Release No. 33-6714

Release No. IC-15752

May 27, 1987

ELIMINATION OF CERTAIN PRICING AMENDMENTS AND REVISION OF PROSPECTUS FILING PROCEDURES

ACTION: Final Rules.

SUMMARY: The Securities and Exchange Commission ("Commission") today announced adoption of a new rule and amendments to existing rules intended to simplify the filing requirements applicable to a registration statement at the time of effectiveness. New Rule 430A allows registrants, if specified conditions are satisfied, to omit information concerning the public offering price, price-related information and the underwriting syndicate from a prospectus contained in a registration statement at the time that it is declared effective. The information omitted in reliance upon Rule 430A would be included either in the final prospectus and deemed to be part of the registration statement or in a post-effective amendment to the registration statement. In addition, the Commission has adopted related amendments to Rules 424(b) and 497 to require more immediate filing of a prospectus where Rule 430A has been used. Finally, the Commission has adopted other changes to Rule 424 to provide for a similarly shortened filing period for certain other prospectuses, to eliminate unnecessary filings, and to classify prospectuses according to the nature of the information being modified or added.

EFFECTIVE DATE: Rule 430A and amendments other than those to Rule 424 are effective thirty days following publication in the Federal Register for registration statements filed or amended on or after that date. The amendments to Rule 424 are effective with respect to all registration statements thirty days following publication.

FOR FURTHER INFORMATION CONTACT: Prior to the effective date, Alexander G. Shtofman, (202) 272-2589, Office of Disclosure Policy, Division of Corporation Finance, or for questions regarding applicability to investment companies, Robert Plaze, (202) 272-2107, Office of Disclosure and Adviser Regulation, Division of Investment Management, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. After the effective date, contact Mauri L. Osheroff, Deputy Chief Counsel, or Abigail Arms, at (202) 272-2573, Office of Chief Counsel, Division of Corporation Finance or, with respect to investment companies, Robert Plaze, Division of Investment Management.

SUPPLEMENTARY INFORMATION: The Commission today announced the adoption of Rule 430A, related amendments to Items 501, 502, 512 and 601 of Regulation S-K ¹ and related amendments to Rules 423, ² 424, ³ 481, ⁴ 482 ⁵ and 497 ⁶ of Regulation C. ⁷ Technical amendments have been made to other rules, regulations and forms to conform references to Rule 424 and to adapt requirements to amended Rule 424.

Table of Contents

I. EXECUTIVE SUMMARY

In October 1986, the Commission proposed a new rule and related amendments intended to simplify and reduce registrants filing obligations under the federal securities laws, while permitting more immediate identification of and access to information filed with the Commission. ⁸ The Commission is adopting, with modifications, the new Rule, Rule 430A, under the Securities Act of 1933 (the "Securities Act") ⁹ to eliminate the need for pre-effective amendments to most registration statements filed solely to provide pricing information, price-related information, the names of the underwriting syndicate and respective amounts underwritten, underwriter compensation, material relationships with underwriters and dealer allowances. As adopted, the Rule is available to any registrant that is offering securities for cash pursuant to a registration statement that is declared effective. The Rule 430A information ¹⁰ will be disclosed in a prospectus filed under Rule 424 or 497 ¹¹ and deemed to be part of the registration statement as of the time it was declared effective. A post-effective amendment will be necessary, however, where the final prospectus is not filed within five business days after the effectiveness of the registration statement or transmitted by a means reasonably calculated to result in filing with the Commission by that date.

Rule 430A does not change registrants disclosure obligations to investors. The Rule does not change the information required to be disclosed in either a preliminary prospectus used before effectiveness of the registration statement or a prospectus meeting the requirements of Section 10(a) of the Act (the latter being a "final prospectus"). ¹²

The Commission has adopted, with modifications, a number of amendments to Rule 424. One of these requires that the prospectus that contains the Rule 430A information be filed not later than the second business day following the earlier of the date of the determination of the public offering price or the date the prospectus containing the Rule 430A information is first used in connection with the public offering or sales or transmitted by a means reasonably calculated to result in filing with the Commission on that date. A comparable amendment to Rule 497 provides the same shortened filing period for investment companies relying on Rule 430A. Other changes to Rule 424 shorten the filing period for certain other prospectuses used after effectiveness pursuant to Rule 415, ¹³ eliminate unnecessary filings and classify Rule 424 prospectuses more systematically.

II. FINAL RULE AND AMENDMENTS

A. Rule 430A

1. Introduction

Rule 430A contemplates that, subject to the satisfaction of specified conditions, a prospectus contained in a registration statement at the time it is declared effective may omit information concerning the public offering price; price-related information and the underwriting syndicate. This information ordinarily is filed in a pre-effective "pricing" amendment to the registration statement.

The elimination of the requirement that such information be filed prior to effectiveness is intended to simplify and reduce filing obligations without reducing investor protection. ¹⁴ The change should minimize the risk of disruption of a registrants marketing schedule caused by the need to file a pricing amendment and wait until the registration statement is declared effective by the Commission or its staff pursuant to delegated authority. ¹⁵ At the same time, Rule 430A and the related amendments should not affect the adequacy and timeliness of disclosure of information to investors or investor rights of action under the federal securities laws. There is no change in the information required to be provided to the public by means of either the preliminary prospectus ¹⁶ or the final prospectus.

2. Information That May Be Omitted Under Rule 430A ¹⁷

Rule 430A permits a registration statement to be declared effective that contains a prospectus that omits information on the public offering price (including interest and dividend rates on the securities being offered), underwriting syndicate (including material relationships with any underwriter not named therein), underwriting discounts or commissions, discounts or commissions to dealers, amount of proceeds, conversion rates, call prices and other items dependent upon the public offering price, delivery dates, and terms of the securities dependent upon the offering date. ¹⁸ This range of information substantially parallels that in Rule 430.

Questions have been raised about whether "information with respect to... the underwriting syndicate", which may be excluded pursuant to Rule 430A, also was intended to address information concerning the managing underwriter(s). The identity of the managing underwriter(s) is known prior to effectiveness and Rule 430 does not allow such information to be omitted from a preliminary prospectus. Nor may the information concerning managing underwriters be omitted in reliance upon Rule 430A, which was not intended to change the disclosure required in the preliminary prospectus.

In contrast, Rule 430A specifically permits a registrant to omit the names of other underwriting syndicate members and related information. ¹⁹ Prior to the registrant requesting acceleration of effectiveness, the registration statement should include all of the other required information on the plan of distribution ²⁰ but need not include the names of the syndicate members other than the managing underwriter(s), material relationships with any underwriter not named therein, the amounts underwritten and the discounts and commission. ²¹ If, however, a registrant chooses to include the names of syndicate members, information concerning material relationships between such named underwriters and the registrant must also be included.

With respect to underwriter compensation, the registration statement should continue to disclose any compensation that is not easily reducible to a dollar per unit basis, such as options or warrants to purchase equity securities, fees for other services to be provided, and right of first refusal on future financings. ²² The underwriting agreement or the final form thereof should continue to be filed as part of the registration statement prior to effectiveness. ²³

Finally, a registrant requesting acceleration of effectiveness of a registration statement for other than a delayed offering pursuant to Rule 415 must have a present intent to offer. The registrant thus must provide all required information other than that omitted in reliance upon Rule 430A, including the information regarding distribution of the preliminary prospectus called for pursuant to Rule 418(a)(7). ²⁴

3. Eligibility and Conditions for Use of Rule 430A ²⁵

As proposed, Rule 430A is available to any registrant ²⁶ but is limited to offerings of securities for cash. ²⁷ Thus, the Rule is not applicable to a registration statement covering securities to be issued in connection with a business combination, whether effected by a merger or exchange offer, recapitalization, reorganization or other similar transaction.

Rule 430A also is limited to registration statements that are declared effective-- i.e., where effectiveness is accelerated by the Commission or its staff acting pursuant to delegated authority, rather than by lapse of time pursuant to section 8(a) of the Securities Act. Accordingly, the Rule is not available for filings that lack a Rule 473 delaying amendment. ²⁸ To permit otherwise would provide a mechanism to avoid the review process. While certain types of filings always become effective automatically and are not permitted to use delaying amendments, ²⁹ the Commission believes these filings need not come within the scope of Rule 430A because such filings characteristically do not contain market sensitive pricing information determined shortly before commencement of the offering.

