The SEC has finalized its 15c2- 12 disclosure amendments which appear to be more narrowly tailored based on the comments that we and many groups filed. Below are the SEC press release and final rule links. The Commission said that it will focus on material financial obligations that could impact on issuers/borrowers liquidity, overall credit worthiness, or existing security holders rights. Compliance date for the rules are 180 days after they are published in the Federal Register.
You may recall that last year the SEC proposed to add broad and vague new event notice requirements to the list of events issuers/obligated persons must agree to disclose through EMMA. Criticism was focused on the overly broad definition of a financial obligation.
These final rules will require disclosure of the incurrence of a financial obligation of the issuer or obligated person, if material, as well as any agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the issuer or obligated person, if these are material. “Financial obligation” has been narrowed to a debt obligation or derivative instrument entered into in connection with, or pledged as a security or a source of payment for, an existing or planned debt obligation or guarantee of a debt obligation derivative. Eliminated is last year’s broader language that included leases and “a monetary obligation resulting from a judicial, administrative or arbitration proceeding.”
The rules also require an event notice to be filed for certain actions or events related to the financial obligation that “reflect financial difficulties” such as a default, event of acceleration, termination event or modification of terms.
We welcome all comments from the members, their lawyers and advisors on the implications of any issue surrounding this final rule which undoubtedly will now be subject to intensive commentary in the public finance community.
https://www.sec.gov/news/press-release/2018-158
https://www.sec.gov/rules/final/2018/34-83885.pdf
You may recall that last year the SEC proposed to add broad and vague new event notice requirements to the list of events issuers/obligated persons must agree to disclose through EMMA. Criticism was focused on the overly broad definition of a financial obligation.
These final rules will require disclosure of the incurrence of a financial obligation of the issuer or obligated person, if material, as well as any agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the issuer or obligated person, if these are material. “Financial obligation” has been narrowed to a debt obligation or derivative instrument entered into in connection with, or pledged as a security or a source of payment for, an existing or planned debt obligation or guarantee of a debt obligation derivative. Eliminated is last year’s broader language that included leases and “a monetary obligation resulting from a judicial, administrative or arbitration proceeding.”
The rules also require an event notice to be filed for certain actions or events related to the financial obligation that “reflect financial difficulties” such as a default, event of acceleration, termination event or modification of terms.
We welcome all comments from the members, their lawyers and advisors on the implications of any issue surrounding this final rule which undoubtedly will now be subject to intensive commentary in the public finance community.
https://www.sec.gov/news/press-release/2018-158
https://www.sec.gov/rules/final/2018/34-83885.pdf
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