The following table summarizes the estimated effects of the
proposed amendments on the paperwork burdens associated with the
affected forms filed by investment companies.

  Table 4--Estimated Paperwork Burden Effects for Investment Companies
------------------------------------------------------------------------
                              Estimated effect and  Brief explanation of
          Amendment              affected forms       estimated effect
------------------------------------------------------------------------
Proposed Rule 6-11, Rule 1-   A reduction of 100     This
 02(w), Article 11 of          burden hours for      reduction is
 Regulation S-X, and Form N-   each filing that      derived from an
 14.                           contains acquired     estimated reduction
                               fund financial        of 125 burden hours
                               information on the    resulting from the
                               following forms: N-   proposed amendments
                               1A, N-2 and N-14.     discussed in
                                                     Section II.E. above
                                                     \304\ compared to
                                                     existing Rule 3-05
                                                     and pro forma
                                                     financial
                                                     information
                                                     requirements.\305\
                                                     This
                                                     reduction was then
                                                     offset by an
                                                     estimated increase
                                                     of 25 burden hours
                                                     for the proposed
                                                     schedules and
                                                     supplemental
                                                     information under
                                                     proposed Rule 6-
                                                     11.\306\
------------------------------------------------------------------------

    Considering the various revisions outlined in Section II.E above,
we estimate that proposed Rule 6-11 and the related amendments would
generally reduce the paperwork burden for filings on an affected form
that currently includes Rule 3-05 Financial Statements. However, not
all filings on the affected forms include these disclosures. Therefore,
to estimate the overall paperwork burden reduction from the proposed
amendments, we first estimated the number of filings that include
acquired fund financial statements. To do so, we searched the various
form types over a three-year period ended October 1, 2018 for
indications of fund acquisition disclosure.\307\ The table below sets
forth our estimates of the number of filings on these forms that
included acquired fund financial statements in that period.
---------------------------------------------------------------------------

    \304\ This estimated reduction of 125 burden hours is due to the
proposed changes affecting the required reporting periods and pro
forma financial information and permitting the use of U.S. GAAP-
compliant financial statements for acquired private funds. See,
e.g., Section II.E.2.
    \305\ To determine the paperwork burden for a registrant to make
disclosures in accordance with the proposed Rule 6-11 and proposed
amendments to Form N-14, we estimated the number of burden hours
required for an issuer to provide the existing financial statements.
As previously noted, for PRA purposes, we estimate that existing
Rule 3-05 Financial Statements require an average of 500 burden
hours. See supra note 298.
    \306\ See supra Section II.E.2 and II.E.3.
    \307\ To conduct this analysis, Commission staff used text-based
search terms of filings made through the EDGAR system to identify
filings that may contain acquired fund financial statements and pro
forma financial information from investment company registrants.
However, the use of text-based search terms may understate the
actual number of instances. Because the number of filings varied
from year to year, we use an average over a three-year period.

                   Table 5--Number of Filings on Affected Investment Company Forms (2016-2018)
----------------------------------------------------------------------------------------------------------------
                                                                                Number of
                                                                                filings
                                                             Average annual       including       Percentage of
                           Form                                 number of       acquired fund   filings affected
                                                                 filings          financial
                                                                                statements
                                                                         (A)               (B)               (C)
----------------------------------------------------------------------------------------------------------------
N-1A......................................................             8,936                12            0.0013
N-2.......................................................               132                 2              0.15
N-14......................................................               152                70                46
----------------------------------------------------------------------------------------------------------------

    We used this data to extrapolate the effect of these changes on the
paperwork burden. In order to appropriately adjust the current burden
estimates, we applied these percentages to the estimates of the number
of responses in the Commission's current OMB PRA filing inventory.

       Table 6--Calculation of the Number of Filings on Affected Investment Company Forms for PRA Purposes
----------------------------------------------------------------------------------------------------------------
                                                                                Estimated number
                                                                Number of                          of filings
                                                              responses in        Estimated         including
                                                               current PRA      percentage of     acquired fund
                                                                estimates     filings affected      financial
                                                                                statements
                                                                         (A)               (B)               (C)
----------------------------------------------------------------------------------------------------------------
N-1A......................................................             6,002            0.0013                 8
N-2.......................................................               166              0.15                 3
N-14......................................................               192                46                88
----------------------------------------------------------------------------------------------------------------

C. Aggregate Burden and Cost Estimates for the Proposed Amendments

    Below we estimate the aggregate change in paperwork burden as a
result of the proposed amendments. These estimates represent the
average burden for all registrants, both large and small. In deriving
our estimates, we recognize that the burdens will likely vary among
individual registrants based on a number of factors, including the
nature of their business. The burden estimates were calculated by
multiplying the estimated number of responses by the estimated average
amount of time it would take a registrant to prepare and review
disclosure required under the proposed amendments. The portion of the
burden carried by outside professionals is reflected as a cost,\308\
while the portion of the burden carried by the registrant internally is
reflected in hours.\309\
---------------------------------------------------------------------------

    \308\ We recognize that the costs of retaining outside
professionals may vary depending on the nature of the professional
services, but for purposes of this PRA analysis, we estimate that
such costs would be an average of $400 per hour. This estimate is
based on consultations with several registrants, law firms, and
other persons who regularly assist registrants in preparing and
filing reports with the Commission.
    \309\ For purposes of the PRA, we estimate that 75% of the
burden of preparation of Forms 8-K and 1-A is carried by the
registrant internally and that 25% of the burden of preparation is
carried by outside professionals retained by the company at an
average cost of $400 per hour. Additionally, we estimate that 25% of
the burden of preparation for Forms 10, S-1, S-3, F-1, F-3, N-1A, N-
2, and N-14 is carried by the registrant internally and that 75% of
the burden of preparation is carried by outside professionals
retained by the company at an average cost of $400 per hour.
---------------------------------------------------------------------------

    The tables below illustrate the change to the total annual
compliance burden of affected forms, in hours and in costs, as a result
of the proposed amendments.

 Table 7--Calculation of the Reduction in Burden Estimates of Current Responses Due to the Proposed Amendments to Rule 3-05 and Rule 3-14 and Pro Forma
                                                           Financial Information Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Reduction in      Reduction in
                                                Number of        Burden hour      Reduction in      company hours     professional       Reduction in
                   Form                         estimated       reduction per   burden hours for     for current        hours for     professional costs
                                                affected      current affected  current affected      affected      current affected      for current
                                                reponses          response          responses         responses         responses     affected responses
                                                         (A)               (B)   (C) = (A) x (B)  (D) = (C) x 0.75  (E) = (C) x 0.25    (F) = (E) x $400
                                                                                or 0.25           or 0.75
--------------------------------------------------------------------------------------------------------------------------------------------------------
10........................................                20             (100)           (2,000)             (500)           (1,500)          ($600,000)
1-A.......................................                18             (100)           (1,800)           (1,350)             (450)           (180,000)
S-1.......................................                78             (100)           (7,800)           (1,950)           (5,850)         (2,340,000)
S-3.......................................               192             (100)          (19,200)           (4,800)          (14,400)         (5,760,000)
F-1.......................................                 2             (100)             (200)              (50)             (150)            (60,000)
F-3.......................................                 3             (100)             (300)              (75)             (225)            (90,000)
8-K.......................................               947             (100)         ( 94,700)          (71,025)          (23,675)         (9,470,000)

    Total.................................             1,260  ................         (126,000)          (79,750)          (46,250)        (18,500,000)
--------------------------------------------------------------------------------------------------------------------------------------------------------

            Table 8--Calculation of the Change in Burden Estimates of Current Responses Due to Proposed Rule 6-11 and Amendments to Form N-14
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Change in         Change in
                                                Number of        Burden hour    Change in burden    company hours     professional         Change in
                   Form                         estimated        change per         hours for        for current        hours for     professional costs
                                                affected      current affected  current affected      affected      current affected      for current
                                                reponses          response          responses         responses         responses     affected responses
                                                         (A)               (B)   (C) = (A) x (B)  (D) = (C) x 0.75  (E) = (C) x 0.25    (F) = (E) x $400
                                                                                or 0.25           or 0.75
--------------------------------------------------------------------------------------------------------------------------------------------------------
N-1A......................................                 8             (100)             (800)             (200)             (600)          ($240,000)
N-2.......................................                 3             (100)             (300)              (75)             (225)            (90,000)
N-14......................................                88             (100)           (8,800)           (2,200)           (6,600)         (2,640,000)

    Total.................................                99  ................           (9,900)           (2,475)           (7,425)         (2,970,000)
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                Table 9--Requested Paperwork Burden Under the Proposed Amendments
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Current burden                                     Program change                               Requested change in burden
                                        --------------------------------------------------------------------------------------------------------------------------------------------------------
                  Form                                                                         Number of                       Reduction in
                                         Current annual  Current burden     Current cost       affected      Reduction in      professional        Annual       Burden hours      Cost burden
                                            responses         hours            burden          responses     company hours        costs           responses
                                                    (A)             (B)                (C)       (D) \310\       (E) \311\          (F) \312\       (G) = (A)     (H) = (B) +    (I) = (C) + (F)
                                                                                (E)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
10.....................................             216          11,774        $14,128,888              20           (500)         ($600,000)             216          11,274        $13,528,888
1-A....................................             112          63,084          8,400,000              18         (1,350)          (180,000)             112          61,734          8,220,000
S-1....................................             901         150,998        181,197,300              78         (1,950)        (2,340,000)             901         149,048        178,857,300
S-3....................................           1,657         196,930        236,322,036             192         (4,800)        (5,760,000)           1,657         192,130        230,562,036
F-1....................................              63          26,980         32,375,700               2            (50)           (60,000)              63          26,930         32,315,700
F-3....................................             112           4,760          5,712,000               3            (75)           (90,000)             112           4,685          5,622,000
8-K....................................         118,387         685,255         91,367,630             947        (71,025)        (9,470,000)         118,387         614,230         81,897,630
N-1A...................................           6,002       1,596,749        129,338,408               8           (200)          (240,000)           6,002       1,596,549        129,098,408

N-2....................................             166          73,250          4,668,396               3            (75)           (90,000)             166          73,175          4,578,396
N-14...................................             192          97,280          4,498,000              88         (2,200)        (2,640,000)             192          95,080          1,858,000
                                        --------------------------------------------------------------------------------------------------------------------------------------------------------
    Total..............................         127,808       2,907,060        708,008,358           1,359        (82,225)       (21,470,000)         127,808       2,824,835        686,538,358
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Request for Comment
---------------------------------------------------------------------------

