Mandatory Electronic Filing and Other Changes to Form D

March 17, 2009

On March 16, 2009, the amendments to Form D requiring electronic filing and annual updates became effective.  These requirements were included in the amendments to Regulation D adopted by the Securities and Exchange Commission (the "SEC") in February 2008.  The rules initially permitted issuers to make Form D filings either in paper format or electronically beginning on September 15, 2008.  As of March 16, 2009, however, Form D filings must be made electronically, subject to very limited hardship exceptions.

Form D serves as the official notice of an offering of securities made without registration under the Securities Act of 1933 (the "Act") in reliance on an exemption provided by Regulation D.  Regulation D requires companies that meet such an exemption to file a report on Form D with the SEC within 15 days after the first sale of securities in the offering.  Earlier filing is permitted.  Form D filings were previously only accepted by the SEC in paper format.

Overview of New Form D

In place of the old Form D’s five sections of preliminary and other informational requests, the new Form D requires issuers to respond to sixteen numbered fields.  Issuers filing during the transition period from September 15, 2008 to March 16, 2009 have had the option of using new Form D, or temporary Form D, which was the same as the previous paper Form D.  Issuers are now required to use the new Form D.  While many of the requirements of the old Form D continue to exist, the new Form D also requires disclosure of some additional items, including:

  • if the issuer claims an exclusion from being an "investment company" under Section 3(c) of the Investment Company Act of 1940, the specific subsection of Section 3(c) being relied upon;
  • the date of first sale in the offering, or indicate the first sale has yet to occur[1];
  • whether the issuer intends that the offering will continue for more than one year;
  • whether the offering is being made in connection with a business combination transaction, such as an exchange (tender) offer, a merger or an acquisition;
  • additional information regarding the types of securities being offered; and
  • the recipients and amounts of any compensation paid in connection with the sale of the securities, including the Central Registration Depository ("CRD") number of each such person, provided the person has a CRD number.

The new electronic Form D omits certain items that were previously required by the old Form D. Most significantly, the electronic Form D no longer requires issuers to identify owners of 10% or more of a class of their equity securities as "related persons." In addition, the new Form D includes a single signature block for federal and state filing purposes.

Among the new requirements, when an offering lasts more than one year, an annual amendment to the Form D must be filed.  Therefore, all issuers engaged in ongoing offerings whose last Form D (either the initial Form D or the most recent amendment) was filed with the SEC on or before March 15, 2008 were required to file an annual amendment on the new electronic Form D by March 16, 2009.  Most hedge fund offerings are continuous offerings, and therefore are subject to this new requirement.

Amendments must also be filed if a material mistake of fact or error is discovered in a previously filed Form D, and to reflect a change in the information that was previously provided, except no amendment is required to reflect a change that occurs after the offering terminates.[2]

"Blue Sky" Laws

Under Section 18(b)(4)(D) of the Act, any private placement made in accordance with Rule 506 of Regulation D will preempt the operation of state securities laws relating to registration or qualification of securities.  However, under Section 18(c) of the Act, states are expressly permitted to require notice filings, a consent to services of process and notice filing fees in connection with any transaction in a covered security.  Additionally, many states have drafted provisions incorporating all of the various exemptions found in Regulation D into state law exemption provisions.  Consequently, Regulation D and Form D are important provisions in relation to compliance with state "blue sky" laws.

Although it is anticipated that the states will accept the new version of Form D and electronic filings gradually over time, issuers may initially need to file both the current and new versions of Form D using both electronic and paper filing methods. The SEC is working with the North American Securities Administrators Association, the organization of state securities regulators, to develop a system that will enable issuers to file Form D information both with the SEC and the states in one electronic transmission.

Filing Codes

In order to comply with the new Form D electronic requirement, an issuer effecting a private placement of securities in reliance upon Regulation D will need to obtain a Central Index Key (CIK) code, a CIK Confirmation Code (CCC) and a password.  Current EDGAR / IDEA filers can use their existing access codes to complete Form D filings.  Because access codes will now be required to file a Form D electronically, issuers without access codes should obtain codes as early as possible to avoid any delay in complying with the Form D filing requirements.  In a notice posted on the SEC website on February 17, 2009, the Division of Corporation Finance warned that there may be delays in providing EDGAR / IDEA access codes around March 16 because of the expected high volume of requests.

Submission of Authenticating Documents for EDGAR Access Codes

To streamline the process of applying for and receiving EDGAR access codes, on March 9, 2009, the SEC amended Rules 10 and 101 of Regulation S-T and Form ID.  Prior to the amendment, applicants submitting Form ID applications to receive EDGAR access codes were required to submit the application online.  This online submission would then be notarized, and a notarized copy would be faxed to the SEC. This additional notarized fax transmission is referred to as an "authenticating document."  Under the SEC’s amendments, Form ID applicants are now permitted to submit their authenticating documents as attachments to their online Form ID applications in PDF format.  This rule also became effective on March 16, 2009.

 [1]   In the adopting release and in the instructions to new Form D, the SEC provides that the date of first sale is "the date on which the first investor is irrevocably contractually committed to invest, which, depending on the terms and conditions of the contract, could be the date on which the issuer receives the investor’s subscription agreement or check."  (See

  [2]   No amendment is required to reflect a change in the following information: (i) the address or relationship to the issuer of a related person; (ii) an issuer’s revenues or aggregate net asset value; (iii) the minimum investment amount, provided the change is an increase in the amount, or when the change does not result in a decrease of more than 10%; (iv) any address or state(s) of solicitation; (v) the total offering amount, provided the change is a decrease, or when the change does not result in an increase of more than 10%; (vi) the amount of securities sold in the offering or the amount remaining to be sold; (vii) the number of non-accredited investors, so long as there are no more than 35; (viii) the total number of investors who have invested in the offering; or (ix) the amount of sales commissions, finders’ fees or use of proceeds for payments to executive officers, directors or promoters, provided the change is a decrease, or does not result in an increase of more than 10%.

 Gibson, Dunn & Crutcher LLP 

Gibson, Dunn & Crutcher’s Securities Regulation and Corporate Governance Practice Group is available to assist in addressing any questions you may have regarding these issues.

Please contact the Gibson Dunn attorney with whom you work, or any of the following:

John F. Olson (202-955-8522, [email protected])
Brian J. Lane (202-887-3646, [email protected])
Ronald O.  Mueller (202-955-8671, [email protected])
Amy L. Goodman, (202-955-8653, [email protected])
James J. Moloney (949-451-4343, [email protected]
Ari B. Lanin (310-552-8581, [email protected]

© 2009 Gibson, Dunn & Crutcher LLP

Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.