Originally published April 28, 2008
Keywords: SEC, Division of Corporation Finance, Form 8-K, interpretations, filing requirements, unregistered sales, equity securities, stock option plan, directors duties
The Securities and Exchange Commissions Division of Corporation Finance has posted a consolidated set of interpretations on the filing requirements for Current Reports on Form 8-K, as last updated April 10, 2008. See http://www.sec.gov/divisions/corpfin/guidance/8-kinterp.htm. This set of interpretations replaces interpretations regarding Form 8-K that previously appeared in three sources:
- The Form 8-K interpretations in the July 1997 Manual of
Publicly Available Telephone Interpretations;
- The June 13, 2003, Frequently Asked Questions Regarding
the Use of Non-GAAP Financial Measures; and
- The November 22, 2004, Form 8-K Frequently Asked
Questions.
As a result, there is now a single source to consult for SEC staff guidance on Form 8-K interpretive issues. In some cases, the previously published positions have been updated, refined or otherwise revised. In others, new interpretative material has been added and some obsolete material has been deleted.
Questions and Answers of General Applicability
The first section of the interpretations consists of questions and answers of general applicability for each item of Form 8-K. Highlights of the new or modified material in this section includes the following:
ITEM 1.01: ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
- Material definitive agreements must be summarized in the
body of a Form 8-K filed under Item 1.01, even if the
agreement is filed as an exhibit to the Form 8-K.
- As a result of the deletion of compensatory arrangements
from Items 1.01 and 1.02 and the addition of revised
requirements concerning compensatory arrangements in Item
5.02, the questions and answers dealing with compensatory
matters in the November 2004 FAQ have been either deleted or
changed and moved to the section dealing with Item 5.02.
(While the deleted material is no longer relevant to Form
8-K, it still presumably represents 2 SECs Division of
Corporation Finance Issues Consolidated and Updated
Interpretations on Form 8-K the staffs interpretative
position in the exhibit requirements of Regulation S-K, Item
601(b)(10)(iii)).
ITEM 3.02: UNREGISTERED SALES OF EQUITY SECURITIES
- If a grant of stock options pursuant to an employee stock
option plan does not constitute a sale or offer to sell, the
grant does not have to be reported under Item 3.02 of Form
8-K.
- If a registrant sells shares of a class of equity
securities that is not currently outstanding in an
unregistered transaction, the volume threshold under Item
3.02 (generally 1 percent or more of the number of shares
outstanding of the class of equity securities sold; 5 percent
in the case of smaller reporting companies) would be exceeded
and a Form 8-K would be required.
ITEM 4.02: NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED AUDIT REPORT OR COMPLETED INTERIM REVIEW
- The Item 4.02 filing requirement does not apply to
pro forma information. If an error is detected in
pro forma financial information, an amendment to the
form containing such information may be required to correct
the error.
ITEM 5.02: DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS
- Notice of a decision to resign, retire or refuse to stand
for re-election triggers a Form 8-K requirement even if such
notice is conditional or subject to acceptance. A board
policy that all directors must provide any such notice to the
corporate secretary is suggested as an appropriate disclosure
control and procedure for this purpose.
- A Form 8-K is triggered under Item 5.02(b) if a person
identified as a "named executive officer" in the
most recent filing retires, resigns or is terminated from the
position that the executive officer is listed as holding in
the most recent filing. This does not mean that current
disclosure is triggered when the officers relative level of
total compensation no longer requires that he or she be
included in the summary compensation table on a going-forward
basis.
- If a director is elected to the board other than by a
vote of security holders, the Form 8-K under Item 5.02(d) is
triggered as of the date of the election, even though the
term may begin on a later date. The Form 8-K should disclose
the date the directors term begins.
- The setting of specific performance goals and business
criteria for named executive officers under a cash bonus plan
does not require disclosure pursuant to Item 5.02(e)of Form
8-K if the specific performance goals and business criteria
set for the performance period are materially consistent with
the previously disclosed terms of the plan.
- If a Form 8-K is needed to report an annual non-equity
incentive plan award under Item 5.02(e), specific target
levels do not need to be disclosed with respect to specific
quantitative or qualitative performance-related factors, or
any other factors or criteria involving confidential trade
secrets or confidential commercial or financial information,
the disclosure of which would result in competitive harm for
the registrant.
