SEC Simplifying Exempt Stock Offerings

By Stephen Barlas
May 1, 2020

The U.S. Securities & Exchange Commission (SEC) has moved forward with an effort to simplify the eligibility and reporting requirements attached to “exempt” stock offerings for small and medium-size companies, which allow for more limited financial information being disclosed to investors. The proposed changes would affect Rules 3-10 and 3-16.


With regard to Rule 3-10, for example, the changes would replace the condition that a subsidiary issuer or guarantor be 100% owned by the parent company with a condition that it be consolidated in the parent company’s consolidated financial statements and replace condensed consolidating financial information with certain new financial and nonfinancial disclosures.


One of the Rule 3-16 changes would replace the existing requirement to provide separate financial statements for each affiliate whose securities are pledged as collateral with amended financial and nonfinancial disclosures about the affiliate(s) and the collateral arrangement as a supplement to the consolidated financial statements of the registrant that issues the collateralized security. More detailed information is available at bit.ly/2RCnixC.


Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at sbarlas@verizon.net.
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