Expand
(Last updated: 6/30/2013)
2200.1 Form S-4 - General - Form S-4 registers securities being offered to security holders of a business to be acquired. The Form S-4 requirements for target company financial statements vary based on a number of facts and circumstances, as summarized below. The determination of the target company should be based on the legal form of the transaction. The fact that the target company may be the acquiring company for accounting purposes does not change that analysis. For example, in both a reverse acquisition between two operating companies and the acquisition by a shell company, as defined in Exchange Act Rule 12b-2 and Regulation C, Rule 405, of an operating company, the target company financial statements for purposes of Form S-4 are those of the legal target, which in these cases is also the accounting acquirer.
As described in Sections 2200.4 and 2200.5, the target company financial statement periods to present depend on whether the:
  • target is a reporting company;
  • target is a non-reporting company and the issuer's shareholders are voting;
  • target is a non-reporting company and the issuer's shareholders are not voting;
  • target is a smaller reporting company;
  • acquirer is an EGC; or
  • acquirer is a shell company.
As described in Sections 2200.6 and 2200.7, the need to audit target company financial statements depends on whether the:
  • target is a reporting company; or
  • target is a non-reporting company (irrespective of whether the issuer's shareholders' are voting)
2200.2 Form S-4 - How Financial Statement Requirements Differ from Form 8-K
The form and number of periods of a target's financial statements required in a Form S-4 may differ from the form and number of periods of a target's financial statements required in a Form 8-K reporting consummation of the business combination.
Item 17 of Form S-4 requires inclusion of the target's financial statements that would be required in an annual report sent to security holders if an annual report was required. A non-reporting target that would meet the S-K 10(f) requirements to be a smaller reporting company if it were an issuer (i.e., applying the revenue test) may apply the scaled reporting requirements for a smaller reporting company (i.e., S-X Article 8) in the Form S-4 even if the registrant is not a smaller reporting company. Similarly, a non-reporting target that would not meet the S-K 10(f) requirements to be a smaller reporting company if it were an issuer may not apply the scaled reporting for a smaller reporting company in the Form S-4, but instead must comply with S-X reporting requirements applicable to entities that are not smaller reporting companies, even if the registrant is a smaller reporting company. See Section 10220.6 regarding financial statement requirements in a Form S-4 when the transaction involves an EGC.
Form 8-K requires the registrant to file the acquired business' financial statements required by S-X 3-05 or, if the registrant is a smaller reporting company, S-X 8-04. If the registrant is subject to S-X 3-05, the non-reporting acquired business' financial statements must comply with S-X reporting requirements applicable to entities that are not smaller reporting companies in a subsequent Form 8-K reporting the business combination. If the registrant is subject to S-X 8-04, the non-reporting acquired business' financial statements may comply with scaled reporting requirements for a smaller reporting company. [Form 8-K, Item 9.01] Registrants that qualify as EGCs may be able to present fewer periods than those required by S-X 3-05 in the circumstances described in Section 10220.5.
2200.3 Form S-4 - Periods to be Presented General
The determination of the number of periods for which target company financial statements need be included in the Form S-4 should be made by reference to the requirements of Form S-4, not S-X 3-05 or S-X 8-04. See 2200.7 below for audit requirements.
2200.4 Form S-4 - Periods to be Presented —  Reporting Target OR Non-Reporting Target with Issuer's Shareholders Voting
If the target is a reporting company (whether or not the issuer's shareholders are voting), or the target is a non-reporting company and the issuer's shareholders are voting, the registration statement must include:
  1. Balance sheets as of the two most recent fiscal years.
  2. Statements of comprehensive income and cash flows for each of the three most recent fiscal years (two most recent fiscal years for a smaller reporting company target (see S-K 10(f) and S-X Article 8) or a non-reporting target who would meet the smaller reporting company requirements if they were an issuer). See Section 10220.6 regarding financial statement requirements in a Form S-4 when the transaction involves an EGC.
  3. Interim financial statement requirements differ depending on whether the target is a reporting company or a non-reporting company. See Items 15, 16, 17(a) and 17(b) of Form S-4.
  4. Financial statements of a business recently acquired or probable of being acquired by a reporting target under S-X 3-05. This requirement is included in Form S-4 Item 15, which cross-references Form S-4 Item 10(b)(1); Form S-4 Item 16, which cross-references Form S-4 Item 12(a)(3); and Form S-4, Item 17(a), which cross-references Form S-4, Item 14(e). See also 10220.5.
  5. Financial statements of a business recently acquired or probable of being acquired by a non-reporting target under S-X 3-05 if the omission of those financial statements renders the target company's financial statements substantially incomplete or misleading. See also 10220.5.
2200.5 Form S-4 - Periods to be Presented —  Non-Reporting Target with Issuer's Shareholders NOT Voting
If the target is a non-reporting company and the issuer's shareholders are not voting and:
Significance
Financial Statement Requirement
Significance of target under S-X 3-05 or S-X 8-04 does not exceed 20%
No target financial statements required in the registration statement, subject to the following: Registrants continue to have the obligation under S-X 3-05 to evaluate the individually insignificant acquisitions in the aggregate, including the insignificant target. If, in the aggregate, the 50% significance level is reached, the registrant must present audited GAAP financial statements for a mathematical majority of those acquisitions for the most recently completed fiscal year and interim period.
Significance of target under S-X 3-05 or S-X 8-04 exceeds 20% level AND S-4 to be used for resales to the public by any person who is deemed an underwriter within the meaning of Securities Act Rule 145(c) with respect to the securities being reoffered.
