SEC to Review Rules for Effect on Small Companies

Summary: The SEC said it will review some rules issued a decade ago, including one that deals with shareholder communications during corporate takeovers and a second dealing with audit committee reviews of quarterly and annual financial statements. Regulatory agencies are mandated by law to conduct the reviews.

The SEC on September 3, 2010, issued Release No. 33-9138,List of Rules to be Reviewed Pursuant to the Regulatory Flexibility Act. The RFA requires agencies to review their rules that have a significant economic impact on a substantial number of small entities within 10 years of the publication of final rules. Comments are due December 15, 2010.

The following rules and forms handled by the division of corporation finance are found in:

• Release No. 33-7760,Regulation of Takeovers and Security Holder Communications, adopted in October 1999. The rules apply to takeover transactions, including tender offers, mergers, acquisitions and similar transactions. They also permit increased communications with security holders and the markets, balance the treatment of cash and stock tender offers, simplify and centralize disclosure requirements, and eliminate regulatory inconsistencies in mergers and tender offers;

• Release No. 33-7759,Cross-Border Tender and Exchange Offers, Business Combination and Rights Offerings, adopted in October 1999. The rules provide tender offer and Securities Act registration exemptions for cross-border tender and exchange offers, business combinations and rights offerings relating to the securities of foreign companies;

• Release No. 34-41936,International Disclosure Standards, adopted in September 1999. The rules revised disclosure requirements to conform to the international disclosure standards endorsed by the International Organization of Securities Commissions in September 1998; and

• Release No. 34-42266,Audit Committee Disclosure, adopted in December 1999. The rule requires that companies’ independent auditors review the companies’ financial information included in the companies’ quarterly reports prior to the filing of these reports.

• The following rules and forms administered by the division of investment management are found in:

• Release No. 33-7728,Personal Investment Activities of Investment Company Personnel, adopted in August 1999; and Release No. 33-7766,Delivery of Disclosure Documents to Households, adopted in November 1999.

• And the following rules and forms administered by the division of trading and markets are found in:

• Release No. 34-41905,Purchases of Certain Equity Securities by the Issuer and Others, adopted in September 1999; and Release No. 34-41594,Broker-Dealer Registration and Reporting, adopted in July 1999.