    \310\ From Table 3, Column (C) and Table 6, Column (C). The
affected responses will not add to the number of annual responses;
rather the requested change in burden will be averaged across all
annual responses.
    \311\ From Column (D) in Tables 7 and 8.
    \312\ From Column (F) in Tables 7 and 8.
---------------------------------------------------------------------------

    Pursuant to 44 U.S.C. 3506(c)(2)(B), we request comment in order
to:
     Evaluate whether the proposed collections of information
are necessary for the proper performance of the functions of the
Commission, including whether the information will have practical
utility;
     evaluate the accuracy of our assumptions and estimates of
the burden of the proposed collection of information;
     determine whether there are ways to enhance the quality,
utility, and clarity of the information to be collected;
     evaluate whether there are ways to minimize the burden of
the collection of information on those who respond, including through
the use of automated collection techniques or other forms of
information technology; and
     evaluate whether the proposed amendments would have any
effects on any other collection of information not previously
identified in this section.
    Any member of the public may direct to us any comments concerning
the accuracy of these burden estimates and any suggestions for reducing
these burdens. Persons submitting comments on the collection of
information requirements should direct their comments to the Office of
Management and Budget, Attention: Desk Officer for the U.S. Securities
and Exchange Commission, Office of Information and Regulatory Affairs,
Washington, DC 20503, and send a copy to Secretary, U.S. Securities and
Exchange Commission, 100 F Street NE, Washington, DC 20549, with
reference to File No. S7-05-19. Requests for materials submitted to OMB
by the Commission with regard to the collection of information
requirements should be in writing, refer to File No. S7-05-19 and be
submitted to the U.S. Securities and Exchange Commission, Office of
FOIA Services, 100 F Street NE, Washington DC 20549. OMB is required to
make a decision concerning the collection of information requirements
between 30 and 60 days after publication of the proposed amendments.
Consequently, a comment to OMB is best assured of having its full
effect if the OMB receives it within 30 days of publication.

VI. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996 (``SBREFA''),\313\ we solicit data to determine whether the
proposed amendments constitute a ``major'' rule. Under SBREFA, a rule
is considered ``major'' where, if adopted, it results or is likely to
result in:
---------------------------------------------------------------------------

    \313\ Public Law 104-121, tit. II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------

     An annual effect on the economy of $100 million or more
(either in the form of an increase or a decrease);
     a major increase in costs or prices for consumers or
individual industries; or
     significant adverse effects on competition, investment, or
innovation.
    Commenters are requested to provide comment and empirical data on
(a) the potential annual effect on the U.S. economy; (b) any increase
in costs or prices for consumers or individual industries; and (c) any
potential effect on competition, investment, or innovation.

VII. Initial Regulatory Flexibility Act Analysis

    This Initial Regulatory Flexibility Act Analysis has been prepared
in accordance with the Regulatory Flexibility Act.\314\ It relates to
proposed amendments to the financial disclosure requirements in
Regulation S-X relating to significant business acquisitions and
dispositions to improve those requirements for both investors and
registrants.
---------------------------------------------------------------------------

    \314\ 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------

A. Reasons for, and Objectives of, the Proposed Action

    The proposed amendments would include changes to the requirements
for the financial statements of acquisitions and dispositions of
businesses, including real estate operations, in Rule 3-05 and Rule 3-
14 and other related rules and forms.\315\ We are also proposing new
Rule 6-11 and amendments to Form N-14 to specifically govern financial
reporting for acquisitions involving investment companies. These
changes are intended to provide investors with the information that is
important given the specific facts and circumstances, make the
disclosures easier to understand, and reduce the costs and burdens to
registrants of preparing the disclosure. The reasons for, and
objectives of, the proposed amendments are discussed in more detail in
Sections II.A through II.E. above.
---------------------------------------------------------------------------

    \315\ We are also proposing related amendments to the definition
of ``significant subsidiary'' in Rule 1-02(w) of Regulation S-X,
Exchange Act Rule 12b-2, Securities Act Rule 405, Investment Company
Act Rule 8b-2; Rule 3-06 of Regulation S-X; Article 8 of Regulation
S-X; and Article 11 of Regulation S-X. In addition, we are proposing
amendments to Form 8-K, Form 10-K, and Form N-2.
---------------------------------------------------------------------------

B. Legal Basis

    We are proposing the rule and form amendments contained in this
release under the authority set forth in Sections 3, 6, 7, 8, 10,
19(a), and 28 of the Securities Act of 1933, as amended, Sections 3(b),
12, 13, 15(d), 23(a), and 36 of the Securities Exchange Act of 1934, as
amended, and Sections 6(c), 8, 24(a), 30, and 38 of the Investment
Company Act of 1940, as amended.

C. Small Entities Subject to the Proposed Rules

    The proposed changes would affect some registrants that are small
entities. The Regulatory Flexibility Act defines ``small entity'' to
mean ``small business,'' ``small organization,'' or ``small
governmental jurisdiction.'' \316\ For purposes of the Regulatory
Flexibility Act, under our rules, an issuer, other than an investment

company, is a ``small business'' or ``small organization'' if it had
total assets of $5 million or less on the last day of its most recent
fiscal year and is engaged or proposing to engage in an offering of
securities that does not exceed $5 million.\317\ We estimate that there
are 1,173 issuers that file with the Commission, other than investment
companies, that may be considered small entities and are potentially
subject to the proposed amendments.\318\ An investment company is a
small entity if, together with other investment companies in the same
group of related investment companies, it has net assets of $50 million
or less as of the end of its most recent fiscal year.\319\ Commission
staff estimates that, as of December 31, 2018, there were approximately
90 open-end and closed-end investment companies that would be
considered small entities. Commission staff further estimates that, as
of December 31, 2018, approximately 16 BDCs are small entities.\320\
---------------------------------------------------------------------------

    \316\ 5 U.S.C. 601(6).
    \317\ See 17 CFR 230.157 under the Securities Act and 17 CFR
240.0-10(a) under the Exchange Act.
    \318\ This estimate is based on staff analysis of issuers,
excluding coregistrants, with EDGAR filings of Form 10-K, 20-F and
40-F, or amendments, filed during the calendar year of January 1,
2018 to December 31, 2018. Analysis is based on data from XBRL
filings, Compustat, and Ives Group Audit Analytics.
    \319\ 17 CFR 270.0-10(a).
    \320\ These estimates are based on staff analysis of Morningstar
data and data submitted by investment company registrants in forms
filed on EDGAR between April 1, 2018 and June 30, 2018.
---------------------------------------------------------------------------

D. Reporting, Recordkeeping, and Other Compliance Requirements

    As noted above, the purpose of the proposed amendments to Rules 3-
05 and 3-14 is to improve the quality and relevance of financial
information about acquired businesses and reduce the complexity and
costs of preparing the disclosure.\321\ We are also proposing specific
regulatory requirements for investment companies to address the unique
attributes of this group of registrants.\322\
---------------------------------------------------------------------------

    \321\ See supra Sections II.A. through II.D. for a detailed
discussion of the proposed amendments applicable to registrants with
operations or that otherwise are not investment companies.
    \322\ See supra Section II.E.
---------------------------------------------------------------------------

    Many of the proposed changes would simplify and streamline existing
disclosure requirements in ways that are expected to reduce compliance
burdens for all registrants, including small entities. The proposed
changes to the pro forma financial information requirements would
incrementally increase compliance costs for registrants, although we do
not expect these additional costs to be significant.\323\ In addition,
compliance with the proposed amendments would require the use of
professional skills, including accounting and legal skills. We discuss
the economic impact, including the estimated costs and burdens, of the
proposed amendments to all registrants, including small entities, in
Sections IV and V above.
---------------------------------------------------------------------------

    \323\ Specifically, the proposed amendment of Rule 8-05 would
require that for smaller reporting companies and issuers relying on
Regulation A, the preparation, presentation, and disclosure of pro
forma financial information substantially comply with Article 11
rather than directing these entities to consider the requirements of
Article 11. However, based on a staff analysis of 2017 disclosures
of acquisitions and dispositions by smaller reporting companies, we
do not expect the increase in incremental compliance costs resulting
from the proposed amendment to be significant because it appears
that most smaller reporting companies already comply with the
conditions in existing Rule 11-01. See supra Section II.D.3.
---------------------------------------------------------------------------

E. Duplicative, Overlapping, or Conflicting Federal Rules

    We believe that the proposed amendments would not duplicate,
overlap, or conflict with other federal rules.

F. Significant Alternatives

    The Regulatory Flexibility Act directs us to consider alternatives
that would accomplish our stated objectives, while minimizing any
significant adverse impact on small entities. In connection with the
proposed amendments, we considered the following alternatives:
     Establishing different compliance or reporting
requirements that take into account the resources available to small
entities;
     clarifying, consolidating, or simplifying compliance and
reporting requirements under the rules for small entities;
     using performance rather than design standards; and
     exempting small entities from all or part of the
requirements.
    The proposed amendments generally would simplify and streamline
disclosure requirements in ways that are expected to reduce compliance
burdens for all registrants, including small entities. Revising Rule 8-
05 to require that the preparation, presentation, and disclosure of pro
forma financial information by smaller reporting companies
substantially comply with Article 11 may increase the burden of
preparing that disclosure for some registrants. However, based on staff
analysis of 2017 disclosures of acquisitions and dispositions by
smaller reporting companies, we believe that most of these companies
already comply with the conditions in existing Rule 11-01.\324\ For
investment companies, we believe that proposed Rule 6-11and related
amendments will make it easier and less costly to provide appropriate
disclosures to investors regarding fund acquisitions, which may benefit
small entities that have smaller asset levels over which to apportion
compliance costs. Accordingly, we do not believe it is necessary to
exempt small entities from all or part of the proposed amendments or to
establish different compliance or reporting requirements for such
entities. However, we are soliciting comment on whether the amendments
should permit additional or different flexibility for smaller reporting
companies and other types of issuers in light of the burdens associated
with the financial reporting requirements.
---------------------------------------------------------------------------

    \324\ Commission staff found that out of 191 disclosures of
acquisitions and dispositions by smaller reporting companies in
2017, 178 appeared to comply with Article 11 requirements.
---------------------------------------------------------------------------

    Finally, with respect to using performance rather than design
standards, Regulation S-X and the proposed amendments generally contain
elements similar to performance standards. For example, rather than
imposing a specific uniform metric for determining significant business
acquisitions and dispositions, the proposed amendments utilize a
flexible standard, with alternative tests (e.g., the investment,
income, or asset test) that are intended to facilitate a registrant's
determination of whether an acquisition or disposition is significant.
We believe this flexible standard is appropriate because it would allow
registrants to omit financial information that is not necessary for an
investment decision based on the facts and circumstances applicable to
that registrant and offering. We have not, however, proposed an
approach that would allow registrants to determine significance based
on materiality. Nevertheless, we have solicited comment throughout this
release on whether a materiality standard would be appropriate for
these purposes.
Request for Comment
    We encourage the submission of comments with respect to any aspect
of this Initial Regulatory Flexibility Analysis. In particular, we
request comments regarding:
     How the proposed rule and form amendments can achieve
their objective while lowering the burden on small entities;
     The number of small entity companies that may be affected
by the proposed rule and form amendments;

     The existence or nature of the potential effects of the
proposed amendments on small entity companies discussed in the
analysis; and
     How to quantify the effects of the proposed amendments.
    Commenters are asked to describe the nature of any effect and
provide empirical data supporting the extent of that effect. Comments
will be considered in the preparation of the Final Regulatory
Flexibility Analysis, if the proposed rules are adopted, and will be
placed in the same public file as comments on the proposed rules
themselves.

