Release No. 33-6383

Release No. 34-18524

Release No. 35-22407

Release No. 39-700

Release IC-12264

Release ASR-306

47 Fed. Reg. 11466 - Mar. 16, 1982

Adoption of Integrated Disclosure System

ACTION: Final rules.

Table of Contents

SUMMARY: The Commission today announced the adoption of a comprehensive revision to the rules and forms governing the registration of securities under the Securities Act of 1933. This action integrates the disclosure systems under the various Federal securities laws and simplifies and improves the disclosure requirements imposed under these systems. Specifically, this action involves (1) the adoption of three registration forms which constitute the basic framework for registration statements under the Securities Act; (2) the expansion and reorganization of Regulation S-K as the repository for the uniform disclosure requirements of documents filed with the Commission under the Securities Act and the Securities Exchange Act of 1934; (3) the revision of the procedures which govern the registration of securities under the Securities Act and the registration and reports of certain issuers under the Exchange Act; (4) the adoption of a temporary rule governing the shelf registration of securities; (5) the adoption of a rule identifying certain circumstances bearing upon the reasonableness of the investigation to discharge ones obligation under section 11(b) of the Securities Act and upon what constitutes reasonable grounds for belief under that section; (6) the adoption of rules permitting the voluntary disclosure of security ratings in registration statements under the Securities Act; (7) the revision of various rules, forms and schedules under the Securities Act and the Exchange Act to implement and to reflect other changes; and (8) the rescission of obsolete and rarely used forms under the Securities Act and the Exchange Act.

DATES: Effective date: Except with respect to Rule 415 17 CFR 230.415, these amendments are effective May 24, 1982, for all documents filed on or after that date. Rule 415 (delayed or continuous offerings) is effective March 16, 1982 and will be effective until December 10, 1982.

Compliance date: Registrants are permitted, however, to use Rule 415 immediately and to use the other provisions amended herein in filings made after publication of this release in the Federal Register. If a registrant elects to comply with the provisions amended herein prior to May 24, 1982, it must comply with all the applicable provisions adopted herein (other than Rule 415) upon the election to do so and in any subsequent filings. Notwithstanding the above, registrants are permitted, in filings made after publication of this release in the Federal Register, to comply solely with the provisions of Instruction 5 to Item 103 of Regulation S-K amended herein when disclosing environmental proceedings and paragraph (d) of Item 503 of Regulation S-K with respect to the ratio of earnings to fixed charges.

FOR FURTHER INFORMATION CONTACT: Prior to the effective date, questions relating to these actions should be directed to the Office of Disclosure Policy, Division of Corporation Finance, Securities and Exchange Commission, 500 North Capitol Street, Washington, D.C. 20549 as follows:

(1) Forms S-1, S-2, and S-3, Catherine Collins McCoy or Robert Pincus (202-272-2589);

(2) Regulation S-K, Robert Pincus (202-272-2589);

(3) Regulations C and 12B, W. Scott Cooper (202-272-2589);

(4) Shelf registration, Catherine Collins McCoy (202-272-2589) or William L. Larsen (202-272-2604);

(5) Liability issues, Gregory H. Mathews, (202-272-2589);

(6) Security ratings, Susan P. Davis, (202-272-2604);

(7) Securities Act implementing amendments, William L. Larsen (202-272-2604); and

(8) Exchange Act implementing amendments, Susan P. Davis (202-272-2604).

After the effective date, questions should be directed to the Office of Chief Counsel, Division of Corporation Finance, Securities and Exchange Commission, 500 North Capitol Street, Washington, D.C. 20549 (202-272-2573) as follows:

(1) Forms S-1, S-2 and S-3, William E. Morley;

(2) Regulation S-K, Norman R. Schou;

(3) Regulation C and 12B, William E. Toomey;

(4) Shelf registration, David B.H. Martin;

(5) Liability issues, Michael R. Kargula;

(6) Security ratings, Ann M. Glickman;

(7) Securities Act implementing amendments, Michael R. Kargula; and

(8) Exchange Act implementing amendments, Ann M. Glickman. For questions concerning market related matters, particularly in connection with at the market offerings under Rule 415, contact Eric E. Miller, Division of Market Regulation (202-272-2882). For questions concerning the ratio of earnings to fixed charges, contact Howard P. Hodges, Jr., Division of Corporation Finance (202-272-2553), or Clarence M. Staubs, Office of the Chief Accountant (202-272-2133). For questions concerning investment companies, contact Sandra Molley, Division of Investment Management (202-272-2033).

SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission today announced the adoption of various rules, registration forms and disclosure requirements under the Securities Act of 1933 (the "Securities Act") 15 U.S.C. 77a et seq. (1976 and Supp. III 1979), as amended by the Small Business Incentive Act of 1980, Pub. L. No. 96-477 (October 21, 1980) and the Securities Exchange Act of 1934 (the "Exchange Act") 15 U.S.C. 78a et seq. (1976 and Supp. III 1979). This action, in conjunction with the rescission of the Guides for the Preparation and Filing of Registration Statements (the "Guides"), ¹ represents the final stage of the Commissions program to implement an integrated disclosure system under the Securities Act and the Exchange Act. ² Specifically, the Commission has adopted: (1) Three new registration forms (Forms S-1, S-2 and S-3) (17 CFR 239.11, 239.12 and 239.13) which will serve as the basic framework for the registration of securities under the Securities Act; (2) amendments to Regulation S-K (17 CFR Part 229) which expand and reorganize this regulation, thereby creating a repository for the disclosure requirements of registration statements and reports filed with the Commission under the Securities Act and the Exchange Act, and which adopt provisions relating to the ratio of earnings to fixed charges and an amendment (to Instruction 5 of Item 103) which substantially revises the Commissions environmental disclosure requirement by establishing additional thresholds for disclosure; and (3) amendments to Regulation C (17 CFR 230.400 through 230.494) and Regulation 12B (17 CFR 240.12b-1 through 240.12b-36) which update and coordinate the procedures for filing registration statements and reports with the Commission under the Securities Act and the Exchange Act, respectively. ³ In addition to the revision of various forms, rules and schedules under the Securities Act and the Exchange Act to implement the integrated disclosure system and the rescission of obsolete and rarely used forms, the Commission has taken action to provide guidance on liability issues arising in the integrated disclosure system, to address by temporary rule the registration and sale of securities on a delayed or continuous basis, and to permit the disclosure of security ratings. With respect to liability issues, the Commission has adopted Rule 176 (17 CFR 230.176) identifying certain circumstances bearing upon the reasonableness of the investigation conducted to discharge ones obligation under section 11(b) of the Securities Act and upon what constitutes reasonable grounds for belief under that Section. ⁴ With respect to the registration and sales of securities that are to be offered and sold on a delayed or continuous basis in the future ("shelf registration"), the Commission has adopted Rule 415 in Regulation C establishing conditions for such registration on a temporary basis. With respect to security ratings, the Commission has set forth a statement of policy in Regulation S-K to permit the voluntary disclosure of security ratings in registration statements under the Securities Act and has adopted amendments to Rule 134 (17 CFR 230.134) and Rule 436 of Regulation C to facilitate such disclosure.

The Commission determined to announce the adoption of these actions in one release in order that registrants, their counsel and other interested persons would have a single document to which they could refer for an understanding of the integrated disclosure system. Attention is directed to the text of the forms and rules, which is presented in the order in which it will appear in the Code of Federal Regulations, for a more complete understanding.

The discussion of the newly adopted registration forms, rules and disclosure requirements has been organized in the same manner as a registrant and its counsel would approach the integrated disclosure system for guidance as to the applicable requirements for the registration of securities under the Securities Act or the preparation of registration statements or periodic reports under the Exchange Act. ⁵ First, the registrant would look to the registration or report forms to determine the proper form to be used. Second, after choosing the proper form, the registrant would be directed by the form to Regulation S-K for the specific disclosure requirements for each form. Third, after identifying the disclosure requirements, the registrant would look to Regulation C or Regulation 12B for the procedures to be followed in preparing and filing the particular registration statement or report. Moreover, the registrant, its counsel and other persons involved in the registration process should be aware of the statutory obligations and duties under the Securities Act. The following Table of Contents indicates the order and specific components of the discussion set forth herein.

Table of Contents

I. Background

The concept of integrating the various disclosure systems under the Federal securities laws has been the subject of theoretical discussion for quite some time. ⁶ It was long clear that the transaction-oriented framework of the Securities Act and the disclosure system which developed thereunder often overlap with, and produce disclosure duplicative of, that prepared independently in response to the status-oriented framework of the Exchange Act and the continuous disclosure system operating thereunder. The Commissions program ⁷ to integrate the two disclosure systems has focused on two principal objectives: first, a comprehensive evaluation of the disclosure policies and procedures under both Acts to identify the information which is material to security holders and investors in both the distribution process and the trading markets, such as the minimum information package; ⁸ and, second, a determination of the circumstances under which information should be disseminated to security holders, investors and the marketplace. ⁹ The goal of the Commissions integrated disclosure program has been to revise or eliminate overlapping or unnecessary disclosure and dissemination requirements wherever possible, thereby reducing burdens on registrants while at the same time ensuring that security holders, investors and the marketplace have been provided with meaningful, non-duplicative information upon which to base investment decisions.

This rulemaking action is the culmination of several rulemaking proceedings initiated by the Commission over the past several years. ¹⁰ Specifically, this action is based on eight major proposals published for comment in August 1981. ¹¹ Based upon the comment received ¹² and its own experience, the Commission has determined to adopt the proposals substantially as published for comment.

II. Forms

The registration and report forms under the Securities Act and the Exchange Act provide the starting point for registrants complying with the integrated disclosure system. Each of the various Securities Act registration forms establishes the type and amount of disclosure required by registrants able to use the form. The Exchange Act forms establish the type and amount of disclosure required to be provided in the Exchange Act reports which registrants must file.

A. Securities Act Registration Forms

1. Forms S-1, S-2 and S-3.

a. Operation of the three-tier registration system.

New Forms S-1, S-2 ¹³ and S-3 provide the basic framework for the registration of securities under the Securities Act. These Forms establish three categories for registration statements. The same information will be required to be part of Securities Act registration statements in all categories, either presented in, or delivered with, the prospectus or incorporated by reference from another document. Differences among the three Forms reflect the Commissions determination as to (1) when this required information must be presented in full in the prospectus delivered to investors, (2) when certain of the delivered information may be presented on a streamlined basis and supplemented by documents incorporated by reference, and (3) when certain information may be incorporated by reference from documents in the Exchange Act continuous reporting system without delivery to investors.

