Companies subject to the reporting requirements of the Securities Exchange Act of 1934 (Exchange Act) are required to file current reports on Form 8-K with the Securities and Exchange Commission (SEC) generally within four business days of specified material events. Some triggering events are easy to spot, such as the appointment of a new CEO or the release of quarterly earnings. Others are easier to miss. Failure to timely file a Form 8-K can impact a company’s eligibility to use Form S-3 to access the capital markets. This Sidley Practice Note addresses the requirements of Form 8-K, the related requirements of Form S-3 and the consequences of a Form S-3 issuer’s failure to make timely Form 8-K filings.
Form 8-K Filing Requirements
The purpose of Form 8-K is to provide investors with real time disclosure of important corporate events. Generally, a Form 8-K must be filed with the SEC within four business days of the event that triggers disclosure. The principal exceptions are for a Form 8-K furnished under Item 7.01 to provide Regulation FD disclosure and a Form 8-K filed under Item 8.01 to provide disclosure of other events.
Form S-3 Eligibility Filing Requirements
Form S-3 under the Securities Act of 1933 (Securities Act) facilitates access to the public capital markets by providing the conveniences of shelf registration, which include delayed primary offerings, incorporation by reference of historical and future Exchange Act filings to satisfy most disclosure requirements, and, for a well-known seasoned issuer (WKSI), automatic effectiveness on filing and a pay-as-you-go registration fee system.
To use Form S-3, a company must, among other things, have been subject to Exchange Act reporting for at least twelve full calendar months preceding the filing of the Form S-3 and have filed all required reports during that period.1 In the twelve full calendar months and any portion of a month preceding the Form S-3 filing, such reports must have been timely filed, with a number of exceptions.2 Because current reports on Form 8-K are required to be filed upon the occurrence of specified material events, and because, unlike Forms 10-K and 10-Q,3 no extension of time is available in the event the company is unable to meet or has not met the filing deadline, failure to comply with the filing requirements of Form 8-K is the most likely cause of Form S-3 eligibility problems.
A company’s failure to timely file a Form 8-K under the following specified items will affect a company’s Form S-3 eligibility:
- Item 1.03 – Bankruptcy or Receivership
- Item 2.01 – Completion of Acquisition or Disposition of Assets
- Item 3.01 – Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing
- Item 3.02 – Unregistered Sales of Equity Securities
- Item 3.03 – Material Modification to Rights of Security Holders
- Item 4.01 – Changes in Registrant’s Certifying Accountant
- Item 4.02(b)-(c) – Non-Reliance on Audit Report or Completed Interim Review
- Item 5.01 – Changes in Control of Registrant
- Item 5.02(a)-(d), (f) – Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers
- Item 5.03 – Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
- Item 5.04 – Temporary Suspension of Trading Under Registrant’s Employee Benefit Plans
- Item 5.05 – Amendments to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics
- Item 5.06 – Change in Shell Company Status
- Item 5.07 – Submission of Matters to a Vote of Security Holders
- Item 5.08 – Shareholder Director Nominations
- Item 6.01 – ABS Informational and Computational Material
- Item 6.02 – Change of Servicer or Trustee
- Item 6.03 – Change in Credit Enhancement or Other External Support
- Item 6.04 – Failure to Make a Required Distribution
- Item 6.05 – Securities Act Updating Disclosure
- Item 6.06 – Static Pool
A company’s failure to timely file a Form 8-K under any other item will not affect a company’s Form S-3 eligibility.4
Timely Exchange Act reports must be filed no later than 5:30 p.m. Eastern Time on the date the filing is due. Submissions made after 5:30 p.m. are recorded as filed on the next business day. Therefore, a Form 8-K filing that is untimely by a matter of mere seconds may cause a company to become ineligible to use Form S-3.
The period of Form S-3 ineligibility begins on the date the Exchange Act report should have been filed and lasts for twelve full calendar months.5 To illustrate, if a company were required to file a report on Form 8-K by August 15, 2016, but files late, as of August 15, 2016, the company would be (a) eligible to conduct shelf takedowns from effective Form S-3s until the date on which the company is required to update the registration statement under Section 10(a)(3) of the Securities Act and (b) ineligible to file a new Form S-3 until September 1, 2017, if there are no further filing failures and the company is otherwise eligible to use Form S-3.
Curing an Untimely Filing under Form 8-K
If a company attempts in good faith to file an Exchange Act report, including a report on Form 8-K, on a timely basis, but is unable to do so “due to technical difficulties” beyond the company’s control, the company may submit a request to adjust the filing date pursuant to Rule 13(b) under Regulation S-T. Any such request must be made by the company via a publicly available CORRESP submission addressed to the SEC’s Chief, Office of Information Technology, Division of Corporation Finance (with a request to confirm receipt by email to email@example.com). The company may (and should) discuss the request with the SEC staff by telephone prior to submission. The request must provide “a concise, but detailed, description of the technical difficulties leading to the late filing, including the date and time of the initial attempted transmission,” and a statement of how the company would be harmed if the SEC staff does not grant the request.6 If the request is granted, the report will be deemed to have been timely filed.