VIII. Statutory Authority

    The amendments contained in this release are being proposed under
the authority set forth in Sections 3, 6, 7, 8, 10, 19(a), and 28 of
the Securities Act, Sections 3(b), 12, 13, 15(d), 23(a), and 36 of the
Exchange Act, and Sections 6(c), 8, 24(a), 30, and 38 of the Investment
Company Act.

List of Subjects

17 CFR Part 210

    Accountants, Accounting, Banks, Banking, Employee benefit plans,
Holding companies, Insurance companies, Investment companies, Oil and
gas exploration, Reporting and recordkeeping requirements, Securities,
Utilities.

17 CFR Part 230

    Investment companies, Reporting and recordkeeping requirements,
Securities.

17 CFR Part 239

    Reporting and recordkeeping requirements, Securities.

17 CFR Part 240

    Brokers, Fraud, Reporting and recordkeeping requirements,
Securities.

17 CFR Part 249

    Brokers, Reporting and recordkeeping requirements, Securities.

17 CFR Parts 270 and 274

    Investment companies, Reporting and recordkeeping requirements,
Securities.

Text of the Proposed Amendments

    For the reasons set out in the preamble, the Commission is
proposing to amend title 17, chapter II of the Code of Federal
Regulations as follows:

PART 210--FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL
STATEMENTS, SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF
1934, INVESTMENT COMPANY ACT OF 1940, INVESTMENT ADVISERS ACT OF
1940, AND ENERGY POLICY AND CONSERVATION ACT OF 1975

0
1. The authority citation for part 210 continues to read as follows:

    Authority:  15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3,
77aa(25), 77aa(26), 77nn(25), 77nn(26), 78c, 78j-1, 78l, 78m, 78n,
78o(d), 78q, 78u-5, 78w, 78ll, 78mm, 80a-8, 80a-20, 80a-29, 80a-30,
80a-31, 80a-37(a), 80b-3, 80b-11, 7202 and 7262, and sec. 102(c),
Pub. L. 112-106, 126 Stat. 310 (2012), unless otherwise noted.

0
2. Revise Sec.  210.1-02(w) to read as follows:

Sec.  210.1-02   Definitions of terms used in Regulation S-X (17 CFR
part 210).

* * * * *
    (w) Significant subsidiary. (1) The term significant subsidiary
means a subsidiary, including its subsidiaries, which meets any of the
conditions in paragraphs (w)(1)(i), (w)(1)(ii), or (w)(1)(iii) of this
section; however if the subsidiary is a registered investment company
or a business development company, it meets any of the conditions in
paragraph (w)(2) of this section instead of any of the conditions in
this paragraph (w)(1). A registrant that files its financial statements
in accordance with or provides a reconciliation to U.S. Generally
Accepted Accounting Principles (U.S. GAAP) shall use amounts determined
under U.S. GAAP. A foreign private issuer that files its financial
statements in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board
(IFRS-IASB) shall use amounts determined under IFRS-IASB.
    (i) Investment Test. (A) The registrant's and its other
subsidiaries' investments in and advances to the tested subsidiary
exceed 10 percent of the aggregate worldwide market value of the
registrant's voting and non-voting common equity, or if the registrant
has no such aggregate worldwide market value the total assets of the
registrant and its subsidiaries consolidated as of the end of the most
recently completed fiscal year. Aggregate worldwide market value of the
registrant's voting and non-voting common equity shall be determined as
of the last business day of the registrant's most recently completed
fiscal year, which for acquisitions and dispositions shall be at or
prior to the date of acquisition or disposition;
    (B) For a combination between entities or businesses under common
control, this test shall be met when either the net book value of the
tested subsidiary exceeds 10 percent of the registrant's and its
subsidiaries' consolidated total assets or the number of common shares
exchanged or to be exchanged by the registrant exceeds 10 percent of
its total common shares outstanding at the date the combination is
initiated;
    (C) For all other acquisitions, the ``investment in'' the tested
subsidiary shall include the fair value of contingent consideration if
required to be recognized at fair value by the registrant at the
acquisition date under U.S. GAAP or IFRS-IASB, as applicable; however
if recognition at fair value is not required, include all contingent
consideration, except sales-based milestones and royalties, unless the
likelihood of payment is remote. The ``investment in'' the tested
subsidiary also excludes the registrant's and its subsidiaries'
proportionate interest in the carrying value of assets transferred by
the registrant and its subsidiaries consolidated to the tested
subsidiary that will remain with the combined entity after the
acquisition; and
    (D) For dispositions, the ``investment in'' the tested subsidiary
shall equal the fair value of the consideration, which shall include
contingent consideration, for the disposed subsidiary when comparing to
the aggregate worldwide market value of the registrant or, when the
registrant has no such aggregate worldwide market value, the carrying
value of the disposed subsidiary when comparing to total assets of the
registrant. For a real estate operation as defined inSec.  210.3-
14(a)(2), when the investment test is based on the total assets of the
registrant and its subsidiaries consolidated, include any debt secured
by the real properties that is assumed by the buyer in the ``investment
in'' the tested real estate operation.
    (ii) Asset Test. The registrant's and its other subsidiaries'
proportionate share of the total assets (after intercompany
eliminations) of the tested subsidiary exceeds 10 percent of such total
assets of the registrant and its subsidiaries consolidated as of the
end of the most recently completed fiscal year.
    (iii) Income Test. (A)(1) The absolute value of the registrant's
and its other subsidiaries' equity in the tested subsidiary's
consolidated income or loss from continuing operations (after
intercompany eliminations) attributable to the controlling interests
exceeds 10 percent of the absolute value of such income or loss of the
registrant and its

subsidiaries consolidated for the most recently completed fiscal year;
and
    (2) The registrant's and its other subsidiaries' proportionate
share of the tested subsidiary's consolidated total revenue (after
intercompany eliminations) exceeds 10 percent of such total revenue of
the registrant and its subsidiaries consolidated for the most recently
completed fiscal year. This component does not apply if either the
registrant and its subsidiaries consolidated or the tested subsidiary
does not have recurring annual revenue.
    (B) When determining the income component in paragraph
(w)(1)(iii)(A)(1) of this section:
    (1) If a net loss from continuing operations attributable to the
controlling interest has been incurred by either the registrant and its
subsidiaries consolidated or the tested subsidiary, but not both,
exclude the equity in the income or loss from continuing operations of
the tested subsidiary attributable to the controlling interest from
such income or loss of the registrant and its subsidiaries consolidated
for purposes of the computation;
    (2) Compute the test using the average described herein if the
revenue component in paragraph (w)(1)(iii)(A)(2) does not apply and the
absolute value of the registrant's and its consolidated subsidiaries'
income or loss from continuing operations attributable to the
controlling interests for the most recent fiscal year is at least 10
percent lower than the average of the absolute value of such amounts
for each of its last five fiscal years; and
    (3) Entities reporting losses shall not be aggregated with entities
reporting income where the test involves combined entities, as in the
case of determining whether summarized financial data should be
presented, except when determining whether related businesses meet this
test for purposes of Sec. Sec.  210.3-05 and 210.8-04.
    (2) For a registrant that is a registered investment company or a
business development company, the term significant subsidiary means a
subsidiary, including its subsidiaries, which meets any of the
following conditions using amounts determined under U.S. GAAP and, if
applicable, section 2(a)(41) of the Investment Company Act of 1940 (15
U.S.C. 80a-2(a)(41)):
    (i) Investment Test. The value of the registrant's and its other
subsidiaries' investments in and advances to the tested subsidiary
exceed 10 percent of the value of the total investments of the
registrant and its subsidiaries consolidated as of the end of the most
recently completed fiscal year; or
    (ii) Income Test. The absolute value of the combined investment
income from dividends, interest, and other income, the net realized
gains and losses on investments, and the net change in unrealized gains
and losses on investments from the tested subsidiary, for the most
recently completed fiscal year exceeds:
    (A) 80 percent of the absolute value of the change in net assets
resulting from operations of the registrant and its subsidiaries
consolidated for the most recently completed fiscal year; or
    (B) 10 percent of the absolute value of the change in net assets
resulting from operations of the registrant and its subsidiaries
consolidated for the most recently completed fiscal year and the
Investment Test (paragraph (w)(2)(i) of this section) condition exceeds
5 percent. However, if the registrant and its subsidiaries consolidated
has an insignificant change in net assets resulting from operations for
its most recently completed fiscal year, compute the test using the
average of the absolute value of such amounts for the registrant and
its subsidiaries consolidated for each of its last five fiscal years.
* * * * *
0
3. Revise Sec.  210.3-05 to read as follows:

Sec.  210.3-05   Financial statements of businesses acquired or to be
acquired.