4. Pre-effective Amendments; Recirculation

Rule 430A does not alter traditional considerations regarding the need, in light of events or facts that are known prior to effectiveness, to file a pre-effective amendment to assure that the registration statement is not misleading when declared effective. ³⁰ Registrants also should consider whether material changes from the disclosure contained in the latest prospectus distributed to underwriters, dealers and others, ³¹ either before or after effectiveness, ³² necessitate recirculation of an amended prospectus. ³³ Changes that previously were not required to be provided in a pre-effective amendment to the registration statement but were permitted to be made in a prospectus filed after effectiveness can continue to be made in the final prospectus. ³⁴

5. Post-effective Amendments

Rule 430A also does not alter traditional considerations regarding whether events or facts require post-effective amendment of the registration statement. A registrant that has relied on Rule 430A and files a correcting or updating post-effective amendment to the registration statement may either include the Rule 430A information in the amendment, or omit it from the amendment but include it in a prospectus filed within five business days after the amendment is declared effective. The same alternatives are available when a post-effective amendment is required to be filed because the prospectus containing the Rule 430A information was not filed within five business days after effectiveness of the registration statement. ³⁵ In either case, whether a post-effective amendment contains the Rule 430A information or is used to recommence the five business day period during which the Rule 430A information may be filed in a Rule 424 or Rule 497 prospectus in reliance upon Rule 430A, the amendment must contain a prospectus that is current in all respects.

6. Age of Financial Statements

Rule 430A does not change requirements concerning the age of financial statements contained in a registration statement at the time of effectiveness. ³⁶ Accordingly, use of the Rule does not eliminate the need to file a pre-effective amendment if the financial statements are required to be updated at the time of effectiveness, and a registrant whose financial statements are not current should not request acceleration of effectiveness. ³⁷ If a registrant does not file a Rule 424 or Rule 497 prospectus to provide the Rule 430A information within five days of effectiveness, a post-effective amendment filed either to include the Rule 430A information or to recommence the five business day period for Rule 430A ³⁸ must be current in all respects. Thus, to assure the currency of financial information, such a post-effective amendment must contain updated financial statements if the previously filed financial statements are no longer current. ³⁹

7. Bona Fide Estimate Based On Offering Price

Rule 430A does not change procedures requiring disclosure in the preliminary prospectus of information based on a bona fide estimate of the public offering price. For example, pro forma financial information on such matters as the ratio of earnings to fixed charges ⁴⁰ should be set forth, accompanied by a clear statement that the information is based on an assumed public offering price and that the pro forma information will vary in a specified manner as the assumed price changes. Disclosure also should continue to be provided on the estimated dollar amount and allocation of proceeds to be received from the offering ⁴¹ and on dilution, ⁴² if applicable.

A registration statement for a registrant not subject to the reporting provisions of the Exchange Act immediately prior to the filing of the registration statement must contain a bona fide estimate of the range of the maximum offering price. ⁴³ If such a registrant requests acceleration of effectiveness in reliance upon Rule 430A and subsequently determines that the public offering price will not fall within the bona fide estimate of the range of the maximum offering price set forth in the prospectus included in the registration statement at the effective date, because changes in such information are of the type that necessitate post-effective amendments, the registrant must file a post-effective amendment to include the Rule 430A information (and update other information) or to update the estimate (and other information). ⁴⁴

8. Exhibits

The Rule does not change the filing requirements applicable to exhibits. ⁴⁵ A registrant choosing not to file a pricing amendment must file all required exhibits with the initial registration statement or a pre-effective amendment. Thus, any required opinion, report or other document prepared by an accountant, other expert or counsel and applicable consents must be filed as part of the registration statement prior to effectiveness. ⁴⁶ While the public offering price may not be determined until shortly after the registration statement is declared effective, in most cases requisite opinions, consents and reports, including legality opinions, can be issued prior to the specific pricing. Where issuance is not possible prior to effectiveness, the Commission has determined, after consideration of alternative approaches, that the Rule ordinarily will be unavailable. ⁴⁷

Certain exhibits, unlike opinions and consents, are not required to be filed in executed form at the time of effectiveness (e.g., trust indentures and underwriting agreements). The filing requirement may be satisfied by submission of the final form of the document to be used; the form must be complete, except that prices, signatures and similar matters may be omitted. ⁴⁸

A technical amendment to Instruction 1 to Item 601 of Regulation S-K has been adopted substantially as proposed to provide that information on price and similar matters omitted from an exhibit that is not refiled to provide the information may be provided in a prospectus filed with the Commission pursuant to Rule 424(b) after effectiveness of the registration statement, rather than being included in an amendment to the registration statement. ⁴⁹ The prior requirement to state in any amendment to the registration statement the basis provided by this Instruction for not refiling such exhibit has been deleted because it is not essential.

9. Applicability of Rule 430A to Investment Companies

As explained in the proposing release, Rule 430A will be used primarily by closed-end investment companies because the pricing amendment typically is not the last event, or is only part of the last event, preceding effectiveness of the registration statements of other investment companies under the Investment Company Act of 1940. One commentator urged the Commission to expand the availability of Rule 430A to unit investment trusts whose registration statements become effective automatically under Rule 487. ⁵⁰ The Commission asked for comment on similar possibilities for streamlining unit investment trust filing procedures in connection with the reproposal of Form N-7 ⁵¹ and will consider this comment, as well as others received, in connection with the adoption of Form N-7. ⁵²

10. Section 11 Liability Issues

Section 11 of the Securities Act ⁵³ imposes liability on the issuer, directors, signers, experts and other designated persons for material misstatements in or omissions from a registration statement at the time of effectiveness. Rule 430A as adopted does not alter such liability. Accordingly, paragraph (b) of Rule 430A provides that information omitted from a prospectus filed as part of a registration statement at the time of effectiveness in reliance upon paragraph (a), and subsequently filed in a prospectus pursuant to Rule 424(b) or 497(h), ⁵⁴ is deemed to be part of the registration statement at the time of effectiveness. Further, one condition to the use of the Rule is inclusion in the registration statement of the new undertaking specified by paragraph (j)(1) to Item 512 of Regulation S-K. The effect of paragraph (b) of the Rule and the Item 512(j)(1) undertaking is to maintain section 11 liability on the information omitted from the prospectus contained in the effective registration statement in reliance on paragraph (a) of Rule 430A and subsequently filed with the Commission. ⁵⁵ In addition, paragraph (a) of Rule 430A specifies that the information that may be omitted pursuant to the Rule need not be contained in the prospectus in a registration statement at effectiveness in order for the registration statement to meet the requirements of section 7 of the Securities Act for the purposes of section 5 ⁵⁶ thereof. Thus, the fact that such information is not physically contained in the registration statement at the time of effectiveness would not result in liability under these provisions of the Securities Act.

Because of the close proximity in time between effectiveness of the registration statement, the filing of the final prospectus under Rule 424 or 497 and the initial bona fide offering of the securities (as used in sections 4(3) and 13 of the Securities Act), ⁵⁷ the Commission has determined that it is not necessary for paragraph (j) of Item 512 to contain any undertaking updating the registration statement for statute of limitations and section 11 reliance purposes. However, in the event the Rule 424 or 497 filing is not made within the specified five business day period, Rule 430A requires the filing of a post-effective amendment. Since there is no prescribed time period by which the post-effective amendment must be filed, the Commission has determined after consideration of comments solicited to require an undertaking updating the registration statement for liability and statute of limitations purposes upon the effectiveness of any post-effective amendment containing a prospectus. Accordingly, registrants that intend to utilize Rule 430A as adopted must provide the new undertaking required by Item 512(j)(2) of Regulation S-K.

Section 11 liability continues to extend to exhibits, including opinions of counsel and consents of counsel and accountants, which must be filed as part of the registration statement at the time of effectiveness, as discussed above. ⁵⁸ In addition, underwriter liability under section 11 is not affected by the omission of underwriters names from the registration statement; anyone with the status of an underwriter is potentially liable under section 11 whether or not named in the registration statement. ⁵⁹

11. Relationship to Rule 415

The new Rule does not affect the existing eligibility requirements for filing a registration statement for a continuous or delayed offering under Rule 415. Accordingly, the securities being offered pursuant to a registration statement declared effective as permitted by Rule 430A must be priced before or shortly after the registration statement is declared effective, and the offering must commence promptly, unless a post-effective amendment is filed or the registration statement meets the criteria for a delayed offering under Rule 415. ⁶⁰ Paragraph (a)(3) of the Rule as adopted requires that the Rule 430A information be contained in a post-effective amendment (which must be declared effective before sales are made) if a prospectus containing that information is not filed within five business days after effectiveness of the registration statement or of a post-effective amendment containing a form of prospectus or transmitted by a means reasonably calculated to result in filing with the Commission by that date. ⁶¹ The five business day period is not intended as a definition of what constitutes a delayed offering for purposes of Rule 415, but serves to ensure that delays in pricing and marketing securities will not result in offerings inconsistent with the Rule 415 criteria.

Securities offerings that meet the criteria for delayed offerings under Rule 415 do not have to rely upon Rule 430A. Such registration statements may become effective without price, underwriting syndicate and other information, because the information is not known at the time of effectiveness.

