The Securities and Exchange Commission (“SEC”) recently implemented amendments to most fee-bearing forms and related rules with a stated goal of modernizing filing fee disclosure and enhancing the validation speed and accuracy of filing fee amounts. Most of the rule changes went into effect on January 31, 2022, and directly affect shelf registration statement filings and prospectus filings made after such date.
Prior to the implementation of the rule changes, filing fee-related information was required to be included on a prospectus filing’s cover page and/or as part of a registration statement. Under the new rules, filing-fee related information is required to be included in a separate exhibit in a table format. Revised Item 14(b) of Form SF-3 sets forth three table options depending on the type of fee being paid (e.g., new fee, previously paid fee, carry forward securities, fee offset), and each table contains information that was previously provided in a narrative format on the cover of a prospectus or in Part II of a shelf registration statement. Asset-backed securities issuers will likely look to Table 1 and/or Table 2 and, if applicable, document the carryover of securities or fee offsets tied to prior registration statements or previous filings.
Each table contains instructions on what data should be provided. For example, an issuer filing a preliminary prospectus and using pay-as-you-go fees without anything to carryover from a prior shelf or registration statement will complete Table 1 and document the “Fees to be paid” as the amount of the wire that the issuer is sending to the SEC in connection with the offering. The applicable table must also include any explanatory footnotes that were previously required, such as a footnote that a prior registration statement has been terminated or completed in order to carry over fees and a footnote that payment of registration fees are being deferred to utilize pay-as-you-go under a registration statement filing.
In addition, prior to the new rules being implemented, filing fee calculations were only shown either in a preliminary prospectus or in a registration statement. Now, a fee exhibit is required for a final prospectus, which must include an updated maximum aggregate offering price and an indication that the prospectus is a final prospectus for the related offering. Based on the above example, the issuer would document the amount of the securities sold.
The SEC intends to use the tabular format to automate the fee validation process such that filings will be suspended if the correct supporting information is not provided in the required format. However, the SEC Release clarifies that this suspension will be phased-in a few months after issuers have had a chance to learn the new system. This validation process will also provide additional comfort to issuers that the fee calculation is confirmed.
Asset-backed issuers relying on Form SF-3 registration statements are permitted, but not required, to provide the filing fee tables using Inline eXtensible Business Reporting Language (“XBRL”). The XBRL format will be required for certain issuers over time, but the SEC has not yet extended that requirement to asset-backed issuers.