    (a) Financial statements required. (1) Financial statements (except
the related schedules specified in Sec.  210.12) prepared and audited
in accordance with this regulation (including the independence
standards in Sec.  210.2-01 or, alternatively if the business is not a
registrant, the applicable independence standards) shall be filed for
the periods specified in paragraph (b) of this section if any of the
following conditions exist:
    (i) During the most recent fiscal year or subsequent interim period
for which a balance sheet is required by Sec.  210.3-01, a business
acquisition has occurred; or
    (ii) After the date of the most recent balance sheet filed pursuant
to Sec.  210.3-01, consummation of a business acquisition has occurred
or is probable.
    (2) For purposes of determining whether the provisions of this rule
apply:
    (i) The determination of whether a business has been acquired
should be made in accordance with the guidance set forth in Sec.
210.11-01(d); and
    (ii) The acquisition of a business encompasses the acquisition of
an interest in a business accounted for by the registrant under the
equity method or, in lieu of the equity method, the fair value option.
    (3) Acquisitions of a group of related businesses that are probable
or that have occurred subsequent to the latest fiscal year-end for
which audited financial statements of the registrant have been filed
shall be treated under this section as if they are a single business
acquisition. The required financial statements of related businesses
may be presented on a combined basis for any periods they are under
common control or management. For purposes of this section, businesses
shall be deemed to be related if:
    (i) They are under common control or management;
    (ii) The acquisition of one business is conditional on the
acquisition of each other business; or
    (iii) Each acquisition is conditioned on a single common event.
    (4) This rule shall not apply to a real estate operation subject to
Sec.  210.3-14 or a business which is totally held by the registrant
prior to consummation of the transaction.
    (b) Periods to be presented. (1) If securities are being registered
to be offered to the security holders of the business to be acquired,
the financial statements specified in Sec. Sec.  210.3-01 and 210.3-02
shall be filed for the business to be acquired, except as provided
otherwise for filings on Form N-14, S-4, or F-4 (Sec.  239.23, Sec.
239.25, or Sec.  239.34 of this chapter). The financial statements
covering fiscal years shall be audited except as provided in Item 14 of
Schedule 14A (Sec.  240.14a-101 of this chapter) with respect to
certain proxy statements or in registration statements filed on Forms
N-14, S-4, or F-4 (Sec.  239.23, Sec.  239.25, or Sec.  239.34 of this
chapter).
    (2) In all cases not specified in paragraph (b)(1) of this section,
financial statements of the business acquired or to be acquired shall
be filed for the periods specified in this paragraph (b)(2) or such
shorter period as the business has been in existence. The periods for
which such financial statements are to be filed shall be determined
using the conditions specified in the definition of significant
subsidiary in Sec.  210.1-02(w), using the lower of the total revenue
component or income or loss from continuing operations component for
evaluating the income test condition, as follows:
    (i) If none of the conditions exceeds 20 percent, financial
statements are not required.
    (ii) If any of the conditions exceeds 20 percent, but none exceed
40 percent, financial statements shall be filed for at least the most
recent fiscal year and the

most recent interim period specified in Sec. Sec.  210.3-01 and 210.3-
02.
    (iii) If any of the conditions exceeds 40 percent, financial
statements shall be filed for at least the two most recent fiscal years
and any interim periods specified in Sec. Sec.  210.3-01 and 210.3-02.
    (iv) If the aggregate impact of businesses acquired or to be
acquired since the date of the most recent audited balance sheet filed
for the registrant, for which financial statements are either not
required by paragraph (b)(2)(i) of this section or are not yet required
based on paragraph (b)(4)(i) of this section, exceeds 50 percent, the
registrant shall provide:
    (A) Pro forma financial information pursuant to Sec. Sec.  210.11-
01 through 210.11-02 that depicts the aggregate impact of these
acquired or to be acquired businesses in all material respects; and
    (B) Financial statements covering at least the most recent fiscal
year and the most recent interim period specified in Sec. Sec.  210.3-
01 and 210.3-02 for any acquired or to be acquired business for which
financial statements are not yet required based on paragraph (b)(4)(i)
of this section.
    (3) The determination shall be made using Sec.  210.11-01(b)(3).
    (4) Financial statements required for the periods specified in
paragraph (b)(2) of this section may be omitted to the extent specified
as follows:
    (i) Registration statements not subject to the provisions of Sec.
230.419 of this chapter and proxy statements need not include separate
financial statements of an acquired or to be acquired business if
neither the business nor the aggregate impact specified in paragraph
(b)(2)(iv) of this section exceeds any of the conditions of
significance in the definition of significant subsidiary in Sec.
210.1-02 at the 50 percent level computed in accordance with paragraph
(b)(3) of this section, and either:
    (A) The consummation of the acquisition has not yet occurred; or
    (B) The date of the final prospectus or prospectus supplement
relating to an offering as filed with the Commission pursuant to Sec.
230.424(b) of this chapter, or mailing date in the case of a proxy
statement, is no more than 74 days after consummation of the business
acquisition, and the financial statements have not previously been
filed by the registrant.
    (ii) A registrant, other than a foreign private issuer required to
file reports on Form 6-K (Sec.  249.306 of this chapter), that omits
from its initial registration statement financial statements of a
recently consummated business acquisition pursuant to paragraph
(b)(4)(i) of this section shall file those financial statements and any
pro forma information specified by Article 11 under cover of Form 8-K
(Sec.  249.308 of this chapter) no later than 75 days after
consummation of the acquisition.
    (iii) Separate financial statements of the acquired business need
not be presented once the operating results of the acquired business
have been reflected in the audited consolidated financial statements of
the registrant for a complete fiscal year.
    (iv) A separate audited balance sheet of the acquired business is
not required when the registrant's most recent audited balance sheet
required by Sec.  210.3-01 is for a date after the date the acquisition
was consummated.
    (c) Financial statements of a foreign business. If the business
acquired or to be acquired is a foreign business, financial statements
of the business meeting the requirements of Item 17 of Form 20-F (Sec.
249.220f of this chapter) will satisfy this section. If such financial
statements are prepared according to a comprehensive body of accounting
principles other than those generally accepted in the United States
(U.S. GAAP) or International Financial Reporting Standards as issued by
the International Accounting Standards Board (IFRS-IASB), they may be
reconciled to IFRS-IASB, rather than U.S. GAAP, if the registrant is a
foreign private issuer that prepares its financial statements in
accordance with IFRS-IASB. The reconciliation to IFRS-IASB shall
generally follow the form and content requirements in Item 17(c) of
Form 20-F.
    (d) Financial statements of an acquired or to be acquired business
that would be a foreign private issuer if it were a registrant. If the
acquired or to be acquired business is not a foreign business (as
defined in Sec.  210.1-02(l)), but would qualify as a foreign private
issuer (as defined in Sec.  230.405 and Sec.  240.3b-4) if it were a
registrant, financial statements of the business may be prepared in
accordance with IFRS-IASB without reconciliation to U.S. GAAP.
    (e) Financial statements for net assets that constitute a business.
For an acquisition of net assets that constitutes a business (e.g., an
acquired product line), the financial statements prepared and audited
in accordance with this regulation may be statements of assets acquired
and liabilities assumed and statements of revenues and expenses
(exclusive of corporate overhead, interest and income tax expenses) if
the following conditions are met:
    (1) The acquired business constitutes less than substantially all
of the assets and liabilities of the seller and was not a separate
entity, subsidiary, segment, or division during the periods for which
the acquired business financial statements would be required;
    (2) Separate financial statements for the business have not
previously been prepared;
    (3) The seller has not maintained the distinct and separate
accounts necessary to present financial statements that include the
omitted expenses and it is impracticable to prepare such financial
statements;
    (4) Interest expense may only be excluded from the statements if
the debt to which the interest expense relates will not be assumed by
the registrant or its subsidiaries consolidated;
    (5) The statements of revenues and expenses do not omit selling,
distribution, marketing, general and administrative, and research and
development expenses incurred by or on behalf of the acquired business
during the periods to be presented; and
    (6) The notes to the financial statements include the following
disclosures:
    (i) The type of omitted expenses and the reason(s) why they are
excluded from the financial statements.
    (ii) An explanation of the impracticability of preparing financial
statements that include the omitted expenses.
    (iii) A description of how the financial statements presented are
not indicative of the financial condition or results of operations of
the acquired business going forward because of the omitted expenses.
    (iv) Information about the business's operating, investing and
financing cash flows, to the extent available.
    (f) Financial statements of a business that includes oil and gas
producing activities. (1) If the acquisition constitutes a business
that includes significant oil- and gas-producing activities (as defined
in the FASB ASC Master Glossary), the disclosures in FASB ASC Topic 932
Extractive Activities--Oil and Gas, 932-235-50-3 through 50-11 and 932-
235-50-29 through 50-36, which may be presented as unaudited
supplemental information, shall be provided for each full year of
operations presented for the acquired business. If prior year reserve
studies were not made, they may be computed using only production and
new discovery quantities and valuation, in which case there will be no
``revision of prior estimates'' amounts. Registrants may develop these
disclosures based on a reserve study for the most recent year,
computing the changes backward if the

method of computation is disclosed in a footnote.
    (2) Financial statements prepared and audited in accordance with
this regulation may be limited to audited statements of revenues and
expenses that exclude depletion, depreciation, and amortization
expense, corporate overhead expense, income taxes, and interest expense
that are not comparable to the proposed future operations if:
    (i) The acquisition generates substantially all of its revenues
from oil and gas producing activities (as defined in Sec.  210.4-
10(a)(16)); and
    (ii) The conditions specified in paragraph (e)(1) through (e)(4)
and (e)(6) of this section are met.
0
4. Revise Sec.  210.3-06 to read as follows:

Sec.  210.3-06   Financial statements covering a period of nine to
twelve months.

    (a) Except with respect to registered investment companies, the
filing of financial statements covering a period of 9 to 12 months
shall be deemed to satisfy a requirement for filing financial
statements for a period of 1 year where:
    (1) The issuer has changed its fiscal year;
    (2) The issuer has made a significant business acquisition for
which financial statements are required under Sec.  210.3-05, Sec.
210.3-14, Sec.  210.8-04, or Sec.  210.8-06 of this chapter and the
financial statements covering the interim period pertain to the
business being acquired; or
    (3) The Commission so permits pursuant to Sec.  210.3-13 or Note 5
to Sec.  210.8 of this chapter.
    (b) Where there is a requirement for filing financial statements
for a time period exceeding one year but not exceeding three
consecutive years (with not more than 12 months included in any period
reported upon), the filing of financial statements covering a period of
9 to 12 months shall satisfy a filing requirement of financial
statements for one year of that time period only if the conditions
described in paragraphs (a)(1), (2) or (3) of this section exist and
financial statements are filed that cover the full fiscal year or years
for all other years in the time period.
0
5. Revise Sec.  210.3-14 to read as follows:

Sec.  210.3-14   Special instructions for financial statements of real
estate operations acquired or to be acquired.

