SEC Proposes to Improve Disclosures Relating to Acquisitions and Dispositions of Businesses
On May 3, the Securities and Exchange Commission (SEC) voted to propose amendments (the proposed amendments ) to improve the information that investors receive regarding the acquisition and disposition of businesses. The proposed amendments are intended to facilitate more timely access to capital and reduce the cost and complexity of preparing the financial disclosures.
The proposed amendments affect Rules 3-05, 3-14 and Article 11 of Reg. S-X, as well as related rules and forms. The proposed amendments to Rule 3-14, which governs the acquisitions of real estate, will be of particular interest to Nareit members operating as equity REITs. The proposed amendments would align Rule 3-14 with Rule 3-05 and clarify the application of Rule 3-14 regarding the determination of significance, the need for interim income statements, special provisions for blind pool offerings, and the scope of the rule’s requirements.
If you are interested in participating in a Nareit Task Force that will review the proposed amendments and evaluate whether Nareit should respond, please contact Christopher Drula ( firstname.lastname@example.org) by May 15. The proposed amendments have a 60-day comment period following its publication in the Federal Register.
In addition to the proposed changes to Rule 3-14 described above, the proposed amendments would, among other things:
The proposed amendments are the result of the SEC’s ongoing initiative to update disclosure requirements, an effort that included the SEC's 2015 Request for Comment on the Effectiveness of Financial Disclosures About Entities Other Than the Registrant . In late 2015, Nareit formed a task force and submitted a responsive comment letter to the SEC on Nov. 15, 2015. In its comment, Nareit recommended that the SEC: