New SEC C&DIs Impacting Mergers And Acquisitions – Corporate/Commercial Law

On March 22, 2022, the staff (Staff) of the US Securities and
Exchange Commission (SEC) issued six compliance and disclosure
interpretations (C&DIs) impacting mergers and acquisitions. Two
of the new C&DIs relate to Item 1.01 of Form 8-K. Three of
the C&DIs interpret proxy solicitation requirements. One
addresses a tender offer issue relating to special purpose
acquisition companies (SPACs).

Form 8-K

C&DI #102.04  specifies that the amount and nature of
consideration, committed financing arrangements, material terms
regarding the securities ownership or management structure of the
combined or surviving company,  material closing conditions,
and  anticipated timeframes for SEC filings and closing are
generally considered material and should be disclosed pursuant to
an Item 1.01 of Form 8-K. This C&DI also indicates that the
Form 8-K must also include all other material information that is
necessary to make the required disclosure, in light of the
circumstances under which it is made, not misleading, including
whether a material term of the agreement has not yet been
determined by the parties and the nature of the target
company’s business, including, at a minimum, whether it has
existing operations or has generated revenues, as well as any
information disclosed by the target company in announcing the
business combination transaction.

C&DI #102.05 encourages companies, as a best practice,
to file the business combination agreement as an exhibit to an Item
1.01 Form 8-K. This C&DI also specifies that, as a best
practice, companies should provide an explanation in the Form 8-K
if they are unable to prepare the agreement in the proper EDGAR
format and file the agreement as an exhibit to the Form 8-K.

Proxy Solicitations

C&DI #101.02 provides that a target company that does
not plan to solicit its own shareholders could be engaged in a
solicitation of the acquiror’s shareholders if its public
communications promote the proposed transaction or may be
reasonably expected to influence the voting decisions of the
acquiror’s shareholders. This would subject the target company
to liability under, and filing and information requirements of, the
Securities Exchange Act of 1934 (Exchange Act).

C&DI #132.01 indicates that the Staff will not object
if a target company that is not soliciting its own shareholders
relies on Exchange Act Rule 14a-12 to communicate publicly about
the proposed business combination transaction if conditions
specified in this C&DI are met.

C&DI #132.02 permits an acquiror to make public
communications regarding a proposed business combination
transaction in reliance on Exchange Act Rule 14a-12 where the
acquiror will not file a definitive proxy statement for the
transaction but the target company will, as long as conditions
specified in this C&DI are met.

Tender Offers

C&DI #166.01 states that to the extent that a SPAC
redemption offer constitutes a tender offer, the Exchange Act Rule
14e-5 prohibition of purchases outside of a tender offer applies to
the purchases of SPAC securities by the SPAC sponsor or its
affiliates outside of the redemption offer. However, the Staff will
not object to purchases by the SPAC sponsor or its affiliates
outside of the redemption offer as long as conditions specified in
this C&DI are satisfied.

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