However, in order to provide additional market flexibility and to avoid an artificial election between the two rules prior to effectiveness, a registrant eligible to engage in a delayed offering pursuant to Rule 415 may retain the option to proceed under either rule as long as it includes the undertakings called for by both Items 512(a) ⁶² and 512(j) of Regulation S-K. Such a registrant may choose to include both sets of undertakings (at the time of initial filing or in a pre-effective amendment) either if it plans to offer one tranche of securities immediately and the remainder on a delayed basis, or if it is uncertain at the time it files whether or not the securities will be offered on a delayed basis. ⁶³ At the time it requests acceleration of effectiveness, a registrant that has no present intent to make the first offering of securities under the registration statement promptly, and therefore will be making the offering on a delayed basis rather than in reliance on Rule 430A, should so state in its request for acceleration. It may then continue to omit, in addition to Rule 430A information, other information not known at the time of effectiveness. When the delayed offering is ultimately made, the prospectus containing the required information will be filed pursuant to Rule 424(b)(2) or (5).

On the other hand, a registrant requesting acceleration that plans to offer securities promptly must provide all required information, except that which may be omitted in reliance on Rule 430A. In the event that both sets of undertakings are included and only Rule 430A information is omitted at the time of effectiveness, the registrant will be presumed to be relying upon Rule 430A for the first offering under the registration statement and will file the prospectus containing the Rule 430A information pursuant to Rule 424(b)(1) or (4) within five business days of effectiveness. ⁶⁴ Nonetheless, registrants eligible to engage in delayed offerings need not file a post-effective amendment to provide the Rule 430A information if the Rule 424(b) prospectus is not filed within five business days; instead, the information may be included in a prospectus filed pursuant to Rule 424(b)(2) or (5). ⁶⁵ The Item 512(a) undertakings will apply in this fact situation.

This approach will alleviate continuing interpretive and administrative questions concerning whether a registration statement otherwise eligible to be filed as a delayed offering under Rule 415 is a "convenience shelf," i.e., a registration statement for which the offering of some or all the securities is intended at the time of effectiveness to commence promptly. The Commission has stated previously that the securities to be offered promptly cannot be considered part of a delayed offering; therefore, a pricing amendment has been required for such filings. ⁶⁶ Under Rule 430A, such filings will be able to be declared effective without pricing amendments, provided the terms and conditions of the Rule are met.

12. Use of Prospectus After Effectiveness

As proposed, then-paragraph (b) of Rule 430A provided that the rule would not "limit the information required to be contained in a form of prospectus meeting the requirements of section 10 ⁶⁷ of the Act for purposes of section 5(b) thereof used after effectiveness of the registration statement." One commentator believed that an unintended consequence of proposed paragraph (b), when read in conjunction with Rule 430 (which relates only to preliminary prospectuses used prior to the effective date), would have been to prohibit the use of any form of prospectus after the effective date and prior to pricing. As adopted, this paragraph, redesignated paragraph (c) of Rule 430A, has been clarified to reflect that a prospectus that omits Rule 430A information may be used after effectiveness and prior to pricing. ⁶⁸ However, use of such a prospectus is not permitted for purposes of satisfying the requirements of section 5(b)(2) in connection with delivery of a security for sale or for delivery after a sale or the requirements of section 2(10)(a) in connection with delivery of other written communications (e.g., confirmations) to investors. ⁶⁹

Such a pre-pricing prospectus must be clearly marked on the cover page to indicate that it is subject to completion or amendment. In lieu of requiring registrants to reprint or sticker to so indicate, the Commission has amended the statement required by Item 501(c)(8) of Regulation S-K and Rule 481(b)(2) so that it may be used after effectiveness and prior to pricing. ⁷⁰ Rule 423 has also been amended so that a prospectus used after effectiveness and prior to pricing would not have to be re-dated.

13. Formula Pricing

Previously, companies that intended to price an offering according to a formula related to the market price filed alternative prospectus cover pages as part of the registration statement. One cover page described the formula and was used to meet the requirements of paragraph (16) of Schedule A of the Securities Act and Item 501 of Regulation S-K. ⁷¹ The other, used in the final prospectus, omitted the formula cover page and included the pricing table that was completed after the securities were priced. The adoption of Rule 430A makes these procedures no longer necessary.

14. Competitive Bidding

The Commission has not changed the procedures applicable to securities to be offered by competitive bidding. Therefore, companies that offer and sell securities by that procedure may not use Rule 430A. ⁷² Such companies should continue to comply with the current rules and staff interpretations applicable to competitive bidding. ⁷³

15. Item 502 of Regulation S-K and Rule 481 (Pre-Pricing Stabilization)

Where the registrant or any underwriter knows or has reason to believe that the price of any security may be stabilized to facilitate the offering of registered securities, the prospectus must include the stabilization legend prescribed by Item 502(d)(1) ⁷⁴ of Regulation S-K or Rule 481(d)(1). ⁷⁵ Item 502(d)(2) ⁷⁶ and Rule 481(d)(2) ⁷⁷ further provide that if such stabilizing began prior to the effective date, the prospectus must set forth the amount of securities bought, the prices at which they were bought and the period within which they were bought. Except where formula pricing was used, previously the offering price was normally determined after the close of the market on the day before the effective date and, accordingly, the effect of Item 502(d)(2) and Rule 481(d)(2) was to require disclosure regarding stabilizing transactions effected prior to pricing.

Where Rule 430A is used, stabilizing transactions may be effected after the effective date but prior to determination of the initial public offering price. To assure that investors receive substantially the same disclosure regarding pre-pricing stabilizing as was previously required, the Commission has amended Item 502(d)(2) and Rule 481(d)(2) to provide that, where Rule 430A is used, the prospectus filed pursuant to Rule 424 or Rule 497 (or a post-effective amendment if a Rule 424 or Rule 497 prospectus is not filed) must include information as to stabilizing transactions effected prior to the determination of the initial public offering price.

B. Amendments to Rule 424 ⁷⁸

1. Types of Prospectuses Required to be Filed and Classification of Prospectuses

Because the previous requirement of Rule 424 to file with the Commission prospectuses in the exact form furnished to investors ⁷⁹ resulted in nonessential filings, the Commission has removed the word "exact" and restricted the filing requirement to prospectuses that contain substantive modifications or additions. ⁸⁰ The term "substantive" refers to additions or modifications that supplement, update or correct the content and substance of the information contained in a prospectus, excluding such matters as those typographical, grammatical, format and clarifying changes that do not affect investors understanding of the information. ⁸¹

In addition, to facilitate access to and use of the information, the prospectuses are classified according to the nature of the information being added or modified. Because of the new classification scheme, restructured from the proposal, the distinction between the first prospectus filed after effectiveness and subsequently filed prospectuses has been eliminated. Accordingly, paragraphs (b) and (c) of Rule 424, which maintained such a distinction and specified different times for filing, have been merged.

New paragraphs (b)(1) and (2) apply to prospectuses disclosing "transaction-specific" information, i.e., information relating primarily to the securities offering. If a registrant relies upon Rule 430A, a prospectus used after effectiveness of the registration statement will ordinarily be filed under Rule 424(b)(1). ⁸² Prospectuses filed under that paragraph will disclose the price, price-related information and underwriter-related information that was omitted from the registration statement at the time of effectiveness. ⁸³

Any prospectus that discloses transaction-specific information about the offering of securities on a delayed shelf basis under Rule 415(a)(1)(vii), (viii) and (x) ordinarily will be filed under new paragraph (b)(2). ⁸⁴ The transaction information will include the price, specific description of the securities, and specific method of distribution. Typically, such a prospectus will be filed every time another series or "tranche" of securities is offered.

Prospectuses reflecting other substantive changes or additions not covered in the first two categories will be filed under new paragraph (b)(3). ⁸⁵ Finally, prospectuses reflecting information that falls within more than one paragraph of proposed Rule 424(b) will be filed under new paragraph (b)(4) or (5), as applicable. ⁸⁶ In order to make the classification system useful, paragraph (e) of Rule 424 has been amended to require that the filing specify the applicable paragraph or subparagraph (i.e., "(a)," "(d)" or "(b)(1)"-"(b)(5)") pursuant to which it is being made. ⁸⁷ The rule as adopted has been reformatted from the proposal in order to simplify these designations.

2. Filing Period

The Commission has shortened the time within which certain prospectuses used after effectiveness of the registration statement must be filed. Such filings warrant a short time period in order that the information may be promptly available to the investing public and the Commission.

Under the proposed amendments, the filing date would have been tied to the first use after effectiveness of the prospectus that contains modified or additional information. Commentators expressed concern that the proposed requirements to file on the date of first use removed too much of the flexibility intended by the proposal, particularly as they would have applied to delayed offerings under Rule 415 that occur late in the business day. The Commission appreciates this desire for flexibility. Nonetheless, it is important for this highly significant information to be on file with the Commission in a timely fashion.