    (a) Financial statements required. (1) Financial statements (except
the related schedules specified in Sec.  210.12) prepared and audited
in accordance with Regulation S-X (including the independence standards
in Sec.  210.2-01 or, alternatively if the business is not a
registrant, the applicable independence standards) for the periods
specified in paragraph (b) of this section and the supplemental
information specified in paragraph (f) of this section shall be filed
if any of the following conditions exist:
    (i) During the most recent fiscal year or subsequent interim period
for which a balance sheet is required by Sec.  210.3-01, an acquisition
of a real estate operation has occurred; or
    (ii) After the date of the most recent balance sheet filed pursuant
to Sec.  210.3-01, consummation of an acquisition of a real estate
operation has occurred or is probable.
    (2) For purposes of determining whether the provisions of this rule
apply:
    (i) The term real estate operation means a business (as set forth
in Sec.  210.11-01(d)) that generates substantially all of its revenues
through the leasing of real property.
    (ii) The acquisition of a real estate operation encompasses the
acquisition of an interest in a real estate operation accounted for by
the registrant under the equity method or, in lieu of the equity
method, the fair value option.
    (3) Acquisitions of a group of related real estate operations that
are probable or that have occurred subsequent to the latest fiscal
year-end for which audited financial statements of the registrant have
been filed shall be treated under this section as if they are a single
acquisition. The required financial statements may be presented on a
combined basis for any periods they are under common control or
management. For purposes of this section, acquisitions shall be deemed
to be related if:
    (i) They are under common control or management;
    (ii) The acquisition of one real estate operation is conditional on
the acquisition of each other real estate operation; or
    (iii) Each acquisition is conditioned on a single common event.
    (4) This rule shall not apply to a real estate operation that is
totally held by the registrant prior to consummation of the
transaction.
    (b) Periods to be presented. (1) If securities are being registered
to be offered to the security holders of the real estate operation to
be acquired, the financial statements specified in paragraph (c) of
this section and the supplemental information specified in paragraph
(f) of this section shall be filed for the real estate operation to be
acquired for the periods specified in Sec. Sec.  210.3-01 and 210.3-02,
except as provided otherwise for filings on Form S-4 or F-4 (Sec.
239.25 or Sec.  239.34 of this chapter). The financial statements
covering fiscal years shall be audited except as provided in Item 14 of
Schedule 14A (Sec.  240.14a-101 of this chapter) with respect to
certain proxy statements or in registration statements filed on Forms
S-4 or F-4 (Sec.  239.25 or Sec.  239.34 of this chapter).
    (2) In all cases not specified in paragraph (b)(1) of this section,
financial statements of the real estate operation acquired or to be
acquired shall be filed for the periods specified in this paragraph
(b)(2) or such shorter period as the real estate operation has been in
existence. The periods for which such financial statements are to be
filed shall be determined using the condition specified in the
definition of significant subsidiary in Sec.  210.1-02(w)(1)(i)
modified as follows:
    (i)(A) If the condition does not exceed 20 percent, financial
statements are not required.
    (B) If the condition exceeds 20 percent, financial statements of
the real estate operation for at least the most recent fiscal year and
the most recent interim period specified in Sec. Sec.  210.3-01 and
210.3-02 shall be filed.
    (C) If the aggregate impact of acquired or to be acquired real
estate operations since the date of the most recent audited balance
sheet filed for the registrant, for which financial statements are
either not required by paragraph (b)(2)(i)(A) of this section or are
not yet required based on paragraph (b)(3)(i), exceeds 50 percent, the
registrant shall provide:
    (1) Pro forma financial information pursuant to Sec. Sec.  210.11-
01 through 210.11-02 that depicts the aggregate impact of these
acquired or to be acquired real estate operations in all material
respects; and
    (2) Financial statements covering at least the most recent fiscal
year and the most recent interim period specified in Sec. Sec.  210.3-
01 and 210.3-02 for any acquired or to be acquired real estate
operation for which financial statements are not yet required based on
paragraph (b)(3)(i) of this section.
    (ii) When the investment test is based on the total assets of the
registrant and its subsidiaries consolidated, include any assumed debt
secured by the real properties in the ``investment in'' the tested real
estate operation.
    (iii) Determine total assets as of the end of the most recently
completed fiscal year included in the registrant's most recent
consolidated financial statements filed at or prior to the date of
acquisition; however, the determination may be made using Sec.  210.11-
01(b)(3)(i) and Sec.  210.11-

01(b)(3)(ii). When a registrant, including a real estate investment
trust, conducts a continuous offering over an extended period of time
and applies the Item 20.D Undertakings of Industry Guide 5, use the
following instead:
    (A) During the distribution period, determine total assets as of
the date of acquisition plus the proceeds (net of commissions) in good
faith expected to be raised in the registered offering over the next 12
months; and
    (B) After the distribution period ends and until the next Form 10-K
is filed, determine total assets as of the date of acquisition; and
    (C) After that next Form 10-K is filed, determine total assets as
of the end of the most recently completed fiscal year included in the
Form 10-K. However, the determination may be made using Sec.  210.11-
01(b)(3)(i) and Sec.  210.11-01(b)(3)(ii).
    (3) Financial statements required for the periods specified in
paragraph (b)(2) of this section may be omitted to the extent specified
as follows:
    (i) Registration statements not subject to the provisions of Sec.
230.419 of this chapter and proxy statements need not include separate
financial statements of the acquired or to be acquired real estate
operation if neither the real estate operation nor the aggregate impact
specified in (b)(2)(i)(C) of this section exceeds the condition of
significance in the definition of significant subsidiary in Sec.
210.1-02(w)(1)(i), as modified by paragraphs (b)(2)(ii) and (iii) of
this section, at the 50 percent level computed in accordance with
paragraph (b)(2) of this section, and either:
    (A) The consummation of the acquisition has not yet occurred; or
    (B) The date of the final prospectus or prospectus supplement
relating to an offering as filed with the Commission pursuant to Sec.
230.424(b) of this chapter, or mailing date in the case of a proxy
statement, is no more than 74 days after consummation of the
acquisition of the real estate operation, and the financial statements
have not previously been filed by the registrant.
    (ii) A registrant, other than a foreign private issuer required to
file reports on Form 6-K (Sec.  249.306 of this chapter), that omits
from its initial registration statement financial statements of a
recently consummated acquisition of a real estate operation pursuant to
paragraph (b)(3)(i) of this section shall file those financial
statements and any pro forma information specified by Sec. Sec.
210.11-01 to 210.11.03 (Article 11) of this chapter under cover of Form
8-K (Sec.  249.308 of this chapter) no later than 75 days after
consummation of the acquisition.
    (iii) Separate financial statements of the acquired real estate
operation need not be presented once the operating results of the
acquired real estate operation have been reflected in the audited
consolidated financial statements of the registrant for a complete
fiscal year.
    (c) Presentation of the financial statements. (1) The financial
statements prepared and audited in accordance with this regulation may
be only statements of revenues and expenses excluding expenses not
comparable to the proposed future operations such as mortgage interest,
leasehold rental, depreciation, amortization, corporate overhead and
income taxes.
    (2) The notes to the financial statements shall include the
following disclosures:
    (i) The type of omitted expenses and the reason(s) why they are
excluded from the financial statements;
    (ii) A description of how the financial statements presented are
not indicative of the results of operations of the acquired real estate
operation going forward because of the omitted expenses; and
    (iii) Information about the real estate operation's operating,
investing and financing cash flows, to the extent available.
    (d) Financial statements of foreign business. If the real estate
operation acquired or to be acquired is a foreign business, financial
statements of the real estate operation specified in paragraph (c) of
this section meeting the requirements of Item 17 of Form 20-F (Sec.
249.220f of this chapter) will satisfy this section. If such financial
statements are prepared according to a comprehensive body of accounting
principles other than those generally accepted in the United States
(U.S. GAAP) or International Financial Reporting Standards as issued by
the International Accounting Standards Board (IFRS-IASB), they may be
reconciled to IFRS-IASB, rather than U.S. GAAP, if the registrant is a
foreign private issuer that prepares its financial statements in
accordance with IFRS-IASB. The reconciliation to IFRS-IASB shall
generally follow the form and content requirements in Item 17(c) of
Form 20-F.
    (e) Financial statements of an acquired or to be acquired real
estate operation that would be a foreign private issuer if it were a
registrant. If the acquired or to be acquired real estate operation is
not a foreign business (as defined in Sec.  210.1-02(l)), but would
qualify as a foreign private issuer (as defined in Sec.  230.405 and
Sec.  240.3b-4) if it were a registrant, financial statements of the
real estate operation specified in paragraph (c) of this section may be
prepared in accordance with IFRS-IASB without reconciliation to U.S.
GAAP.
    (f) Supplemental information. For each real estate operation for
which financial statements are required to be filed by paragraphs
(b)(2)(i)(B) and (b)(2)(i)(C)(2), material factors considered by the
registrant in assessing the real estate operation must be described
with specificity in the filing, including sources of revenue
(including, but not limited to, competition in the rental market,
comparative rents, and occupancy rates) and expense (including, but not
limited to, utility rates, property tax rates, maintenance expenses,
and capital improvements anticipated). The disclosure must also
indicate that the registrant is not aware of any other material factors
relating to the specific real estate operation that would cause the
reported financial statements not to be indicative of future operating
results.
    Instruction to paragraph (f): When the financial statements are
presented in Form S-11 (Sec.  239.18 of this chapter), the discussion
of material factors considered should supplement the disclosures
required by Item 15 of Form S-11.

Sec.  210.3-18   [Amended]

0
6. Amend Sec.  210.3-18(d) by removing the phrase ``Sec. Sec.  210.6-01
to 210.6-10'' and adding in its place ``Sec. Sec.  210.6-01 to 210.6-
11''.

Sec.  210.5-01   [Amended]

0
7. Amend Sec.  210.5-01(a) by removing the phrase ``Sec. Sec.  210.6-01
to 210.6-10'' and adding in its place ``Sec. Sec.  210.6-01 to 210.6-
11''.

