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B. Filing of Written Information
us SEC - C&DI - Proxy Rules and Schedules
Question 1
Q: As a condition to the Rule 165 exemption, offerors must file written communications in connection with or relating to a business combination. Must a written communication be filed if it is not an offer to sell or a solicitation of an offer to buy?
A: No, if a communication is not an offer to sell or a solicitation of an offer to buy the Rule 165 exemption will not be needed. Therefore, it is not necessary to comply with the conditions of the rule. The party to the transaction and its counsel should make this determination, based upon the facts and circumstances, in accordance with traditional legal principles. A similar analysis also applies to the need to file material under the proxy or tender offer rules. See Question D.1.
Question 2
Q: Rule 165 requires offerors to file written communications in connection with or relating to a business combination. If a company uses electronic technology--such as posting audio or video information over the Internet--in connection with a business combination, must the company file these materials? One area this might come up is in an Internet road show relating to a planned business combination. Similarly, if a company uses the telephone or Internet technology to make a telephone conversation with analysts or other conference call available to the public, must the company file a transcript of the conversation?
A: See Note 37 to Release No. 33-7760, which indicates that written communications include electronic communications and other future applications of changing technology. The note states that parties that use videos and CD-ROMs must file them on EDGAR by means of a transcript. (If the transaction relates to a company that is not required to file electronically, such as a foreign private issuer, the transcript will be filed in paper.) It is similarly our view that parties that use Internet or telephone technology to make available video or audio materials in connection with a business combination transaction must file transcripts of those materials.
The staff, however, will not object if parties do not file live, "real-time" audio or video material. For example, a company need not file a transcript of a live video or audio presentation, whether made available over the Internet or by telephone, so long as the presentation does not continue to be made available after it is completed.
This interpretation also applies to the filing of proxy material under Rule 14a-12 and tender offer material under Rules 14d-2 and 14d-6.
Question 3
Q: If a company decides to make a live presentation, such as a speech or a telephone call to analysts, available to the public afterwards, how should it handle the legend required by Rule 165(c)(1) and similar provisions of the proxy and tender offer rules?
A: The company is not required to state the legend in the initial live presentation, although it may wish to do so as a matter of good practice. Whether or not the legend is in the live presentation, however, it must be inserted in the material when it is subsequently made available. For example,
- the company should insert the legend in writing at the top of the transcript in the material filed with the SEC;
- in addition, if the company is making the presentation available by telephone, the company should record the legend as part of the phone call so that persons calling in will hear the legend before the conversation begins; and
- if the company is making the presentation available over the Internet in video or audio form, the company may either insert the legend in audio or video form at the beginning of the presentation, or include the legend on its Internet site in the same place where viewers are instructed to "click here" for the video or audio presentation of the particular material.
Question 4
Q: A company official has a script prepared for a speech he/she is giving about the deal. The speech will be read aloud from the script. Does the script have to be filed?
A: No. If, however, the script is given out to the audience or the press, attached to a press release, or otherwise distributed, it must be filed. Similarly, if the script is widely distributed throughout the company so the speech can be given many times, it must be filed; this would be analogous to the "proxy solicitation scripts" that are routinely filed.
Question 5
Q: A company wishes to send a separate communication about the deal to its employees. It plans to send them the basic communication that has already been filed, along with a separate Q & A sheet addressing particular concerns of employees. Must the Q & A sheet be filed?
A: If this information is reasonably viewed as offering material, it must be filed, since the Q & A sheet will be adding substance to what has previously been filed. Employees are often shareholders, and concerns of employees regarding the transaction may very well be relevant to the investing public at large. In contrast, if the company does not have a Q & A sheet, but instead simply uses a cover letter whose tenor is, "Dear Employee, you may be interested to read the attached letter about the exchange offer" (attaching the communication that has previously been filed), the company would not have to file the cover letter. This is because it would not be providing any information about the transaction in addition to what already has been filed. See note 46 to the release.
Question 6
Q: Must a bidder file the written communications made to a bank or other financial institution when making financing arrangements for an offer?
A: No. Communications with banks or other lending institutions in connection with financing arrangements for an offer would not have to be filed. Communications with lenders would be considered internal communications among the parties to the transaction.
Question 7
Q: Does the company have to file with the Commission all the information it files with other regulators (e.g., IRS, antitrust, material filed with foreign regulators?)
