[Federal Register Volume 61, Number 176 (Tuesday, September 10, 1996)]
[Proposed Rules]
[Pages 47706-47712]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22726]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 228, 230, 239, 240 and 249
[Release Nos. 33-7326 and 34-37624; File No. S7-23-96]
RIN 3235-AG82
Expansion of Short-Form Registration To Include Companies With
Non-voting Common Equity
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rules.
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SUMMARY: The Securities and Exchange Commission (``Commission'') today
proposes amendments to rules and Forms S-3 and F-3 under the Securities
Act of 1933 (``Securities Act'') to include non-voting as well as
voting common equity in the computation of the required $75 million
aggregate market value of common equity held by non-affiliates of the
registrant.
In addition, the Commission is proposing conforming amendments to
Form F-2 under the Securities Act, Forms 10-K and 10-KSB under the
Securities Exchange Act of 1934 (``Exchange Act'') and the definition
of ``Small Business Issuer'' in Rule 405 and in Item 10 of Regulation
S-B under the Securities Act and in Rule 12b-2 under the Exchange Act.
Under the proposed revisions, the aggregate market value of voting and
non-voting common equity would be included in the calculation of the
amount of the required public float for issuers to qualify to use Form
F-2 and to be small business issuers and in stating the amount of the
public float on Forms 10-K and 10-KSB.
DATES: Comments should be received on or before October 10, 1996.
ADDRESSES: Comments should be submitted in triplicate to Jonathan G.
Katz, Secretary, U.S. Securities and Exchange Commission, Mail Stop 6-
9, 450 Fifth Street, NW., Washington, DC 20549. Comments also may be
submitted electronically at the following E-mail address: rule-
[email protected]. All comment letters should refer to File Number S7-
23-96. Include this file number on the subject line if E-mail is used.
Comment letters will be available for inspection and copying in the
Public Reference Room at the same address. Electronically submitted
comment letters will be on the Commission's Internet web site (http://
www.sec.gov).
FOR FURTHER INFORMATION CONTACT: Mary J. Kosterlitz, Special Counsel,
(202) 942-2900, Office of Chief Counsel, Division of Corporation
Finance, Securities and Exchange Commission, 450 Fifth Street, NW.,
Mail Stop 3-3, Washington, DC 20549.
SUPPLEMENTARY INFORMATION: The Commission is proposing amendments to
Forms S-3 1 and F-3 2 under the Securities Act 3 to
include non-voting common equity in the computation of the required
public float. Conforming changes are also proposed to be made to Forms,
F-2, 4 10-K,5 and 10-KSB 6 and to the definition of
``small business issuer'' in Rule 405 7 and in Item 10 of
Regulation S-B 8 under the Securities Act and in Rule 12b-2 9
under the Exchange Act.10
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\1\ 17 CFR 239.13.
\2\ 17 CFR 239.33.
\3\ 15 USC 77a et seq.
\4\ 17 CFR 239.32.
\5\ 17 CFR 249.310.
\6\ 17 CFR 249.310b.
\7\ 17 CFR 230.405.
\8\ 17 CFR 228.10.
\9\ 17 CFR 240.12b-2.
\10\ 15 U.S.C. 78a et seq.
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I. Introduction and Background
The Commission's short-form registration statements, Forms S-3 and
F-3, require as one condition to eligibility for registration of a
primary offering of non-investment grade securities (such as common
stock) that the company have at least $75 million of voting stock held
by non-affiliates (referred to as the ``public float'').11 Some
companies, both domestic and foreign, that have significant amounts of
non-voting common stock held by non-affiliates (but not significant
amounts of voting stock) are not eligible to use these forms for such
an offering because non-voting stock is not included in the calculation
of the required public float. The revisions proposed today would make
Forms S-3 and F-3 available to these issuers provided they otherwise
qualify for these forms. These changes are proposed to provide
additional flexibility for registered capital raising transactions by
extending the availability of the short form registration statements.
The proposed revisions are
[[Page 47707]]
consistent with the spirit of the recommendations of the Commission's
Task Force on Disclosure Simplification (``Task Force Report'') 12
and with requirements included in S. 1815, the Securities Investment
Promotion Act of 1996.13
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\11\ See General Instruction I.B.1 of Forms S-3 and F-3. General
registrant requirements for Forms S-3 and F-3 eligibility are
outlined in General Instruction I.A to these forms.
\12\ The Task Force Report in part seeks to eliminate rules that
no longer may be necessary or appropriate for investor protection
and to streamline, simplify, and modernize the overall regulatory
scheme without compromising or diminishing important investor
protections. See March 5, 1996, Letter from Arthur Levitt printed in
Report on Task Force Simplification, March 1996. See Release No. 33-
7271 (March 5, 1996) [61 FR 9848]. The report is available for
inspection and copying in the Commission's Public Reference Room and
is posted on the Commission's Internet Web Site (http://
www.sec.gov).
