Staleness Rules for Securities Offerings

Summary

This practice note discusses Rule 3-12 of Regulation S-X (17 C.F.R. § 210.3-12) and other rules determining how recent the financial statements in a registration statement must be when filed with the Securities and Exchange Commission (SEC) in a securities offering. These rules (often referred to as the staleness rules) depend on the registration form used, filing status of the issuer, the anticipated effective date of the registration statement, and the applicability of certain exceptions. The staleness rules can have significant ramifications for issuers, who may be precluded from launching an offering with stale financial statements until they are appropriately updated, a time-consuming and expensive process. This practice note identifies potential logistical, disclosure, or audit issues related to the staleness rules that attorneys should keep in mind at the outset of a transaction to mitigate considerable holdups at a later date.