Securities Act Release No. 6823

Exchange Act Release No. 26589

Investment Company Act Release No. 16845

March 2, 1989

RELEASE NO. 35 Amendments to Reporting Requirements for Issuer's Change of Fiscal Year; Financial Reporting Changes; Period to be Covered by First Quarterly Report After Effective Date of Initial Registration Statement

ACTION: Final Rules.

SUMMARY: The Securities and Exchange Commission ("Commission") today announced the adoption of amendments to Regulations 13A and 15D under the Securities Exchange Act of 1934 that revise the reporting and filing requirements when a domestic or foreign private issuer changes its fiscal year end or a successor issuer has a different fiscal year than its predecessor. The Commission also is adopting amendments to Form 8-K to require reporting of a change in fiscal year. New Rule 30b1-3 under the Investment Company Act of 1940 is being adopted to govern the reporting requirements for investment companies that change their fiscal year end. In addition, a new accounting Rule 3-06 and other amendments to the accounting and proxy rules relating to financial reporting are being adopted. Finally, the Commission is adopting amendments to the quarterly reporting rules that modify the period to be covered in a new registrant's first quarterly report.

EFFECTIVE DATE: April 12, 1989. The amendments to Exchange Act Rules 12b-25, 13a-10, and 15d-10, Forms 8-K, 10-K, 10-Q, 20-F, 12b-25, and N-SAR, and new Investment Company Act Rule 30b1-3 are effective for an issuer's decision to change a fiscal year end made on or after April 12, 1989. All other amendments are effective for filings made on or after April 12, 1989.

FOR FURTHER INFORMATION CONTACT: Howard P. Hodges or Joseph S. Aleknavage, (202) 272-2553, Office of the Chief Accountant of the Division of Corporation Finance, or Barbara J. Green, (202) 272-2589, Office of Disclosure Policy, Division of Corporation Finance, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. After the effective date, contact Joseph S. Aleknavage, (202) 272-2553, Office of the Chief Accountant of the Division of Corporation Finance, or Emanuel D. Strauss or Mark W. Green, (202) 272-2573, Office of Chief Counsel, Division of Corporation Finance. With respect to investment companies, contact Lawrence A. Friend, (202) 272-2106, Office of Disclosure, Division of Investment Management.

SUPPLEMENTARY INFORMATION: The Commission today announced the adoption of amendments to Rules 12b-25,¹  13a-10,²  13a-13,³  14a-3,⁴  15d-10,⁵  and 15d-13⁶  under the Securities Exchange Act of 1934 ("Exchange Act"),⁷  as well as revisions to Forms 8-K⁸  10-K,⁹  10-Q,¹⁰  20-F,¹¹  and 12b-25.¹²  The Commission also is adopting a new accounting Rule 3-06 and amendments to Rule 3-12¹³  of Regulation S-X.¹⁴  With respect to investment companies, new Rule 30b1-3 and amendments to Rules 8b-16¹⁵  and 30b1-2¹⁶  and Form N-SAR¹⁷  under the Investment Company Act of 1940 ("Investment Company Act")¹⁸  are being adopted.

Table of Contents

I. Executive Summary

A. The Proposals

On June 2, 1988 the Commission issued a release proposing amendments to Exchange Act Rules 13a-10 and 15d-10, which set forth reporting requirements applicable when an issuer changes its fiscal year end.¹⁹  The proposals were designed to update the rules, integrate them with other current periodic reporting requirements, codify staff rule interpretations, and clarify issuers' quarterly reporting obligations in change of fiscal year circumstances. The Commission also proposed a new item to Form 8-K to require reporting of a change in fiscal year and a new Investment Company Act rule to govern the reporting requirements for investment companies that change their fiscal year end. In addition, to codify staff practices, amendments were proposed to the proxy and accounting rules regarding financial reporting. Proposals also were made to amend the quarterly reporting rules to eliminate a reporting gap by modifying the period for which a new registrant's first quarterly report must be filed.

A majority of the commentators on the Proposing Release were accounting firms and an accounting association.²⁰  All but one of the commentators expressed general support for the proposals, in whole or in part.²¹  While commentators generally approved of the revision of issuers' reporting obligations in change of fiscal year circumstances, or codification of staff practices, most also had suggestions on specific aspects of the proposals.

The Commission is adopting the amendments substantially as proposed. The changes from the proposals are mainly in response to commentators' suggestions. All substantive changes from the proposals are noted and explained in the detailed discussion of the amendments in Part II below.

B. The Amendments

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II. Discussion

A. Reporting Fiscal Year Changes

1. Transition Reporting on Forms 10-Q and 10-K

The Commission is adopting amendments to Rules 13a-10 and 15d-10²⁵  requiring an issuer to file separate transition reports for all transition periods, except those of one month or less. Under the prior rules, a separate transition report was not required for a transition period shorter than three months. In the Proposing Release, the Commission solicited comment on a proposed requirement of separate transition reports for all transition periods, including transition periods shorter than three months. Three commentators criticized the proposed requirement as not useful, necessary or justified by the costs, and recommended that information on such shorter transition periods be included in the issuer's next report on Form 10-Q.

The Commission has decided not to require a separate transition report for transition periods of one month or less. Where the transition period is one month or less, the Commission believes that the costs associated with filing a separate report for such a short time span outweigh the limited benefit of such reports to investors.²⁶  The amendments instead permit information about a transition period of one month or less to be included in the issuer's report on Form 10-Q for the first quarter of the newly adopted fiscal year that ends after the date on which the determination was made to change the fiscal year.²⁷  If the issuer's next report is the first annual report for the newly adopted fiscal year, the transition period may be covered in that annual report.

Separate transition reports are required for all transition periods longer than one month. As the transition period becomes longer, the investor's interest in the prompt disclosure of financial information about the transition period increases. The Commission believes that requiring transition reports for all transition periods longer than one month strikes the appropriate balance between the investment community's need for disclosure and the desire of issuers to minimize the costs of compliance.

Under the amendments, as under the prior rules, use of Form 10-K will continue to be required for transition reports for transition periods of six or more months.²⁸  For transition periods shorter than six months, amended Rules 13a-10 and 15d-10 give issuers the option to file transition reports on either Form 10-Q, including unaudited financial statements, or Form 10-K, including audited financial statements.²⁹  All information requested in the textual items of the reporting forms, as well as the required financial information, must be provided. Technical changes are being adopted, as proposed, to make the descriptions and cover sheets of and General Instructions to Forms 10-K and 10-Q consistent with the amendments.

In the Proposing Release, comment was invited on the six month cutoff. The three commentators addressing the six month cutoff favored it.³⁰  While the proposals would have required use of Form 10-Q for transition periods shorter than six months, two commentators favored affording issuers an option to file on either Form 10-Q or Form 10-K for such shorter transition periods so that issuers could furnish audited financial statements in the first instance. The Commission has adopted this suggested option, enabling issuers that opt to use Form 10-K to avoid the possibility of later revisions of previously published unaudited financial statements for the transition period.

Because the amendments afford issuers the option to use Form 10-K or 10-Q, the Commission has added a requirement, not contained in the proposals, that an issuer state in its Form 8-K reporting the change in fiscal year the Form (Form 10-Q or 10-K) on which the report covering the transition period will be filed.³¹  This requirement will enable investors and the Commission staff to determine when information on the transition period will be available.

2. Filing Requirements for Transition Reports

To parallel the current filing requirements for Form 10-K, the amendments change the time for filing a transition report on Form 10-K from 120 to 90 days after the close of the transition period or the date of the determination to change the fiscal year, whichever is later.³²  The 90 day filing period applies to all transition reports filed on Form 10-K, regardless of the length of the transition period, and should give issuers sufficient time to have audited financial statements prepared covering transition periods of any length. To parallel the current filing requirements for Form 10-Q, an issuer that chooses to file a separate transition report on Form 10-Q must file that report within 45 days after the later of the close of the transition period or the date of the determination to change the fiscal year.³³

3. Requirements for Changing a Fiscal Year After the Year End

Amended Rules 13a-10(a) end 15d-10(a) codify current staff rule interpretations by requiring an issuer to file an annual report for any fiscal year that ended before the date on which the issuer determined to change its fiscal year end. An issuer is required to report this date in the Form 8-K reporting its change in fiscal year.³⁴  In most cases, the date would be evidenced by minutes of the issuer's board of directors or an authorized committee thereof.³⁵  The amendments also codify the staff interpretive position that a transition report can be used only for periods of less than 12 months. Transition reports are not permitted for periods longer than 12 months because of the difficulties of constructing data for comparable periods that would be useful in understanding trends in a business.

4. Financial Reporting Requirements for Transition Periods

Under the amendments, financial statements in transition reports on Form 10-K must be audited. In contrast, unaudited financial statements are permitted in transition reports on Form 10-Q.

Under the amendments, a transition report on Form 10-K must include either financial statements, which may be unaudited, for the comparable period of the prior year, or a footnote, which may be unaudited, giving specified information for the comparable period of the prior year.³⁶  The prior year footnote information must state, at a minimum, revenues, gross profits, income taxes, income or loss from continuing operations before extraordinary items and cumulative effect of a change in accounting principles, and net income or loss. The effects of any discontinued operations and/or extraordinary items as classified under the provisions of generally accepted accounting principles also must be shown, if applicable. Per share data based upon such income or loss end net income or loss is required to be presented in conformity with applicable accounting standards.³⁷

One commentator recommended that the amendments address whether the financial statements or footnote information for the comparable period of the prior year must be included in subsequent filings. The amendments as adopted have been changed to specify that, where called for by the time span covered, subsequent filings must include such statements or information.

Consistent with existing requirements for Form 10-Q, a transition report on Form 10-Q also is required to include financial information about the comparable period of the prior year.³⁸  As suggested by one commentator, the amendments as adopted state that schedules need not be filed in transition reports on Form 10-Q.³⁹  When an issuer files a transition report on Form 10-Q, separate audited statements of income and cash flows covering the transition period are required to be filed as part of the first annual report for the newly adopted fiscal year.⁴⁰  The annual report also must contain a separate audited balance sheet for a transition period of less than six months, if an audited balance sheet as of the end of the prior fiscal year is not filed. Further, the amendments specify that notes to the financial statements for the transition period included in the annual report may be integrated with the notes for the full fiscal period.

As discussed above, pursuant to amended Rule 13a-10(d) or 15d-10(d), in specified circumstances, an issuer may include information about a transition period of one month or less in its first quarterly report on Form 10-Q for the newly adopted fiscal year after the date of determination to change its year end, rather than in a separate transition report. If this is done, the financial statements required by Part I, which may be unaudited, must be furnished separately for the transition period as part of the Form 10-Q.⁴¹  In addition, the issuer must file with the first annual report of the newly adopted fiscal year separate audited statements of income and cash flows covering the transition period. If the issuer's next report is a Form 10-K rather than a Form 10-Q, all of the required information for the transition period must be included in the Form 10-K.

Commentators asked for clarification of the application of the requirements of Item 303, "Management's Discussion and Analysis of Financial Condition end Results of Operations,"⁴²  of Regulation S-K⁴³  to transition periods. Consistent with new Rule 3-06 of Regulation S-X, as discussed below,⁴⁴  for a transition period of nine or more months, the information for full fiscal years set forth in Item 303(a)⁴⁵  will be required. For transition periods shorter than nine months, the information for interim periods set forth in Item 303(b)⁴⁶  will be required.

Similarly when responding to Item 301 of Regulation S-K, "Selected Financial Data,"⁴⁷  a transition period of nine or more months will be deemed to meet the requirement for one year of selected financial data if the data for all other periods covers the full time span required to be reported. Transition periods of less than nine months may be shown in the table of selected financial data for the last five fiscal years of the issuer (or for the life of the issuer if less) or may be shown in a footnote. The table of selected financial data should report on all periods within the time span for which information is required to be furnished, including any transition periods.

5. Quarterly Reporting When an Issuer Changes Its Fiscal Year

The amendments to Rules 13a-10 and 15d-10 are intended to clarify the requirements for filing quarterly reports in change of fiscal year circumstances.⁴⁸  The amendments codify the current staff practice of requiring issuers to file quarterly reports during the transition period. Under the amendments, companies continue to have the option of filing such quarterly reports based on the quarters of either the old or newly adopted fiscal year.⁴⁹  Under either option, an issuer still is required to file a quarterly report for any quarter of the old fiscal year that ended before the date on which the issuer determined to change its fiscal year end, except where the last day of the quarter also is the last day of the transition period.⁵⁰

The amendments also specify the time by which an issuer must begin filing quarterly reports on the basis of the newly adopted fiscal year. An issuer is required to begin filing quarterly reports on the new basis with the quarterly report for the first quarter of the new fiscal year ending after the issuer determined to change its fiscal year end.⁵¹  With respect to quarterly periods ending before the issuer's determination to change its year end, no reporting on the new basis is required.