\13\ See S. 1815, 2d Sess. Sec. 314 (1996).
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Under the integrated disclosure system, there are three basic
Securities Act registration forms: Forms S-1, S-2 and S-3.14 These
forms establish three categories of registrants. Although the
information required for each of these forms is the same, the method of
delivering the information varies depending on the category of
registrant. These methods of delivering information are: (1) Provision
of information physically in the prospectus; (2) delivery with the
prospectus; or (3) incorporation by reference into the prospectus from
Exchange Act reports. Form S-3 permits maximum reliance on Exchange Act
reports, allowing eligible issuers to use this form to incorporate
information into the prospectus by reference from Exchange Act
filings.15 Form F-3, the corollary to Form S-3 for foreign private
issuers,16 also allows eligible registrants to incorporate
information by reference from Exchange Act reports.
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\14\ These three classes of forms apply to domestic issuers.
Foreign private issuers have three parallel Securities Act
registration forms: Forms F-1, F-2 and F-3. 17 CFR 239.0-1.
\15\ See Release No. 33-6383 (March 3, 1982) [47 FR 11380]. Form
S-3 also allows issuers to update the issuer prospectus information
through incorporation by reference of future Exchange Act filings,
instead of filing post-effective amendments to the registration
statement. Id.
\16\ The term ``foreign private issuer'' is defined in Rule 405.
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The Commission's rules have always conditioned the availability of
short form registration for primary offerings of non-investment grade
securities (such as common stock) on the issuer's having a minimum
amount of voting stock held by non-affiliates. The rationale for the
float condition has been to assure that physical delivery of the
detailed information required by longer registration forms would not be
necessary because complete and current information about the issuer was
already ``disseminated and accounted for by the market place.'' 17
Float consistently has been viewed as an indicator of analyst or market
following (which in turn assures a sufficient dissemination of
information to allow use of short form registration).18
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\17\ See Release No. 33-6331 (August 6, 1981) [47 FR 41902,
41904].
\18\ Release No. 33-6943 (July 22, 1992)[57 FR 32461]; Release
No. 33-6331 (August 6, 1981)[46 FR 41902]; Release No. 33-5923
(April 11, 1978)[43 FR 16677].
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Throughout the development of short form registration, the
Commission has not fully articulated a reason for excluding non-voting
common stock from the calculation of public float.19 Because it is
not clear that analyst or market following would be affected by whether
or not a company's securities carry voting rights as long as the
securities are common equity securities, and in light of questions
raised by issuers and others that believe non-voting common stock
should be included, the Commission has decided to reexamine the basis
for excluding non-voting stock in calculating public float.
Consequently, the Commission is proposing today to eliminate the
distinction, thus making short form registration available to a broader
class of issuers.
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\19\ In connection with expansion of a predecessor short form,
Form S-16, the Commission analyzed the distinction between voting
equity securities and non-voting debt securities. In that context,
the Commission agreed that information about companies with publicly
held non-voting securities may be widely available but noted that
while a $50 million float requirement (which was the amount being
adopted at the time) is appropriate for voting securities, it is not
necessarily indicative of general market interest in debt
securities. See Release No 5923 (April 11, 1978)[43 FR 16677].
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II. Discussion of Proposals
A. Changes to Forms S-3 and F-3
The proposed amendments relating to the use of Forms S-3 and F-3
for primary offerings of non-investment grade securities would change
the transaction requirements outlined in the General Instructions to
the Forms to provide that non-voting common equity would be included in
the calculation of the $75 million float requirement.20 These
changes would be accomplished by removing the term ``voting stock'' as
it appears in these sections and substituting the phrase ``shares of
voting and non-voting common equity.'' The meaning of the term ``common
equity'' would be as defined in Rule 405 under the Securities
Act.21
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\20\ The amendments proposed would not alter any other
requirements of Forms S-3 or F-3, including the amount of the public
float.
\21\ Rule 405 defines ``common equity'' as ``any class of common
stock, or an equivalent interest, including but not limited to a
unit of beneficial interest in a trust or a limited partnership
interest.''
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Comment is requested concerning whether the proposed change to
include non-voting shares of common equity in calculating public float
is appropriate. Specifically, the Commission solicits comment as to
whether the distinction between voting and non-voting common equity
affects market following of companies. Does it matter if a significant
amount of the securities necessary to qualify are not voting equity
securities? In addition, the Commission seeks comment as to whether it
is appropriate to provide short form eligibility if the only publicly
held equity securities are non-voting.