To maintain Form S-3 eligibility following an untimely or failed Form 8-K filing, a company may also seek a waiver of Form S-3 eligibility requirements. Requests for waivers are granted only under very limited circumstances and are handled solely by the SEC’s Office of Chief Counsel in the Division of Corporation Finance (Division).7 Any such request should be submitted to the Division through the SEC’s website. The Division’s primary consideration will be the number of days by which the filing is late. The greater the number of days, the less likely the waiver will be granted. Other considerations include whether information required to be disclosed on Form 8-K was timely disclosed through some other means, such as a press release, and the reason for the late filing. Companies will also need to demonstrate that they have a need for the waiver because they intend to access the public capital markets in the near term. If the Division grants the waiver, it will only be communicated orally by telephone, and not in writing.
Impact of Form S-3 Ineligibility
If an untimely Form 8-K filing is not cured, the company will be ineligible to file a new Form S-3 for a minimum of twelve months. Effective registration statements on Form S-3 are also affected, but differently. The company in such a case may continue to use the effective registration statement through the date on which the company is required to update the registration statement under Section 10(a)(3) of the Securities Act, which is construed to be the date on which the company files its next Form 10-K.8 In all cases, a company must consider whether the prospectus included in the registration statement as of the effective date for the shelf takedown continues to be a valid Section 10(a) prospectus. Usually, a company will conclude that it may continue to make offers and sales under the registration statement so long as the untimely Form 8-K is in fact filed. However, after the company files its Form 10-K, all offers and sales under an effective registration statement on Form S-3 must cease.9 The Form S-3, however, does not cease to be effective except in accordance with its terms and, except as discussed below, may be used once the company’s Form S-3 eligibility is restored.
Conducting a Public Securities Offering During Form S-3 Ineligibility
While a company is disqualified from use of Form S-3, registered offerings for cash would need to be made on the then appropriate registration statement form (usually Form S-1, the residual form of Securities Act registration).10 Such a company may file a new Form S-1 or, if it has an effective registration statement on Form S-3 on file, the company may be able to change the form type to Form S-1 by means of a post-effective amendment.11 However, because delayed primary offerings may not be made on Form S-1, this alternative would not be suitable in all cases.
Several considerations may affect the choice between filing a standalone Form S-1 registration statement or converting the form type of an effective Form S-3 by post-effective amendment. First, a registration fee will be required for a standalone Form S-1, although the fee paid but not used under an effective Form S-3 could be applied to the new registration statement on Form S-1 pursuant to Rule 457(p) under the Securities Act. A new legality opinion would be required as an exhibit, along with new signatures from the company’s CEO, CFO, CAO, and at least a majority of the company’s directors.12 In contrast, if an existing Form S-3 registration statement included an appropriate power of attorney, new signatures for the post-effective amendment would be unnecessary, and no new legality opinion would need to be filed with the post-effective amendment.
If a standalone registration statement on Form S-1 is filed, no action needs to be taken with any existing registration statement on Form S-3 that is on file, although it may not be used until the company’s eligibility for the form is restored. For purposes of the discussion below, we refer to both the standalone Form S-1 registration statement and the post-effective amendment to an existing Form S-3 converting that registration statement into a Form S-1 registration statement as a Form S-1.
Content of Form S-1
The prospectus for a Form S-1 registration statement at the time of its filing may look very similar to the prospectus within a Form S-3 because most companies reporting under the Exchange Act and using Form S-1 may satisfy the business and financial disclosure requirements through historical incorporation by reference, which is to say incorporation of their most recent Form 10-K and any subsequent quarterly and current reports.13 However, because Form S-1 does not permit incorporation by reference of future Exchange Act reports, any updates to the Form S-1 necessary at the time of an offering could be made only by prospectus supplement or, in cases of more significant disclosures, a post-effective amendment.
Effectiveness of Form S-1
As indicated by their name, automatic shelf registration statements on Form S-3ASR filed by WKSIs become effective immediately on filing. Other forms of registration, including Form S-1, are subject to review by the SEC staff. If selected for a full review by the SEC staff, a comment letter is typically issued by the SEC staff approximately thirty days after filing, and there follows an exchange of correspondence between the company and the SEC staff in which the company responds to the questions raised in the comment letters. Once the issues raised in the correspondence have been resolved, the SEC staff will act on a request for acceleration and declare the registration statement effective. When the SEC staff has informed a company that its registration statement has not been selected for review, the acceleration request will be acted on in a matter of days.