The switch in quarterly reporting from the old to the new fiscal year may result in a period of less than three months that is not covered by a separate report on Form 10-Q. The Proposing Release stated that such a period would be covered on a cumulative basis in the next report on either Form 10-Q, Form 10-K or in a transition report, depending on when the switch occurred. One commentator noted that, under the proposals, the disclosure of some non-financial information about such a period might not be required in the next Form 10-Q and thus might be delayed, and further that it might be difficult for investors to derive financial information about such a period from cumulative financial information disclosed in the next Form 10-Q or other later reports.

The amendments as adopted have been modified to specify that, unless such a period of less than three months is or will be covered in the issuer's transition report or in the first annual report on Form 10-K for the newly adopted fiscal year, information (e.g. legal proceedings, changes in securities) about such period must be included in the issuer's initial report on Form 10-Q for the newly adopted fiscal year.⁵²  Separate financial statements covering such period, which may be unaudited, must be furnished therewith.⁵³  These modifications do not require any additional reports, only that the financial information also be set out separately, and not just cumulatively.

The amendments also specify when recasting of prior year quarterly financial information is not required for an issuer that changes to a new fiscal year end that does not coincide with the end of a quarter of the previous fiscal year. A new Note to paragraphs (c) and (e) of Rules 13a-10 and 15d-10 permits an issuer to file quarterly reports for the quarters of the new fiscal year without recasting data for the prior fiscal year, where recasting either is not practicable or cannot be cost-justified, if the issuer furnishes (1) financial statements for the quarters of the preceding fiscal year most nearly comparable to the quarters in the newly adopted fiscal year; (2) an adequate discussion of seasonal and other factors that could affect the comparability of information or trends reflected; (3) an assessment of the comparability of the data; and (4) a representation as to the reason the recasting has not been undertaken. The Note also applies to prior year information in transition reports on Form 10-Q.⁵⁴

6. Transition Reporting for Successor Issuers

Amended Rules 13a-10(f) and 15d-10(f) specify transition reporting requirements for successor issuers with a different fiscal year end from that of the predecessor. No transition report is required where the successor issuer and the predecessor have the same fiscal year end. Under such circumstances, the successor issuer continues to report on the same reporting schedule as that of the predecessor.⁵⁵

While former Rule 13a-10 specified reporting requirements only for successor issuers with securities registered on Form 8-B,⁵⁶  the amendments cover all successor issuers.⁵⁷  Although former Rule 15d-10 had no provision covering transition reporting for successor issuers, the amendments add such a provision to cover companies with reporting obligations pursuant to Section 15(d).⁵⁸

Under the amendments, the transition reporting requirements for successor issuers correspond generally to the transition reporting rules applicable when other issuers change their fiscal year. The principal difference is the period to be covered in the transition report. The period to be reported on by a successor issuer ends on the date of the succession, rather than on the day prior to the beginning of the newly adopted year, in order to reflect the predecessor's operations separately from those of the successor.⁵⁹

For a transition period of six or more months, the amendments require a successor issuer to file a transition report on Form 10-K, including audited financial statements, within 90 days after the date of the succession.⁶⁰  For a transition period shorter than six months, the successor issuer has the option to file the transition report on either Form 10-K, including audited financial statements, within 90 days after the date of the succession, or Form 10-Q, including unaudited financial statements, within 45 days after the date of the succession.⁶¹  If the transition report is filed on Form 10-Q, the next annual report of the successor issuer must include audited statements of income and cash flows for the transition period. For a transition period of one month or less, no separate transition report is required, provided that information on the transition period is included in the successor issuer's report on Form 10-Q for the first quarter that ends after the date of the succession, or if the successor issuer's next report is an annual report, in that annual report.

These amendments, which give an issuer the option to use either Form 10-K or Form 10-Q for transition periods shorter than six months, differ from the proposals, which would have required a successor issuer to file a transition report on Form 10-Q for such shorter transition periods. Like the option afforded other issuers that change their fiscal year, the option is available to successor issuers so that they may furnish audited financial statements covering the transition period in the first instance, and avoid the possibility of revision in a later audit of previously released unaudited financial information about the transition period.⁶²

7. Transition Reporting for Foreign Private Issuers

The Commission is adopting separate transition reporting provisions for foreign private issuers. The separate provisions provide specific guidelines for foreign private issuers in change of fiscal year circumstances and are consistent with other separate reporting requirements and separate reporting forms for such issuers. In addition, given the varied reporting requirements and practices in foreign jurisdictions, in appropriate cases, the Commission staff will consider requests to modify the transition reporting requirements for foreign private issuers to take account of varying domicile country reporting requirements and practices.

Under amended Rules 13a-10(g) and 15d-10(g), a foreign private issuer is required to file a Form 20-F to report on all transition periods, except those of one month or less. Where the transition period is longer than six months, such issuer is required to file a transition report on Form 20-F that contains responses to all items required when the form is used as an annual report and includes audited financial statements.⁶³  For transition periods of six or fewer months, the amendments give a foreign private issuer an option similar to that given domestic issuers. The foreign private issuer may file its transition report on Form 20-F, either with responses to all items required when Form 20-F is used as an annual reporting form and including audited financial statements, or, in the alternative, with responses to a limited number of specified items and including unaudited financial statements.⁶⁴  The Commission has determined not to require a foreign private issuer to file a separate transition report for a transition period of one month or less if the first annual report for the newly adopted fiscal year covers the transition period as well as the fiscal year. As with domestic issuers, the costs associated with filing separate transition reports for such limited periods of one month or less are not justified by the minimal benefit to investors.

In the Proposing Release, the Commission proposed the same cutoff for foreign private issuers as domestic issuers. The Commission, however, has determined to adopt for foreign private issuers a different cutoff from that used for domestic issuers. While domestic issuers have the option to file transition reports on Form 10-Q with unaudited financial statements only for transition periods shorter than six months, foreign private issuers have the option of filing an abbreviated Form 20-F with unaudited financial statements for transition periods of six or fewer months. The different cutoff for foreign private issuers is adopted to be consistent with the reporting practices of some foreign private issuers, which develop interim financial statements that cover semi-annual periods pursuant to the laws or practices of their domicile country or rules of exchanges upon which their securities are traded.⁶⁵

Under the amendments, a transition report on Form 20-F with responses to only the selected items and unaudited financial statements is required to be filed within three months after the close of the transition period or the date of the determination to change the fiscal year, whichever is later. A transition report on Form 20-F with responses to all items required when the form is used as an annual report and including audited financial statements must be filed within six months after the later of these two events. This six month filing period parallels the filing period for annual reports on Form 20-F.