The term ``common equity'' as used in the proposed changes to Forms
S-3 and F-3 would not include either convertible securities or
preferred shares, because it is not clear that such securities,
standing alone, would give rise to a market following. Comment is
requested, however, as to whether there are types of preferred or
convertible securities that have sufficient market following that would
justify their inclusion in the calculation of public float for purposes
of Forms S-3 and F-3 eligibility. Commenters urging inclusion of other
securities are requested to identify the characteristics of the
securities and provide information about market following of issuers
with such securities.
B. Conforming Changes to Other Commission Rules and Forms Referencing
Public Float
The Commission also is proposing conforming changes to Forms F-2,
10-K and 10-KSB, as well as to the definition of ``small business
issuer'' in Rule 405 and in Item 10 of Regulation S-B under the
Securities Act and to Rule 12b-2 under the Exchange Act, to provide
that the public float requirement is to be computed by including the
aggregate market value of both voting and non-voting common equity.
Form F-2 is used by certain foreign private issuers to register
securities offerings under the Securities Act.22 One Form F-2
eligibility requirement is that, in certain cases, the foreign private
issuer must have an aggregate worldwide market value of voting stock
held by non-affiliates of the equivalent
[[Page 47708]]
of $75 million.23 The proposed amendments would change the
eligibility requirement outlined in the General Instruction to Form F-2
to indicate that non-voting common equity as well as voting common
equity would be included in the calculation of the $75 million float
requirement.
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\22\ See General Instruction I.A and I.B of Form F-2 for the
eligibility requirements of Form F-2. This form allows certain
foreign private issuers to provide some of the required prospectus
information by supplying a copy of the issuer's most recent annual
report on Form 20-F. Form F-2 is generally available for foreign
private issuers with a 36 month reporting history; for issuers with
less than 36 months of reporting, a $75 million float requirement
applies.
\23\ See General Instruction I.B.2 of Form F-2.
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Forms 10-K and 10-KSB each require registrants to state on the
cover page the aggregate market value of voting stock held by non-
affiliates. The information serves a number of purposes, including use
by the Commission staff in considering form eligibility. As proposed to
be amended, the forms would instead require a statement of the
aggregate market value of voting and non-voting common equity held by
non-affiliates.
The proposed amendments also would change the definition of ``small
business issuer'' in Rule 405 and in Item 10 to Regulation S-B under
the Securities Act and Rule 12b-2 under the Exchange Act. The current
definition of ``small business issuer'' states that ``an entity is not
a small business issuer if it has a public float (the aggregate market
value of the outstanding securities held by non-affiliates) of
$25,000,000 or more.'' 24 This definition does not specify what is
meant by the term ``outstanding securities.'' However, in the adopting
release for the Small Business Initiatives, the Commission described
public float as ``the aggregate market value of the issuer's voting
stock held by non-affiliates,'' 25 and the staff of the Division
of Corporation Finance has interpreted the float test for small
business issuers in that manner. Consistent with the proposed changes
to Forms S-3 and F-3, the proposed amendments to the small business
issuer eligibility criteria would replace ``securities'' with ``shares
of voting and non-voting common equity.''
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\24\ See Rule 405 and Item 10(a)(1) of Regulation S-B.
\25\ See Release No. 33-6949 (July 30, 1992) [57 FR 36442].
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Comment is requested as to whether these conforming changes to
Forms F-2, 10-K and 10-KSB, Rule 405, Item 10 of Regulation S-B, and
Rule 12b-2 are necessary or appropriate. Specifically, the Commission
solicits comment as to whether the proposed changes regarding the use
of non-voting as well as voting shares of common equity to calculate
the public float for Forms F-2, 10-K, 10-KSB and for small business
issuers are appropriate, and whether there is a basis for excluding
non-voting common equity from the definition of public float in these
contexts. The proposed changes to the definition of small business
issuer could cause some issuers that have non-voting common equity to
become ineligible for the small business issuer disclosure system.
26 Notwithstanding this potential impact, the Commission believes
that public float should be measured consistently for both larger and
smaller issuers. Comment is requested, however, as to whether these
proposed amendments would result in significant new burdens for small
business issuers and, if so, whether the burden justifies a different
public float test for small business issuer eligibility.
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\26\ Under the small business issuer disclosure system, eligible
companies may use Forms SB-1 and SB-2 for registration under the
Securities Act, Form 10-SB for registration under the Exchange Act,
and Forms 10-KSB and 10-QSB for periodic reporting under the
Exchange Act. These forms generally allow more streamlined
disclosure than the Securities Act and Exchange Act forms for
issuers that are not small business issuers. In addition, some
Commission forms that are not limited to small business issuers
permit specified streamlined disclosures. See, e.g. General
Instruction D.3. to From S-4, General Instruction C.3. to Form 8-K
and Note G to Schedule 14A.