A: This depends on the circumstances. In most cases, the answer is no, especially where the information is not public. It was not our intent to become a repository of all the information filed with regulators around the world. In most cases, the filings will not have new or different information from what is already required to be filed with the Commission. However, if the filing with the foreign regulator were public, used to communicate with investors, and had new or different information, it could be viewed as an offer that would have to be filed.
Question 8
Q: If an issuer has publicly announced a business combination transaction, does it need to file the written communications made to a credit rating agency under Rule 425 if they discuss an upcoming business combination? The written communications are made as a part of the company's annual presentation to the rating agency for purposes of obtaining a credit rating for the company's debt securities.
A: No, so long as the information is not published or otherwise disseminated to security holders. Generally, credit rating agencies do not own securities in the companies that they rate. These communications would not be viewed as offers.
Question 9
Q: If the offeror and target jointly issue a press release announcing a proposed merger where the consideration consists of securities, what are the filing obligations for these parties under the new regulatory scheme?
A: The offeror must file the press release under Rule 425. If the offeror also is participating in a proxy solicitation, the material is subject to the proxy rules, but the offeror need not make a separate filing under Rule 14a-12, since Note 2 to Rule 425 provides that the filing would be deemed filed under other applicable regulatory sections. However, in this event the Rule 425 filing would have to comply with the disclosure requirements of Rule 14a-12. For example, it would have to contain the participant information called for by Rule 14a-12. See Question D.2.
The target has a separate filing obligation. Note 2 to Rule 425 does not apply, since that note eliminates the need for duplicative filings by the same party. Each different party has its own liability and must make its own filings. If the target's security holders are voting on the transaction, then any written statements by the target regarding the transaction may be soliciting material that must be filed under Rule 14a-12. Also, if the target views itself as joining with the bidder in making the offer, the target may want to rely on the Rule 165 exemption from Section 5 and file the written communications under Rule 425 (which would be deemed filed under Rule 14a-12). See Rule 165(d).
Question 10
Q: Must a dealer-manager that is retained by a bidder in an exchange offer file under Rule 425 any scripts or other written materials used to solicit tenders in the offer?
A: Yes. A dealer-manager retained by the bidder would in most circumstances be viewed as acting on behalf of the bidder. Even where the dealer-manager is paid the same soliciting fee that all other broker-dealers are paid for tenders, any written materials or scripts used by the dealer-manager are most likely based on information received from the bidder. In addition, the bidder will most likely review and approve the written materials before they are used by the dealer-manager to solicit tenders. Therefore, the dealer-manager should file any written materials it uses to solicit tenders, including scripts.
Question 11
Q: It is important to identify the filing person and subject company correctly for purposes of Rule 425(c). In the case of an EDGAR filing, misidentifying these parties in the header tags will make it difficult for the SEC staff and public users of the information to locate the filing.
(a) Who is the "filing person"?
A: The "filing person" is the person making communications about a proposed business combination transaction in reliance on Rules 165 and 166. This person usually is the acquiror, but also may be the subject company or some other party.
Q: (b) Who is the "subject company"?
A: The "subject company" is the company whose securities are sought in the proposed business combination transaction. The subject company is sometimes referred to as the "target" company.
Question 12
Q: What file number should a filing person use in the upper right-hand corner of a communication filed under Rule 425?
A: When filing written communications about a business combination transaction in reliance on new Rules 165 and 166, use the Securities Act file number of the registration statement (e.g., Form S-4) for the transaction if one has been filed. If a registration statement has not yet been filed, then use the Exchange Act file number (zero-dash or one-dash) of the subject company. If the subject company has no Exchange Act file number (e.g., it is a private company), then use the filing person's Exchange Act file number. If neither the filing person nor the subject company has an Exchange Act number, use a correspondence (132-dash) file number obtained from the file desk.
In a merger of equals where two companies merge into a newly-formed public company, use the file number of the new company (the Securities Act file number of the registration statement). If the registration statement has not been filed, use the file number of one of the component companies--whichever "subject company" made the communication.
Question 13
NEW
Q: When making communications relating to a business combination in reliance on Rule 165 or 166, is a company required to file its Exchange Act reports under Rule 425 if they contain information relating to the transaction?
A: No. Information that is required to be disclosed in an annual or other Exchange Act report, including the company's glossy annual report to shareholders, need not be filed under Rule 425 so long as the information in the report is being disclosed solely to satisfy the requirements of that report. If, however, a report contains information that goes well beyond the information that is required to be disclosed, and is included to publicize the transaction, the information (not the complete Exchange Act report) would need to be filed separately under Rule 425.
