Use of Credit Ratings in SEC Rules and Forms: SEC Adopts New Short-Form Registration Criteria to Replace Credit Ratings

Sullivan & Cromwell LLP - August 5, 2011

On July 26, 2011, the SEC adopted amendments to its rules and forms that remove references to credit ratings in the eligibility requirements for the use of short-form registration statements in offerings of non-convertible debt and preferred stock, including shelf offerings. The amendments expand the alternative eligibility criteria from those the SEC proposed in February 2011, with the aim of preserving the use of registration on Form S-3 and Form F-3 for issuers that are widely followed in the market. The new criteria include a temporary “grandfather” provision that will allow an issuer that is not otherwise eligible to use short-form registration, but reasonably believes it would have satisfied the prior requirements, to use Form S-3 or Form F-3 for offerings made during the three years following the effective date of the amendments.

Related amendments modify provisions of other SEC rules and forms to incorporate the new Form S-3 or Form F-3 eligibility criteria or otherwise to delete references to credit ratings. These changes address incorporation by reference in Forms S-4 and F-4 and Schedule 14A, as well as rules that provide safe harbors for research and certain other communications during the offering process. The amendments will also eliminate Form F-9, which is available for investment grade offerings by certain Canadian issuers.

The amendments relating to short-form registration and offering-related communications will become effective on September 2, 2011. The removal of Form F-9 and related amendments will become effective on December 31, 2012.