In the Proposing Release, the Commission solicited comment on whether foreign private issuers should be excused from providing unaudited financial statements in transition reports if they are not required to develop such statements under the laws or practices of their domicile country, or any exchange upon which their securities trade. While two commentators agreed with the exception, the Commission is not adopting the exception as part of Rules 13a-10(g) and 15d-10(g). Because the financial reporting practices of foreign private issuers vary, the Commission has determined that requests for such an exception will be considered by the staff in appropriate circumstances, particularly where an issuer can demonstrate that developing such financial data would not be practicable or cost-justified.⁶⁶

8. Reporting Fiscal Year Changes on Form 8-K

The Commission also is adopting amendments to require an issuer to report on a Form 8-K its decision to adopt a new fiscal year in response to a new Item 8. Formal notice of a change in reporting periods should eliminate confusion and misapprehension as to the reasons for issuers' financial reports not being filed and provide an orderly and reliable mechanism for getting news of the change to investors.

Under the amendments, the issuer must report both the date of its determination to change its fiscal year end and the date of its new fiscal year end.⁶⁷  In addition, to accommodate the option to file either a Form 10-K or Form 10-Q covering a transition period shorter than six months,⁶⁸  the amendments as adopted are modified to require the issuer to state in its Form 8-K the particular Form on which the report covering the transition period will be filed. This information should be available at the time of filing the Form 8-K because of the planning required for an audit.⁶⁹  The report on Form 8-K must be filed within 15 days after the date of the issuer's determination to change its fiscal year end.

9. Filing Fees and Extensions of Time

Amendments to Rules 13a-10 and 15d-10 make it explicit that no filing fee is required for a transition report.⁷⁰  Amendments to Rule 12b-25, Form 12b-25, and the description of the Form also are being adopted that add transition reports to those reports for which an extension of time for filing is available.⁷¹  Consistent with the extension periods for Forms 10-K and 10-Q, the extension for a transition report on Form 10-K or 20-F is 15 calendar days after the due date and the extension for a transition report on Form 10-Q is five calendar days after the due date.

10. Transition Reporting for Investment Companies

Instead of filing annual and quarterly reports on Forms 10-K and 10-Q, registered management investment companies file semi-annual reports on Form N-SAR, while unit investment trusts file only annual reports on Form N-SAR.⁷²  Therefore, the Commission is (1) exempting registered investment companies from Rules 13a-10 and 15d-10,⁷³  and (2) adopting a new Rule under the Investment Company Act specifying their transition reporting obligations.⁷⁴  The new Rule requires investment companies that change their fiscal year end to file a report on Form N-SAR within 60 days after either the close of the resulting transition period or the date of the determination to change the fiscal year end, whichever is later.⁷⁵

Under the amendments, the transition report filed by a management investment company must cover a period no longer than six months, which is the period ordinarily covered by a report on Form N-SAR.⁷⁶  The new Rule does not specify the period the transition report must cover and, in certain circumstances, an investment company has a choice between two periods.⁷⁷  Like the amendments to Rules 13a-10 and 15d-10, new Rule 30b1-3 specifies that no filing fee is required for a transition report.⁷⁸

B. Other Financial Reporting Changes

1. Amendments to the Accounting and Proxy Rules to Permit Reliance on Nine Month Statements

The Commission is adopting new Rule 3-06 of Regulation S-X, which provides that, where the issuer has changed its fiscal year, the filing of financial statements covering a period of nine to 12 months will be deemed to satisfy a requirement for one year of financial statements.⁷⁹  The new Rule also provides that, where there is a requirement for filing financial statements for a multiple year period that does not exceed three consecutive years,⁸⁰  the filing of financial statements that include one period of nine to 12 months will be deemed to satisfy a filing requirement of one year, if for all other years in the time period financial statements covering the full years are provided.⁸¹  The new Rule applies to financial statements in proxy and information statements, registration statements and Exchange Act reports. A parallel provision is added to the proxy rules in the form of a new Note 2 to Rule 14a-3(b)(1).⁸²  The note, which tracks the language of new Rule 3-06,⁸³  provides that separate audited financial statements covering two years and one period of nine to twelve months fulfill the requirement for statements of income and cash flows for the three most recent fiscal years.⁸⁴  Registered investment companies, however, are not covered by the proposed new Rule and Note because they are subject to different reporting requirements.⁸⁵

2. Amendment to Rule 3-12

To assure more timely financial statements of first-time issuers, the Commission is adopting an amendment to Rule 3-12 of Regulation S-X.⁸⁶  The amendment, which codifies staff practice, specifies that the registrant's most recent audited financial statements in a registration statement filed under the Securities Act or on Form 10 under the Exchange Act that relates to the securities of a non-reporting issuer may not be more than one year and 45 days old at the date of effectiveness of the registration statement.⁸⁷  Prior to the amendments, by changing its fiscal year end, an issuer that was not a reporting company before filing a registration statement could have attempted to file and have declared effective a registration statement with financial statements up to 18 and one-half months old.⁸⁸

The amendment applies only to companies not yet in the Exchange Act reporting system because their financial and business history is not available to investors and the marketplace. As noted in the Proposing Release, the one year and 45 day cutoff for the age of non-reporting company financial statements is consistent with those requirements of Rule 3-01 of Regulation S-X that limit the age of the financial statements in a registration statement of a company that previously has not been reporting pursuant to the requirements of the Exchange Act.⁸⁹

C. Quarterly Reporting: First Report to be Filed on Form 10-Q

Finally, the Commission is adopting amendments to Rules 13a-13 and 15d-13 to eliminate any gap in the reporting period between the financial information included in a registration statement and the first report on Form 10-Q.⁹⁰  Under the amendments, the requirement to file quarterly reports commences with the first fiscal quarter following the most recent fiscal year or full quarter for which financial statements were included in the registration statement.⁹¹  A first-time registrant is required to file its first Form 10-Q the later of 45 days after the effectiveness of the registration statement, or the date on which such report would have been required to be filed if the issuer had been a reporting company as of its last fiscal quarter. Prior to the amendments, an issuer's first report on Form 10-Q was required to be filed commencing with the first quarter ending after the effective date of its first registration statement.⁹²  As is currently the case, first-time registrants generally will continue to be required to commence filing quarterly reports at the time specified, regardless of whether they have operations during this period.⁹³

III. Cost-Benefit Analysis

In the Proposing Release, the Commission requested commentators to provide views and data as to the costs and benefits associated with the proposed amendments to Exchange Act Rules 12b-25, 13a-10, 14a-3, and 15d-10, Forms 8-K, 10-K, 10-Q, 20-F, and 12b-25, proposed new Investment Company Act Rule 30b1-3, the proposed amendments to Investment Company Act Rules 8b-16 and 30b1-2 and Form N-SAR, proposed new Rule 3-06 and the proposed amendment to Rule 3-12 of Regulation S-X.

