by the staff in September 2005. Today’s Q&As contain no surprises, and in many cases they confirm positions already stated in public by SEC staff members.
Highlights of the Q&As include the following:
· If an underwriter agrees not to use a free writing prospectus without the consent of the issuer, the issuer’s consent, in and of itself, will not constitute authorization or approval of the free writing prospectus for purposes of determining whether it is an “issuer free writing prospectus.” However, if the issuer’s actions amount to “adoption of or entanglement with” the free writing prospectus—a determination that will turn on the particular facts and circumstances of the situation—the issuer will be considered to have approved or authorized the free writing prospectus.
· Item 10(e) of Regulation S-K, which restricts the use of non-GAAP information in documents required to be filed with the SEC, does not apply to free writing prospectuses, unless they are included in, or incorporated by reference into, a registration statement or included in an Exchange Act filing. Regulation G, which restricts the use of non-GAAP information in public disclosures by issuers required to file Exchange Act reports, does apply to free writing prospectuses used by such issuers.
· Canadian issuers filing annual reports on Form 40-F under the Multi-Jurisdictional Disclosure System cannot qualify as “well-known seasoned issuers.”
· Convictions of an issuer or a subsidiary in a non-U.S. court of certain felonies or misdemeanors, such as larceny, robbery and the making of false reports, will result in ineligibility of the issuer under the definition of “ineligible issuer.”
· Notice that a sale was made pursuant to a registration statement, which is required by Rule 173 when a final prospectus is not delivered, may be made within two business days following the date of settlement.
The Q&As can be accessed using the following link:
http://www.sec.gov/divisions/corpfin/faqs/securities_offering_reform_qa.pdf
Please feel free to call any of your regular contacts at the firm or any of our partners and counsel listed under Capital Markets in the Our Practice section of our web site if you have any questions.
CLEARY GOTTLIEB STEEN & HAMILTON LLP