SEC

Published date01 January 2016
DOIhttp://doi.org/10.1002/jcaf.22132
Date01 January 2016
121
© 2016 Wiley Periodicals, Inc.
Published online in Wiley Online Library (wileyonlinelibrary.com).
DOI 10.1002/jcaf.22132
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SEC
Donald A. Walker Jr.
SEC REPORTING CONCERNS
FOR MERGERS AND
ACQUISITIONS
In this column, I will address
some of the Securities and
Exchange Commission (SEC)
compliance matters that become
critical when undertaking merg-
ers and acquisitions around the
end of the calendar year.
DETERMINING WHETHER
ABUSINESS COMBINATION
HAS TAKEN PLACE
There are many types of
transactions that are obvi-
ously business combinations
requiring current reporting
on Form 8-K. Form 8-K Item
2.01 applies to significant
“acquisitions or dispositions
of assets” which includes busi-
nesses. Although the definition
of a business for purposes of
Form 8-K is different from the
definition of a business for
financial reporting in Financial
Accounting Standards Board
(FASB) Accounting Standards
Codification (ASC) 805, the
SEC is currently working to
address that difference as part
of its disclosure updating
process. In addition, prior to
acquisition, Item 1.01 requires
disclosures about entry into
material definitive agree-
ments. Aside from the usual
acquisition of one business by
another, an acquisition report-
able on Form 8-K may include
obtaining control of another
business through a contract or
agreement, or through becom-
ing the primary beneficiary
of a variable interest entity.
Should a company focus on the
usual acquisition, and not con-
sider acquisitions by contract
or consolidation of variable
interest entities, a reportable
acquisition might be missed.
Given the importance of this
determination, management
attention to significant trans-
actions and agreements, espe-
cially around the fiscal year-
end, should include careful
analysis to determine whether
gaining control of another
entity or assets and obliga-
tions falls under the reporting
requirements of Form 8-K.
Inaddition, the short four-
business-day deadline for filing
a timely Form 8-K puts pres-
sure on the internal informa-
tion system.
ANNOUNCING A BUSINESS
COMBINATION
SEC staff members respon-
sible for reviewing registrant
disclosure documents often set
notifications in the Electronic
Data Gathering, Analysis, and
Retrieval (EDGAR) system
that alert them to filings by
companies for which they
have responsibility. In addi-
tion, they often search the
Internet for earnings and other
announcements for those com-
panies. They read filings and
announcements, and consider
whether they should initiate
formal review and comment
procedures. In their analyses,
they consider whether disclo-
sures and press announcements
are consistent, and to what
degree additional disclosure
filings such as agreements
and financial statements and
pro forma financial state-
ments may be required under
the 1933 and 1934 Acts. They
consider whether the financial
statements and disclosures are
timely and consistent with the
requirements for issuing securi-
ties if there is an ongoing or
planned issuance of securities

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