Four commentators expressed views specifically on the costs and benefits associated with the reporting requirements for transition periods shorter then three months. One commentator believed that the requirement of separate transition reports for such shorter transition periods would not be cost beneficial as data concerning such periods would not be accompanied by similar disclosure for comparable historical periods. Another commentator that found the requirement unnecessary stated that the additional costs of such reports would not be substantial, but that the benefits would decrease as the transition period becomes shorter. As noted above in Part II.A.1., the amendments as adopted do not require a separate transition report for transition periods of one month or less.

Two other commentators expressed concerns that the costs of presenting audited financial statements covering shorter transition periods of less than three months in the first annual report of the newly adopted fiscal year would outweigh the benefits because of the short period covered and because such audited financial statements would be over one year old when presented. The amendments have not modified substantially the former rules in this regard.

The Commission also requested views and data as to the costs and benefits associated with amending Rules 13a-13 and 15d-13 to require a new registrant to file its first report on Form 10-Q for the first quarterly period other than the fourth quarter ending after the annual or quarterly period covered by the most recent financial statements included in its effective registration statement. The Commission noted that this revision should benefit investors by providing more timely and complete financial information about a first-time registrant for the period following the latest financial information in an effective registration statement. No comments were received on the costs and benefits associated with these amendments.

IV. Final Regulatory Flexibility Analysis

A Final Regulatory Flexibility Analysis in accordance with 5 U.S.C. 604 has been prepared concerning the proposed amendments to Exchange Act Rules 12b-25, 13a-10, 13a-13, 14a-3, 15d-10, and 15d-13, Forms 8-K, 10-K, 10-Q, 20-F, and 12b-25, proposed new Investment Company Act Rule 30b1-3 and the proposed amendments to Investment Company Act Rules 8b-16 and 30b1-2 and Form N-SAR, proposed new Rule 3-06 and the proposed amendment to Rule 3-12 of Regulation S-X. Members of the public who wish to obtain a copy of the Final Regulatory Flexibility Analysis should contact Barbara J. Green, (202) 272-2589, Office of Disclosure Policy, Division of Corporation Finance, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. A summary of the corresponding Initial Regulatory Flexibility Analysis appears at 53 FR 21670 (Release No. 33-6778).

V. Appendix

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VI. Codification Update

The "Codification of Financial Reporting Policies" announced in Financial Reporting Release No. 1 (April 15, 1982) [47 FR 21028] is updated to:

1. Add a new Section 102.05, "Issuer's Change of Fiscal Year."

2. Include in Section 102.05 the text in Part I.B. of this Release, "The Amendments," and the examples set forth in Part V. "Appendix," which are cross-referenced to that text.

The Codification is a separate publication of the Commission. It will not be published in the Federal Register/Code of Federal Regulations Systems.

VII. Statutory Basis

The amendments are being adopted by the Commission pursuant to Sections 7 and 19(a) of the Securities Act of 1933, Sections 13, 14, 15(d), and 23(a) of the Securities Exchange Act of 1934, and Sections 8, 30, and 38 of the Investment Company Act of 1940.

List of Subjects in CFR Parts 210, 240, 249, 270 and 274

Reporting and recordkeeping requirements, securities. VIII Text of Amendments

VIII Text of Amendments

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

PART 210 - FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL STATEMENTS, SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934, PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, INVESTMENT COMPANY ACT OF 1940, AND ENERGY POLICY AND CONSERVATION ACT OF 1975

1. The authority citation for Part 210 continues to read, in part, as follows:

AUTHORITY: Secs. 6, 7, 8, 10, 19 and Schedule A of the Securities Act of 1933 (15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77aa(25)(26)) * * *

2. By adding new § 210.3-06 to read as follows: * * * [Text omitted.]

3. By amending § 210.3-12 by redesignating current paragraphs (d) and (e) as paragraphs (e) and (f), respectively, and adding new paragraph (d) to read as follows: * * * [Text omitted.]

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. By amending § 240.12b-25 by revising paragraphs (a) and (b)(2)(ii) to read as follows: * * * [Text omitted.]

3. By revising § 240.13a-10 to read as follows: * * * [Text omitted.]

4. By amending § 240.13a-13 by revising paragraph (a) to read as follows: * * * [Text omitted.]

5. By amending § 240.14a-3 by redesignating the Note to paragraph (b)(1) as Note 1 and adding Note 2 to paragraph (b)(1) to read as follows: * * * [Text omitted.]

6. By revising § 240.15d-10 to read as follows: * * * [Text omitted.]

7. By amending § 240.15d-13 by revising paragraph (a) to read as follows: * * * [Text omitted.]

PART 249 - FORMS, SECURITIES EXCHANGE ACT OF 1934

1. The authority citation for Part 249 continues to read, in part, as follows:

AUTHORITY: The Securities Exchange Act of 1934, 15 U.S.C. 78a, et seq. * * *

2. By amending § 249.220f by revising the section heading and paragraphs (a) and (b), and adding a new paragraph (d) as set forth below.

Form 20-F is amended by revising the cover sheet above the line beginning with the words "Commission file number" and revising paragraphs (a) and (b) of, and adding a new paragraph (d) to General Instruction A as set forth below. * * * [Text omitted.]

3. By amending Form 8-K (§249.308) by adding a sentence to the end of General Instruction B.1. and adding new Item 8 as set forth below. * * * [Text omitted.]

4. By amending §249.308a by revising the section heading, the second sentence, and adding two new sentences after the Second Sentence as set forth below.

Form 10-Q is amended by revising General Instructions A.1. and A.2. and revising the cover sheet above the line beginning with the words "Commission file number" as set forth below. * * * [Text omitted.]

5. By amending § 249.310 by revising the section heading and the text of the section, except for the first and last sentences as set forth below.

Form 10-K is amended by revising General Instruction A, except for the first and last sentences, and the cover sheet above the line designated for the "Exact name of the registrant as specified in its charter" as set forth below. * * * [Text omitted.]
6. By amending §249.322 by revising the first sentence as set forth below.

Form 12b-25 is amended by revising the cover sheet above the line reading "Read Instructions (on back page) Before Preparing Form. Please Print or Type," paragraph (b) of Part II, and the first sentence of Part III as set forth below. ** * * [Text omitted.]