The amendments as adopted balance both concerns, requiring that a prospectus disclosing transaction-specific information specified in either paragraph (b)(1) or (2) be filed not later than the second business day following the earlier of the date of the determination of the offering price or the date that it is first used after effectiveness in connection with the public offering or sales or transmitted by a means reasonably calculated to result in filing with the Commission by that date. ⁸⁸ The concept of "first use" is not limited to provision of the prospectus to purchasers with their confirmations. Rather, it refers to availability of the prospectus to the managing underwriter, syndicate members or offerees.

In recognition of the possibility that the Rule 424 filing may not reach the Commission for filing due to circumstances beyond the registrants control, paragraphs (b)(1) and (b)(2) of Rule 424 provide for transmission by a means reasonably calculated to result in filing with the Commission by the second business day deadline. ⁸⁹ In order to meet the requirements of Rule 430A, however, it will be necessary for a registrant to ascertain promptly whether a form of prospectus that contains Rule 430A information that has been transmitted for filing under Rule 424(b) or Rule 497(h) actually was received by the Commission. Further, in the event that it was not received, Rule 430A requires that the registrant promptly file such prospectus.

As prospectuses filed under paragraphs (b)(4) and (b)(5) also will contain information subject to the timing requirement provided for in paragraphs (b)(1) and (2), respectively, they are required to be filed no later than the second business day following the date of the earlier of pricing or first use. Paragraphs (b)(4) and (5) also provide for transmission by a means reasonably calculated to result in filing with the Commission by that date.

Unlike prospectuses filed pursuant to paragraphs (b)(1) and (2), prospectuses filed under paragraph (b)(3), which only reflect other substantive changes, will have to be filed no later than the fifth business day after first use; like prospectuses filed pursuant to paragraphs (b)(1) and (2), they may be transmitted by a means reasonably calculated to result in filing with the Commission by that date. ⁹⁰ In the usual case, mailing of Rule 424(b)(3) prospectuses on the date of first use would suffice even if overnight mail service or similar means were not used.

3. Filing Format

In the usual case, revised Rule 424(c) explicitly permits the filing of a prospectus supplement or "sticker" only, rather than requiring that a registrant using a supplement refile the entire prospectus with the supplement attached. ⁹¹ The prospectus supplement distributed to investors, however, ordinarily is still required to be attached to the prospectus to which the supplement relates. ⁹² The Rule requires that a supplement smaller than a prospectus page filed separately be attached to a sheet of 8 1/2 inches x 11 inches paper for ease in processing.

A related amendment requires that the first page of each prospectus supplement include a cross reference to the date(s) of the related prospectus and/or prospectus supplement(s). This will permit the Commission and persons obtaining this information to determine which documents comprise the complete prospectus. ⁹³

4. Amendments to Rule 424(a). ⁹⁴

The Commission has amended paragraph (a) of Rule 424 to eliminate the filing requirement for prospectuses used prior to effectiveness containing non-substantive changes from a previously filed prospectus. This change conforms Rule 424(a) to new Rule 424(b).

III. COST-BENEFIT ANALYSIS

To evaluate fully the benefits and costs associated with proposed Rule 430A and the amendments to Rules 424 and 497 and Items 512 and 601 of Regulation S-K, the Commission requested commentators to provide views and data as to the costs and benefits associated with the rules to eliminate pricing amendments and non-substantive Rule 424 filings, to permit the filing of a supplement without the rest of the prospectus, and to require more immediate filing of the prospectus. In this regard, the Commission noted that the amendments would reduce the filing burden borne by registrants, and associated costs such as printing and travel expenses, but that the reduction of these expenses might be offset in part by an increase in the costs associated with filing a Rule 424(b) or Rule 497(h) prospectus at an earlier time. In response to commentator concerns that the offset might reduce the cost savings from Rule 430A rather substantially, the time for filing was lengthened.

IV. FINAL REGULATORY FLEXIBILITY ANALYSIS

This final regulatory flexibility analysis concerns new Rule 430A and amendments to Rules 424 and 497 of Regulation C and Items 512 and 601 of Regulation S-K and has been prepared by the Commission in accordance with 5 U.S.C. 604. The corresponding Initial Regulatory Flexibility Analysis is contained in the proposing release.

Objectives of the New Rule and Amendments

The objectives of Rule 430A and the related amendments to Items 512 and 601 of Regulation S-K are to simplify and to reduce filing procedures and to minimize possible disruptions to a registrants marketing schedule as the result of having to file a pre-effective pricing amendment. The amendments to Rules 424 and 497 governing the prospectus classification system, filing format and time requirements are intended to provide a more useful and effective system for filing post-effective prospectuses. The changes achieve these purposes without affecting the adequacy of disclosure of information to investors or investor protection under the federal securities laws.

Public Comment

No commentators responded to the Commissions request for comments on the Initial Regulatory Flexibility Analysis.

Significant Alternatives

Pursuant to section 604 of the Regulatory Flexibility Act, the following types of alternatives were considered:

(1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities;

(2) The clarification, consolidation or simplification of compliance and reporting requirements under the rules for such small entities;

(3) The use of performance rather than design standards; and

(4) An exemption from coverage of the rules, or any part thereof, for small entities.

Specifically, the Commission considered whether or not Rule 430A should be available to registrants not subject to the reporting provisions of sections 13(a) or 15(d) of the Exchange Act immediately prior to filing a registration statement. The Commission decided to extend the rule to such registrants, thus enabling small issuers to take advantage of the benefits of Rule 430A.

With respect to the amendments to Rule 424 the Commission considered used after effectiveness by small issuers to file such prospectuses any earlier than currently required. The Commission does not believe, however, that such alternative proposals would be consistent with the Commissions mandate of investor protection. Similarly, the Commission does not consider the use of performance standards to be a significant alternative because such standards would be inconsistent with the Commissions statutory mandate.

V. STATUTORY BASIS

Rule 430A is being adopted by the Commission and Rules 423, 424, 481, 482 and 497 and Items 501, 502, 512 and 601 of Regulation S-K are being amended by the Commission pursuant to Sections 7, 10 and 19(a) of the Securities Act.

List of Subjects in 17 CFR Parts 229, 230, 239 and 240.

Reporting and recordkeeping requirements, Securities.

VI. TEXT OF RULES

In accordance with the foregoing, Title 17, Chapter II of the Code of Federal Regulations is to be amended as follows:

Part 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER THE SECURITIES ACT OF 1933 AND SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY CONSERVATION ACT OF 1975--REGULATION S-K

1. The authority citation for Part 229 continues to read, in part, as follows:

Authority: Secs. 6, 7, 8, 10, 19(a), 48 Stat. 78, 79, 81, 85; secs. 12, 13, 14, 15(d), 23(a), 48 Stat. 892, 894, 901; secs. 205, 209, 48 Stat. 906, 908; sec. 203(a), 49 Stat. 704; secs. 1, 3, 8, 49 Stat. 1375, 1377, 1379; sec. 301, 54 Stat. 857; secs. 8, 202, 68 Stat. 685, 686; secs. 3, 4, 5, 6, 78 Stat. 565-568, 569, 570-574; sec. 1, 79 Stat. 1051; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 1, 2, 3-5, 28(c), 84 Stat. 1435, 1497; sec. 105(b), 68 Stat. 1503; secs. 8, 9, 10, 11, 18, 69 Stat. 117, 118, 119, 155; 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 78 l, 78m, 78n, 78l (d), 78w(a). * * *

2. In section 229.10, paragraph (c)(1)(iii) is amended by removing the reference to "Rule 424(c)" and replacing it with a reference to "Rule 424(b)" and by removing the accompanying citation "(§230.424(c) of this chapter)" and replacing it with "(§230.424(b) of this chapter)".

3. In section 229.501, paragraph (c)(8) is revised to read as follows:

§229.501 (Item 501) Forepart of registration statement and outside front cover page of prospectus

* * * * *

(c) * * *

(8) In the case of any prospectus to be used before the effective date of the registration statement (or, in the case of any prospectus that omits information as permitted by Rule 430A under the Securities Act §230.430A of this chapter, prior to the determination of the initial public offering price), in red ink, the caption "Subject to Completion," the date of its issuance, and the following statement printed in type as large as that generally used in the body of the prospectus:

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state.

* * * * *

4. By revising paragraph (d)(2) of section 229.502 to read as follows:

§229.502 (Item 502) Inside front and outside back cover pages of prospectus

* * * * *

(d) * * *

(2) If the stabilizing began prior to the effective date of the registration statement, set forth the amount of securities bought, the prices at which they were bought and the period within which they were bought. In the event that Rule 430A under the Securities Act §230.430A of this chapter is used, the prospectus filed pursuant to Rule 424(b) §230.424(b) of this chapter or included in a post-effective amendment must include information as to stabilizing transactions effected prior to the determination of the public offering price set forth in such prospectus.

5. By adding new paragraph (j) of section 229.512 to read as follows:

§229.512 (Item 512) Undertakings.