Sec.  210.6-01   [Amended]

0
8. Amend Sec.  210.6-01 by removing the phrases ``Sec. Sec.  210.6-01
to 210.6-10'' in the title and in the rule text and adding in each
place ``Sec. Sec.  210.6-01 to 210.6-11''.

Sec.  210.6-02   [Amended]

0
9. Amend Sec.  210.6-02(b) and (c) by removing the phrases ``Sec. Sec.
210.6-01 to 210.6-10'' and adding in each place ``Sec. Sec.  210.6-01
to 210.6-11''.

Sec.  210.6-03   [Amended]

0
10. Amend Sec.  210.6-03 by removing the phrase ``Sec. Sec.  210.6-01
to 210.6-10'' in the introductory text and paragraph (a) and adding in
each place ``Sec. Sec.  210.6-01 to 210.6-11''.
0
11. Add Sec.  210.6-11 to read as follows:

Sec.  210.6-11   Financial statements of funds acquired or to be
acquired.

    (a) Financial statements required. (1) Financial statements,
including the schedules specified in Sec. Sec.  210.12-01 to 210.12-29
(Article 12), prepared and audited in accordance with this regulation
(including the independence standards in Sec.  210.2-01 or,
alternatively if the fund is not a registrant, the applicable
independence standards) for the periods specified in paragraph (b) of
this section and the supplemental information specified in paragraph
(d) of this section shall be filed if any of the following conditions
exist:
    (i) During the most recent fiscal year or subsequent interim period
for which a balance sheet is required by Sec. Sec.  210.3-01 or 210.3-
18, a fund acquisition has occurred; or
    (ii) After the date of the most recent balance sheet filed pursuant
to Sec. Sec.  210.3-01 or 210.3-18 or, if no relevant balance sheet has
been filed in connection with a post-effective amendment for a new
series submitted pursuant to Rule 485(a)(2) under the Securities Act
(Sec.  230.485(a)(2) of this chapter), the filing of such amendment,
consummation of a fund acquisition has occurred or is probable.
    (2) For purposes of this section:
    (i) The term fund includes any investment company as defined in
section 3(a) of the Investment Company Act of 1940, including a
business development company, or any company that would be an
investment company but for the exclusions provided by sections 3(c)(1)
or 3(c)(7) of that Act, or any private account managed by an investment
adviser.
    (ii) The determination of whether a fund has been acquired or will
be acquired should be evaluated in light of the facts and circumstances
involved. A fund acquisition includes the acquisition by the registrant
of all or substantially all of the portfolio investments held by
another fund or an acquisition of a fund's portfolio investments that
will constitute all or substantially all of the initial assets of the
registrant.
    (3) Acquisitions of a group of related funds that are probable or
that have occurred subsequent to the latest fiscal year-end for which
audited financial statements of the registrant have been filed shall be
treated under this section as if they are a single acquisition. The
required financial statements may be presented either on an individual
or a combined basis for any periods they are under common control or
management. For purposes of this section, funds shall be deemed to be
related if:
    (i) They are under common control or management;
    (ii) The acquisition of one fund is conditional on the acquisition
of each other fund; or
    (iii) Each acquisition is conditioned on a single common event.
    (4) This rule shall not apply to a fund which is totally held by
the registrant prior to consummation of the transaction.
    (b) Periods to be presented. (1) If securities are being registered
to be offered to the security holders of the fund to be acquired, the
financial statements specified in Sec. Sec.  210.3-01 and 210.3-02 or
Sec.  210.3-18, for the fund to be acquired and the supplemental
information specified in paragraph (d) shall be filed, except as
provided otherwise for filings on Form N-14 (Sec.  239.23 of this
chapter). The financial statements covering the fiscal year shall be
audited except as provided in Item 14 of Schedule 14A (Sec.  240.14a-
101 of this chapter) with respect to certain proxy statements or in
registration statements filed on Forms N-14 (Sec.  239.23 of this
chapter).
    (2) In all cases not specified in paragraph (b)(1) of this section,
financial statements of the fund acquired or to be acquired for the
periods specified in this paragraph (b)(2) or such shorter period as
the fund has been in existence and the supplemental information
specified in paragraph (d) of this section shall be filed. Whether such
financial statements and supplemental information are to be filed shall
be determined using the conditions specified in the definition of
significant subsidiary in Sec. Sec.  210.1-02(w)(2)(i) and (ii)(B) as
follows:
    (i) If none of the conditions set forth in Sec.  210.1-02(w)(2)(i)
and (ii)(B), substituting 20 percent for 10 percent each place it
appears therein, are satisfied, the financial statements and
supplemental financial information in paragraph (d) of this section are
not required.
    (ii) If any of the conditions set forth in Sec.  210.1-02(w)(2)(i)
and (ii)(B), substituting 20 percent for 10 percent each place it
appears therein, are satisfied, the financial statements of the
acquired fund for the most recent fiscal year and the most recent
interim period shall be filed. The registrant shall also provide the
supplemental financial information in paragraph (d) of this section.
    (iii) If the aggregate impact of funds acquired or to be acquired
since the date of the most recent audited balance sheet filed for the
registrant, for which financial statements are not required by
paragraph (b)(2)(i) of this section, satisfies any of the conditions
set forth in Sec.  210.1-02(w)(2)(i) and (ii)(B), substituting 50
percent for 10 percent each place it appears therein, the registrant
shall provide financial statements for at least the most recent fiscal
year and the most recent interim period specified in Sec. Sec.  210.3-
01 and 210.3-02, or Sec.  210.3-18, for any fund acquired or to be
acquired for which financial statements are not yet required by
paragraph (b)(2)(i) of this section. The registrant shall also provide
the supplemental financial information in paragraph (d) of this section
for such funds.
    (3) The determination shall be made by comparing the most recent
annual financial statement of each such fund, or for acquisitions each
group of related funds on a combined basis, to the registrant's most
recent annual financial statements filed at or prior to the date of
acquisition. However, the determination may be made by using pro forma
amounts as calculated by the registrant for the periods specified in
Sec.  210.1-02(w)(2) that only give effect to an acquisition
consummated after the latest fiscal year-end for which the registrant's
financial statements are required to be filed when the registrant has
filed audited financial statements of such acquired fund and provided
the supplemental financial information for the periods required by this
section.
    (4) Separate financial statements of the acquired fund need not be
presented after the portfolio investments of the acquired fund have
been reflected in the registrant's most recent audited balance sheet
required by Sec. Sec.  210.3-01 or 3-18 for a date after the date the
acquisition was consummated.
    (c) Presentation of financial statements. If the fund to be
acquired would be an investment company under the Investment Company
Act but for the exclusion provided from that definition by either
sections 3(c)(1) or 3(c)(7) of that Act, then the required financial
statements shall comply with U.S. Generally Accepted Accounting
Principles and only Article 12 of this part. In situations of any
private account managed by an investment adviser provide the schedules
specified in Article 12 of this part for the assets to be acquired.
    (d) Supplemental financial information. (1) Supplemental financial
information shall consist of:
    (i) A table showing the current fees for the registrant and the
acquired fund and pro forma fees, if different, for the registrant
after giving effect to the acquisition using the format prescribed in
the appropriate registration statement under the Investment Company
Act;

    (ii) if the transaction will result in a material change in the
acquired fund's investment portfolio due to investment restrictions, a
schedule of investments of the acquired fund modified to reflect such
change and accompanied by narrative disclosure describing the change;
and
    (iii) narrative disclosure about material differences in financial
and operating policies of the acquired fund when compared to the
registrant.
    (2) With respect to any fund acquisition, registered investment
companies and business development companies shall provide the
supplemental financial information required in this section in lieu of
any pro forma financial information required by Sec. Sec.  210.11-01 to
210.11-03 of this regulation.
0
12. Amend Sec.  210.8-01 by revising NOTE 2 to Sec.  210.8 to remove
the undesignated paragraph following paragraph (c) to NOTE 2, and
adding NOTE 6 to Sec.  210.8 to read as follows:

Sec.  210.8-01   Preliminary Notes to Article 8.

* * * * *

    Note 6 to Sec.  210.8:  Section 210.3-06 shall apply to the
preparation of financial statements of smaller reporting companies.

Sec.  210.8-03   [Amended]

0
13. Remove and reserve Sec.  210.8-03(b)(4).
0
14. Revise Sec.  210.8-04 to read as follows:

Sec.  210.8-04   Financial statements of businesses acquired or to be
acquired.

    Apply Sec.  210.3-05 substituting Sec. Sec.  210.8-02 and 210.8-03,
as applicable, wherever Sec.  210.3-05 references Sec. Sec.  210.3-01
and 210.3-02.
0
15. Revise Sec.  210.8-05 to read as follows:

Sec.  210.8-05   Pro forma financial information.

    (a) Pro forma financial information shall be disclosed when any of
the conditions in Sec.  210.11-01 exist.
    (b) The preparation, presentation and disclosure of pro forma
financial information shall comply with Sec. Sec.  210.11-01 through
210.11-03 (Article 11), except that the pro forma financial information
may be condensed pursuant to Sec.  210.8-03(a).
0
16. Revise Sec.  210.8-06 to read as follows:

Sec.  210.8-06   Real estate operations acquired or to be acquired.

    Apply Sec.  210.3-14 substituting Sec. Sec.  210.8-02 and 210.8-03,
as applicable, wherever Sec.  210.3-14 references Sec. Sec.  210.3-01
and 210.3-02.
0
17. Amend Sec.  210.11-01 by:
0
a. Removing and reserving (a)(5);
0
b. Revising the introductory text of paragraph (a), and paragraphs
(a)(1), (a)(2), (a)(6), (a)(8), (b), and (c) to read as follows:

Sec.  210.11-01   Presentation requirements.