Generally, it is the registrant-oriented portion of the information relating to a public offering, as opposed to the transaction-specific information, which sometimes may be satisfied otherwise than through full prospectus presentation. Much of this registrant-oriented information is the same as that which is required to be presented in annual reports to the Commission on Form 10-K and in annual reports to security holders, as well as in quarterly and current reports on Forms 10-Q (17 CFR 249.308a) and 8-K (17 CFR 249.308), respectively. Information about the offering, however, will not have been reported on in any other disclosure document or other wise have been publicly disseminated and thus will be required to be presented in the prospectus in all cases.

The registration statement for the first category is Form S-1. It requires complete disclosure to be set forth in the prospectus and permits no incorporation by reference. Form S-1 is to be used by registrants in the Exchange Act reporting system for less than three years and also may be used by any registrants who choose to do so or for whom no other form is available.

The second category of registration statement is Form S-2, which combines reliance on incorporating Exchange Act reports by reference with delivery to investors of streamlined information. Registrants in the Exchange Act reporting system for three years may use this Form, which allows them to choose to either: (1) Deliver a copy of their annual report to security holders along with the prospectus describing the offering or (2) present registrant-oriented information comparable to that of the annual report in the prospectus along with the description of the offering. In either case, the more complete information in the Form 10-K is incorporated by reference into the prospectus.

Form S-3, in reliance on the efficient market theory, allows maximum use of incorporation by reference of Exchange Act reports and requires the least disclosure to be presented in the prospectus and delivered to investors. Generally, the Form S-3 prospectus will present the same transaction-specific information as will be presented in a Form S-1 or S-2 prospectus. Information concerning the registrant will be incorporated by reference from Exchange Act reports. The prospectus will not be required to present any information concerning the registrant unless there has been a material change in the registrants affairs which has not been reported in an Exchange Act filing or the Exchange Act reports incorporated by reference do not reflect certain restated financial statements or other financial information.

Most public commentators supported the proposed three-tier Securities Act registration framework in general and agreed that criteria determining prospectus disclosure and delivery requirements based on reporting history and following in the marketplace are more appropriate than criteria related to the quality of the registrant. Accordingly, the Commission has determined to adopt Forms S-1, S-2 and S-3 substantially as proposed.

b. Revisions in Forms as Adopted.

(1) Form S-1.

Form S-1 is adopted essentially unchanged from proposed Form S-1. Complete information about both the transaction and the registrant is required to be presented in the prospectus. Reference is made to Regulation S-K and, with respect to financial statements, to Regulation S-X (17 CFR Part 210) for specific content provisions. Commentators generally applauded the proposed Form S-1s simplification, the use of references to the uniform disclosure provisions of Regulation S-K, and the elimination of unnecessary or outmoded disclosure provisions that previously had been required.

The few minor changes from the proposal are as follows. First, General Instruction III relating to the omission of or the filing of substituted financial statements in certain cases has been deleted because it unnecessarily repeats the provisions of Rule 3-13 of Regulation S-X. ¹⁴ Second, an instruction has been added to the Instructions as to Summary Prospectuses to clarify the requirements relating to such prospectuses where securities being registered are to be offered pursuant to an exchange offer. Third, revisions were made to correspond to changes made in items of Regulation S-K (specifically, the change of proposed Item 510, Indemnification of Directors and Officers, into Item 510, Disclosure of Commission Position on Indemnification for Securities Act Liabilities, and Item 702, Indemnification of Directors and Officers, with the new Item 510 placed in Part I of the registration statement). ¹⁵ Finally, several changes were made in the numbering and terminology of certain provisions of Forms S-1 for purposes of clarification and consistency.

(2) Form S-2.

Form S-2 as adopted reflects no major changes from the Form as proposed. The proposal received general support and few specific comments or objections. While a few commentators were concerned about the Forms optional use of the annual report to security holders and believed it should be expanded to include the optional use of Form 10-K, the Commission has made no change in the formulation of the multiple document delivery aspect of Form S-2. The Commission continues to believe that, by providing an opportunity to make use of the highly readable annual report to security holders, an existing disclosure document, the Form not only affords an opportunity to affect savings in the cost of registration but also promotes the goal of concise, effective communication in the Securities Act context.

A few commentators suggested changing the Form S-2 formulation regarding Exchange Act documents incorporated by reference to allow subsequently filed reports to be incorporated into Form S-2 as is permitted on Form S-3. The Commission has determined not to make this change because it does not believe that companies using Form S-2 are sufficiently widely followed to insure sufficient dissemination of information in Exchange Act reports in the context of an offering of securities under the Securities Act.

A number of changes, of a generally clarifying nature, have been made in response to commentators suggestions. In the order in which these changes appear in the Form, they are as follows:

First, General Instruction I.G. has been expanded to clarify that Form S-2 may be used by subsidiaries who do not themselves meet the tests for use of the Form but whose parents meet the Form S-2 eligibility requirements and guarantee the securities offered.

Second, Item 11 (Information with Respect to the Registrant) has been changed in several respects. ¹⁶ An instruction has been added to Item 11 to codify the discussion in the S-1-2-3 Release which indicated that where the multiple document delivery option is chosen, each document must be delivered with the preliminary prospectus but need not be redelivered with the final prospectus if the recipient already has been given the document along with the preliminary prospectus. Item 11 also is changed to correct an oversight in proposed Form S-2 by adding to Item 11(b)(2), which sets forth the prospectus disclosure requirements if the annual report option is not chosen, a requirement for interim financial information and a requirement relating to restated financial statements. The provision requiring restated financial statements where there have been business combinations accounted for by the pooling of interest method subsequent to the most recent fiscal year end has been limited so that the item as adopted requires the restated financial statements only when the acquired businesses meet the test of a significant subsidiary. ¹⁷

Several commentators mentioned the possible conflict between Item 11 of proposed Forms S-2 and S-3, which requires restated financial statements when poolings have occurred subsequent to year end, and Paragraph 61 of APB Opinion No. 16, which does not permit the issuance of restated financial statements of combined entities until after the financial statements of the combining entity have been issued. In such circumstances, the staff has permitted inclusion in the filing of the separate financial statements of the combining entities and supplemental pro forma information of the combined entity. This matter will be considered for inclusion in the Commissions final pro forma rules.

Third, Item 12 (Incorporation of Certain Information by Reference) is changed (1) to clarify in paragraph one that only specific portions of the annual and quarterly reports to security holders must be incorporated by reference, if applicable, and (2) to add an instruction directing registrants attention to Rule 439 of Regulation C regarding consents to use of material incorporated by reference. ¹⁸

Finally, the signature provision of Form S-2 has been changed to add a reasonable belief standard to the requirement that the registrant certify that it meets the requirements for filing on Form S-2. ¹⁹ The proposed signature provision would have required those signing the registration statement on behalf of the registrant to certify that the registrant meets the requirements for filing on Form S-2. The Commission believes that requiring the registrant to certify that it has reasonable grounds to believe that it meets the tests for use of the Form will insure that sufficient attention is devoted to those tests without at the same time imposing an unnecessary burden or giving rise to the liability concerns to which several commenters expressed objection.

(2) Form S-3.

The greatest commentator response was directed to Form S-3, particularly to the criteria for use of the Form. Commentators generally agreed that Form S-3s dual eligibility requirements, i.e., registrant requirements and transaction requirements, adequately meet the objective of relating short-form registration to the existence of widespread following in the marketplace. Moreover, commentators directed substantial attention to the specific transaction requirements for primary offerings and generally believed that (a) a test based on the registrants float, i.e., the aggregate market value of outstanding voting stock held by non-affiliates, is an appropriate measure of marketplace following and (b) a float of $150 million is the appropriate level at which short-form registration should be allowed. In addition, a number of commentators supported the alternative transaction requirement on which the Commission specifically requested comment, which would allow use of the Form by registrants with a smaller float who have a minimum volume of shares traded on an annual basis. Accordingly, the Commission has determined to adopt the $150 million float transaction requirement for the use of Form S-3 by certain registrants and to add an alternative test of $100 million float and 3 million share annual trading volume.

The use of Form S-3 to register primary offerings of certain high grade non-convertible debt securities received overwhelming commentator support. Commentators agreed that short-form prospectuses are appropriate for issues of investment grade debt regardless of the registrants float, because such securities are generally purchased on the basis of interest rates and security ratings. In addition, commentators supported expansion of the test to include high grade non-convertible preferred stock regardless of the registrants float. The Commission is adopting this transaction requirement, with an expansion to include preferred stock offerings, and is retaining the use of security ratings to define what constitutes an investment grade security. The definition of investment grade for purposes of the use of Form S-3 also is clarified to indicate that a rating in one of the generic rating categories which signify investment grade is required and that typically it is the four highest rating categories (within which there may be gradations, such as pluses or minuses, to indicate relative standing) which signify investment grade.

With respect to transactions involving secondary offerings (i.e., offerings of outstanding securities to be offered for the account of any person other than the registrant), Form S-3 was proposed to be available for offerings of securities of registrants who meet the registrant requirements and the $150 million float transaction requirement. ²⁰ Most of the commentators who responded to the Commissions specific inquiry as to this change from the provisions of Form S-16 (17 CFR 239.27), which did not impose any float test upon secondary offerings, ²¹ objected to this aspect of the proposal. These commentators asserted that the Form S-3 test would impact adversely venture capital companies and their investors and such other shareholders as directors and other affiliates of companies acquired in transactions subject to Rule 145 (17 CFR 230.145). They cited the similarities between these shareholders and other holders who purchase their shares in secondary market transactions and the absence of any evidence of abuse related to the more expanded availability of Form S-16 for secondary offerings. ²²

As a result of the comments received, the Commission further analyzed the secondary offering transactions registered on Form S-16 and concluded that most secondary offerings are more in the nature of ordinary market transactions than primary offerings by the registrant, and, thus, that Exchange Act reports may be relied upon to provide the marketplace the information needed respecting the registrant. Accordingly, if the registrant meets the Exchange Act reporting and other registrant requirements, Form S-3 will be available for registering secondary offerings of securities listed on an exchange or quoted on the automatic quotation system of a national securities association. ²³

In addition to the changes discussed above, Form S-3 has been revised in several further respects, largely in response to public comments. First, the provisions relating to the use of Form S-3 by subsidiaries have been placed in a new General Instruction C which is intended to clarify that the Form may be used if: (a) The subsidiary itself meets the various eligibility requirements; (b) the parent meets the eligibility requirements and guarantees the securities offered; or (c) the parent meets the registrant requirements (Exchange Act reporting history, etc.) and the securities offered are investment grade debt or preferred stock. The Commission believes that this revision responds to those commentators whose concerns suggested a lack of clarity in the provision as proposed. In addition, the expansion of the investment grade securities test to include preferred stock responds to the concerns of those commentators who advocated relaxing the requirement for parent guarantees or otherwise expanding the use of Form S-3 by subsidiaries. The Commission does not believe any further expansion for subsidiaries is necessary or appropriate for short form registration.