Note that providing information in a voluntarily filed Form 8-K does not eliminate the need to file the information under Rule 425. Some companies have a practice of filing a merger agreement on Form 8-K as soon as a deal is announced. In the case of a foreign private issuer, the agreement may be submitted on Form 6-K. The staff does not want to discourage the prompt public disclosure of the merger agreement. However, the Form 8-K or 6-K disclosure does not eliminate the need to provide this information under Rule 425. Public information about the business combination should be located in the Rule 425 filings. Although Rule 425 generally does not permit incorporation by reference, the staff will not require the merger agreement provided on Form 8-K or 6-K to be repeated in the Form 425 filing, so long as the Form 8-K or 6-K is filed on EDGAR and the Rule 425 filing contains a brief statement such as: "The merger agreement for Company A's acquisition of Company B was filed by Company A under cover of Form 8-K today and is incorporated by reference into this filing." Alternatively, of course, the company may elect to provide this information under Rule 425 only rather than on a Form 8-K. This interpretation also is applicable to a cash deal, where the relevant filing will be under the proxy or tender offer rules instead of Rule 425.
Question 14
Q: If a company official is quoted in a newspaper or other media article regarding a business combination, is the company required to file the article under Rule 425? Suppose an article is published based on a company press conference or an in-depth interview with a company official?
A: Articles that merely quote a company official discussing a business combination transaction would not be viewed as a written communication by a party to the transaction or a person acting on their behalf. This is true even if the article is based on a public communication by the company such as a press conference. The article is viewed as a communication by someone other than a party to the transaction or a person acting on behalf of a party.
In contrast, if a party to the transaction controls or arranges for an article to be published, pays for the article to be published, or disseminates the article (for example, by placing the article on the party's website as discussed in the following question), the article would be a written communication that must be filed under Rule 425. For example, if a company official gives an in-depth interview with a member of the press with the understanding that the interview will be published substantially verbatim, the interview would need to be filed by the company.
Question 15
Q: If a company posts an article on its website that discusses a business combination involving the company or otherwise provides a hyperlink to that article, would the company need to file the article under Rule 425?
A: If a party to a business combination posts an article discussing the transaction on its website, the article would be a written communication that must be filed under Rule 425. If the website provides a hyperlink to the article, a strong inference arises that the party has adopted that information, and accordingly must file the article under Rule 425. See Release No. 33-7856 (April 28, 2000), Part II.B.
Question 16
Q: Do written communications made in reliance on Rule 134 have to be filed under Rule 425?
A: No. If the party relies on Rule 135 to make its first public announcement and does not go beyond Rules 135 and 134 before the registration statement is effective, the only written communication that must be filed is the initial Rule 135 communication. If the party is relying on Rule 165 to communicate and for some reason then wants to make a limited written communication pursuant to Rule 134, that limited communication would not have to be filed under Rule 425.
Question 17
Q: After a registration statement is filed, must communications relating to or in connection with the offer continue to be filed under Rule 425?
A: Communications viewed as offers must be filed under Rules 424 or 425 (or as post-effective amendments), as appropriate, until the offering period is over. In general, communications that must be part of the mandated prospectus must be filed under Rule 424 or as post-effective amendments, as was the case before the new regulatory scheme was adopted. "Optional" communications may be filed under Rule 425 instead. See note 52 of the Regulation M-A release.
Question 18
Q: Must soliciting material filed under Rule 425 that is used after the definitive proxy statement has been filed or additional tender offer material used after commencement of the offer also be filed under the proxy or tender offer rules?
A: Certain communications filed under Rule 425 satisfy the filing requirements under the proxy and tender offer rules. See Instruction 2 to Rule 425, which specifies that communications made under Rules 13e-4(c), 14a-12(b), 14d-2(b) and 14d-9(a) may be covered by the Rule 425 filing. These communications, however, generally are limited to those made before filing a proxy statement or tender offer statement.
Rule 14a-6(j) under the proxy rules states that merger proxy materials filed under Rules 424 or 425, or as part of the registration statement, will be deemed filed under the proxy rules even if they are filed only under the Securities Act. But there is no analogous provision in the tender offer rules. Accordingly, in a registered exchange offer, post-commencement communications filed under the Securities Act also must be filed as an amendment to the Schedule TO. The information may be incorporated by reference as provided by General Instruction F of Schedule TO.
This is a work of the U.S. Government
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