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III. Request for Comment
Any interested person wishing to submit comment on the proposed
amendments, as well as other matters that might have an impact on the
proposed changes to rules and forms, is requested to do so. Comment is
requested on the impact of the proposals from the point of view of the
investing public, as well as the entities or persons making filings
with the Commission. The Commission also requests comment on whether
the proposed amendments, if adopted, would have an adverse impact on
competition that is neither necessary nor appropriate in furthering the
purposes of the Exchange Act. Comments responsive to this inquiry will
be considered by the Commission in complying with its responsibility
under Section 23(a) of the Exchange Act.27
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\27\ 15 U.S.C. 78w(a).
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IV. Cost-Benefit Analysis
Commenters are requested to provide their views and data relating
to any costs and benefits associated with these proposals to aid the
Commission in its evaluation of the costs and benefits that may result
from the changes proposed in this release. It is anticipated that these
proposals will have a benefit to issuers with filing obligations that
would become eligible to use short form registration, by decreasing
their costs. It is also possible that a small number of issuers
currently able to use the small business issuer disclosure system may
have increased costs due to their inability to use this system. No
detrimental effects to investors are expected.
V. Summary of Initial Regulatory Flexibility Analysis
An initial regulatory flexibility analysis has been prepared in
accordance with 5 U.S.C. 603 concerning the proposed amendments. The
analysis notes that the amendments would revise forms and rules, which
may increase the availability of Forms S-3, F-2 and F-3 and possibly
decrease the availability of the small business disclosure system
(Forms SB-1, SB-2, 10-SB, 10-KSB and 10-QSB) for some issuers.
As discussed more fully in the analysis, the proposals would affect
persons that are small entities, as defined in the Commission's rules,
because the proposed changes to the definition of small business issuer
could cause some issuers that have non-voting common equity held by
non-affiliates to become ineligible to use the small business
disclosure system. The Commission estimates that approximately three
percent of the small business issuers may become subject to more
detailed reporting obligations in the future, or may otherwise be
impacted by the rule proposals. 28 These estimates were not the
product of a formal study, but were solely the result of estimates
provided by the staff of the Division of Corporation Finance based on
its expertise from the review of corporate filings. These estimates
were thought by the Corporation Finance Division staff to reflect the
maximum percent of companies that would no longer be eligible to use
the small business issuer disclosure system. Instead, they would be
required to file Forms S-1 or S-2 for registered securities offerings,
Form 10 to register a class of securities under the Exchange Act, and
Forms 10-Q and 10-K for periodic reporting under the Exchange Act. The
Commission's Office of Economic Analysis is currently conducting a
study to estimate the number of companies that would lose their small
business status. The result of this study will be incorporated into the
final Regulatory Flexibility Analysis. The Commission does not expect
that the number of companies that would become ineligible to meet the
definition of small business issuer would be significant. The
Commission solicits comment on its preliminary estimates of the number
of small entities that would be impacted by the proposed rules. The
Commission also does not expect that
[[Page 47709]]
materially increased reporting, recordkeeping and compliance burdens
would result from the changes. The Commission, however, also seeks
comment as to whether these proposed amendments would result in
significant new burdens for small entities, and, if so, whether the
burden justifies a different public float test for small business
eligibility. The analysis also indicates that there are no current
federal rules that duplicate, overlap or conflict with the rules and
forms to be amended.
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\28\ See estimates in Section VI, ``Paperwork Reduction Act,''
infra.
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As stated in the analysis, several possible significant
alternatives to the proposals were considered, including, among others,
establishing different compliance or reporting requirements for small
entities or exempting them from all or part of the proposed
requirements. As discussed more fully in the analysis, the nature of
these amendments do not lend themselves to separate treatment, nor
would they impose significant additional burdens on small entities.
Written comments are encouraged on any aspect of the analysis. Such
comments will be considered in the preparation of the Final Regulatory
Flexibility Analysis if the proposed amendments are adopted. A copy of
the analysis may be obtained by contacting Mary J. Kosterlitz, Office
of Chief Counsel, Division of Corporation Finance, Mail Stop 3-2, 450
Fifth Street, N.W., Washington, D.C. 20549.
VI. Paperwork Reduction Act
Certain provisions of the proposed amendments to Forms S-3, F-2 and
F-3, Rule 405 and Item 10 of Regulation S-B under the Securities Act
and Rule 12b-2 under the Exchange Act contain ``collection of
information'' requirements within the meaning of the Paperwork
Reduction Act of 1995 (the ``Act'') (44 U.S.C. 3501 et seq.). The
Commission has submitted its proposed revisions to the information
collections required by these provisions to the Office of Management of
Budget (``OMB'') for review in accordance with 44 U.S.C. Sec. 3507(d)
and 5 CFR 1320.11. The titles of the affected information collections
are ``Form S-1,'' ``Form S-2,'' ``Form S-3,'' ``Form F-1,'' ``Form F-
2,'' ``Form F-3,'' ``Form SB-1,'' ``Form SB-2,'' ``Form 10-K,'' ``Form
10-Q,'' ``Form 10-KSB,'' ``Form 10-QSB,'' ``Form 10,'' and ``Form 10-
SB.''