* * * * *

(j) Include the following in a registration statement permitted by Rule 430A under the Securities Act of 1933 §230.430A of this chapter:

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of a registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of the registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

6. By revising Instruction 1 to Section 229.601 to read as follows:

§229.601 (Item 601) Exhibits.

* * * * *

Instructions to Item 601. 1. If an exhibit to a registration statement (other than an opinion or consent), filed in preliminary form, has been changed only (A) to insert information as to interest, dividend or conversion rates, redemption or conversion prices, purchase or offering prices, underwriters or dealers commissions, names, addresses or participation of underwriters or similar matters, which information appears elsewhere in an amendment to the registration statement or a prospectus filed pursuant to Rule 424(b) under the Securities Act §230.424(b) of this chapter, or (B) to correct typographical errors, insert signatures or make other similar immaterial changes, then, notwithstanding any contrary requirement of any rule or form, the registrant need not refile such exhibit as so amended. Any such incomplete exhibit may not, however, be incorporated by reference in any subsequent filing under any Act administered by the Commission.

* * * * *

Part 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933.

1. The authority citation for Part 230 continues to read, in part, as follows:

Authority: Sections 230.400 to 230.499 issued under secs. 6, 8, 10, 19, 48 Stat. 78, 79, 81 and 85, as amended (15 U.S.C. 77f, 77h, 77i, 77s);

2. The introductory phrase in the first sentence of section 230.423 is amended to read as follows:

§230.423 Date of prospectus.

* * * * *

Except for a form of prospectus used after the effective date of the registration statement and before the determination of the offering price as permitted by Rule 430A(c) under the Securities Act (§230.430A(c) of this chapter) or before the opening of bids as permitted by Rule 445(c) under the Securities Act (§230.445(c) of this chapter), each * * *

* * * * *

3. By revising paragraphs (a), (b), (c), and (e), and adding a "Note" after paragraph (c) of §230.424 to read as follows:

§230.424 Filing of prospectuses, number of copies.

(a) Five copies of every form of prospectus sent or given to any person prior to the effective date of the registration statement which varies from the form or forms of prospectus included in the registration statement as filed pursuant to §230.402(a) of this chapter shall be filed as a part of the registration statement not later than the date such form of prospectus is first sent or given to any person: Provided, however, that only a form of prospectus that contains substantive changes from or additions to a prospectus previously filed with the Commission as part of a registration statement need be filed pursuant to this paragraph (a); Provided, further, that an investment company advertisement which is deemed to be a prospectus pursuant to §230.482 of this chapter and which is required to be filed pursuant to this paragraph shall not be filed as part of the registration statement.

(b) Ten copies of each form of prospectus purporting to comply with section 10 of the Securities Act 15 U.S.C 77j shall be filed with the Commission in the form in which it is used after the effectiveness of the registration statement and identified as required by paragraph (e); Provided, however, that only a form of prospectus that contains substantive changes from or additions to a previously filed prospectus is required to be filed; Provided, further, that this paragraph (b) shall not apply in respect of a form of prospectus contained in a registration statement and relating solely to securities offered at competitive bidding, which prospectus is intended for use prior to the opening of bids. The ten copies shall be filed or transmitted for filing as follows:

(1) A form of prospectus that discloses information previously omitted from the prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Securities Act §230.430A of this chapter shall be filed with the Commission no later than the second business day following the earlier of the date of determination of the offering price or the date it is first used after effectiveness in connection with a public offering or sales, or transmitted by a means reasonably calculated to result in filing with the Commission by that date.

(2) A form of prospectus used in connection with a primary offering of securities on a delayed basis pursuant to Rule 415(a)(1)(vii), (viii) or (x) under the Securities Act §230.415(a)(1)(vii), (viii) or (x) of this chapter that discloses the public offering price, description of securities, specific method of distribution or similar matters shall be filed with the Commission no later than the second business day following the earlier of the date of the determination of the offering price or the date it is first used after effectiveness in connection with a public offering or sales, or transmitted by a means reasonably calculated to result in filing with the Commission by that date.

(3) A form of prospectus that reflects facts or events other than those covered in paragraphs (b)(1) and (2) of this rule that constitute a substantive change from or addition to the information set forth in the last form of prospectus filed with the Commission under this rule or as part of a registration statement under the Securities Act shall be filed with the Commission no later than the fifth business day after the date it is first used after effectiveness in connection with a public offering or sales, or transmitted by a means reasonably calculated to result in filing with the Commission by that date.

(4) A form of prospectus that discloses information, facts or events covered in both paragraphs (b)(1) and (3) shall be filed with the Commission no later than the second business day following the earlier of the date of the determination of the offering price or the date it is first used after effectiveness in connection with a public offering or sales, or transmitted by a means reasonably calculated to result in filing with the Commission by that date.

(5) A form of prospectus that discloses information, facts or events covered in both paragraphs (b)(2) and (3) shall be filed with the Commission no later than the second business day following the earlier of the date of the determination of the offering price or the date it is first used after effectiveness in connection with a public offering or sales, or transmitted by a means reasonably calculated to result in filing with the Commission by that date.

(c) If a form of prospectus, other than one filed pursuant to paragraph (b)(1) or (b)(4) of this Rule, consists of a prospectus supplement attached to a form of prospectus that (1) previously has been filed or (2) was not required to be filed pursuant to paragraph (b) because it did not contain substantive changes from a prospectus that previously was filed, only the prospectus supplement need be filed under paragraph (b) of this rule, provided that the first page of each prospectus supplement includes a cross reference to the date(s) of the related prospectus and any prospectus supplements thereto that together constitute the prospectus required to be delivered by Section 5(b) of the Securities Act 15 U.S.C. 77e(b) with respect to the securities currently being offered or sold. The cross reference may be set forth in longhand, provided it is legible.

NOTE: Any prospectus supplement being filed separately that is smaller than a prospectus page should be attached to an 8-1/2 inches x 11 inches sheet of paper.

(d) * * *

(e) Each copy of a form of prospectus filed under this rule shall contain in the upper right corner of the cover page the paragraph of this rule, including the subparagraph if applicable, under which the filing is made, and the file number of the registration statement to which the prospectus relates. The information required by this paragraph may be set forth in longhand, provided it is legible.

4. By adding new §230.430A to read as follows:

§230.430A Prospectus in a registration statement at the time of effectiveness.

(a) The form of prospectus filed as part of a registration statement that is declared effective may omit information with respect to the public offering price, underwriting syndicate (including any material relationships between the registrant and underwriters not named therein), underwriting discounts or commissions, discounts or commissions to dealers, amount of proceeds, conversion rates, call prices and other items dependent upon the offering price, delivery dates, and terms of the securities dependent upon the offering date; and such form of prospectus need not contain such information in order for the registration statement to meet the requirements of Section 7 of the Securities Act 15 U.S.C. 77g for the purposes of Section 5 thereof 15 U.S.C. 77e, Provided that:

(1) the securities to be registered are offered for cash;

(2) the registrant furnishes the undertakings required by Item 512(j) of Regulation S-K §229.512(j) of this chapter; and

(3) the information omitted in reliance upon paragraph (a) from the form of prospectus filed as part of a registration statement that is declared effective is contained in a form of prospectus filed with the Commission pursuant to Rule 424(b) or Rule 497(h) under the Securities Act §§230.424(b) or 230.497(h) of this chapter; except that if such form of prospectus is not so filed by the later of five business days after the effective date of the registration statement or five business days after the effectiveness of a post-effective amendment thereto that contains a form of prospectus, or transmitted by a means reasonably calculated to result in filing with the Commission by that date, the information omitted in reliance upon paragraph (a) must be contained in an effective post-effective amendment to the registration statement.

(b) The information omitted in reliance upon paragraph (a) from the form of prospectus filed as part of an effective registration statement, and contained in the form of prospectus filed with the Commission pursuant to Rule 424(b) or Rule 497(h) under the Securities Act §§ 230.424(b) 230.497(h) of this chapter, shall be deemed to be a part of the registration statement as of the time it was declared effective.

(c) When used prior to determination of the offering price of the securities, a form of prospectus relating to the securities offered pursuant to a registration statement that is declared effective with information omitted from the form of prospectus filed as part of such effective registration statement in reliance upon this Rule 430A need not contain information omitted pursuant to paragraph (a), in order to meet the requirements of Section 10 of the Securities Act 15 U.S.C. 77j for the purpose of Section 5(b)(1) 15 U.S.C. 77e(b)(1) thereof. This provision shall not limit the information required to be contained in a form of prospectus meeting the requirements of Section 10(a) of the Act for the purposes of Section 5(b)(2) thereof or exception (a) of Section 2(10) 15 U.S.C. 77b(10) thereof.

(d) This rule shall not apply to registration statements for securities to be offered by competitive bidding.