GAAP financial statements for the periods required by S-X 3-05(b)(2) or S-X 8-04(b), as applicable [Instruction 3 to Item 17(b)(7) of Form S-4]. See Section 10220.6 regarding financial statement requirements in a Form S-4 when the transaction involves an EGC. Note: Instruction 3 to Item 17(b)(7) of Form S-4 only references S-X 3-05, however a non-reporting target who would meet the smaller reporting company requirements (i.e., S-K 10(f)) if they were an issuer may provide the financial statements required by S-X 8-04(b).
Significance of target under S-X 3-05 or S-X 8-04 exceeds 20% level AND S-4 NOT to be used for resales to the public by any person who is deemed an underwriter within the meaning of Securities Act Rule 145(c) with respect to the securities being reoffered.
GAAP financial statements for the latest fiscal year and interim information as recent as would have been filed on Form 10-Q had the target company been subject to the Exchange Act, except that interim information need include only cumulative year-to-date interim information of the target for the latest and comparable interim periods. [Item 17(b)(7)(i) of Form S-4] Prior years' financial statements are also required if the target's GAAP financial statements were previously furnished to its security holders. [Item 17(b)(7)(i) of Form S-4]. See also Section 10220.6 regarding prior year financial statement requirements in a Form S-4 when the transaction involves an EGC.
Example 1: Target's latest fiscal year ended 12/31/07. Target previously furnished 2006, but not 2005, GAAP financial statements to its security holders. Target's 2006 and 2007 annual financial statements are required in the Form S-4
Example 2: Target's latest fiscal year ended 12/31/07. Target previously furnished 2005, but not 2006, GAAP financial statements to its security holders. Only Target's 2007 annual financial statements are required in the Form S-4.
2200.6 Form S-4 - Audit Requirements -  Target is a reporting company (whether or not the issuer's shareholders are voting) - All target company fiscal years presented must be audited.
2200.7 Form S-4 - Audit Requirements -  Target is a non-reporting company (whether or not the issuer's shareholders are voting) - The requirement to audit depends on whether or not the Form S-4 is to be used for resales by persons considered underwriters under Securities Act Rule 145(c). See Item 17(b) of Form S-4.
In transactions where the registrant is a SPAC, the target’s financial statements become those of the registrant upon consummation of the merger. In light of this fact and the staff considers the transaction to be equivalent to an initial public offering of the target, the staff would expect the financial statements of the target to be audited in accordance with the standards of the PCAOB. (Last updated: 10/30/2020)
S-4 to be used for resales
S-4 not to be used for resales
Required to be audited for the periods specified in S-X 3-05(b)(2) or S-X 8-04(b), as applicable.
Latest Fiscal Year
Need be audited only if practicable to do so. To determine whether an audit is practicable, consider the feasibility of completing the audit on a timely basis. Since the target's audited financial statements will be required to be included in a Form 8-K filed 71 calendar days after the 4th business day following consummation of the acquisition, the registrant should be able to explain why audited financial statements cannot be completed in time for the Form S-4, but can be completed in time to meet the Form 8-K requirements.
Fiscal years before the latest fiscal year
Need not be audited if they were not previously audited.
NOTES to SECTION 2200.7
  1. The relief from the audit requirement for a target company's financial statements applies only to merger proxies and transactions registered on Form S-4. It is not applicable to other forms. If the acquisition is significant, audited financial statements will ordinarily be required in a Form 8-K after consummation.
  2. Although relief from obtaining an audit of financial statements may be available as described above, the registrant would still be required to include all financial statements specified by Item 17 of Form S-4 on an unaudited basis.
  3. If financial statements are not audited for the periods required by S-X 3-05 /S-X 8-04, the registrant should supplementally provide to the staff representation that the Form S-4 will not be used for resales by underwriters.
2200.8 Form S-4 - Updating Target Company Financial Statements
The requirement to update target company financial statements (both reporting and non-reporting target companies) is based on the registrant's obligation to update under S-X 3-12 (or S-X 8-08 for a smaller reporting company). See Section 2045.5 for target updating requirements.
2200.9 Form S-4Target Company is a Foreign Business - Reconciliation Requirement
If the foreign business is a non-reporting company and its financial statements are prepared on the basis of a comprehensive body of accounting principles other than U.S. GAAP or IFRS as issued by the IASB, the reconciliation to U.S. GAAP in accordance with Item 17 of Form 20-F is not required if it is unavailable or not obtainable without unreasonable cost or expense. If a reconciliation is not available, the filing should contain, at a minimum, a narrative description of all material variations in accounting principles, practices, and methods used in preparing the non-U.S. GAAP financial statements from those accepted in the U.S. This guidance also applies to smaller reporting companies. Registrants should consider all relevant facts and circumstances in determining whether the U.S. GAAP reconciliation is unavailable or not obtainable without unreasonable cost or expense. For example, the staff has objected to the omission of the U.S. GAAP reconciliation in circumstances where the non-reporting target company was a subsidiary (or investee) of a larger reporting company, and considerable reconciling information for the subsidiary would have already been necessary to prepare the parent company's U.S. GAAP reconciliation. Registrants are encouraged to consult with CF-OCA in advance of filing if they intend to omit the U.S. GAAP reconciliation on the basis of unavailability or unreasonable cost. (Last updated: 12/31/2010)
2200.10 Form S-4 - Pro forma financial information depicting the acquisition(s) is only required if the acquisition is significant under S-X 3-05 or S-X 8-04 individually or in the aggregate.
Expand Expand
Resize
Tools
Rcl

Welcome to Viewpoint, the new platform that replaces Inform. Once you have viewed this piece of content, to ensure you can access the content most relevant to you, please confirm your territory.

signin option menu option suggested option contentmouse option displaycontent option contentpage option relatedlink option prevandafter option trending option searchicon option search option feedback option end slide