PART 270 - RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940

1. The authority citation for Part 270 continues to read, in part, as follows:

AUTHORITY: Secs. 38, 40, 54 Stat. 841, 842; 15 U.S.C. 80a-37, 80c-89; the Investment Company Act of 1940, as amended, 15 U.S.C. 80a-1, et seq. * * *

2. By revising §270.8b-16 to read as follows: * * * [Text omitted.]

3. By revising §270.30b1-2 to read as follows: * * * [Text omitted.]

4. By adding §270.30b1-3 to read as follows: * * * [Text omitted.]

PART 274 - FORMS PRESCRIBED UNDER THE INVESTMENT COMPANY ACT OF 1940

1. The authority citation for Part 274 continues to read as follows:

AUTHORITY: The Investment Company Act of 1940, 15 U.S.C. 80a-1 et seq. * * *

2. By amending § 274.101 by revising the text of the section as set forth below.

Form N-SAR is amended by revising page 1 above the line indicating whether the filing is in an amendment, and General Instructions A C (except the last two paragraphs which will remain the same), and F(2). [The text of Form N-SAR does not appear in the Code of Federal Regulations.] * * * [Text omitted.]

By the Commission.

¹ 17 CFR 240.12b-25 LK:NON: SEC-ALNK 17CFR240.12B-25 .

² 17 CFR 240.13a-10 LK:NON: SEC-ALNK 17CFR240.13A-10 .

³ 17 CFR 240.13a-13 LK:NON: SEC-ALNK 17CFR240.13A-13 .

⁴ 17 CFR 240.14a-3 LK:NON: SEC-ALNK 17CFR240.14A-3 .

⁵ 17 CFR 240.15d-10 LK:NON: SEC-ALNK 17CFR240.15D-10 .

⁶ 17 CFR 240.15d-13 LK:NON: SEC-ALNK 17CFR240.15D-13 .

⁷ 15 U.S.C. 78a et seq.

⁸ 17 CFR 249.308 LK:NON: SEC-ALNK 17CFR249.308 .

⁹ 17 CFR 249.310 LK:NON: SEC-ALNK 17CFR249.310 .

¹⁰ 17 CFR 249.308a LK:NON: SEC-ALNK 17CFR249.308A .

¹¹ 17 CFR 249.220f LK:NON: SEC-ALNK 17CFR249.220F .

¹² 17 CFR 249.322 LK:NON: SEC-ALNK 17CFR249.322 .

¹³ 17 CFR 210.3-12 LK:NON: SEC-ALNK 17CFR210.3-12 .

¹⁴ 17 CFR 210.1-01 LK:NON: SEC-ALNK 17CFR210.1-01 -.12-29.

¹⁵ 17 CFR 270.8b-16 LK:NON: SEC-ALNK 17CFR270.8B-16 .

¹⁶ 17 CFR 270.30b1-2 LK:NON: SEC-ALNK 17CFR270.30B1-2 .

¹⁷ 17 CFR 274.101 LK:NON: SEC-ALNK 17CFR274.101 . 17 CFR 229.303(a).

¹⁸ 15 U.S.C. 80a-1 et seq.

¹⁹ Release No. 33-6778 (June 2, 1988) [53 FR 21670] ("Proposing Release"). Attention is directed to the Proposing Release for a detailed discussion of the proposals and their objectives.

²⁰ The nine comment letters received are available for public inspection and copying at the Commission's Public Reference Room (File No. S7-8-88). The commentators included five accounting firms, one accounting association, one bar association, one law firm, and one public utility holding company.

²¹ The other commentator made recommendations on specific parts of the proposals but expressed neither general support nor opposition to the proposals.

²⁵ Rule 13a-10 applies to issuers with securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. 78l ]. Rule 15d-10 applies to issuers with securities registered under the Securities Act and filing Exchange Act reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. 78o(d)].

²⁶ A change from a fiscal year ending as of the last day of the month to a 52-53 week fiscal year commencing within seven days of the month end (or from a 52-53 week to a month end) is not deemed a change in fiscal year for purposes of reporting subject to Rule 13a-10 or 15d-10 if the new fiscal year commences with the end of the old fiscal year. In such cases, a transition report would not be required. Either the old or new fiscal year could, therefore, be as short as 359 days, or as long as 371 days (372 in a leap year).

²⁷ See Part II.A.4., infra, amended Rules 13a-10(d) and 15d-10(d), and Appendix Examples 1.a. & 1.e.

²⁸ See amended Rules 13a-10(b) and 15d-10(b) and Appendix Examples 1.d., 1.g., & 1.h.

²⁹ See amended Rules 13a-10(c) and 15d-10(c) and Appendix Examples 1.b., 1.c., & 1.f.

³⁰ With a six month cutoff, the amendments allow 17 months between filing audited financial statements in the case where an issuer changes its fiscal year end with a resulting transition period of five months. For example, an issuer with a December 31 year end that changes its fiscal year in 1990 to May 31, 1990 will be permitted to file a Form 10-Q, including unaudited financial statements, covering the transition period from January 1, 1990 through May 31, 1990. The issuer will not be required to file audited financial statements until August 29, 1991, the due date for its next annual report covering the newly adopted fiscal year from June 1, 1990 through May 31, 1991. Compliance with the requirements for financial statements under the transition reporting rules will be deemed to satisfy the updating obligations under Section 10(a)(3) of the Securities Act [15 U.S.C. 77j(a)(3).]

³¹ For a discussion of new Item 8 of Form 8-K, see II.A.8., infra.

³² See amended Rules 13a-10(b) and 15d-10(b).

³³ See amended Rules 13a-10(c) and 15d-10(c).

³⁴ See discussion of new Item 8 of Form 8-K at II.A.8., infra.

³⁵ Other evidence of the date could include a contemporaneous public announcement or press release.

³⁶ See amended Rules 13a-10(b) and 15d-10(b).

³⁷ The prior year footnote information tracks Rule 1-02(aa) of Regulation S-X, except that disclosure of income taxes is required under the amendments because such information is pertinent to understanding the fluctuations in earnings and earnings trends.

³⁸ See II.A.5., "Quarterly Reporting When an Issuer Changes Its Fiscal Year," infra, for a discussion of the new Note to paragraphs (c) end (e) of Rules 13a-10 and 15d-10 that addresses difficulties in providing comparable period financial information.