The collections of information contained in the fourteen forms at
issue are required for the registration of various securities for sale
to the public under the Securities Act and periodic reporting
obligations under the Exchange Act. The likely respondents to each form
are, respectively: (i) For Form S-1, generally all issuers registering
offerings of securities under the Securities Act that are not eligible
to use other forms; (ii) for Form S-2, generally issuers that have been
reporting companies for three years and that have filed Exchange Act
reports timely for the past 12 calendar months; (iii) for Form S-3,
issuers that have been Exchange Act reporting companies for 12 months,
have timely filed Exchange Act reports for 12 months, and if making
primary offerings of non-investment grade securities, generally have a
public float of at least $75 million; (iv) for Form F-1, generally all
foreign private issuers (as defined in Rule 405 under the Securities
Act) registering securities under the Securities Act that are not
eligible to use other forms; (v) for Form F-2, generally foreign
private issuers that have filed Exchange Act reports for 36 months or,
in some instances, that have a public float of at least $75 million;
(vi) for Form F-3, generally foreign private issuers that have been
Exchange Act reporting companies for 12 months (and have filed at least
one annual report on the appropriate form), have timely filed Exchange
Act reports for 12 months, and if making primary offerings of non-
investment grade securities, have a public float of at least $75
million; (vii) for Form SB-1, generally small business issuers (as
defined in Rule 405 under the Securities Act) registering up to $10
million of securities under the Securities Act in a continuous 12 month
period to be sold for cash; (viii) for Form SB-2, generally small
business issuers registering securities offerings under the Securities
Act; (ix) for Form 10-K, generally all issuers reporting under the
Exchange Act filing annual reports that are not foreign private issuers
or small business issuers; (x) for Form 10-Q, generally all issuers
reporting under the Exchange Act filing quarterly reports that are not
foreign private issuers or small business issuers; (xi) Form 10,
generally all issuers registering under the Exchange Act that are not
foreign private issuers or small business issuers; (xii) for Form 10-
KSB, generally small business issuers reporting under the Exchange Act
filing annual reports; (xiii) for Form 10-QSBs, generally small
business issuers reporting under the Exchange Act filing quarterly
reports; and (xiv) Form 10-SB, generally small business issuers
registering under the Exchange Act. The estimated burden for responding
to the collections of information in each form is not expected to
change. Those estimates per respondent are as follows: (i) For Form S-
1: 1,267 burden hours; (ii) for Form S-2: 470 burden hours; (3) for
Form S-3: 398 burden hours; (iv) for Form F-1: 1,868 burden hours; (v)
for Form F-2: 559 burden hours; (vi) for Form F-3: 166 burden hours;
(vii) for Form SB-1: 710 burden hours; (viii) for Form SB-2: 876 burden
hours; (ix) for Form 10-K: 1,723 burden hours; (x) for Form 10-Q: 144
burden hours; (xi) for Form 10-KSB: 1,216 burden hours; (xii) for Form
10-QSB: 131 burden hours; (xiii) for Form 10: 95 burden hours; and
(xiv) for Form 10 SB: 90 burden hours.
It is expected that the Commission's proposal to include non-voting
as well as voting common equity in computing the required public float
for use of Forms S-3, F-2, and F-3 would increase the number of issuers
able to use these forms, and proportionately decrease the number of
issuers that use Forms S-1, S-2 and F-1. The result would be a net
overall reduction in reporting or recordkeeping burden, since Forms S-3
and F-3 provide for short form registration. The Commission's proposal
to amend the definition of ``small business issuer'' in Rule 405 and in
Item 10 of Regulation S-B under the Securities Act and in Rule 12b-2
under the Exchange Act so that the $25 million public float maximum
includes the aggregate market value of non-voting as well as voting
common equity could reduce the number of issuers that would qualify as
small business issuers. The result would be a commensurate decrease in
the number of issuers filing Form SB-1 and SB-2. Such issuers instead
would use Form S-1 or S-2. The proposal to change the definition of
small business issuer in Rule 12b-2 under the Exchange Act would also
result in a decrease in the number of issuers filing Forms 10-KSB, 10-
QSB, and 10-SB. Such issuers would instead use Forms 10-K, 10-Q and 10,
respectively.