    (a) Pro forma financial information shall be filed when any of the
following conditions exist:
    (1) During the most recent fiscal year or subsequent interim period
for which a balance sheet is required by Sec.  210.3-01, a significant
business acquisition has occurred (for purposes of these rules, this
encompasses the acquisition of an interest in a business accounted for
by the equity method);
    (2) After the date of the most recent balance sheet filed pursuant
to Sec.  210.3-01, consummation of a significant business acquisition
or a combination of entities under common control has occurred or is
probable;
* * * * *
    (5) [Reserved];
    (6) Pro forma financial information required by Sec.  229.914 is
required to be provided in connection with a roll-up transaction as
defined in Sec.  229.901(c);
* * * * *
    (8) Consummation of other transactions has occurred or is probable
for which disclosure of pro forma financial information would be
material to investors.
    (b) A business acquisition or disposition shall be considered
significant if:
    (1) The business acquisition meets:
    (i) The definition of a significant subsidiary in Sec.  210.1-
02(w)(1), substituting 20 percent for 10 percent each place it appears
therein; or
    (ii) If the business is a real estate operation as defined in Sec.
210.3-14(a)(2), the significant subsidiary condition in Sec.  210.1-
02(w)(1)(i), substituting 20 percent for 10 percent, as modified by the
guidance in Sec.  210.3-14(b)(2).
    (2) The business disposition, including a business that is a real
estate operation as defined in Sec.  210.3-14(a)(2), meets the
definition of a significant subsidiary in Sec.  210.1-02(w)(1),
substituting 20 percent for 10 percent each place it appears therein.
    (3) The determination shall be made by comparing the most recent
annual financial statements of each such business, or for acquisitions
each group of related businesses (as defined in Sec.  210.3-05(a)(3))
on a combined basis or each group of related real estate operations (as
defined in Sec.  210.3-14(a)(2)) on a combined basis, to the
registrant's most recent annual consolidated financial statements filed
at or prior to the date of acquisition or disposition, except as noted
in Sec.  210.3-14(b)(2)(iii) for real estate operations. Registrants
that acquire net assets that constitute a business or a business that
includes oil- or gas- producing activities may make the determination
using the financial statements described in Sec.  210.3-05(e) or Sec.
210.3-05(f) if the business meets the conditions for presenting those
financial statements. However, the determination may be made using:
    (i) Pro forma amounts specified in Sec.  210.11-02(a)(6)(i) for the
registrant for the periods specified in Sec.  210.11-01(b)(3) that only
depict significant business acquisitions and dispositions consummated
after the latest fiscal year-end for which the registrant's financial
statements are required to be filed, provided that the registrant has
filed audited financial statements for any such acquired business for
the periods required by Sec.  210.3-05 or Sec.  210.3-14 and the pro
forma financial information required by Sec.  210.11-01 through Sec.
210.11-02 for any such acquired or disposed business. The tests may not
be made by ``annualizing'' data; or
    (ii) The registrant's annual consolidated financial statements, for
the most recent fiscal year ended prior to the acquisition or
disposition, that are included in the registrant's Form 10-K (Sec.
249.310 of this chapter) filed after the acquisition or disposition,
but before the date financial statements and pro forma financial
information for the acquisition or disposition would be required to be
filed on Form 8-K (Sec.  249.308 of this chapter).
    (c) The pro forma effects of a business acquisition need not be
presented pursuant to this section if separate financial statements of
the acquired business are not included in the filing, except where the
aggregate impact of businesses acquired or to be acquired is
significant as determined by Sec. Sec.  210.3-05(b)(2)(iv) or 210.3-
14(b)(2)(i)(C).
* * * * *
0
18. Revise Sec.  210.11-02 to read as follows:

Sec.  210.11-02   Preparation requirements.

    (a) Form and content. (1) Pro forma financial information shall
consist of a pro forma condensed balance sheet, pro forma condensed
statements of comprehensive income, and accompanying explanatory notes.
In certain circumstances (i.e., where a limited number of pro forma
adjustments are required and those adjustments are easily understood),
a narrative description of the pro forma effects of the transaction may
be

disclosed in lieu of the statements described herein.
    (2) The pro forma financial information shall be accompanied by an
introductory paragraph which briefly sets forth a description of:
    (i) Each transaction for which pro forma effect is being given;
    (ii) The entities involved;
    (iii) The periods for which the pro forma financial information is
presented; and
    (iv) An explanation of what the pro forma presentation shows.
    (3) The pro forma condensed financial information need only include
major captions (i.e., the numbered captions) prescribed by the
applicable sections of Regulation S-X. Where any major balance sheet
caption is less than 10 percent of total assets, the caption may be
combined with others. When any major statement of comprehensive income
caption is less than 15 percent of average net income attributable to
the registrant for the most recent three fiscal years, the caption may
be combined with others. In calculating average net income attributable
to the registrant, loss years should be excluded unless losses were
incurred in each of the most recent three years, in which case the
average loss shall be used for purposes of this test. Notwithstanding
these tests, de minimis amounts need not be shown separately.
    (4) Pro forma statements shall ordinarily be in columnar form
showing condensed historical statements, pro forma adjustments, and the
pro forma results.
    (5) The pro forma condensed statement of comprehensive income shall
disclose income (loss) from continuing operations and income or loss
from continuing operations attributable to the controlling interest.
    (6) The pro forma condensed balance sheet and pro forma condensed
statements of comprehensive income shall present in separate columns
and shall include, and be limited to, the following pro forma
adjustments:
    (i) Transaction Accounting Adjustments. (A) Adjustments that depict
in the pro forma condensed balance sheet the accounting for the
transaction required by U.S. Generally Accepted Accounting Principles
(U.S. GAAP) or, as applicable, International Financial Reporting
Standards as issued by the International Accounting Standards Board
(IFRS-IASB). Calculate pro forma adjustments using the measurement date
and method prescribed by the applicable accounting standards. For a
probable transaction, calculate pro forma adjustments using, and
disclose, the most recent practicable date prior to the effective date
(for registration statements) or the mail date (for proxy statements).
    (B) Adjustments that depict in the pro forma condensed statements
of comprehensive income the effects of the pro forma balance sheet
adjustments in paragraph (a)(6)(i)(A) of this section assuming those
adjustments were made as of the beginning of the fiscal year presented.
If the condition in Sec.  210.11-01(a) that is met does not have a
balance sheet effect, then depict the accounting for the transaction
required by U.S. GAAP or IFRS-IASB, as applicable.
    (ii) Management's Adjustments. Management's Adjustments shall be
limited to adjustments that:
    (A) Give effect to reasonably estimable synergies and other
transaction effects, such as closing facilities, discontinuing product
lines, terminating employees, and executing new or modifying existing
agreements, that have occurred or are reasonably expected to occur.
    (B) Show the registrant as an autonomous entity if the condition in
Sec.  210.11-01(a)(7) is met.
    Instruction to paragraph (a)(6)(ii): Any forward-looking
information supplied is expressly covered by the safe harbor rule. See
Sec.  230.175 and Sec.  240.3b-6 of this chapter.
    (7) All pro forma adjustments should be referenced to notes that
clearly explain the assumptions involved. When Management's Adjustments
are presented, the pro forma condensed statements of comprehensive
income shall include a separate subtotal column that combines the
historical statements and the Transaction Accounting Adjustments before
the column depicting Management's Adjustments.
    (8)(i) Historical and pro forma basic and diluted per share amounts
based on continuing operations attributable to the controlling
interests and the number of shares used to calculate such per share
amounts shall be presented on the face of the pro forma condensed
statement of comprehensive income for both the pro forma total
depicting the combined historical statements and Transaction Accounting
Adjustments as well as the pro forma total depicting the combined
historical statements, Transaction Accounting Adjustments, and
Management's Adjustments, if any.
    (ii) The number of shares used in the calculation of the pro forma
per share amounts shall be based on the weighted average number of
shares outstanding during the period adjusted to give effect to the
number of shares issued or to be issued to consummate the transaction,
or if applicable whose proceeds will be used to consummate the
transaction as if the shares were outstanding as of the beginning of
the period presented. Calculate the pro forma effect of potential
common stock being issued in the transaction (e.g., a convertible
security), or the proceeds of which will be used to consummate the
transaction, on pro forma earnings per share in accordance with U.S.
GAAP or IFRS-IASB, as applicable, as if the potential common stock were
outstanding as of the beginning of the period presented. If a
Management's Adjustment will change the number of shares or potential
common shares, reflect the change within Management's Adjustment in
accordance with U.S. GAAP or IFRS-IASB, as applicable, as if the common
stock or potential common stock were outstanding as of the beginning of
the period presented.
    (9) If the transaction is structured in such a manner that
significantly different results may occur, provide additional pro forma
presentations which give effect to the range of possible results.
    (10) The accompanying explanatory notes shall disclose:
    (i) Revenues, expenses, gains and losses and related tax effects
which will not recur in the income of the registrant beyond 12 months
after the transaction.
    (ii) For Transaction Accounting Adjustments:
    (A) A table showing the total consideration transferred or received
including its components and how they were measured. If total
consideration includes contingent consideration, describe the
arrangement(s), the basis for determining the amount of payment(s) or
receipt(s), and an estimate of the range of outcomes (undiscounted) or,
if a range cannot be estimated, that fact and the reasons why; and
    (B) The following information when the accounting is incomplete: A
prominent statement to this effect; the items for which the accounting
depicted is incomplete; a description of the information that the
registrant requires, including, if material, the uncertainties
affecting the pro forma financial information and the possible
consequences of their resolution; an indication of when the accounting
is expected to be finalized; and other available information that will
enable a reader to understand the magnitude of any potential
adjustments to the measurements depicted.
    (iii) For each Management's Adjustment, a description, including
the material uncertainties, of the synergy or other transaction effect,
the material assumptions, the calculation of the adjustment, the
estimated time frame for completion, and qualitative information
necessary to give a fair and balanced

