SEC Revises Rules For Mergers
Tuesday October 19 12:17 PM ET
WASHINGTON (Reuters) - The Securities and Exchange
Commission Tuesday revised rules governing mergers and
acquisitions to benefit small investors and U.S. shareholders in
foreign companies.
The new rules, which focus on takeovers and shareholder
communications, overseas tender and exchange offers and rights
offerings, ''are an attempt to modernize and bring up to date the
rules and regulations regarding mergers and acquisitions,'' said Brian
Lane, head of the SEC's corporation finance unit.
One major area affected by the changed rules is the communication
that companies engaged in tender offers, mergers and similar
business combination deals can have with investors.
In the same way that initial public offerings have ''quiet periods,'' so
do merger and acquisition transactions. When a deal is announced,
current regulatory laws force companies to remain silent until a
formal document is filed with the SEC, agency officials explained.
Now, under the amended rule, once a deal is announced companies
will be mandated to file the same documents that analysts and other
Wall Street insiders get. The filings will be posted for all to see on
the SEC's massive EDGAR database, Lane said.
Companies had been frustrated because they wanted to get the
message of the deal out but felt that the regulations in place
prohibited them from doing that, Lane added.
The SEC also moved to balance the way it treats cash and stock
tender offers. The former can begin as soon as a tender offer
schedule is filed with the agency and the information is passed on to
security holders.
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