³⁹ However, schedules for such transition periods are required to be filed in subsequent annual reports on Form 10-K pursuant to Rules 5-04, 7-05, and 9-07 of Regulation S-X where the income statements covering the transition period are required to be audited.

⁴⁰ See amended Rules 13a-10(c) and 15d-10(c).

⁴¹ The information covering the transition period required by Part II and Item 2 of Part I, "Management's Discussion and Analysis of Financial Condition and Results of Operations," may be combined with the information regarding the quarter.

⁴² 17 CFR 229.303.

⁴³ 17 CFR 229.10-.802.

⁴⁴ See "Amendments to the Accounting and Proxy Rules to Permit Reliance on Nine Month Statements," Part II.B.1., infra.

⁴⁵ 17 CFR 229.303(a).

⁴⁶ 17 CFR 229.303(b).

⁴⁷ 17 CFR 229.301.

⁴⁸ See amended Rules 13a-10(e) and 15d-10(e).

⁴⁹ See amended Rules 13a-10(e)(2) and 15d-10(e)(2). Thus, an issuer with a December 31 year end that decides on February 1, 1990 to change its year end to October 31, 1990 has the option of filing quarterly reports either for the quarters of the old fiscal year ending March 31, June 30, and September 30, 1990 or for the periods coinciding with quarters of the new fiscal year ending January 31, April 30, and July 31, 1990. If the same issuer had decided on June 1, 1990 to change its year end to October 31, 1990, the issuer already would have filed a quarterly report for the quarter ending March 31, 1990 but still would have the option to file the quarterly reports either for the quarters of the old fiscal year ending June 30 and September 30, 1990 or for the period coinciding with the quarter of the new fiscal year ending July 31, 1990.

⁵⁰ See amended Rules 13a-10(e)(1) and 15d-10(e)(1). For example, an issuer with a December 31 year end that decides on October 15, 1990 to change its year end to November 30, 1990 is required to file by November 14, 1990 a quarterly report on Form 10-Q for the quarter ending September 30, 1990 of the old fiscal year. If the same issuer decided on October 15, 1990 to change its year end to September 30, 1990, the issuer is not required to file a quarterly report on Form 10-Q for the quarterly period ending September 30, 1990 of the old fiscal year, because the last day of the quarter would be the same as the last day of the transition period. In that event, a transition report on Form 10-K is required to be filed within 90 days after October 15, 1990 to cover the transition period from January 1, 1990 through September 30, 1990.

⁵¹ See amended Rules 13a-10(e)(3) and 15d-10(e)(3). In the first example in footnote 50, a Form 10-Q is required for the first quarter (ending February 28, 1991) of the new fiscal year.

⁵² The information covering the transition period required by Part II and Item 2 of Part I, "Management's Discussion and Analysis of Financial Condition and Results of Operations," may be combined with the information regarding the quarter.

⁵³ See amended Rules 13a-10(e)(4) and 15d-10(e)(4) and Appendix Example 1.e. For example, an issuer with a December 31 year end decides on June 1, 1990 to change its year end to October 31, 1990 and begins filing quarterly reports based on the quarters of the new fiscal year with the quarterly report for the quarter ending July 31, 1990. Under the amendments, the period from April 1 through April 30, 1990 would not be covered by a separate report on Form 10-Q. That period would be required to be covered in the quarterly report filed for the quarter ending July 31, 1990, and separate financial statements covering April 1 through April 30, 1990 would be required to be filed with that quarterly report.

⁵⁴ The amendments do not require an issuer that decides to change its year end after having filed quarterly reports based on the old fiscal year to file new Form 10-Qs for those quarters of the new fiscal year already concluded. However, pursuant to Item 302(a)(5) of Regulation S-K, specified issuers must provide selected financial data for each full quarter of the two most recent fiscal years in their annual reports on Form 10-K. Accordingly, the first annual report on Form 10-K of such an issuer after a fiscal year change would be required to contain historical quarterly information on the basis of the new fiscal year.

⁵⁵ See Rules 12g-3 and 15d-5.

⁵⁶ 17 CFR 249.208b. Form 8-B is a registration form principally used for the securities of an issuer that has no registered securities but has succeeded to an issuer with registered securities.

⁵⁷ Thus, successions reported on Form 8-K, as well as on Form 8-B, are covered. See Release No. 34-9072 (February 10, 1971) [36 FR 3804]. Rule 12b-2 defines succession and, correlatively, successor.

⁵⁸ See amended Rule 15d-10(f).

⁵⁹ Where the successor issuer and the predecessor have a different fiscal year end and the succession is solely for the purpose of forming a holding company or changing the state of incorporation, the succession will be viewed as any change in fiscal year and not subject to the provisions of amended Rules 13a-10(f) and 15d-10(f).

⁶⁰ See amended Rules 13a-10(f) and 15d-10(f) and Appendix Example 2.b.

⁶¹ See amended Rules 13a-10(f) and 15d-10(f) and Appendix Example 2.a.

⁶² Other current reporting requirements for successor issuers and the Division's current interpretive positions respecting disclosures by successor issuers are not affected. As noted in the Proposing Release, when there is a change in accounting basis between the successor and predecessor, the quarterly or annual report for the period in which the succession occurs is required to present separately the statements of income and cash flows to reflect the periods prior and subsequent to the succession.

⁶³ Form 20-F generally is used by foreign private issuers as a registration statement, as well as an annual report. General Instruction G(b) of Form 20-F specifies that an annual report on Form 20-F shall include the information specified in Parts I, III and IV of the Form.

⁶⁴ The items, which cover most of the subjects covered in a Form 10-Q, are: Item 3, "Legal Proceedings;" Item 9, "Management's Discussion and Analysis of Financial Condition and Results of Operations;" Item 15, "Defaults Upon Senior Securities;" Item 16, "Changes in Securities and Changes in Security for Registered Securities;" and either Item 17 or 18, "Financial Statements."

⁶⁵ Cf. Release No. 34-24634 (June 23, 1987) [52 FR 24230] in which the Commission approved proposed rule changes by the American and New York Stock Exchanges permitting the exchanges to waive or modify specified listing standards for foreign securities. The Commission noted that the proposals would permit some foreign companies to report interim earnings on a semi-annual rather than quarterly basis.

⁶⁶ See Rule 3-13 of Regulation S-X, which allows the Commission to waive the filing of financial statements upon informal written request of an issuer and where consistent with the protection of investors.

⁶⁷ See discussion of the provisions on changing a fiscal year after the end of that particular year at II.A.3., supra.

⁶⁸ See discussion at II.A.1., "Transition Reporting on Forms 10-Q and 10-K," supra.

