The SEC is proposing to modernize filing fee disclosure as well as filing fee payment methods. These amendments would change most fee-bearing forms, schedules, statements, and related rules to require each fee table and accompanying disclosure to include all required information for fee calculation in a structured format. In addition, these amendments would allow for fee payment via Automated Clearing House (“ACH”), which would eliminate the need for fee payments via paper checks and money orders. These amendments are intended to improve filing fee preparation and payment processing by facilitating enhanced validation via fee structuring and lower-cost, easily routable payments through ACH.
Wednesday, October 30. 2019
Filing fees are assessed by the SEC as part of Section 6(b) of the Securities Act and Sections 13(e) and 14(g) of the Exchange Act. They pertain to companies filing documents related to transactions, which includes registered securities, tender offers, and merger or acquisition transactions. The SEC also assesses fees related to registered offerings by investment companies, including unit investment trusts, business development companies, and small business investment companies. Because this filing fee information is not generally machine-readable, the process of assessing these fees is time intensive and laborious. In addition, the underlying calculations to derive the fees are not always transparent or easily understandable. Often a filer must manually enter data relevant to fee calculations in multiple different places, including the filing’s cover page and again when the filing is submitted to EDGARLink. This introduces the chance for errors, and correcting miscalculated fees or fee statements can increase burdens on both filers and SEC staff.
The proposed amendments should improve the fee payment validation process. Specifically, most fee-bearing forms will be changed to provide that each fee table, together with the explanatory notes to the table, be formatted in Inline XBRL. This would enable an efficient, automated access to and processing of fee information, as well as eliminating the need for the filer to enter duplicative information in the filing, which should in turn reduce errors. The following forms would be included: Forms S-1, S-3, S-8, S-11, S-4, F-1, F-3, F-4, and F-10 under the Securities Act, and Schedules 13E-3, 13E-4F, 14A, 14C, TO, and 14D-1F under the Exchange Act. Forms N-2, N-5, and N-14 would also be subject to these new requirements. The suggested changes include:
- Adding a “Reliance on Rule(s)” column to the fee table of the affected forms and schedules where the filer would indicate through checkboxes whether it is planning to carry forward or include an equivalent amount of unsold securities, use a combined prospectus, offset a fee paid in connection with the same or a prior transaction, or is calculating a fee based on maximum aggregate offering price by relying on certain Securities Act rules
- Adding a “fee rate” column to the fee table of the affected forms and schedules
- Revising fee information in some Schedules to require filers to present basic fee calculation information in a table format
- Adding or clarifying instructions regarding fee table presentation and related disclosure in general
- Adding fee table and disclosure requirements to Exchange Act Rule 13e-1
- Revising Securities Act Rule 424(g) so that the form of prospectus that reflects filing fees for pay-as-you-go fee offerings also includes all fee information needed for the fee calculation and to permit all this information to be included on the prospectus cover page
- Revising the instructions to Forms S-3 and F-3 to provide that (1) information specified by the proposed term “General Interactive Data File” must appear in a prospectus filed under Rule 424(b) or post-effective amendment rather than a periodic report that is incorporated by reference into the registration statement, and (2) each post-effective amendment or final prospectus filed pursuant to Rule 424(b) must include the maximum aggregate amount or maximum aggregate offering price of the securities to which the post-effective amendment or prospectus relates and each such prospectus must indicate that it is the final one in relation to this offering, which will assist in the calculation of the number of securities sold
- Revising the instructions to Forms S-3 and F-3 to provide that each post-effective amendment or final prospectus supplement filed under Rule 424(b) must include required information about a specific transaction and particular company being acquired, the maximum aggregate amount or maximum aggregate offering price of the securities to which the filing relates, and whether or not this is the final prospectus related to those securities
- Adding an instruction relating to Rule 429 reliance that requires an issuer to check the related box in the fee table and also requires it to disclose the file number(s) of the earlier effective registration statement(s) and the amount or maximum aggregate offering price of unsold securities registered on the earlier registration statement(s) that may be offered and sold using the combined prospectus
- Amending the affected Securities Act and Exchange Act Forms and Schedules for which Rule 415(a)(6) is potentially available to require that when the filer relies on that rule, the amount of securities being carried forward (expressed in terms of the number of securities) or, if the related filing fee was calculated in reliance on Rule 457(o), the maximum aggregate offering amount, be disclosed. This also includes disclosing the file number of the earlier registration statement, the initial effective date of this statement, and the previous filing fee paid in connection with the unsold securities being carried forward
- Requiring those filing affected Securities Act and Exchange Act Forms and Schedules or documents under Rule 13e-1 and relying on Rule 457(b) or Rule 0-11(a)(2) to disclose the dollar amount of the previously paid filing fee to be offset, the type of filing or form type, the file number, and the initial filing date of the earlier registration statement or Exchange Act filing with which the earlier fee was paid
- Requiring additional disclosures under Rule 457(g) concerning unsold securities that would appear in the fee instructions of the affected Securities Act and Exchange Act Forms and Schedules and the resulting disclosure would have to be presented in the proposed structured format
- Proposing the new term “General Interactive Data File” (as part of Rule 11 of Regulation S-T) and specifying the information that a filer must structure
Similar proposed changes to instructions apply to other affected forms. The disclosures required would be formatted in Inline XBRL on the cover pages as stipulated under Rule 13e-1 and would include each fee table in the affected Securities Act and Exchange Act Forms and Schedules with explanatory information. The specific forms and required information would be stipulated in the EDGAR Filer Manual. Filers who would be subject to the new structured reporting requirements may already be familiar with submitting disclosures in Inline XBRL due to cover page tagging mandates on annual report Forms 10-K, 20-F, and 40-F, quarterly report Form 10-Q, current report Form 8-K, and reports on Form 6-K. Some companies not currently subject to Inline XBRL tagging requirements would become subject to them under these new proposed amendments. Filers of Forms N-2, N-5, and N-14 would also become subject to Inline XBRL reporting requirements, and they may not currently be familiar with the format and process. Some forms, such as Forms SF-1,7 SF-3,7 S-20, F-6, F-7, F-8, and F-80 under the Securities Act or foreign government registration statements filed pursuant to Schedule B of the Securities Act, would not be subject to the proposed changes even though these are fee bearing documents.
The proposed phase-in for filer compliance is as follows:
|Large Accelerated Filers||Filings submitted on or after 18 months after the requirements’ effectiveness|
|Accelerated Filers||Filings submitted on or after 30 months after the requirements’ effectiveness|
|All other filers, including all investment companies filing reports on Forms N-2, N-5, and N-14||Filings submitted on or after 42 months after the requirements’ effectiveness|
These improvements would come in addition to the ACH payment option. Other changes are being proposed to clarify the rules concerning how fees and fee offsets should be calculated. The complete set of proposed rules can be read here.
You can submit comments using the form available on the SEC’s website or by e-mailing firstname.lastname@example.org with the reference number (S7-20-19) 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 S7-20-19. The public comment period will be open for 60 days after publication in the Federal Register.