Corporate And Financial Weekly Digest - May 24, 2013

Edited by Robert Weiss and Gregory Xethalis

SEC/CORPORATE

SEC Division of Corporation Finance Issues 13 New and Revised C&DIs

On May 16, the Securities and Exchange Commission's Division of Corporation Finance issued 13 new and revised Compliance and Disclosure Interpretations (C&DIs) on a range of topics under the Securities Act of 1933 (Securities Act) and the Securities Exchange Act of 1934 (Exchange Act), and the related rules, forms and disclosure provisions thereunder. The new and revised C&DIs included the following interpretive guidance:

C&DI 129.03 states that, if an affiliate of a company transfers, by bona fide gift, company stock acquired in the open market (i.e., the securities are not "restricted securities" in the affiliate's hands) to a donee in a non-public transaction, the donee need not comply with any Rule 144 holding period requirement under the Securities Act for subsequent sales (notwithstanding the fact that the securities are "restricted securities" in the hands of the donee immediately following such gift) and may resell such securities pursuant to Rule 144 subject only to Rule 144's current public information requirement.

C&DI 133.07 clarifies that an affiliate's sales of securities back to the issuer in a non-public transaction (i.e., a transaction that is exempt from registration under Section 4 of the Securities Act) may be excluded when calculating the amount of securities that may be sold by the affiliate under Rule 144 under the Securities Act.

C&DI 210.03 states that an automatic shelf registration statement on Form S-3 (available for "well known seasoned issuers") that registers the offer and sale of a specified number of securities of a specified class of securities may be post-effectively amended to add more securities of the same class already registered.

C&DI 228.04 clarifies that, while a registrant may omit "the identities of selling security holders and amounts of securities to be registered on their behalf" from the prospectus included in a non-automatic shelf registration statement until after effectiveness of the registration statement, the prospectus must disclose the aggregate number of shares being registered for resale before effectiveness.

C&DI 256.22 clarifies that, when an acquiror seeks consent from the target's stockholders with respect to a business combination involving the issuance of securities in reliance on Rule 505 or 506 of Regulation D under the Securities Act, and the target's stockholders include non-accredited investors, financial statements and other information required under Securities Act Rule 502(b)(2) must be provided to the target's non-accredited investor stockholders a "reasonable amount of time" prior to obtaining any written consents from them. This interpretation is based on the Staff's view that the delivery of the written consent in such context constitutes the "sale" for purposes of Rules 505 and 506 under the Securities Act.

C&DI 532.01 clarifies the Staff's position that, where a pledgor who is an affiliate of an issuer defaults on a loan that is secured by a bona fide pledge of the issuer's stock acquired by the affiliate in the open market, the pledgee may resell such securities under Rule 144 under the Securities Act without regard to any holding period requirement under the Securities Act, provided that the pledgee is not an affiliate of the issuer and that Rule 144's current public information requirement is satisfied.

C&DI 116.24 clarifies the Staff's position that, when calculating whether the size of an offering consisting of common stock and warrants sought to be registered on Form S-3 under General Instruction I.B.6 (limited primary offerings by certain registrants) exceeds the one-third cap in General Instruction I.B.6(a), the registrant must comply with Instruction 2 thereto (which provides a formula for calculating the aggregate market value of securities sold during any period of twelve calendar months) in calculating the market value of the warrants, even when the warrants are not exercisable for common stock within twelve months.

C&DI 125.12 states that, if a registrant "meets the requirements for use of Form S-3," it may incorporate by reference into a Form S-4 (typically used for business combination transactions) risk factor disclosure...