⁶⁹ If the issuer decides later to file the report covering the transition period on a form different from the form specified in its Form 8-K reporting the change in fiscal year, the issuer should file an amended Form 8-K stating the change.

⁷⁰ See amended Rules 13a-10(i) and 15d-10(i).

⁷¹ See amended Rule 12b-25(a) and (b)(2)(ii).

⁷² See Rules 30a-1 and 30b1-1 under the Investment Company Act and 270.30b1-1]. Form N-SAR is filed under both the Exchange Act and the Investment Company Act.

⁷³ See amended Rules 13a-10(h) and 15d-10(h).

⁷⁴ See new Investment Company Act Rule 30b1-3. Investment companies electing to be regulated as business development companies must comply with the Exchange Act periodic reporting requirements applicable to entities other than investment companies, including the filing of Forms 10-K and 10-Q. Accordingly, such companies are subject to the provisions of Exchange Act Rules 13a-10 and 15d-10 rather than new Investment Company Act Rule 30b1-3.

⁷⁵ Investment companies filing Form N-SAR must do so within 60 days of the end of the reporting period. See Rule 30b1-1.

⁷⁶ The rule does not provide for a transition report for unit investment trusts which, regardless of their fiscal year ends, are required to file Form N-SAR for a 12-month period ending December 31.

⁷⁷ A management investment company making a determination on January 15 to change its fiscal year end from December 31 to February 28 cannot file a report for the period from July 1 to February 28 because the period would be longer than six months. Rather, the investment company must file a report, no later than 60 days after January 15, either (1) covering the transition period beginning July 1 and ending August 31 or (2) covering the period from July 1 to December 31, and then file, no later than 60 days after February 28, a report for the transition period from January 1 to February 28.

⁷⁸ Form N-SAR is amended to provide an instruction for transition reporting. In addition, the Commission is adopting technical amendments to Rules 8b-16 and 30b1-2 and Form N-SAR under the Investment Company Act to correct erroneous references to Rule 30b1-3. The references are changed to Rule 30b1-1 which, until 1985, was designated as Rule 30b1-3. See Release No. 33-6591 (July 1, 1985) [50 FR 27940].

⁷⁹ See Rule 3-05(b) of Regulation S-X and Rule 14a-3(b)(1) of the proxy rules. Rule 3-05(b) is referred to in Form 8-K under the Exchange Act and applicable to the Securities Act registration statement forms (except Form S-18 and those forms filed by investment companies).

⁸⁰ See Rules 3-02(a)end 3-05(b) of Regulation S-X, Rule 14a-3(b)(1) of the proxy rules, and Item 21(d) of Form S-18. The Securities Act registration statement forms (except Form S-18) and Exchange Act Forms 8-K, 10, end 10-K all require financial statements prepared in accordance with Regulation S-X.

⁸¹ Where there has been a significant acquisition by the issuer, new Rule 3-06 also permits the filing of financial statements of the company being acquired covering a period of nine to 12 months in satisfaction of a requirement for one year of financial statements, if the required financial statements for all other periods cover the full time span. In addition, under the amendments, the filing of financial statements covering a period of nine to 12 months satisfies a requirement for one year of financial statements where the Commission so permits pursuant to Rule 3-13 of Regulation S-X.

⁸² This provision also applies to information statements. See Rule 14c-3(a)(1), which requires that the information specified in Rules 14a-3(b)(1) through (b)(11) also be given to shareholders who receive information statements.

⁸³ The wording of the amendment has been changed from the proposals to parallel new Rule 3-06 more closely.

⁸⁴ Three commentators raised the issue of restatement of prior period financial statements. As in the past, the staff will continue to accept in annual reports on Form 10-K and annual reports to shareholders the restatement of prior period financial statements to conform with an issuer's newly adopted fiscal year, although such restatement will not be required.

⁸⁵ See Rule 3-18 of Regulation S-X.

⁸⁶ See new paragraph (d); former paragraphs (d) and (e) have been redesignated.

⁸⁷ The wording of the amendment has been modified to clarify that the one year and 45 day rule does not apply to financial statements other than those of the registrant.

⁸⁸ Rule 3-01(b) of Regulation S-X has permitted specified registrants to use unaudited financial statements that are at least as current as the third fiscal quarter of the most recently completed fiscal year if their registration statement is filed within 45 days after the end of the most recent fiscal year. Thus, under the former rules, a first-time registrant under the Securities Act with a December 31, 1986 year end that changed its year end in 1987 to May 31, 1987 could have filed unaudited financial statements covering the transition period from January 1, 1987 through May 31, 1987 and unaudited financial statements covering the subsequent nine months ending February 29, 1988 in a registration statement and attempted to have that registration statement declared effective on July 14, 1988. The most recently audited financial statements in the registration statement would have covered the year ending December 31, 1986.

⁸⁹ Rule 3-01(b) provides that the audited financial statements of the prior fiscal year may not be used more than 45 days after the end of the current fiscal year, unless the specified circumstances in Rule 3-01(c) exist, which include the requirement that the registrant be filing reports pursuant to Section 13 [15 U.S.C. 78m] or 15(d). In addition, Rule 3-01(a)requires a registrant that has been in existence for less than one fiscal year to file audited financial statements within 135 days of the date of filing the registration statement.

⁹⁰ Cf. Rule 15d-2, which eliminates a similar reporting gap by requiring an issuer whose registration statement becomes effective after a fiscal year end without audited financial statements as of such fiscal year end in the prospectus to file a special report within 90 days of effectiveness on the form appropriate for annual reports of the registrant. The special report must include audited financial statements for the last full fiscal year.

⁹¹ See amended Rules 13a-13(a) and 15d-13(a).

⁹² For example, under the amendments, a registrant with a December 31 year end whose registration statement became effective on April 14, l990 including financial statements as of December 31 of the prior year, is required to file a quarterly report for the quarter ending March 31, 1990. The quarterly report is not due until 45 days after April 14, 1990, the date of effectiveness. Under the former rules, the same registrant would not have been required to file a quarterly report for the quarter ending on March 31, 1990. The former rules only would have required its first quarterly report for the quarter ending June 30, 1990.

⁹³ Generally, the staff has taken the position that registrants under the Securities Act whose registration statements are declared effective shortly before the end of their fiscal year, thereby creating Exchange Act reporting requirements pursuant to Section 15(d), are required to file annual and quarterly reports even where the registrant has not commenced operations; for example, where the registrant is in the process of a best efforts offering and has not yet met the minimum, or where an acquisition by the registrant has not yet been completed pending regulatory approval.