New Rules Could Help Companies That Have Registered or Are Considering Registering Guaranteed or Collateralized Debt Securities
On March 2, 2020, the Securities and Exchange Commission (SEC) adopted certain rule amendments to simplify and modernize the financial disclosure requirements for registered offerings of guaranteed and collateralized debt securities, in an attempt to relieve some of the cost and burden of compliance. The current Rule 3-10 of Regulation S-X (which governs when a filing must include financial statements for a subsidiary that either issues securities guaranteed by the parent or guarantees the parent’s securities) and Rule 3-16 of Regulation S-X (which governs when separate financial statements are required for an affiliate whose securities collateralize the registrant’s debt securities) are burdensome and have caused many companies to use exemptions from registration (typically Rule 144A) when offering guaranteed or collateralized securities. The SEC provides in its press release that the “changes are intended to both improve the quality of disclosure and increase the likelihood that issuers will conduct debt offerings on a registered basis.” These amendments may cause issuers of guaranteed or collateralized debt securities to re-evaluate whether to pursue a registered offering when accessing the capital markets and will provide some relief to certain existing registered debt issuers.
Continue Reading SEC Simplifies Disclosure Requirements for Certain Registered Debt Offerings