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Section 164. Rule 165 — Offers Made in Connection With a Business Combination Transaction
us SEC - C&DI - Securities Act Rules
Question 164.01
Question: May an issuer contemplating a registered exchange offer subject to Exchange Act Rule 13e-4 rely on Rules 165 and 166 to communicate with its security holders before and after the first public announcement of the offering?
Answer: Yes, so long as the issuer satisfies the conditions set forth in Rules 165 and 166. In particular, the primary purpose or effect of the communication must be to convey information concerning a business combination transaction, as defined in Rule 165(f), and not to condition the market for a capital raising or resale transaction. Rules 165 and 166 are intended to apply to communications relating to exchange offers made in accordance with the applicable tender offer rules, including offers subject to Exchange Act Rule 13e-4. [June 4, 2010]
Question 164.02
Question: An electronic communication relying on the exemption in Rule 165 must contain the legend required by paragraph (c)(1) of that rule. Some electronic communication platforms, such as those made available through certain social media websites, limit the number of characters or amount of text that can be included in the communication, effectively precluding display of the legend together with the other information. Under what circumstances would the use of a hyperlink to the legend satisfy the Rule 165(c)(1) requirement?
Answer: Recognizing the growing interest in using technologies such as social media to communicate with security holders, the staff will not object to the use of an active hyperlink to satisfy the requirements of Rule 165(c)(1) in the following limited circumstances:
- The electronic communication is distributed through a platform that has technological limitations on the number of characters or amount of text that may be included in the communication;
- Including the legend in its entirety, together with the other information, would cause the communication to exceed the limit on the number of characters or amount of text; and
- The communication contains an active hyperlink to the required legend and prominently conveys, through introductory language or otherwise, that important or required information is provided through the hyperlink.
Where an electronic communication is capable of including the required legend, along with the other information, without exceeding the applicable limit on number of characters or amount of text, the use of a hyperlink to the required legend would be inappropriate. This position also applies to written communications that constitute solicitations made in reliance on Exchange Act Rule 14a-12 and pre-commencement written communications subject to Exchange Act Rules 13e-4(c), 14d-2(b) and 14d-9(a). [April 21, 2014]
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