242 B.E. Eckbo et al.
A second major change in SEC regulations is increased disclosure requirements in
registration statements and 10-K statements concerning risk factors. Third, Rule 415
will no longer limit the amount of securities registered on a shelf registration statement
to an amount intended to be offered and sold within two years of the effective date of
the registration statement. In practice the SEC has allowed shelf registration statements
to remain effective for many years. Under the new rules, the shelf registration can only
be used for three years. The new rules allow seasoned issuers to conduct primary offer-
ings immediately after the effectiveness of a shelf registration statement. Shelf issuers
may also conduct “at-the-market” equity offerings (sales at varying prices rather than a
conventional fixed price offer) without existing volume limitations and without needing
to identify the potential underwriters.
WKSIs are permitted to omit the plan of distribution, the names of any selling security
holders, the description of securities to be offered, and the allocation between primary
and secondary shares. This information can be incorporated in prospectus supplements
and post-effective date amendments to the shelf registration statement.
Foreign private issues are able to take advantage of the relaxation of the gun-jumping
rules (communications occurring prior to the effective date of the registration statement)
and the revised shelf registration rules to the same extent as domestic issuers. Moreover,
automatic shelf registration will make it much easier for foreign private issuers that are
WKSIs to conduct rights offerings in the U.S.
Other changes in SEC regulations include giving issuers a safe harbor from being
in violation of security regulations for written communications of regularly released
factual information made before or during an offering and commonly released forward-
looking information (e.g., earnings forecasts) made before or during an offering, allow-
ing issuers a wider range of oral and written communications while the offering is in
registration, allowing electronic delivery of filing materials to shareholders, and allow-
ing analysts reports of new issues under a wide range of situations, even for analysts
affiliated with an underwriter.
Parallel to U.S. securities regulation, there are similar national regulatory authorities
around the globe. The International Organization of Securities Commissions (IOSC)
is a global organization of national security regulators created to foster cooperation in
promoting high standards of regulation in order to maintain efficient and sound capi-
tal markets; to establish standards and effective surveillance of international securities
transactions and to promote effective enforcement of these standards. Among its re-
cent achievements, the IOSC in 1998 adopted a comprehensive set of objectives and
principles of securities regulation, which today are recognized by the world financial
community as international benchmarks for all markets. In 2002 the IOSC endorsed a
memorandum of understanding among securities regulators around the world, designed
to facilitate the enforcement of security regulation and the exchange of information.
Looking internationally, there has been an increase in disclosure regulation and in-
creased regulation and enforcement of insider trading activity.
In addition to securities regulation, several other recent laws and rules of self reg-
ulatory organizations also have impacted the security offering process. In 1999, the