Second, a new General Instruction D has been added to allow foreign private issuers who meet certain registrant criteria to use Form S-3 to register securities to be offered upon the exercise of certain outstanding rights. Such rights offerings previously have been allowed to be registered on Form S-16. The new instruction is intended to maintain the status quo for rights offerings by foreign private issuers until such time as the Commission takes final action with respect to the outstanding proposals for an integrated disclosure system for foreign private issuers. ²⁴

Third, Item 9 (Description of Securities to be Registered) and Item 12 (Incorporation of Certain Information by Reference) have been revised to allow the description of securities to be incorporated by reference from Exchange Act reports, rather than presented in the prospectus, where capital stock is being registered and securities of the same class are registered pursuant to Section 12 of the Exchange Act.

Fourth, Item 11 (Material Changes) has been revised in several respects in light of substantial comment. Paragraph (b) has been revised to provide that the restated financial statements and other financial information specified therein may be incorporated by reference in lieu of prospectus presentation not only from those Exchange Act reports which Item 12(a) requires to be incorporated by reference (Form 10-K and all other reports filed pursuant to section 13(a) or 15(d) of the Exchange Act), but also from other documents filed with the Commission (proxy statements pursuant to section 14(a) of the Exchange Act or Rule 424(c) prospectuses under the Securities Act) which may contain the specified information. The provisions specifying the necessary additional financial information have been clarified and a materiality standard relating to the test for a significant subsidiary has been added to the requirement for restated financial statements for acquisitions accounted for by the pooling of interests method. While some commentators believed the additional financial information required by Item 11(b) is inappropriate in a short form prospectus, it should be noted that such financial statements and information would need to be presented in the prospectus only if not disclosed in reports on Forms 10-K, 8 (17 CFR Part 249.460), 8-K or 10-Q, in proxy statements or in previous Securities Act prospectuses which are incorporated by reference into the registration statement. ²⁵

The final change to Item 11 is the deletion of proposed paragraph (b)(2), which would have required a brief prospectus description of the transaction, accounting change, correction or disposition with respect to which financial information is incorporated by reference. The Commission agrees with the commentators, who opposed this mandatory description provision, that prospectus descriptions of the information incorporated by reference should be addressed more flexibly, relying on registrant discretion and on the facts of individual cases.

The Commission has determined to adopt Form S-3 as proposed with respect to a number of matters on which public comment was received. First, commentators widely applauded the proposal to provide that registration statements relating solely to dividend or interest reinvestment plans become effective automatically on the twentieth day after filing.

Commentators also supported the decision reflected in the S-1-2-3 Release to maximize the flexibility provided in Form S-3 by not mandating a specific minimum time period between filing and effectiveness of a registration statement on Form S-3. The Commission believes that it can deal effectively with this issue through its administrative discretion to grant requests for acceleration, and, therefore, that it is not necessary to impair Form S-3s flexibility by imposing a specified minimum time period requirement before Form S-3 registration statements may become effective.

While a number of commentators advocated making Forms S-3 and S-2 available for registering securities issued in an exchange offer for securities of another person, the Commission has determined not to make these Forms available for exchange offer registration at this time. For the reasons more fully described in the S-1-2-3 Release, the Commission believes it is more appropriate to address the appropriate form and content for exchange offer registration statements as part of the separate business combination project which the staff will be considering this year.

2. Rescission of Forms S-7 and S-16 and Replacement of Existing Form S-2.

As a consequence of the adoption of new Forms S-2 and S-3, the Commission is rescinding Forms S-7 (17 CFR 239.26) and S-16 (17 CFR 239.27) and replacing existing Form S-2.

3. Rescission of Obsolete Forms.

In an effort to streamline further the Securities Act registration system, the Commission proposed to rescind the following infrequently used or obsolete forms: Form C-2 (17 CFR 239.4) (for Certain Types of Certificates of Interest in Securities; Form D-1 (17 CFR 239.6) (for Certificates of Deposit); Form D-1A (17 CFR 239.7) (for Certificates of Deposit Issued by Issuers of Securities Called for Deposit); Form S-10 (17 CFR 239.17) (for Oil or Gas Interests or Rights); and Form S-13 (17 CFR 239.25) (for Registration under the Securities Act of 1933 of Voting Trust Certificates). ²⁶ Commentators generally supported rescission of these Forms, but urged that the Commission state what forms registrants should employ instead of those rescinded. The Commission is rescinding the Forms as proposed and believes that any questions with respect to the appropriate form to be used can be answered by the staff on a case by case basis.

4. Amendments to Other Securities Act Forms.

In addition to adopting the basic Securities Act registration framework consisting of Forms S-1, S-2 and S-3, the Commission reviewed the other major Securities Act registration forms and proposed a number of changes in certain forms. ²⁷ These proposed changes were intended to be consistent with the new registration framework and to clarify, streamline and integrate disclosure requirements by (1) substituting, where possible, the uniform disclosure items of Regulation S-K for existing disclosure items; (2) eliminating unnecessary and burdensome disclosure items; and (3) standardizing certain other aspects of the forms, such as instructions and signature clauses. Public comment on the proposed changes was predominantly favorable. Therefore, the Commission is adopting most of the coordinating and technical amendments to the Securities Act forms as proposed. However, in certain instances discussed below, the Commission has made some changes in response to public comments or where otherwise deemed appropriate.

