• New Form D Rules Now In Effect; Mandatory Electronic Filing Coming Soon
  • September 28, 2008 | Authors: Megan L. Muir; Sanjay M. Shirodkar
  • Law Firms: DLA Piper - Seattle Office ; DLA Piper - Baltimore Office
  • The offer and sale of securities in private placements under the exemptions provided by Regulation D of the Securities Act of 1933, as amended, require the filing of a Notice of Sale of Securities on Form D with the SEC within 15 days after the first sale of securities. Beginning September 15, 2008, new rules relating to Form D have gone into effect.

    Following a six-month transition period ending on March 15, 2009, Regulation D filings will need to be made electronically via EDGAR, the SEC’s electronic filing system, using a New Form D, which contains information requirements different from the traditional Form D.

    Prior to March 15, 2009, issuers will have the option of voluntarily filing the New Form D electronically but will also be permitted to file either a slightly revised version of the existing Form D, referred to as the Temporary Form D or the New Form D on paper. Beginning March 16, 2009, paper submissions will no longer be accepted.

    Edgar Access and CIK Number Required to File Electronically

    To file electronically, the issuer will need EDGAR access codes as well as a CIK number, each of which is assigned by the SEC without charge by filing a Form ID with the SEC. For companies that do not already have such codes, recent SEC guidance provides instructions for obtaining the same, Such EDGAR codes may be used for all electronic filings going forward.

    Substantive Changes to Form D Information Requirements

    Among other changes, the New Form D:

    • No longer requires issuers to provide information about holders of 10 percent or more of a class of the issuer’s equity securities (unless such person must otherwise be disclosed as a promoter, executive officer or director of the issuer);
    • Requests information relating to the issuer’s revenues or net asset value, although the issuer may decline to disclose such information;
    • Requires the issuer to identify the specific exemption(s) being claimed;
    • Requires disclosure of the date of first sale, whether the offering is expected to last more than one year, as well as whether the offering is made in connection with a merger or other business combination;
    • Requires additional information relating to sales compensation, including identifying the recipient of such sales compensation by such person’s Central Registration Depository (CRD) number (if such person has a CRD number);
    • Clarifies that an amended Form D should be filed: (1) to correct a material mistake of fact; (2) to reflect a change in the information previously filed; and (3) annually if the offering is continuing for more than a year; and
    • Clarifies when an amendment to Form D is not required.

    More Easily Accessible to the Public

    In mandating electronic filing, the SEC intends to make Form D filings more easily accessible to the public through the SEC’s searchable web site. As a result, financial reporters and competitors of issuers will be able to easily find information about an issuer’s private offerings. Start-p companies operating in stealth mode and investors who will be disclosed on Form Ds should be aware that this information will now be widely available.