SEC Proposes Rules to Simplify and Streamline Disclosures in Certain Registered Debt Offerings

The SEC proposed rule amendments on July 24th to simplify and streamline the financial disclosure requirements applicable to registered debt offerings. These debt offerings are for guarantors and issuers of guaranteed securities, as well as for affiliates whose securities collateralize a registrant’s securities. The proposed amendments pertain to Rules 3-10 and 3-16 of Regulation S-X.

The amendments would focus disclosures on information that is material to investors given the specific facts and circumstances, make the disclosures easier to understand, and reduce the costs and burdens for registrants. Reducing compliance burdens should further encourage issuers to register debt offerings and provide investors with additional protections that are not present in unregistered offerings.

If adopted, the proposed changes would amend both Rules 3-10 and 3-16 and move part of Rule 3-10 and all of Rule 3-16 to new Article 13 within Regulation S-X. This would comprise Rules 13-01 and 13-02. Under the proposed amendments, Rule 3-10 would continue to allow the omission of separate financial statements of subsidiary issuers and guarantors when particular conditions are met and the parent company provides supplemental financial and non-financial disclosure about its subsidiary issuers, guarantors, and guarantees.

The following changes would be made:

  • replace the condition that a subsidiary issuer or guarantor be 100% owned by the parent company with a condition that it be consolidated in the parent company’s consolidated financial statements
  • replace condensed consolidating financial information with certain proposed financial and non-financial disclosures. These financial disclosures would consist of summarized financial information (as defined in Rule 1-02(bb)(1) of Regulation S-X) of the issuers and guarantors. This may be presented on a combined basis. Non-financial disclosures would expand on the qualitative disclosures about the guarantees and the issuers and guarantors.
  • allow the disclosures to be provided outside the footnotes to the parent company’s audited annual and unaudited interim consolidated financial statements in the registration statement covering the offer and sale of the securities and any related prospectus and in certain Exchange Act reports filed thereafter.
  • require that the proposed disclosures be included in the footnotes to the parent company’s consolidated financial statements for annual and quarterly reports beginning with the annual report for the fiscal year during which the first bona fide sale of the securities is completed.
  • require the proposed financial and non-financial disclosures for as long as the issuers and guarantors have an Exchange Act reporting obligation with respect to the guaranteed securities rather than for how long the guaranteed securities are outstanding.

Amendments to Rule 3-16 would entail:

  • replacing the existing requirement to provide separate financial statements for each affiliate whose securities are pledged as collateral with financial and non-financial disclosures and the affiliates and the collateral arrangement
  • permitting the proposed disclosures to be located in filings for the disclosures related to guarantors and guaranteed securities
  • replacing the requirement to provide disclosure only when the pledged securities meet or exceed a threshold relative to the securities registered or being registered with a requirement to provide the proposed financial and non-financial disclosures in all cases unless they are immaterial

The complete set of rules and comment solicitations can be read in the full releases. You can submit comments using the form available on the SEC’s website or by e-mailing with the reference number (S7-19-18) in the subject line. You can also use the Federal Rulemaking Portal to submit comments or send your comments by mail to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. Again, please remember to include reference number S7-19-18.


SEC Proposes Rules to Simplify and Streamline Disclosures in Certain Registered Debt Offerings (
Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities (