ALERT - Changes to Form D Requirements

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February 24, 2009
Jennifer Randolph Reise

Under new Securities and Exchange Commission (SEC) rules, all companies—public and private—that file a Form D to take advantage of the Rule 506 safe harbor for private placements of unregistered securities need to be aware of new electronic filing and other requirements taking effect March 16, 2009.

Electronic Filing is Mandatory

After March 16, the SEC will accept only Form Ds submitted through its online EDGAR system. Such filings will now be accessible to the public. In addition, even privately held issuers must have EDGAR access codes, which previously only public companies were required to have.

Some Changes to Required Information

The new Form D requires issuers to state the date of first sale, defined as the date on which the investor irrevocably contractually committed to invest in the offering. Depending on the facts, this may be earlier than the first closing. The new Form D also makes other changes, including removing the state appendix.

The new amendment filing requirements also require annual filings on or before the anniversary of the Form D filing for ongoing or continuous offerings, and clarify when an amendment is required.

State "Blue Sky" Filing Requirements Not Coordinated

Issuers must continue to comply with the applicable notice filing requirements of each state in which sales occur. While a few states have proposed rules which would allow electronic filing, most continue to require paper filings, usually with a filing fee and consent to service of process. We expect state requirements will continue to evolve.

Practical Advice to Issuers

  • Continue to file a Form D with the SEC within 15 days of the first sale in an offering.
  • Seek legal advice on the "first sale" in the context of an offering and whether changes in an offering would trigger a Form D amendment, in light of the new rules. Note that the sale may occur when an investor enters into a binding agreement or forwards funds, even if no closing has occurred.
  • Obtain EDGAR codes now, or plan to do so several days before a Form D is due.
  • File a Form D on or before March 16, 2009 for continuous offerings older than one year.

For more information, please contact your Briggs and Morgan attorney or a member of the Business Law Section.