On March 2, 2020, the SEC adopted rule changes to simplify the
financial disclosures that are required when an issuer offers debt
securities with guarantees.1 The old requirements were
complex, and in some circumstances burdensome, and the utility of
some resulting disclosures for investors was doubtful. As discussed
below, the new requirements are easier to apply and permit
substantially simpler disclosures in some cases.
The SEC also adopted rule changes applicable to a similar, less
common situation – securities that are collateralized by a
pledge of shares (typically shares of a subsidiary of the
issuer).
The new rules have a long transition period. They will become
mandatory in 2021 – generally, for a registration statement
first filed on or after January 4, 2021 and for a periodic report
for a period ending after January 4, 2021. However, earlier
compliance is permitted, so an issuer planning a guaranteed or
collateralized offering should consider whether to