There are two minor changes that affect all of the Forms proposed to be amended. The signature requirement for all of the Forms has been changed in the same respect as has that of Forms S-2 and S-3 so that registrants need only certify that they have reasonable grounds to believe that they meet all of the requirements for filing a particular form. In addition, a change in the format of amended Regulation S-K will be reflected in all of the Forms so that they now will include, in the prospectus, an item calling for disclosure of the Commission position on indemnification for Securities Act liabilities ²⁸ and, in Part II of the registration statement, an item requiring certain information regarding the indemnification of directors and officers. This change necessitated renumbering of certain items in all of the Forms. Finally, where necessary, coordinating changes have been made in all of the Forms to reflect changes in numeration or other technical changes that have been made in Regulation C and other parts of the integrated disclosure system.

Other respects in which the amendments to the Forms differ from the proposals are as follows:

a. Form S-8.

The number of additional copies required by Rules 402 and 472 of Regulation C as specified in Instruction D has been raised from two to three to meet the Commissions data processing requirements. In addition, several commentators requested that Form S-8 be made available for resales by affiliates. The Commission continues to believe that it would be inappropriate to allow the use of Form S-8 for resales by affiliates. ²⁹ Moreover, Form S-3 is available for resales of securities acquired pursuant to Form S-8 by affiliates of the issuer pursuant to registration under Rule 415, provided that the registrant satisfies the Registrant Requirements for use of Form S-3, which are the same as the eligibility requirements for use of Form S-2.

b. Form S-11.

With the exception of the general changes discussed above, the revisions to Form S-11 are adopted substantially as proposed.

c. Form S-14.

General Instruction D regarding the cross-reference sheet has been relocated as an Instruction to Item 1 of the Form. The Commission has eliminated proposed Item 5 regarding dilution because it does not wish to alter existing practice with respect to disclosure in merger transactions pending consideration of the separate business combination project. Form items are renumbered accordingly. Paragraph (a) of Item 6 (Additional Information Required for Reoffering by Persons and Parties Deemed to be Underwriters) is replaced by a reference to Item 507 of Regulation S-K (Selling Security Holders), which calls for substantially the same information.

d. Form S-15.

Similar to the treatment given parallel Item 6(a) of Form S-14, paragraph (a) of Item 10, which calls for information on selling security holders, is replaced by a reference to Item 507 of Regulation S-K (Selling Security Holders).

B. Exchange Act Reporting and Registration Forms.

In the Exchange Act Coordinating Release, the Commission proposed to revise the remaining ³⁰ major component in the periodic reporting system, Form 8-K, for current reporting pursuant to Section 13 or 15(d) of the Exchange Act, and to revise Forms 10, 8-A and 8-B (17 CFR 249.210, 249.208a and 249.208b), for the registration of securities pursuant to Section 12(b) or (g) of the Exchange Act, in order to clarify, streamline and otherwise improve their disclosure requirements. In the same release, the Commission proposed several clarifying amendments to Form 10-K, as well as two amendments to elicit certain fourth quarter information in order to produce a continuous flow of corporate information. In addition, the Commission proposed to amend the instructions to Forms 10-K and 10-Q to clarify the conditions pursuant to which informal annual or quarterly reports to shareholders may be combined with the required Form 10-K or 10-Q information. Finally, several Exchange Act reports and registration forms, Forms 12 (17 CFR 249.212), 14 (17 CFR 249.214), 16 (17 CFR 249.216), 14-K (17 CFR 249.314), 16-K (17 CFR 249.316) and 4-MD (17 CFR 249.404), were proposed to be rescinded. Through these proposals, which are explained in more detail in the Exchange Act Coordinating Release, the Commission intended substantially to complete its program to ensure the proper functioning of Exchange Act reports and registration statements in the integrated disclosure system.

The comments of the few commentators who specifically commented on the proposed revisions to Exchange Act reports and registration statements were generally favorable. Accordingly, the Commission is adopting the proposed amendments, with several minor changes discussed below made in response to commentators suggestions or where otherwise deemed appropriate.

1. Rescission of Obsolete Forms.

The Commission is rescinding, as proposed, three registration forms, Form 12 (for Issuers Filing Reports With Other Federal Agencies), Form 14 (for Certificates of deposit Issued by a Committee) and Form 16 (for Voting Trust Certificates), and three annual report forms, Forms 14-K and 4-MD (Annual Reports for Certificates of Deposit Issued by a Committee) and Form 16-K (Annual Report for Voting Trust Certificates). The proposal met with no opposition, although one commentator requested that the Commission clarify what form a registrant should use instead of any of the rescinded Forms. As in the case of the rescinded Securities Act Forms, any questions with respect to the appropriate form to be used can be answered by the staff on a case by case basis.

2. Forms 10, 8-A and 8-B.

The Commission is adopting amendments to revise Exchange Act registration Forms 10, 8-A and 8-B as proposed with one minor renumbering change. ³¹

3. Form 8-K.

Form 8-K plays a critical role in the periodic reporting system, which is intended to provide investors with a continuous stream of corporate information. Reports on Form 8-K are used to provide material information concerning certain specified events that may have occurred since the latest annual report on Form 10-K or quarterly report on Form 10-Q was filed. In addition, registrants may, and in fact are encouraged to, file voluntary reports on Form 8-K pursuant to Item 5 describing any other events that may be of interest to investors.