It is estimated for the purposes of the Act that approximately
1,164 Form S-1s, 111 Form S-2s, 2,059 Form S-3s, 178 Form F-1s, 4 Form
F-2s, 143 Form F-3s, 17 Form SB-1s, and 393 Form SB-2s, 6,019 Form 10-
Ks, 28,934 Form 10-Qs, 887 Form 10-KSBs, 5,443 Form 10-QSBs, 82 Form
10s, and 88 Form 10-SBs are filed each year.29 If the proposed
amendments to Forms S-3, F-2 and F-3 were adopted it is estimated that:
(1) The number of Form S-3s filed per year will increase by
approximately 103 with an estimated per year increase burden of 40,994
hours in the aggregate; (2) the number of F-2s filed per year
[[Page 47710]]
will increase by 1 with an estimated increase burden of 559 hours; (3)
the number of F-3s filed per year will increase by 7 with an estimated
increase burden of 1,162 hours in the aggregate; (4) the number of S-1s
filed per year will decrease by 92 with an estimated decrease burden of
116,564 hours in the aggregate; (5) the number of S-2s filed per year
will decrease by 11 with an estimated decrease burden of 7,370 hours in
the aggregate; and (6) the number of F-1s filed per year will decrease
by 8 with an estimated decrease burden of 14,944 hours in the
aggregate.30 The total net decrease in burden is estimated at
96,162 hours.
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\29\ These estimates are based on the number of such filings
made in fiscal year 1995 and assume that there are no increases or
decreases each year.
\30\ The Commission estimates that approximately three percent
of the small business issuers may become subject to more detailed
reporting obligations in the future, or may otherwise be impacted by
the rule proposals. See Section V, ``Summary of Initial Regulatory
Flexibility Analysis,'' supra.
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If the proposed amendments to Rule 405 and Item 10 of Regulation S-
B were adopted it is estimated that: (1) The number of Form SB-1s filed
per year would decrease by approximately 1 with an estimated decrease
in burden of 710 hours; (2) the number of Form SB-2s filed per year
would decrease by approximately 12 with an estimated decrease in burden
of 10,512 hours in the aggregate; the number of Form S-1s filed per
year would increase by 12 with an estimated increase in burden of
15,204 hours in the aggregate; and the number of Form S-2s filed per
year would increase by 1 with an estimated increase in burden of 470
hours. The total net increase in burden would be 4,452 hours.
If the proposed amendment to Rule 12b-2 under the Exchange Act is
adopted it is estimated that: (1) The number of Form 10-KSBs filed per
year would decrease by approximately 27 with an estimated per year
decrease burden of 32,832 hours in the aggregate; (2) the number of
Form 10-QSBs filed per year would decrease by approximately 163 with an
estimated per year decrease burden of 21,353 hours in the aggregate;
(3) the number of Form 10-SBs filed per year would decrease by
approximately 3 with an estimated per year decrease burden of 270 hours
in the aggregate; (4) the number of Form 10-Ks filed per year would
increase by approximately 27 with an estimated per year increase burden
of 46,521 hours in the aggregate; (5) the number of Form 10-Qs would
increase by approximately 163 with an estimated per year increase
burden of 23,472 hours in the aggregate; and (6) the number of Form 10s
filed per year would increase by approximately 3 with an estimated per
year increase burden of 285 hours in the aggregate. The total net
increase in burden is estimated at 15,823 hours.
Thus, it is anticipated that the adoption of the proposed
amendments to Form S-3, F-2 and F-3 will decrease burden by an
estimated 96,162 hours and the adoption of the proposed amendments to
Rule 405 and Item 10 of Regulation S-B will increase burden by an
estimated 4,552 hours. It is anticipated that the adoption of the
proposed amendments to Rule 12b-2 under the Exchange Act will increase
burden by an estimated 15,823 burden hours. Consequently, it is
estimated that the adoption of all of the proposed amendments will
result in a total decrease in burden of 75,787 hours.
In accordance with 44 U.S.C. 3506(c)(2)(B), the Commission solicits
comments on the following: whether the proposed changes in the
collections of information are necessary for the proper performance of
the functions of the agency, including whether the information would
have practical utility; on the accuracy of the Commission's estimate of
the burden of each collection of information as well as the proposed
changes to the collections of information; on the quality, utility and
clarity of the information to be collected; and whether the burden of
the collections of information on those who are to respond, including
through the use of automated collection techniques or other forms of
information technology, may be minimized.
Persons desiring to submit comments on the collection of
information requirements should direct them to the Office of Management
and Budget Attention: Desk Officer for the Securities and Exchange
Commission, Office of the Information and Regulatory Affairs,
Washington, D.C. 20503, with reference to File No. S7-23-96. The Office
of Management and Budget is required to make a decision concerning the
collection of information between 30 and 60 days after publication, so
a comment to OMB is best assured of having its full effect if OMB
receives it within 30 days of publication.