NOTE: If information is omitted in reliance upon paragraph (a) from the form of prospectus filed as part of an effective registration statement, or effective post-effective amendment thereto, the registrant must ascertain promptly whether a form of prospectus transmitted for filing under Rule 424(b) or Rule 497(h) under the Securities Act actually was received for filing by the Commission and, in the event that it was not, promptly file such prospectus.

5. In section 230.481, paragraphs (b)(2) and (d)(2) are amended to read as follows:

§230.481. Information required in prospectus.

* * * * *

(b) * * *

(2) In the case of any prospectus to be used before the effective date of the registration statement (or, in the case of any prospectus that omits information as permitted by Rule 430A under the Securities Act §230.430A of this chapter, prior to the determination of the initial public offering price), in red ink, the caption "Subject to Completion," the date of its issuance, and the following statement printed in type as large as that generally used in the body of the prospectus:

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state.

* * * * *

(d) * * *

(2) If the stabilizing began prior to the effective date of the registration statement, disclosure of the amount of securities bought, the prices at which they were bought, the prices at which they were bought and the period within which they were bought. In the event that Rule 430A (§230.430A of this chapter) is used, the prospectus filed pursuant to Rule 497(h) (§230.497(h) of this chapter) or included in a post-effective amendment must include information as to stabilizing transactions effected prior to the determination of the public offering price set forth in such prospectus.

* * * * *

6. Paragraph (a)(4) of section 230.482 is added to read as follows:

§230.482. Advertising by an investment company as satisfying requirements of section 10.

* * * * *

(a) * * *

(4) It contains the statement required by Rule 481(b)(2) under the Securities Act §230.481(b)(2) of this chapter when used prior to effectiveness of the companys registration statement or, in the case of a registration statement that becomes effective omitting certain information from the prospectus contained in the registration statement in reliance upon Rule 430A under the Securities Act §230.430A of this chapter, when used prior to the determination of the public offering price.

* * * * *

7. By adding new paragraph (h) of §230.497 to read as follows:

§230.497 Filing of prospectus--number of copies.

* * * * *

(h) No later than the second business day following the earlier of the date of the determination of the offering price or the date it is first used after the effectiveness in connection with a public offering or sales, ten copies of every form of prospectus and Statement of Additional Information, where applicable, that discloses the information previously omitted from the prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Securities Act §230.430A of this chapter shall be filed with the Commission in the exact form in which it is used, or transmitted by a means reasonably calculated to result in filing with the Commission by that date.

8. In paragraph (c)(7) of section 230.499, deleting the reference to paragraph (c) of Rule 424 as follows:

§230.499 EDGAR temporary rule.

* * * * *

(c) * * *

(7) Rule 424 of Regulation C, "Filing of prospectus--number of copies." The copies required to be filed by paragraphs (a) and (b) of Rule 424 under the Securities Act (§230.424 of this chapter) shall consist * * *

* * * * *

PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

1. The authority citation for Part 239 continues to read, in part, as follows:

Authority: The Securities Act of 1933, 15 U.S.C. 77a, et seq., * * *

2. The introductory language of paragraph (b) of Item 11 of Form S-3 (§239.13) is revised to read as follows: note that the text of Form S-3 does not appear in the Code of Federal Regulations:

§239.13. Form S-3, for registration under the Securities Act of 1933 of securities of certain issuers offered pursuant to certain types of transactions.

* * * * *

Form S-3

* * * * *

Part I. Information Required in Prospectus.

* * * * *

Item 11. Material Changes.

(b) Include in the prospectus, if not incorporated by reference therein from the reports filed under the Exchange Act specified in Item 12(a), a proxy or information statement filed pursuant to Section 14 of the Exchange Act, a prospectus previously filed pursuant to Rule 424(b) or (c) under the Securities Act (§230.424(b) or (c) of this chapter) or, where no prospectus is required to be filed pursuant to Rule 424(b), the prospectus included in the registration statement at effectiveness, or a Form 8-K filed during either of the two preceeding years: (i) * * *

* * * * *

3. The introductory language of paragraph (b) of Item 10 of Form S-4 (§239.25) is revised to read as follows note that the text of Form S-4 does not appear in the Code of Federal Regulations:

§239.25 Form S-4, for the registration of securities issued in business combination transactions.

* * * * *

Form S-4

* * * * *

Part I. Information Required in the Prospectus.

* * * * *

B. Information About the Registrant

* * * * *

Item 10. Information with Respect to S-3 Registrants.

* * * * *

(b) Include in the prospectus, if not incorporated by reference from the reports filed under the Exchange Act specified in Item 11 of this Form, a proxy or information statement filed pursuant to Section 14 of the Exchange Act, a prospectus previously filed pursuant to Rule 424 under the Securities Act (§230.424 of this chapter) or, where no prospectus is required to be filed pursuant to Rule 424(b), the prospectus included in the registration statement at effectiveness, or a Form 8-K filed during either of the two preceeding fiscal years:

(1) * * *

* * * * *

4. In Note 1 to General Instruction C, Unavailability of the Form S-8 (Prospectus for Reoffers or Resales), of Form S-8 (§239.16b), the reference to "Rule 424(c)" is changed to refer to "Rule 424(b)" and the corresponding citation is changed from "(§230.424(c) of this chapter)" to "(§230.424(b) of this chapter)" note that the text of Form S-8 does not appear in the Code of Federal Regulations.

5. The introductory language of paragraph (b)(1) of Item 11 of Form F-3 (§229.33) is revised to read as follows note that the text of Form F-3 does not appear in the Code of Federal Regulations:

§239.33. Form F-3, for registration under the Securities Act of 1933 of securities of certain foreign private issuers pursuant to certain types of transactions.

* * * * *

Form F-3

* * * * *

Part I. Information Required in Prospectus.

* * * * *

Item 11. Material Changes.

(b)(1) Include in the prospectus, if not included in the reports filed under the Exchange Act which are incorporated by reference into the prospectus pursuant to Item 12 or a prospectus previously filed pursuant to Rule 424(b) or (c) under the Securities Act §230.424(b) or (c) under this chapter or, where no prospectus is required to be filed pursuant to Rule 424(b), the prospectus included in the registration statement at effectiveness: (i) * * *

* * * * *

6. The introductory language of paragraph (c) of Item 10 of Form F-4 (§239.34) is revised to read as follows note that the text of Form F-4 does not appear in the Code of Federal Regulations:

§239.34. Form F-4, for registration of securities of certain foreign private issuers issued in certain business combination transactions

* * * * *

Form F-4

* * * * *

Part I. Information Required in the Prospectus.

* * * * *

B. Information About the Registrant.

* * * * *

Item 10. Information with Respect to F-3 Companies.

* * * * *

(c) Include in the prospectus, if not incorporated by reference from the reports filed under the Exchange Act specified in Item 11 of this Form, from a prospectus previously filed pursuant to Rule 424 under the Securities Act (§230.424 of this chapter) or, where no prospectus is required to be filed pursuant to Rule 424(b), the prospectus included in the registration statement at effectiveness, or from a Form 6-K filed during either of the two preceding fiscal years:

(1) * * *

* * * * *

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934

1. The authority citation for Part 240 continues to read, in part as follows:

Authority: Sec 23, 48 Stat. 901, as amended, 15 U.S.C. 78w. * * *

2. Item 14(b)(1)(ii) of Section 240.14a-101 is revised to read as follows:

§240.14a-101 Schedule 14A. Information required in proxy statement

* * * * *

* * * * *

Item 14. Mergers, Consolidations, Acquisitions and Similar Matters.

b. Information about the registrant and the other person.

* * * * *

(i) Information with respect to S-3 registrants.

* * * * *

(ii) Include in the proxy statement, if not incorporated by reference from the reports filed under the Exchange Act specified in paragraph (b)(1)(iii) of this Item, from a proxy or information statement filed pursuant to section 14 of the Exchange Act, from a prospectus previously filed pursuant to Rule 424 under the Securities Act (§230.424 of this chapter) or, where no prospectus is required to be filed pursuant to Rule 424(b), the prospectus included in the registration statement at effectiveness, or from a Form 8-K filed during either of the two preceding fiscal years: * * *

* * * * *

By the Commission.

¹ 17 CFR 229.501; 17 CFR 229.502; 17 CFR 229.512; 17 CFR 229.601.

² 17 CFR 230.423.

³ 17 CFR 230.424.

⁴ 17 CFR 230.481.

⁵ 17 CFR 230.482.

⁶ 17 CFR 230.497.

⁷ 17 CFR 230.400 et seq.

⁸ Release No. 33-6672 (October 27, 1986) 51 FR 39868. The proposals generated 17 comment letters. The letters of comment, as well as a copy of the summary of the comment letters prepared by the staff, are available for public inspection and copying at the Commissions Public Reference Room File No. S7-28-86.

⁹ 15 U.S.C. 77a et seq. (1982).

¹⁰ In this Release, the information omitted from the form of prospectus contained in a registration statement at effectiveness in reliance upon Rule 430A is sometimes referred to as "Rule 430A information."

