The Fixing America’s Surface Transportation Act, or FAST Act, is really a transportation bill but has provisions meant to simplify securities laws and capital raising measures. President Obama signed the FAST Act on December 4, 2015. Our summary is below.
Section 71001: Road shows may now begin 15 days after a confidential submission of an IPO registration statement has been made public, instead of 21 days.
Section 71002: An issuer that was an emerging growth company at the time it submitted a confidential registration statement or publicly filed an initial registration but ceases to be an emerging growth company continues to be treated as an emerging market growth company through the earlier of the date on which the issuer consummates its IPO pursuant to the registration statement or the end of the 1-year period beginning on the date the company ceases to be an emerging growth company.
Section 71003: For emerging growth companies:
- The SEC is directed to revise Forms S-1 and F-1 not later than 30 days after the enactment of the FAST Act so that prior to an IPO the issuer may omit financial information at the time of filing if the information will not be required at the time of the offering and prior to the distribution of a preliminary prospectus all financial information is included.
- Issuers filing Forms S-1 and F-1 30 days after the enactment of the Fast Act may omit information referred to in the preceding bullet point subject to including required information in the preliminary prospectus.
Section 72001: Not later than the end of the 180-day period beginning on the date of the enactment of the FAST Act, the SEC must issue regulations to permit issuers to submit a summary page on Form 10–K if each item on the summary page includes a cross-reference to the material contained in the Form 10–K.
Section 72002: Not later than the end of the 180-day period beginning on the date of the enactment of the FAST Act, the SEC must take all such actions to revise Regulation S–K:
- to further scale or eliminate requirements of Regulation S–K, in order to reduce the burden on emerging growth companies, accelerated filers, smaller reporting companies, and other smaller issuers, while still providing all material information to investors;
- to eliminate provisions of Regulation S–K, required for all issuers, that are duplicative, overlapping, outdated, or unnecessary; and
- for which the Commission determines that no further study under Section 72203 of the FAST Act is necessary to determine the efficacy of such revisions to Regulation S–K.
Section 72003: Provides that:
- Study: The SEC must carry out a study of the requirements contained in Regulation S–K which:
- determines how best to modernize and simplify such requirements in a manner that reduces the costs and burdens on issuers while still providing all material information;
- emphasizes a company by company approach that allows relevant and material information to be disseminated to investors without boilerplate language or static requirements while preserving completeness and comparability of information across registrants; and
- evaluates methods of information delivery and presentation and explores methods for discouraging repetition and the disclosure of immaterial information.
- Report: Not later than the end of the 360-day period beginning on the date of enactment of the FAST Act, the SEC must issue a report to Congress containing:
- all findings and determinations made in carrying out the study referred to above;
- specific and detailed recommendations on modernizing and simplifying the requirements in Regulation S–K in a manner that reduces the costs and burdens on companies while still providing all material information; and
- specific and detailed recommendations on ways to improve the readability and navigability of disclosure documents and to discourage repetition and the disclosure of immaterial information.
- Rulemaking: Not later than the end of the 360-day period beginning on the date that the report referred to above is issued to the Congress, the SEC must issue a proposed rule to implement the recommendations of the report referred to above.
Section 76001: This Section provides an exemption for the resale of restricted securities by codifying the so called 4(1-1/2) exemption. Among other things, the purchaser of the security must be an accredited investor and general solicitation may be not be used. Where the issuer of the security is not a public company, the seller and purchaser must obtain from the issuer certain information, including the issuer’s most recent balance sheet and profit and loss statement for the preceding two fiscal years and in some cases interim periods. The financial information must be prepared in accordance with generally accepted accounting principles and must be reasonably current. Use of the exemption is also subject to certain bad actor disqualifications. This Section also provides that securities sold under this Section are “covered securities” under Section 18(b)(4) of the Securities Act and are therefore exempt from state “blue sky” Regulation.
Section 84001: Not later than 45 days after the date of the enactment of the FAST Act, the SEC must revise Form S–1 to permit a smaller reporting company to incorporate by reference in an S-1 registration statement documents that such company files with the SEC after the effective date of such registration. As such, Form S-1’s used for resale shelf registrations will no longer need to be periodically updated by supplements and post-effective amendments.
We have included relevant portions of the FAST Act here (we eliminated a few hundred pages related to railroads, highways, public transportation, recreational boating safety and the like).
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