Commentators were very supportive of most of the proposed amendments to Form 8-K, which included, among other things, new instructions relating to incorporation by reference of press releases and filing of required financial statements for an acquired business up to 60 days after the Form 8-K is filed. ³² The only proposal that received substantial comment was that replacing the requirement to file a report pursuant to Item 5 of Form 8-K (Other Materially Important Events) within 10 days after the event with a statement encouraging registrants to file "promptly" after the event. While several commentators applauded the increased flexibility that would be afforded to registrants under the new provision, other commentators were concerned that the change would create an unnecessary ambiguity as to the time for filing voluntary reports on Form 8-K. Since reports pursuant to Item 5 are voluntary, the Commission believes it is inconsistent to establish a specific time by which such reports must be filed. Accordingly, the Commission is adopting the Item 5 timing requirement as proposed.

The Commission also is making an additional change in Item 5 suggested by a commentator. Item 5 is being amended to make clear that registrants may file voluntary reports not only to report material events, but also to inform their security holders of other matters that may be of interest. The amendment is intended to encourage further voluntary reports on Form 8-K and to remove any reluctance that registrants may have to file voluntary reports pursuant to Item 5 on the basis that they will be deemed to have admitted the materiality of the event reported. ³³

4. Form 10-K.

The Commission is adopting several amendments to Form 10-K to eliminate ambiguities and close disclosure gaps that came to light after the Commissions revision of that Form in December 1980. First, the Commission is requiring that a registrant include information relating to the fourth quarter of its fiscal year concerning terminated legal proceedings and matters submitted to a vote of security holders. In connection with these amendments, the Commission also is amending Instruction J of Form 10-K, as suggested by one commentator, to permit certain wholly-owned subsidiaries to omit fourth quarter information relating to matters submitted to a vote of security holders. These changes are intended to make the disclosure requirements relating to a registrants fourth quarter consistent with those in Form 10-Q relating to the registrants other fiscal quarters. ³⁴

Second, the Commission is adopting the proposed note to the cover page intended to clarify the staffs position with respect to calculating the aggregate market value of voting stock held by non-affiliates, but it is revising the proposal, as suggested by a commentator, to incorporate the "unreasonable effort and expense" standard of Exchange Act Rule 12b-21.

Finally, the Commission is eliminating the last sentence of General Instruction C(1) as unnecessary in view of the Instructions reference to Rule 12b-13.

¹ See Release No. 33-6384 (March 3, 1982) which announces the rescission of the majority of the Guides and the reclassification of the remaining Guides as industry guides (the "1982 Industry Guides Release").

² The Commission, at this time, is not adopting the proposed revisions to Items 6, 9 and 22 of Schedule 14A under the proxy rules (17 CFR 240.14a-100) and current Items 4 and 6 of Regulation S-K (17 CFR Part 229) which originally were published in Release No. 34-17517 (February 5, 1981) 46 FR 11954 and were reproposed without change in Release No. 33-6338 (August 6, 1981) 46 FR 42042 (the "Exchange Act Coordinating Release") and in Release No. 33-6332 (August 6, 1981) 46 FR 41925 (the "S-K Release"). These proposed amendments, relating to (1) business and other relationships between registrants and directors, (2) full board consideration of shareholder nominations, (3) the vote needed for election to office, (4) management indebtedness and remuneration, (5) beneficial ownership and (6) certain amendments affecting shareholder proposals, will be considered as a part of the Commissions general review of the rules governing proxy solicitations.

³ The Commission is withdrawing certain rules and forms that were proposed at various stages in connection with the Commissions integration program, but are not being adopted. See Release No. 33-6385 (March 3, 1982).

⁴ The Commission also has adopted Rule 412 (17 CFR 230.412, proposed as Rule 418) under Regulation C to resolve questions of liability in the context of modified or superseded statements which are found in documents incorporated by reference into other documents.

⁵ In light of this organization, certain issues which were highlighted by the use of separate releases at the proposal stage will be discussed in the context of the part of the integrated disclosure system in which they are located. For example, see the discussion of shelf registration in Part IV, "Procedural Provisions," and the discussion of security ratings in Part III, "Substantive Disclosure Provisions."

⁶ See e.g., Cohen, "Truth in Securities Revisited," 79 Harv. L. Rev. 1340 (1966).

⁷ For a comprehensive discussion of the integration program, including its legislative and administrative background, see Release No. 33-6235 (September 2, 1980) 45 FR 63693 (the "ABC Release").

⁸ See the ABC Release; Release No. 33-6231 (September 2, 1980) 45 FR 63630 adopting major revisions to Form 10-K (17 CFR 249.310) and the annual report to security holders pursuant to Rule 14a-3 (CFR 240.14a-3); and Release No. 33-6331 (August 6, 1981) 46 FR 41902 proposing three new forms which would represent a comprehensive revision of the system for registration under the Securities Act (the "S-1-2-3 Release") for expanded discussions of the development of the minimum information package.

⁹ The dissemination requirements have been developed, in part, on the premise that information regularly furnished to the marketplace through formal Exchange Act periodic reports and informal corporate communications may be reflected in the price of the outstanding securities and thus need not always be reiterated in a prospectus in the context of a distribution. For a comprehensive discussion of this premise, see the S-1-2-3 Release and the ABC Release.

¹⁰ See the S-1-2-3 Release, 46 FR at 41903, for a summary of the actions taken in the 10-K Release, the proposals in Release No. 33-6276 (December 23, 1980) 46 FR 78 (the "Guides Release") and the other rulemaking projects designed to implement the integrated disclosure system.