Note, however, that Form S-1 requires certain disclosures also contained in the proxy statement, most importantly executive compensation disclosures. The staff of the SEC will not declare a Form S-1 registration statement effective until those proxy statement disclosures for the preceding fiscal year are part of the prospectus, either by inclusion or incorporation by reference, which may impact the filing calendar.
Timing of Filing the Form S-1
Rule 415 under the Securities Act does not permit delayed offerings on Form S-1 for securities for the account of the company, or “primary offerings.” As a result, a Form S-1 for an underwritten primary offering would need to be filed in advance of a discrete, standalone offering, allowing enough time for the possibility of SEC review. Continuous primary offerings made on a best-efforts basis are permitted on Form S-1, although such offerings are disfavored by mature companies and investment banks alike. Offerings for the account of selling security holders, or “secondary offerings,” registered on Form S-1 may be made as delayed or continuous offerings and therefore the related Form S-1 may be filed at any time prior to the offering of such securities. However, once effective, a Form S-1 relating to a delayed or continuous offering would need to be amended post-effectively when the company’s Form 10-K is filed, when any “fundamental change” has occurred, and when there is any material change in the plan of distribution. Other updates to the information in the prospectus may be made by means of a prospectus supplement, which would, for example, include the same information included in reports on Forms 10-Q or 8-K filed after the effective date.14 For both primary offerings and secondary offerings, the Form S-1 registration statement or the prospectus therein may need to be further amended if any material developments arise between its filing and the offering or the pricing of the offering.
Conducting a Securities Offering After Form S-3 Eligibility is Restored
If an existing Form S-3 registration statement has not been converted to Form S-1, the company may resume its use of that registration statement without any further action once Form S-3 eligibility is restored. If the conversion to Form S-1 has been made, the company must file another post-effective amendment to convert that registration statement back into a Form S-3. A post-effective amendment cannot be used to convert a Form S-1 into a Form S-3ASR,15 nor can it add securities to a Form S-1 registration statement (i.e., any primary securities that were previously removed from the Form S-3 registration statement so that the Form S-1 registration statement could be used for delayed or continuous offerings of secondary securities).16 In practice, companies contemplating both primary and secondary offerings will more commonly file a new Form S-3 registration statement. And certainly, WKSIs will file a new Form S-3ASR.
1 General Instruction I.A.3 to Form S-3.
2 General Instruction I.A.3(b) to Form S-3.
3 Exchange Act Form 12b-25.
4 Failure to timely file a Form 8-K under the following items will not affect a company’s Form S-3 eligibility:
- Item 1.01 – Entry into a Material Definitive Agreement
- Item 1.02 – Termination of a Material Definitive Agreement
- Item 2.03 – Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registration
- Item 2.04 – Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
- Item 2.05 – Costs Associated With Exit or Disposal Activities
- Item 2.06 – Material Impairments
- Item 4.02(a) – Non-Reliance on Previously Issued Financial Statements
- Item 5.02(e) – Compensatory Arrangements of Certain Officers
In addition, because a Form 8-K reporting solely under Item 2.02 (Results of Operations and Financial Condition) or Item 7.01 (Regulation FD Disclosure) are “furnished” and not “filed” with the SEC, a late report under those items likewise will not affect Form S-3 eligibility. Filings under Item 8.01 (Other Events) are optional and not subject to the four business day filing deadline.
See General Instruction I.A.3(b) to Form S-3 and Questions 115.07 and 126.12 of the SEC staff’s Compliance and Disclosure Interpretations (C&DI) for Securities Act Forms.
5 Securities Act Forms C&DI 115.06.
6 “Division of Corporation Finance Actions Regarding EDGAR Filing Date Adjustments, Continuing Hardship Exemptions, Post Acceptance Corrections, Filing Deletions and Withdrawals, and Other Matters,” available at https://www.sec.gov/info/edgar/cfedgarguidance.htm.
7 Securities Act Forms C&DI 101.01 and 114.01.
8 Item 512(a)(1)(i) of Regulation S-K, Securities Act Forms C&DI 114.04, Securities Act Sections C&DI 144.01 and Securities Act Rules C&DI 198.02.
9 Securities Act Rules C&DI 198.02.
10 Securities Act Rule 401.
11 Securities Act Rules C&DI 198.01.
12 Instruction 1 to Form S-1.
13 General Instruction VII to Form S-1.
14 Securities Act Forms C&DI 113.01 and 113.02 and Securities Act Rules C&DI 212.07, 212.11 and 212.20.
15 Securities Act Rules C&DI 198.04 and 598.01.
16 Securities Act Rule 413(a).
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