VII. Statutory Basis For the Proposals
The amendments to the Commission's rules and forms are proposed
pursuant to Sections 6, 7, 8, 10, 19(a), and 27A of the Securities Act
and Sections 12, 13, 14, 15(d), 21E, 23(a) and 35A of the Exchange Act.
List of Subjects in 17 CFR Parts 228, 230, 239, 240 and 249
Reporting and recordkeeping requirements, Securities.
Text of the Proposals
In accordance with the foregoing, title 17, chapter II of the Code
of Federal Regulations is proposed to be amended as follows:
PART 228--INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS
1. The authority citation for part 228 continues to read as
follows:
Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s,
77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77jjj, 77nnn, 77sss,
78l, 78m, 78n, 78o, 78w, 78ll, 80a-8, 80a-29, 80a-30, 80a-37, 80b-
11, unless otherwise noted.
Sec. 228.10 [Amended]
2. By amending Sec. 228.10(a)(1) by removing the word
``securities'' in the Provided however sentence immediately following
Sec. 228.10(a)(1)(iv) and adding the words ``shares of voting and non-
voting common equity'' in its place.
PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933
3. The authority citation for part 230 continues to read in part as
follows:
Authority: 15 U.S.C. 77b, 77f, 77g, 77h, 77j, 77s, 77sss, 78c,
78d, 78l, 78m, 78n, 78o, 78w, 78ll(d), 79t, 80a-8, 80a-29, 80a-30,
and 80a-37, unless otherwise noted.
Sec. 230.405 [Amended]
* * * * *
4. By amending Sec. 230.405 the definition of ``Small Business
Issuer'' by removing the words ``outstanding securities'' in the
Provided however clause and adding the words ``outstanding voting and
non-voting common equity'' in their place.
PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933
5. The authority citation for part 239 continues to read in part as
follows:
Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77sss, 78c, 78l,
78m, 78n, 78o(d), 78w(a), 78ll(d), 79e, 79f, 79g, 79j, 79l, 79m,
79n, 79q, 79t, 80a-8, 80a-29, 80a-30 and 80a-37, unless otherwise
noted.
Secs. 239.13, 239.32, 239.33 [Amended]
* * * * *
6. 17 CFR part 239 is amended by removing the words ``voting
stock'' and adding, in their place, the words ``shares of voting and
non-voting common equity'' in the following sections:
(a) 17 CFR 239.13(b)(1)
(b) 17 CFR 239.32(b)(2)(i)
(c) 17 CFR 239.33(b)(1)
7. By revising the Instruction to Sec. 239.13(b)(1) to read as
follows:
[[Page 47711]]
Sec. 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.
* * * * *
(b) Transaction requirements. * * *
(1) Primary and secondary offerings by certain registrants. * * *
Instruction to Paragraph (b)(1)
For the purposes of this Form, ``common equity'' is as defined
in Securities Act Rule 405 (Sec. 230.405 of this chapter). The
aggregate market value of the registrant's outstanding voting and
non-voting common equity shall be computed by use of the price at
which the common equity was last sold, or the average of the bid and
asked prices of such common equity, in the principal market for such
common equity as of a date within 60 days prior to the date of
filing. See the definition of ``affiliate'' in Securities Act Rule
405.
* * * * *
8. By amending Form S-3 (referenced in Sec. 239.13) by revising the
Instruction to General Instruction I.B.1 to read as follows:
(Note: The text of Form S-3 does not and the amendments will not
appear in the Code of Federal Regulations.)
Form S-3
* * * * *
General Instructions
I. Eligibility Requirements for Use of Form S-3
* * * * *
B. Transaction Requirements * * *
1. Primary Offerings by Certain Registrants. * * *
Instruction. For the purposes of this Form, ``common equity'' is as
defined in Securities Act Rule 405 (Sec. 230.405 of this chapter). The
aggregate market value of the registrant's outstanding voting and non-
voting common equity shall be computed by use of the price at which the
common equity was last sold, or the average of the bid and asked prices
of such common equity, in the principal market for such common equity
as of a date within 60 days prior to the date of filing. See the
definition of ``affiliate'' in Securities Act Rule 405.
* * * * *
9. By revising Instruction 1 to Sec. 239.32(b)(2) to read as
follows:
Sec. 239.32 Form F-2, for registration under the Securities Act of
1933 for securities of certain foreign private issuers.
* * * * *
(b) * * *
(2) * * *
Instructions to Paragraph (b)
1. For the purposes of this Form, ``common equity'' is as
defined in Securities Act Rule 405 (Sec. 230.405 of this chapter).
The aggregate market value of the registrant's outstanding voting
and non-voting common equity shall be computed by use of the price
at which the common equity was last sold, or the average of the bid
and asked prices of such common equity, in the principal market for
such common equity as of a date within 60 days prior to the date of
filing. See the definition of ``affiliate'' in Securities Act Rule
405.
