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I blogged last week on TheCorporateCounsel.net about a new batch of CFI updates that Corp Fin posted on Wednesday. Some of the updates are cleanup, but there are three new CFIs addressing Item 2.01 of Form 8-K, which I’ve summarized below.

Exchange Act Form 8-K, Section 105. Item 2.01 Completion of Acquisition or Disposition of Assets, New Question 105.01

Explains that registrants need only apply the applicable paragraph in Instruction 4 to Item 2.01 of Form 8-K when determining whether an acquisition or disposition is deemed to involve a significant amount of assets. Specifically, (1) a business development company that did not acquire or dispose of a business as determined under Rule 11-01(d) of Regulation S-X would only apply paragraph (iii) of Instruction 4, (2) a registrant that acquired or disposed of a business as determined under Rule 11-01(d) of Regulation S-X would apply only paragraph (ii), and (3) a registrant that is not a business development company and did not acquire or dispose of a business as determined under Rule 11-01(d) of Regulation S-X would apply only paragraph (i).

Exchange Act Forms 8-K, Section 105. Item 2.01 Completion of Acquisition or Disposition of Assets, New Question 105.02

Clarifies that Instruction 4 does not require registrants to include probable acquisitions of related businesses, real estate operations, and funds with the related businesses, real estate operations, and funds that have already been acquired when assessing aggregate significance for purposes of Item 2.01 reporting because Item 2.01 of Form 8-K only requires disclosure regarding completed acquisitions.

Exchange Act Forms 8-K, Section 105. Item 2.01 Completion of Acquisition or Disposition of Assets, New Question 105.03

Provides that registrants should use their most recent balance sheet required to be filed at or prior to the date of the acquisition or disposition, which may be an interim balance sheet, to derive “the total assets of the registrant and its consolidated subsidiaries” required for the significance test outlined in paragraph (i) of Instruction 4 to Item 2.01 of Form 8-K.

As noted in this Governance Beat blog, the direction in Question 105.03 to use the most recent (including an interim) balance sheet differs from the asset test in Reg. S-X, which refers to “the end of the most recently completed fiscal year” and which practitioners had looked to before this CFI. 

– Meredith Ervine