At an open meeting on October 26, 2004, the SEC announced proposals that would result in significant changes to the registered offering process under the Securities Act of 1933, as amended. The SEC proposed changes in three areas: communications related to registered securities offerings, liability timing issues and improved shelf registration processes. The SEC has not yet released the text of the proposed rules, which release will trigger commencement of the 75-day comment period. Clients should contact Perkins Coie if interested in participating in the comment process.

This Update provides a brief summary of the key elements of the SEC's proposals based on statements made at the open meeting.

SEC Proposal Would Clarify and Relax Restrictions on "Gun-Jumping"

The SEC proposal would ease restrictions on communications around the time of registered securities offerings.

• Shorter "Quiet Period."

The SEC would permit communications more than 30 days before filing a registration statement so long as they did not reference a securities offering.

• More Liberal Communications Allowed. Under the proposal, a new class of "Well-Known Seasoned Issuers," essentially Form S-3 eligible, widely followed registrants that have $700 million of public float (or $1 billion of registered debt in certain circumstances), could communicate with investors at any time, provided that written communications outside the statutory prospectus, so-called "free writing prospectuses," are filed with the SEC. The SEC would permit most other issuers to use free writing prospectuses during an offering only after they file the registration statement.

The SEC would consider road show materials to be free writing prospectuses that companies must file, unless the materials are available from the issuer electronically to an unrestricted audience.

SEC Proposal Would Clarify Liability Timing Issues

Liability Assessed Only on Information Available at Time of Investment Decision

.The SEC proposal would clarify disclosure liability by specifying that liability would be assessed based on information conveyed to investors at the time of their investment decisions, and not information subsequently conveyed or filed.

"Access Equals Delivery" For Final Prospectuses. This liability standard should not delay the offering process because the SEC also proposed a new access equals delivery model for final prospectuses, under which filing a final prospectus on Edgar and complying with other conditions would satisfy the SEC's prospectus delivery requirements.

SEC Would Treat Each Takedown off the Shelf as New Effective Date. Each prospectus filing reflecting a takedown of securities off a shelf registration would establish a new effective date under the SEC's proposal, which would conform the timing for disclosure liability for issuers, underwriters and other parties. In addition, each prospectus supplement would be included in the registration statement for disclosure liability purposes.

SEC Proposal Would Improve Shelf-Registration Processes

SEC Proposal Would Modernize and Clarify the Shelf Registration Process

.The SEC proposal would eliminate restrictions on shelf registrations, including restrictions on "at-the-market" offerings. In addition, the proposal would replace the current requirement that shelf registrations be limited to securities that the issuer intends to sell within two years with a requirement to update the shelf by filing a new registration statement every three years.

Automatic Shelf Registration Available for Well-Known Seasoned Issuers. Well-Known Seasoned Issuers would qualify for a more flexible "Automatic Shelf Registration," which, among other things, would allow automatic effectiveness, prepaid or pay-as-you-go registration fees and flexibility with respect to the timing of determining the amount and types of securities to be sold under the shelf.

SEC Proposal Would Require Additional Exchange Act Disclosure

Companies Must Disclose Risk Factors in Form 10-K and Certain Other Information. The SEC would require additional disclosure to balance the SEC's willingness to forgo, in some cases, registration statement review for companies that file periodic reports required by the Securities Exchange Act of 1934. The additional disclosure would include risk factor disclosure in Form 10-K filings, disclosure of "voluntary" filer status and, for accelerated filers, Form 10-K disclosure of certain material, unresolved SEC comments.

Additional Information

You can listen to a webcast of the open meeting at http://www.sec.gov/news/openmeetings.shtml. You can find discussion of other recent laws, regulations and rule proposals of interest to public companies on our website.