- Item 5.02(e) Form 8-K is not triggered by a discretionary
bonus where a previously disclosed employment agreement
provides that the officer is entitled to receive a cash bonus
in an amount determined by the compensation committee.
- Termination of an executive compensation plan must be
disclosed under Item 5.02(e) of Form 8-K if it constitutes a
material amendment or modification of the executive
compensation plan.
Interpretive Responses Regarding Particular Situations
The second portion of the SEC staffs Form 8-K interpretations consists of responses regarding particular situations. These interpretations address very specific questions. Highlights of these new or modified interpretations include:
ITEM 1.01: ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
- When a Form 8-K is required to be filed after the end of
a registrants first quarter but before the registrant is
required to file its Form 10-Q for that quarter, if the
material contract is not filed with the Form 8-K, the
registrant is required to file the agreement as an exhibit to
its second quarter Form 10-Q.
ITEM 2.01: COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
- The sale of a subsidiarys equity to the public, if it
constitutes a significant amount of the assets of the public
company, would require a report under Item 2.01 of Form 8-K.
This is so because the subsidiary would not be wholly owned
after the transaction is completed and thus would not be
within the exception provided by Instruction 1(iii).
ITEM 2.02: RESULTS OF OPERATIONS AND FINANCIAL CONDITION
- The safe harbor contained in Item 2.02(b) provides that a
Form 8-K is not required to report the disclosure of
material, nonpublic information that is disclosed orally,
telephonically, by webcast, by broadcast or by similar
measures in a presentation that is complementary to, and
initially occurs within 48 hours following, a related written
announcement or release that has been furnished on an Item
2.02 Form 8-K. This safe harbor applies only to such 48 hour
period it is not a two business days or two calendar days
test.
ITEM 2.04: TRIGGERING EVENTS THAT ACCELERATE OR INCREASE A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT
- A voluntary redemption of convertible notes by a
registrant does not trigger a Form 8-K filing
requirement.
- A Form 8-K is required if a notice of default is
received, even if the registrant believes in good faith that
there is no default and submits the matter to
arbitration.
ITEM 3.02: UNREGISTERED SALES OF EQUITY SECURITIES
- An Item 3.02 Form 8-K filing requirement is triggered by
an unregistered sale of 4 SECs Division of Corporation
Finance Issues Consolidated and Updated Interpretations on
Form 8-K warrants to purchase equity securities (or an
unregistered sale of options outside a stock option plan) if
the volume threshold under Item 3.02 is exceeded, or by an
unregistered sale of convertible notes (convertible into
equity securities) if the volume threshold under Item 3.02 of
the underlying equity security issuable upon conversion is
exceeded. If the Item 3.02 Form 8-K that discloses the
initial sale of the warrants, options or convertible notes
also discloses the maximum amount of the underlying
securities that may be issued through the exercise of the
warrants, options or notes, then a subsequent Item 3.02 Form
8-K filing requirement is not triggered upon such
exercise.
ITEM 5.02: DEPARTURE OF CERTAIN DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
- If the duties of a principal financial officer are
temporarily turned over to another person, the registrant
must file a Form 8-K both under Item 5.02(b), to report that
the original principal financial officer has temporarily
stepped down, and under Item 5.02(c), to report that the
temporary replacement principal financial officer has been
appointed. If the original principal financial officer
returns to the position, then the registrant must again file
a Form 8-K under Item 5.02(b), to report the departure of the
temporary replacement principal financial officer, and under
Item 5.02(c), to report the "re-appointment" of the
original principal financial officer.
- If a director who is designated by an issuers majority
shareholder gives notice that he or she will resign if the
majority shareholder sells its entire holdings of issuer
stock, such notice triggers an obligation to file an Item
5.02(b) Form 8-K.
- If the appointment of a director to the board and a
committee assignment were disclosed under Item 5.02(d) of
Form 8-K, a change in that directors committee assignment
does not trigger a new 8-K filing as long as the change was
not contemplated at the time of the directors initial
election to the board and initial committee assignment.
- The automatic renewal of an employment agreement pursuant
to its terms does not trigger an Item 5.02(e) Form 8-K filing
requirement.
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