Securities, Investment Management, Hedge
Funds and Alternative Investments Alert
February 2008
Authors:
Cary J. Meer
+1.202.778.9107
cary.meer@klgates.com
Peter C. Farrand
+1.202.778.9484
peter.farrand@klgates.com
K&L Gates comprises approximately 1,500
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America, Europe and Asia, and represents
capital markets participants, entrepreneurs,
growth and middle market companies,
leading FORTUNE 100 and FTSE 100
global corporations and public sector
entities. For more information, please visit
www.klgates.com.
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SEC Adopts Revisions to, and Mandates the
Electronic Filing of, Form D
At its open meeting on December 11, 2007, the Securities and Exchange Commission (“SEC”)
adopted (i) revisions to the information requirements of Form D and (ii) rule amendments that
will mandate the electronic, online filing of Form D with the SEC. The SEC issued its final
rules relating to these revisions and rule amendments on February 6, 2008. The full text of
the SEC’s final rules release (Release No. 33-8891) is available on the SEC website at http://
www.sec.gov/rules/final.shtml.
These revisions and rule amendments will:
• Revise the content and information requirements of Form D effective as of September 15,
2008
• Permit issuers to voluntarily file Form Ds electronically through the SEC’s website
beginning on September 15, 2008
• Allow issuers to continue filing paper copies of Form D with the SEC, using either the
current version of Form D or a version of the newly revised Form D, during a “transition”
period beginning September 15, 2008 through March 15, 2009
• Require issuers to file Form D electronically through the SEC’s website beginning on
March 16, 2009
The SEC’s stated objectives for its revisions to Form D are to (a) ease the burden and cost
of preparing and filing Form D, (b) streamline and update the information requirements of
Form D, (c) enhance coordination between federal and state securities regulators, (d) increase
the information available regarding the effectiveness of the exemptions under the Securities
Act of 1933, as amended (the “Securities Act”), and (e) increase the information available to
researchers using Form D data to conduct empirical research aimed at improving the efficiency
and effectiveness of private markets.
Form D
Form D is the official notice required to be filed with the SEC by issuers that have sold
securities without registration under the Securities Act in reliance on an exemption from
registration under Regulation D1 or the exemption contained in Section 4(6) of the Securities
Act. Form D requires an issuer to disclose specific information about itself as well as relevant
information about the offering and the exemption claimed. Issuers that rely on an exemption
under Regulation D are required to file a Form D with the SEC within 15 calendar days
following the initial sale of securities pursuant to the exempt offering.
1
Regulation D currently provides three exemptions (Rules 504, 505 and 506) from the Securities Act’s registration requirements for certain limited private offerings.
Securities, Investment Management, Hedge
Funds and Alternative Investments Alert
documents to regulators on request (subject to
applicable law), a consent to service of process and
a certification that the issuer is not disqualified by
rule from relying on the exemption claimed;
Revisions to Form D’s Information
Requirements
As a result of the SEC’s adopted revisions to Form
D, the information requirements of Form D will be
reorganized into 16 numbered categories. Much of
the information currently required to be disclosed on
Form D will carry over to the revised Form D, albeit
in a streamlined and simplified format. Key changes
to Form D’s information requirements include:
• a provision that allows for the identification of
multiple issuers in a multiple-issuer offering in one
Form D filing;
• requiring the reporting of the date of the first sale
in the offering (presumably to aid the SEC and the
state regulators in identifying late filings);
• deletion of the requirement to identify as “related
persons” of the issuer owners of ten percent (10%)
or more of a class of the issuer’s equity securities;
• a requirement for issuers to identify their industry
group from a pre-established list of industries (as
opposed to providing a description of the issuer’s
business);2
• a requirement for all issuers to disclose their
revenue range information3 (subject to options to
“decline to disclose” or answer “not applicable”).
Issuers that classify themselves as “hedge funds”
or as pooled investment funds (other than venture
capital and private equity funds) will be requested
to disclose information on their aggregate net asset
value4 (subject to options to “decline to disclose” or
answer “not applicable”);
• replacing the current federal and state signature
requirements with a combined signature requirement
that includes an undertaking to provide offering
If an issuer identifies itself as a “pooled investment fund” on the
revised Form D, the issuer will also be required to (i) designate
the specific type of pooled investment fund and (ii) state whether
or not it is registered as an investment company under the
Investment Company Act of 1940, as amended.
3
Revenue range information will be based on the issuer’s most
recent fiscal year. If the issuer has been in existence for less than
a year, it will be required to identify its revenues to date.
4
Aggregate net asset value information will be requested as of the
most recent practicable date.
2
• a requirement for issuers to identify specific
information on the exemption from registration
being claimed, as well as information on any
exclusion claimed from the definition of “investment
company” under the Investment Company Act of
1940, as amended; and
• the allowance of a limited amount of free writing in
“clarification” fields to the extent necessary to allow
the issuer to clarify certain of its responses in the
Form D.5
Events Requiring an Amendment to a
Previously Filed Form D
In addition to the foregoing revisions to Form D, the
SEC is amending Rule 503 under Regulation D to
clarify the circumstances in which a previously filed
Form D must be amended. Specifically, an issuer will
be required to amend a previously filed Form D in the
following instances:
• to correct a material mistake of fact or error in
the Form D (the amendment must be filed as soon
as practicable after discovery of the mistake or
error);
• subject to several exceptions, to reflect a change
in the information provided in the Form D (the
amendment must be filed as soon as practicable
after the change in information). No amendment
will be required to reflect, among other things,
a subsequent change in the issuer’s revenues or
aggregate net asset value; and
• annually, on or before the first anniversary of the
filing of the Form D (or the filing of the most recent
amendment), if the offering is continuing at that
time.
The electronic filing of Form D will be exempt from the
prohibition under Rule 502(c) of Regulation D on the use of
general solicitation and general advertising in connection with the
private offering, provided that the filing is made in good faith and
the issuer makes reasonable efforts to comply with the
requirements of Form D.
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Securities, Investment Management, Hedge
Funds and Alternative Investments Alert
When an amendment to a Form D is required, the issuer
will be obligated to provide updated responses to all
of the information requirements in Form D regardless
of the reason for the amendment. Furthermore, during
the “transition” period commencing on September 15,
2008 through March 15, 2009 (in which paper filings
of Form D will still be accepted by the SEC), the SEC’s
adopted rules governing amendments to Form Ds will
also apply to Form Ds that are filed in paper format.
Mandatory Electronic, Online Filing of
Form D
The SEC is establishing a new online system to handle
electronic filings of Form D.6 This online system will
be available on September 15, 2008, and beginning on
that date issuers may voluntarily file Form Ds online
beginning on that date. Effective March 16, 2009,
issuers will be required to file Form Ds online and
the SEC will no longer accept paper filings of Form
D. Issuers will continue to be required to file Form D
within 15 calendar days after the first sale of securities
in the offering.7
The SEC’s new online system will capture and tag data
from Form Ds filed electronically; the data collected,
therefore, will be interactive and searchable by the
general public and state securities regulators. As a
result, federal and state securities regulators will be
able to monitor private offerings more effectively.
The ability to conduct electronic, online searches
for information in Form D filings will better allow
securities regulators (and securities self-regulatory
organizations (“SROs”)) to gather data and use the
Form D as an enforcement tool. Securities regulators
and SROs will be able to flag Form D filings by type of
information and potentially could use the information
gathered as the basis for an investigation. For example,
under the revised Form D an issuer will be required to
separately disclose finder’s fees, which often indicate
that the issuer is paying an unregistered broker-dealer
to solicit sales. Tracking such disclosures will be
significantly easier through the SEC’s new online
system.
In order to file Form D electronically, issuers will
need the same codes as are currently required to make
filings on the SEC’s EDGAR system. If an issuer does
not have EDGAR filing codes, it will need to obtain
the necessary codes from the SEC through an online
application process.
The SEC and the North American Securities
Administrators Association are currently exploring a
“one-stop filing” approach that would allow issuers to
file Form D information with the SEC and with states
designated by them in one electronic transaction. This
capability will not be available, however, when the
electronic filing of Form D becomes mandatory on
March 16, 2009.
The SEC is amending Regulation S-T under the Securities Act, Rule 503 of Regulation D under the Securities Act and Form D to implement this requirement.
7
If a Form D filing would otherwise be due on a weekend or holiday, it will be deemed due on the next business day.
6
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