¹¹ Rule 424 governs the filing of prospectuses under the Securities Act. Rule 497 governs the filing of prospectuses by investment companies registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.). In Securities Act Release No. 33-6660 (Sept. 17, 1986) 51 FR 43384 (Sept. 26, 1986) the Commission proposed to make Rule 497 the exclusive prospectus filing rule for investment companies. If that proposal is adopted, Rule 424 would no longer be available to investment companies.

¹² 15 U.S.C. 77ja.

 In the usual case, a prospectus that omits the Rule 430A information may be used after effectiveness and prior to determination of the public offering price. See Part II.A.12 infra, "Use of Prospectus After Effectiveness."

¹³ 17 CFR 230.415.

¹⁴ The information will be disclosed in a prospectus filed under Rule 424 or 497. A post-effective amendment will be necessary, however, where the final prospectus is not filed within five business days after the effectiveness of the registration statement or a post-effective amendment thereto. See Part II.A.11 infra, "Relationship to Rule 415."

¹⁵See section 8(a) of the Securities Act 15 U.S.C. 77h(a) and 17 CFR 200.30-1(a).

¹⁶See Rule 430 17 CFR 230.430, which specifies the requirements for a preliminary prospectus for purposes of section 5(b)(1) of the Securities Act 15 U.S.C. 77e(b)(1), and the discussion of Rule 430A(b) in Part II.A.12 infra, "Use of Prospectus After Effectiveness," addressing the use of prospectuses after effectiveness when Rule 430A is utilized.

¹⁷See Rule 430A(a).

¹⁸ Terms of the securities dependent upon the offering date include information such as amounts and dates of sinking fund or similar payments, interest or dividend payments, record dates, date from which interest or dividends will accrue and redemption dates.

¹⁹ The underwriters, respective amounts underwritten and material relationships with the registrant may be known at the time of effectiveness and disclosure would be required under Item 508(a) of Regulation S-K without a specific exclusion. 17 CFR 229.508(a).

²⁰See Item 508 of Regulation S-K 17 CFR 229.508.

²¹ Rule 430A does not affect the requirement of Rule 415(a)(4)(iv) 17 CFR 230.415(a)(4)(iv) that the underwriter(s) for an at the market offering of equity securities by or on behalf of the registrant must be named in the prospectus which is part of the registration statement.

²²See Item 508(e) of Regulation S-K 17 CFR 229.508(e), which required disclosure of all items that would be deemed by the National Association of Securities Dealers to constitute underwriting compensation for purposes of the Associations Rules of Fair Practice.

²³See part 11.A.8 infra, "Exhibits."

²⁴ 17 CFR 230.418(a)(7).

²⁵ In addition to the criteria for use of the Rule discussed in this section, the Rule contains two further conditions: (1) that the registration statement contain the new undertakings specified in Item 512(j) of Regulation S-K (see Rule 430A(a)(2); and (2) that the information omitted from the prospectus filed as part of the effective registration statement be in the prospectus filed with the Commission under Rule 424(b), Rule 497(h), or in an effective post-effective amendment (see Rule 430A(a)(3)). These conditions are discussed infra in Parts II.A.10, "Sections 11 Liability Issues", II.A.11, "Relationship to Rule 415," and II.B, "Amendments to Rule 424."

²⁶See Part II.A.7 infra, "Bona Fide Estimate Based on Offering Price," concerning non-reporting companies whose public offering price does not fall within the bona fide estimate of the range of the maximum offering price contained in the registration statement.

²⁷See Rule 430A(a)(1). This requirement should be interpreted in the same manner as the "for cash" requirement for certain primary offerings of securities on Form S-3 17 CFR 239.13. See General Instruction I.B.1 thereof. For example, notes evidencing promises to pay installments in cash are considered to be cash within the meaning of the proposed Rule.

²⁸ 17 CFR 230.473.

²⁹ These registration statements are: (1) Forms S-3 and F-3 17 CFR 239.33 for dividend or interest reinvestment plans; (2) Forms S-4 17 CFR 239.25 for bank or savings and loan holding company formations; and (3) Forms S-8 17 CFR 239.16b, which are used for employee benefit plans. See also Part II.A.9 infra, "Applicability of Rule 430A to Investment Companies," with respect to automatically effective investment company registration statements.

³⁰ For example, a change in the estimated public offering price may materially affect disclosure on the use of proceeds and, if applicable, the adequacy of the proceeds to accomplish one or more stated purposes. See Items 504 and 101(a)(2)(iii)(A)(1) of Regulation S-K 17 CFR 229.504; 17 CFR 229.101(a)(2)(iii)(A)(1), respectively. Other areas of disclosure that may require updating include the business and plan of operation, managements discussion and analysis of financial condition and results of operations, and certain pro forma financial information. See Items 101, 303 and 503(d)(9) of Regulation S-K 17 CFR 229.101; 17 CFR 229.303; 17 CFR 229.503(d)(9), respectively.

³¹See Rule 15c2-8 under the Securities Exchange Act of 1934 as amended ("the Exchange Act") 17 CFR 240.15c2-8, 15 U.S.C. 78a-kk.

³²See Rule 430A(c) and Part II.A.12 infra, "Use of Prospectus After Effectiveness."

³³ Pursuant to Rule 460 17 CFR 230.460, the adequacy and availability of information to the public, including information regarding distribution of the preliminary prospectus provided pursuant to Rule 418(a)(7), may be considered in acting upon requests for acceleration of the effectiveness of a registration statement.

³⁴ Information concerning the amount of securities to be offered is not information that may be omitted pursuant to Rule 430A and changes in such information should be reflected in a pre-effective amendment. If a registrant requests effectiveness in the good faith belief that Rule 430A is available, but determines, after effectiveness, that the amount of securities to be offered must be changed, any increase in amount would require a new registration statement to register the additional securities; a decrease in amount generally would require a post-effective amendment.

³⁵See Rule 430A(a)(3) and discussion in Part II.A.10 infra, "Section 11 Liability Issues."

³⁶See Rule 3-12 of Regulation S-X 17 CFR 210.3-12.

³⁷ A registrant requesting acceleration of the effective date shortly before the date as of which financial statement disclosures would be required to be updated should consider whether such statements will fail to reflect any facts or events that have had or may have a material effect on the Companys financial condition not otherwise disclosed in the registration statement. See Item 303 of Regulation S-K.

³⁸See Part II.A.11 infra, "Relationship to Rule 415." See also Part II.A.5 supra, "Post-effective Amendments."

³⁹ The financial statements would have to be current as of the date of effectiveness of such post-effective amendment.

⁴⁰See Item 503(d)(9) of Regulation S-K.

⁴¹See Item 504 of Regulation S-K.

⁴²See Item 506 of Regulation S-K 17 CFR 229.506.

⁴³See Item 501(c)(6) of Regulation S-K 17 CFR 229.501(c)(6).

⁴⁴ If the estimate is updated by a post-effective amendment that is current in all respects, Rule 430A may continue to be utilized. See Rule 430A(a)(3) and Part II.A.5 supra, "Post-effective Amendments."

⁴⁵See Item 601 of Regulation S-K.

⁴⁶See section 7 and Schedule A(29) of the Securities Act 15 U.S.C. 77g and 77aa Schedule A(29), respectively; Item 601(b)(5), (6), (7), (8), and (24) of Regulation S-K 17 CFR 229.601(b)(5), (6), (7), (8), and (24); and Rules 436-439 17 CFR 230.436-439. An amendment to a registration statement that is filed solely for the purpose of adding exhibits and does not change the prospectus need include only the cover page to the registration statement, the exhibit index, the new or revised exhibits and the signature page.

⁴⁷ This position, however, is not intended to change the current practice with respect to delayed offerings under Rule 415(a)(1)(x) 17 CFR 230.415(a)(1)(x). Although certain qualified legality opinions may be filed as an exhibit to a registration statement that is declared effective, after pricing and prior to sales an unqualified opinion (and consent) must be filed on Form 8-K 17 CFR 249.308 and thus incorporated by reference into the registration statement or must be contained in a post-effective amendment.

⁴⁸ Such exhibits may not be incorporated by reference into any subsequent filing made with the Commission. The completed exhibit, however, even if not part of the registration statement as declared effective, still may be incorporated by reference into other Commission documents if it is previously filed, e.g., as part of a post-effective amendment or Form 8-K. See Instruction 1 to Item 601 of Regulation S-K. These procedures are not affected by Rule 430A.

⁴⁹ Although the proposed Instruction only provided for information in a prospectus filed pursuant to Rule 424(b)(1) and (4), the Instruction as adopted allows such information to be contained in any prospectus filed pursuant to Rule 424(b) 17 CFR 230.424(b).

⁵⁰ 17 CFR 230.487. See Part II.A.3 supra, "Eligibility and Conditions for Use of Rule 430A," concerning the requirement that Rule 430A is only available for registration statements that are declared effective.

⁵¹ Investment Company Act Rel. No. 15612 (March 9, 1987) 52 FR 8286 (March 17, 1987).

⁵² The Commission has, however, adopted paragraph (h) of Rule 497 with modifications to conform to the timing changes made to Rule 424 for the filing of prospectuses containing Rule 430A information. See Part II.B infra, "Amendments to Rule 424" To accommodate the adoption of Rule 430A, the Commission has also adopted technical amendments to Rules 481 (see Part II.A.15 infra, "Item 502 of Regulation S-K and Rule 481") and Rule 482.

⁵³ 15 U.S.C. 77k.

⁵⁴See Part II.B.1 infra, "Types of Prospectuses to be Filed and Classification of Prospectuses," and Part II.A.9 supra, "Applicability of Rule 430A to Investment Companies."

⁵⁵ As other changes in the prospectus would not be deemed to be part of the registration statement, such changes would not be taken into account in determining the adequacy of the registration statement for section 11 liability purposes.

⁵⁶ 15 U.S.C. 77e.

⁵⁷ 15 U.S.C. 77d(3) and 77m, respectively.

⁵⁸See Part II.A.8 supra, "Exhibits".

⁵⁹See generally section 11(a)(5), (b)(3), (d), (e) and (f) of the Securities Act (15 U.S.C. 77k(a)(5), (b)(3), (d), (e) and (f).

⁶⁰ Such criteria are set forth in Rule 415(a)(1) 17 CFR 230.415(a)(1); see particularly Rule 415 (a)(1)(x) 17 CFR 230.415(a)(1)(x).

⁶¹ The business day after the date the registration statement is declared effective, regardless of the time of day effectiveness occurs, is considered the first business day. The prospectus containing the Rule 430A information must be filed by the Commissions close of business on the fifth business day following effectiveness. See Rule 110 17 CFR 230.110.

⁶² 17 CFR 229.512(a).

⁶³ The registrant need not file a pre-effective amendment to remove the Rule 415 undertakings or the checking of the "Rule 415 box" on the cover page in the event that it decides to offer all of the securities promptly.

⁶⁴See discussion in Part II.B.1 infra, "Types of Prospectuses Required to be Filed and Classification of Prospectuses."

⁶⁵ In contrast, registrants making continuous offerings under Rule 415, which are required to commence promptly, may make use of Rule 430A to omit information that would otherwise be required, but a post-effective amendment must be filed if the Rule 424(b) prospectus is not filed within 5 business days. See Rule 415(a)(1)(ix) 17 CFR 230.415(a)(1)(ix).

⁶⁶See Securities Act Release No. 6499 (November 17, 1983) 48 FR 52889.

⁶⁷ 15 U.S.C. 77j.

⁶⁸See Part II.A.4 supra, "Pre-Effective Amendments; Recirculation," discussing material changes from the disclosure contained in the latest prospectus distributed.

⁶⁹ 15 U.S.C. 77e(b)(2); 15 U.S.C. 77b(10)(a).

⁷⁰ CFR 229.501(c)(8); 17 CFR 230.481(b)(2).

⁷¹ 15 U.S.C. 77aa Schedule A(16) and 17 CFR 229.501, respectively. See Instruction 2 to Item 501 of Regulation S-K.

⁷²See Rule 430A(d).

⁷³ Rule 445 17 CFR 230.445 required the filing of a post-effective amendment to reflect the results of the competitive bidding. The post-effective amendment to the registration statement becomes effective automatically at the time it is filed unless the registrant has been notified that proceedings under section 8 of the Securities Act 15 U.S.C. 77h have been commenced. The staff, however, will permit registrants to file prospectuses pursuant to Rule 424(b) 17 CFR 230.424(b) to reflect the results of the competitive bidding for securities offered on a delayed or continuous basis under Rule 415.

⁷⁴ 17 CFR 229.502(d)(1).

⁷⁵ 17 CFR 230.481(d)(1).

⁷⁶ 17 CFR 229.502(d)(2).

⁷⁷ 17 CFR 230.481(d)(2).

⁷⁸See Part II.A.9 supra, "Applicability of Rule 430A to Investment Companies," for a discussion of the more limited changes to Rule 497, the rule applicable to filing of investment company prospectuses.

⁷⁹ Temporary Rule 499(c)(7) 17 CFR 230.499(c)(7) permits registrants participating in the Edgar pilot to file Rule 424 prospectuses electronically, rather than in the exact form furnished to investors; the filing contains a narrative explanation of variations in form.

⁸⁰ The changes to Rule 424 only affect the filing requirements, not the legal determination as to whether information must be provided to investors, and if so, whether such information may be provided in a prospectus or prospectus supplement without being included in a post-effective amendment. See, e.g., Item 512(a) of Regulation S-K, which specifies certain filings that must be made by post-effective amendment.

 The prospectus need not be filed in the exact format in which it is used. Thus, registrants may use available methods to have the prospectus transmitted to Washington and filed by an agent. For example, the prospectus could be telecopied to a service bureau in Washington for filing.

⁸¹ As a result of this change to Rule 424, most registrants that choose to follow traditional procedures and therefore file pricing amendments will not also have to file a Rule 424(b) prospectus, as that prospectus ordinarily would not contain substantive changes from the prospectus contained in the pricing amendment.

⁸² As discussed in Part II.A.11 supra, "Relationship to Rule 415," Rule 430A(a)(3) requires that a post-effective amendment be filed if the prospectus is not filed within five business days after effectiveness.

⁸³ This prospectus also will include updated information required by various items of Regulation S-K to be provided "as of the latest practicable date" (see, e.g., Item 201(a)(1)(v) 17 CFR 229.201(a)(1)(v) and Instruction 2 to Item 501 of Regulation S-K).

⁸⁴ The prospectuses required to be filed pursuant to paragraph (b)(2) have been limited to those concerning primary offerings on a delayed basis under Rule 415(a)(1)(vii), (viii) and (x) 17 CFR 230.415(a)(1)(vii), (viii) and (x). Accordingly, prospectuses relating to all other offerings pursuant to Rule 415, including secondary offerings made on a delayed basis, are to be filed under paragraph (b)(3) unless they contain information omitted pursuant to Rule 430A.

⁸⁵ A prospectus containing Rule 430A information with respect to a continuous offering under Rule 415 would be filed pursuant to new paragraph (b)(1): subsequent prospectuses relating to such offerings would be filed pursuant to new paragraph (b)(3). See n.65 supra.

⁸⁶ These two categories represent a combination of (1) and (3), and (2) and (3), respectively. No combination of (1) and (2) is needed.

 Category (4) would be used when a prospectus includes both information previously omitted pursuant to Rule 430A and other substantive changes that customarily are permitted to be made in a Rule 424 filing. As noted in n.80 supra, the proposed revisions to Rule 424 are not intended to alter traditional considerations determining when information must be included in a post-effective amendment. Accordingly, if a registrant relying on Rule 430A determines after effectiveness that the prospectus will contain information required to be set forth in a post-effective amendment, filing a Rule 424(b) prospectus under category (4) would not substitute for a post-effective amendment. See n.55 supra.

⁸⁷ 17 CFR 230.414(e). For example, a prospectus filed pursuant to paragraph (b)(1) of Rule 424 should be designated "424(b)(1)."

⁸⁸See Rule 456 17 CFR 230.456.

⁸⁹ The means that may be used is dependent upon the date of transmission; a means utilized on the first business day following the date of pricing or first use may not suffice if used on the second business day. Unlike prior-Rule 424(c), in the usual case first class mail would not result in compliance.

⁹⁰ In the proposing Release, the Commission requested comment as to whether prospectuses that do no more a change in the "price and certain other narrowly specified terms" of the security should be provided a longer filing period than the proposed two business day period. Extension of the Rule 424(b)(3) filing period to five business days sufficiently responds to these concerns.

⁹¹ Rule 424(c), however, requires registrants filing the Rule 430A information pursuant to Rule 424(b)(1) or (4) to file either a complete prospectus containing the information or a supplement that is attached to the prospectus. Any subsequently filed prospectus supplement need not be attached to the prospectus.

⁹² The Commission staff previously has permitted registrants to send prospectus supplements not attached to the prospectus (often called an "appendix" in the employee benefit plan context) to participants in an employee benefit plan or dividend or interest reinvestment plan, provided that the supplement is understandable without reference to the prospectus and that the participants have previously received a complete copy of the prospectus to which the supplement relates and are advised that they may receive another copy on request. See Securities Act Release No. 6281 (January 15, 1981) 46 FR 8446 and, e.g., letter re Illinois Power Company available October 11, 1982. This will continue to be permitted.

⁹³ The cross reference would not necessarily refer to all previous supplements filed in connection with the prospectus, but only to those supplements that constitute part of the statutory prospectus with respect to the securities currently being offered.

⁹⁴ 17 CFR 230.424(a).