¹¹ See the S-1-2-3 Release; the S-K Release; Release No. 33-6333 (August 6, 1981) 46 FR 41971 (the "Regulation C Release"); Release No. 33-6334 (August 6, 1981) 46 FR 42001 (the "Shelf Release"); Release No. 33-6335 (August 6, 1981) 46 FR 42015 (the "Liability Release"); Release No. 33-6336 (August 6, 1981) 46 FR 42024 (the "Security Ratings Release"); Release No. 33-6337 (August 6, 1981) 46 FR 42029 (the "Securities Act Coordinating Release"); and the Exchange Act Coordinating Release.

¹² Pursuant to the Commissions request for comment on the eight releases set forth above, 146 commentators submitted 203 letters addressing one or more of those releases. The letters are available for public inspection and copying at the Commissions Public Reference Room. (See File Nos. S7-893 through S7-900). The Commission has placed in the files a copy of highlights of the public comments prepared by the Division of Corporation Finance.

¹³ New Form S-1 represents a substantial revision of existing Form S-1. Existing Form S-2 (for shares of certain corporations in the development stage) will no longer exist; it is being replaced by new Form S-2, which bears no relationship to existing Form S-2.

¹⁴ For the same reason, General Instruction C, Filing of Other Financial Statements in Certain Cases, has been deleted from Form S-2.

¹⁵ Similar changes were made in Forma S-2, S-3 and the other Securities Act Forms amended herein to coordinate with this change in Regulation S-K.

¹⁶ Commentators also pointed out that the requirement in Item 11 of proposed Forms S-2 and S-3 to furnish restated financial statements when poolings have occurred subsequent to year end was duplicative of Rule 3-08 of Regulation S-X. In the recent release proposing revisions to the pro forma financial information rules, the current Rule 3-08 requirements for such restated information are proposed to be included in a revised Article 11 of Regulation S-X. See Release No. 33-6350 (September 24, 1981) 46 FR 48943. Accordingly, no changes have been made to this provision in the final Form S-2 and S-3 requirements. The financial information requirements of Forms S-2 and S-3 relating to restated financial statements, Rule 3-07 and 3-08 transactions and material dispositions of assets outside the normal course of business will be reviewed and any necessary changes made when final action is taken on the pro forma proposals.

¹⁷ The term "significant subsidiary" is defined identically in Rule 1-02 of Regulation S-X (adopted in Release No. 33-6359, (November 6, 1981) 46 FR 56171) and in Rule 405 of Regulation C as adopted herein.

¹⁸ A reference to Rule 439 also is added to Item 12 of Form S-3.

¹⁹ The signature provision of Form S-3 and the other Securities Act forms amended herein are similarly changed.

²⁰ For secondary offerings of securities acquired pursuant to an offering registered on Form S-8 (17 CFR 239.16b), only the registrant requirements or certain volume limitations specified in Form S-8 must be met.

²¹ Form S-16, which is replaced by Form S-3 is being rescinded as part of the rulemaking actions affected in this release.

²² Form S-16 has permitted use of short form registration statements for secondary offerings since its adoption in 1970. See Release No. 33-5117 (December 23, 1970) 36 FR 777.

²³ Because this determination reflects only a difference as to actual delivery (the Exchange Act reports would be incorporated by reference into the registration statement), the selling security holder retains statutory responsibility for the accuracy of the entire registration statement.

²⁴ Release No. 33-6360 (November 20, 1981) 46 FR 58511.

²⁵ A number of commentators expressed concern that outdated financial statements from the latest Form 10-K would be incorporated by reference when restated financial statements are included in the prospectus or are incorporated by reference because of an accounting change or pooling subsequent to the most recent fiscal year end. Additionally, concern was expressed that the staff may require an accountants consent for such outdated financial statements. Rule 412 of Regulation C would operate to make the restated financial statements supersede the Form 10-K financial statements and would render the superseded items not a part of the registration statement or prospectus for purposes of the Securities Act. Therefore, no consent would be required for the superseded financial statements.

²⁶ Securities Act Coordinating Release.

²⁷ Securities Act Forms proposed to be amended in the Securities Act Coordinating Release included Forms S-8, S-11 (17 CFR 239.18), S-14 (17 CFR 239.23) and S-15 (17 CFR 239.29).

²⁸ This item would require prospectus disclosure only in the unusual cases where, because no request for acceleration of effective date is made, the undertaking required by Item 512(i) is not required to be included in the registration statement.

²⁹ See Release No. 33-5767 (November 22, 1976) 41 FR 52662 where the Commission amended Form S-8 to prohibit the use of the Form for reoffers or resales because Form S-8 prospectuses do not provide adequate notice of or information with respect to the registered reoffer.

³⁰ Forms 10-K and 10-Q were revised in earlier phases of the integration program. See the 10-K Release and Release No. 33-6288 (February 9, 1981) 46 FR 12480.

³¹ Due to the renumbering of Regulation S-K Item 510(a) as Item 702. Item 11 of Form 10 (Indemnification of Directors and Officers), which as proposed referred to Item 510(a), is changed to refer to Item 702.

³² The Commission recently solicited comment (Release No. 33-6350) on whether Form 8-K should be revised to require pro forma financial information for consummated transactions, as was suggested by one commentator in response to the Exchange Act Coordinating Release. The Commission will consider the issue as part of its final action with respect to the pro forma proposals.

³³ In addition, the amendment to Item 5 is intended to clarify that reports on Form 8-K may be used as vehicles to file information or exhibits with the Commission which otherwise would require disclosure in a Form S-3 or would necessitate a post-effective amendment thereto.

³⁴ Disclosure of matters submitted to a vote of security holders by certain wholly-owned subsidiaries is not required by Form 10-Q.