United States

SEC implements two FAST Act provisions


On December 4, 2015, the Fixing America’s Surface Transportation (FAST) Act was signed into law by President Obama. Although the primary provisions of this Act relate to funding for transportation improvements, the Act also includes a number of changes to the federal securities laws. On January 13, 2016, the SEC approved interim final rules in Release No. 33-10003, Simplification of Disclosure Requirements for Emerging Growth Companies and Forward Incorporation by Reference on Form S-1 for Smaller Reporting Companies, implementing the following two provisions of the FAST Act:

  • As discussed in recent Compliance and Disclosure Interpretations related to the Act, emerging growth companies (EGCs) will be allowed to omit financial information from a Form S-1 or F-1 filed (or confidentially submitted) for an IPO if that financial information relates to historical periods the EGC reasonably believes will not be required to be included at the time of the contemplated offering. This could apply, for example, when the SEC review process is likely to go beyond the date on which a financial statement becomes “stale.” However, before the EGC distributes the preliminary prospectus to investors, the registration statement would need to be amended to include all financial information required by Regulation S-X as of the date of the amendment.
  • The rules also amend Form S-1 to allow smaller reporting companies, as defined, to use incorporation by reference for future filings the companies make under the federal securities laws after the registration statement becomes effective. Among other requirements, to be eligible to use forward incorporation by reference, a smaller reporting company will be required to be current by having filed (a) an annual report for its most recently completed fiscal year and (b) all required Exchange Act reports and materials during the 12 months immediately preceding filing of the Form S-1 (or such shorter period that the smaller reporting company was required to file such reports and materials).

The interim final rules also include a request for comment on whether the rules should be expanded to include other registrants or forms. The rules will become effective when published in the Federal Register, and the public comment period will remain open for 30 days following their publication.