* * * * *
10. By amending Form F-2 (referenced in Sec. 239.32) by revising
the Instruction to General Instruction I.B.2.1. to read as follows:
(Note: The text of Form F-2 does not and the amendments will not
appear in the Code of Federal Regulations.)
Form F-2
* * * * *
General Instructions
I. Eligibility Requirements For Use of Form F-2
* * * * *
B. * * *
2. * * *
Instructions. 1. For the purposes of this Form, ``common equity''
is as defined in Securities Act Rule 405 (Sec. 230.405 of this
chapter). The aggregate market value of the registrant's outstanding
common equity shall be computed by use of the price at which the voting
and non-voting common equity was last sold, or the average of the bid
and asked prices of such common equity, in the principal market for
such common equity as of a date within 60 days prior to the date of
filing. See the definition of ``affiliate'' in Securities Act Rule 405.
* * * * *
11. By revising the Instruction to paragraph (b)(1) of Sec. 239.33
to read as follows:
Sec. 239.33 Form F-3, for registration under the Securities Act of
1933 of securities of certain foreign private issuers offered pursuant
to certain types of transactions.
* * * * *
(b) Transaction requirements. * * *
(1) Primary offerings by certain registrants. * * *
Instruction to Paragraph (b)(1)
For the purposes of this Form, ``common equity'' is as defined
in Securities Act Rule 405 (Sec. 230.405 of this chapter). The
aggregate market value of the registrant's outstanding voting and
non-voting common equity shall be computed by use of the price at
which the common equity was last sold, or the average of the bid and
asked prices of such common equity, in the principal market for such
common equity as of a date within 60 days prior to the date of
filing. See the definition of ``affiliate'' in Securities Act Rule
405.
* * * * *
12. By amending Form F-3 (referenced in Sec. 239.13) by revising
the General Instruction I.B.1 to read as follows:
(Note: The text of Form F-3 does not appear in the Code of Federal
Regulations.)
Form F-3
* * * * *
General Instructions
I. Eligibility Requirements For Use of Form F-3
* * * * *
B. Transaction Requirements
* * * * *
1. Primary Offerings by Certain Registrants. * * *
Instruction. For the purposes of this Form, ``common equity'' is as
defined in Securities Act Rule 405 (Sec. 230.405 of this chapter). The
aggregate market value of the registrant's outstanding voting and non-
voting common equity shall be computed by use of the price at which the
common equity was last sold, or the average of the bid and asked prices
of such common equity, in the principal market for such common equity
as of a date within 60 days prior to the date of filing. See the
definition of ``affiliate'' in Securities Act Rule 405.
* * * * *
PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934
13. The authority citation for part 240 continues to read, in part,
as follows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77eee, 77ggg,
77nnn, 77sss, 77ttt, 78c, 78d, 78i, 78j, 78l, 78m, 78n, 78o, 78p,
78q, 78s, 78w, 78x, 78ll(d), 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-
37, 80b-3, 80b-4 and 80b-11, unless otherwise noted.
* * * * *
Sec. 240.12b-2 [Amended]
14. By amending Sec. 240.12b-2 the definition of ``Small Business
Issuer'' by removing the words ``outstanding securities'' in the
Provided however clause and adding the words ``outstanding voting and
non-voting common equity'' in their place.
PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934
15. The authority citation for part 249 continues to read in part
as follows:
Authority: 15 U.S.C. 78a, et seq., unless otherwise noted;
* * * * *
16. By amending the front page of Form 10-K (referenced in
Sec. 249.310) by
[[Page 47712]]
revising the paragraph before the ``Note'' to read as follows:
(Note: The text of Form 10-K does not and the amendments will not
appear in the Code of Federal Regulations.)
Form 10-K
* * * * *
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates of the registrant. The aggregate
market value shall be computed by reference to the price at which the
common equity was sold, or the average bid and asked prices of such
common equity, as of a specified date within 60 days prior to the date
of filing. (See definition of affiliate in Rule 405, 17 CFR 230.405.)
* * * * *
17. By amending the front page of Form 10-KSB (referenced in
Sec. 249.310b) by revising the paragraph before the ``Note'' to read as
follows:
(Note: The text of Form 10-KSB does not, and the amendments will not
appear in the Code of Federal Regulations.)
Form 10-KSB
* * * * *
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price
at which the common equity was sold, or the average bid and asked price
of such common equity, as of a specified date within the past 60 days.
(See definition of affiliate in Rule 12b-2 of the Exchange Act.)
* * * * *
By the Commission.
Dated: August 30, 1996.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-22726 Filed 9-9-96; 8:45 am]
BILLING CODE 8010-01-P