presentation of the pro forma financial information. To the extent
known, the reportable segments, products, services, and processes
involved; the material resources required, if any, and the anticipated
timing.
    (iv) For synergies and other transaction effects that are not
reasonably estimable, qualitative information necessary for a fair and
balanced presentation of the pro forma financial information.
    (11) A registrant shall not:
    (i) Present pro forma financial information on the face of the
registrant's historical financial statements or in the accompanying
notes, except where such presentation is required by U.S. GAAP or IFRS-
IASB, as applicable.
    (ii) Present summaries of pro forma financial information elsewhere
in a filing that excludes material transactions for which pro forma
effect is required to be given.
    (iii) Give pro forma effect to the registrant's adoption of an
accounting standard in pro forma financial information required by
Sec. Sec.  210.11-01 through 210.11-03 of this chapter.
    (b) Implementation guidance. (1) Historical statement of
comprehensive income. The historical statement of comprehensive income
used in the pro forma financial information shall only be presented
through income from continuing operations (or the appropriate
modification thereof).
    (2) Business acquisitions. In some transactions, such as in
financial institution acquisitions, measuring the acquired assets at
their acquisition date fair value may result in significant discounts
relative to the acquired business's historical cost of the acquired
assets. When such discounts can result in a significant effect on
earnings (losses) in periods immediately subsequent to the acquisition
that will be progressively eliminated over a relatively short period,
the effect of the discounts on reported results of operations for each
of the next five years shall be disclosed in a note.
    (3) Business dispositions. Transaction Accounting Adjustments
giving effect to the disposition of a business shall not decrease
historically incurred compensation expense for employees who were not,
or will not be, transferred or terminated as of the disposition date.
Adjustments to decrease historically incurred compensation expense for
those employees shall be included in Management's Adjustments if they
meet the requirements in Sec.  210.11-02(a)(6)(ii).
    (4) Multiple transactions. (i) When consummation of more than one
transaction has occurred, or is probable, the pro forma financial
information shall present in separate columns each transaction for
which pro forma presentation is required by Sec.  210.11-01.
    (ii) If the pro forma financial information is presented in a proxy
or information statement for purposes of obtaining shareholder approval
of one of the transactions, the effects of that transaction must be
clearly set forth.
    (5) Tax effects. (i) Tax effects, if any, of pro forma adjustments
normally should be calculated at the statutory rate in effect during
the periods for which pro forma condensed statements of comprehensive
income are presented and should be reflected as a separate pro forma
adjustment.
    (ii) When the registrant's historical statements of comprehensive
income do not reflect the tax provision on the separate return basis,
pro forma statements of comprehensive income adjustments shall reflect
a tax provision calculated on the separate return basis.
    (c) Periods to be presented. (1) A pro forma condensed balance
sheet as of the end of the most recent period for which a consolidated
balance sheet of the registrant is required by Sec.  210.3-01 shall be
filed unless the transaction is already reflected in such balance
sheet.
    (2)(i) Pro forma condensed statements of comprehensive income shall
be filed for only the most recent fiscal year, except as noted in
paragraph (c)(2)(ii) of this section, and for the period from the most
recent fiscal year end to the most recent interim date for which a
balance sheet is required. A pro forma condensed statement of
comprehensive income may be filed for the corresponding interim period
of the preceding fiscal year. A pro forma condensed statement of
comprehensive income shall not be filed when the historical statement
of comprehensive income reflects the transaction for the entire period.
    (ii) For transactions required to be accounted for under U.S. GAAP
or, as applicable, IFRS-IASB by retrospectively revising the historical
statements of comprehensive income (e.g., combination of entities under
common control and discontinued operations), pro forma statements of
comprehensive income shall be filed for all periods for which
historical financial statements of the registrant are required.
Retrospective revisions stemming from the registrant's adoption of a
new accounting principle should not be reflected in pro forma
statements of comprehensive income until they are depicted in the
registrant's historical financial statements.
    (3) Pro forma condensed statements of comprehensive income shall be
presented using the registrant's fiscal year end. If the most recent
fiscal year end of any other entity involved in the transaction differs
from the registrant's most recent fiscal year end by more than one
fiscal quarter, the other entity's statement of comprehensive income
shall be brought up to within one fiscal quarter of the registrant's
most recent fiscal year end, if practicable. This updating could be
accomplished by adding subsequent interim period results to the most
recent fiscal year end information and deducting the comparable
preceding year interim period results. Disclosure shall be made of the
periods combined and of the sales or revenues and income for any
periods which were excluded from or included more than once in the
condensed pro forma statement of comprehensive income (e.g., an interim
period that is included both as part of the fiscal year and the
subsequent interim period).
    Instruction to paragraph (c)(3): In circumstances where different
fiscal year ends exist, Sec.  210.3-12 may require a registrant to
include in the pro forma financial information an acquired or to be
acquired foreign business historical period that would be more current
than the periods included in the required historical financial
statements of the foreign business.
    (4) Whenever unusual events enter into the determination of the
results shown for the most recently completed fiscal year, the effect
of such unusual events should be disclosed and consideration should be
given to presenting a pro forma condensed statement of comprehensive
income for the most recent twelve-month period in addition to those
required in paragraph (c)(2)(i) of this section if the most recent
twelve-month period is more representative of normal operations.

Sec.  210.11-03   [Amended]

0
19. Amend Sec.  210.11-03 by:
0
a. In paragraph (a) introductory text, removing ``Sec.  210.11-
02(b)(1)'' and adding in its place ``Sec.  210.11-02(a)(1)''; and
0
b. In paragraph (a)(2), removing ``Sec.  210.11-02(b)(3)'' and adding
in its place ``Sec.  210.11-02(a)(3)''.
0
c. In paragraph (d), removing ``generally accepted accounting
principles'' and adding in its place ``U.S. GAAP or IFRS-IASB.''

PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933

0
20. The authority citation for part 230 continues to read, in part, as
follows:

    Authority:  15 U.S.C. 77b, 77b note, 77c, 77d, 77f, 77g, 77h,
77j, 77r, 77s, 77z-3, 77sss, 78c, 78d, 78j, 78l, 78m, 78n, 78o, 78o-
7 note, 78t, 78w, 78ll(d), 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a-
30, and 80a-37, and Pub. L. 112-106, sec. 201(a), sec. 401, 126
Stat. 313 (2012), unless otherwise noted.
* * * * *
0
21. Amend Sec.  230.405 by revising the definition of ``Significant
subsidiary'' to read as follows:

Sec.  230.405   Definitions of terms.

* * * * *
    Significant subsidiary. The term significant subsidiary means a
subsidiary, including its subsidiaries, which meets any of the
conditions in paragraphs (1), (2), or (3) of this definition; however,
if the subsidiary is a registered investment company or a business
development company, it meets any of the conditions in paragraph (4) of
this definition instead of any of the conditions in paragraphs (1),
(2), or (3) of this definition. A registrant that files its financial
statements in accordance with or provides a reconciliation to U.S.
Generally Accepted Accounting Principles (U.S. GAAP) shall use amounts
determined under U.S. GAAP. A foreign private issuer that files its
financial statements in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards
Board (IFRS-IASB) shall use amounts determined under IFRS-IASB.
    (1) Investment test. (i) The registrant's and its other
subsidiaries' investments in and advances to the tested subsidiary
exceed 10 percent of the aggregate worldwide market value of the
registrant's voting and non-voting common equity, or if the registrant
has no such aggregate worldwide market value, the total assets of the
registrant and its subsidiaries consolidated as of the end of the most
recently completed fiscal year. Aggregate worldwide market value of the
registrant's voting and non-voting common equity shall be determined as
of the last business day of the registrant's most recently completed
fiscal year, which for acquisitions and dispositions shall be at or
prior to the date of acquisition or disposition;
    (ii) For a combination between entities or businesses under common
control, this test shall be met when either the net book value of the
tested subsidiary exceeds 10 percent of the registrant's and its
subsidiaries' consolidated total assets or the number of common shares
exchanged or to be exchanged by the registrant exceeds 10 percent of
its total common shares outstanding at the date the combination is
initiated;
    (iii) For all other acquisitions, the ``investment in'' the tested
subsidiary shall include the fair value of contingent consideration if
required to be recognized at fair value at the acquisition date;
however if recognition at fair value is not required, include all
contingent consideration, except sales-based milestones and royalties,
unless the likelihood of payment is remote. The ``investment in'' the
tested subsidiary also excludes the registrant's and its subsidiaries'
proportionate interest in the carrying value of assets transferred by
the registrant and its subsidiaries consolidated to the tested
subsidiary that will remain with the combined entity after the
acquisition; and
    (iv) For dispositions, the ``investment in'' the tested subsidiary
shall equal the fair value of the consideration, which shall include
contingent consideration, for the disposed subsidiary when comparing to
the aggregate worldwide market value of the registrant or, when the
registrant has no such aggregate worldwide market value, the carrying
value of the disposed subsidiary when comparing to total assets of the
registrant. For a real estate operation as defined in Sec.  210.3-
14(a)(2), when the investment test is based on the total assets of the
registrant and its subsidiaries consolidated, include any debt secured
by the real properties that is assumed by the buyer in the ``investment
in'' the tested real estate operation.
    (2) Asset test. The registrant's and its other subsidiaries'
proportionate share of the total assets (after intercompany
eliminations) of the tested subsidiary exceeds 10 percent of such total
assets of the registrant and its subsidiaries consolidated as of the
end of the most recently completed fiscal year.
    (3) Income test. (i)(A) The absolute value of the registrant's and
its other subsidiaries' equity in the tested subsidiary's consolidated
income or loss from continuing operations (after intercompany
eliminations) attributable to the controlling interests exceeds 10
percent of the absolute value of such income or loss of the registrant
and its subsidiaries consolidated for the most recently completed
fiscal year; and
    (B) The registrant's and its other subsidiaries' proportionate
share of the tested subsidiary's consolidated total revenue (after
intercompany eliminations) exceeds 10 percent of such total revenue of
the registrant and its subsidiaries consolidated for the most recently
completed fiscal year. This component does not apply if either the
registrant and its subsidiaries consolidated or the tested subsidiary
does not have recurring annual revenue.
    (ii) When determining the income component in paragraph (3)(i)(A)
of the definition of significant subsidiary in this section:
    (A) If a net loss from continuing operations attributable to the
controlling interest has been incurred by either the registrant and its
subsidiaries consolidated or the tested subsidiary, but not both,
exclude the equity in the income or loss from continuing operations of
the tested subsidiary attributable to the controlling interest from
such income or loss of the registrant and its subsidiaries consolidated
for purposes of the computation; and
    (B) Compute the test using the average described herein if the
revenue component in paragraph (3)(i)(B) of the definition of
significant subsidiary in this section does not apply and the absolute
value of the registrant's and its consolidated subsidiaries' income or
loss from continuing operations attributable to the controlling
interests for the most recent fiscal year is at least 10 percent lower
than the average of the absolute value of such amounts for each of its
last five fiscal years.
    (4) For a registrant that is a registered investment company or a
business development company, the term significant subsidiary means a
subsidiary, including its subsidiaries, which meets any of the
following conditions using amounts determined under U.S. GAAP and, if
applicable, section 2(a)(41) of the Investment Company Act of 1940 (15
U.S.C. 80a-2(a)(41)):
    (i) Investment test. The value of the registrant's and its other
subsidiaries' investments in and advances to the tested subsidiary
exceed 10 percent of the value of the total investments of the
registrant and its subsidiaries consolidated as of the end of the most
recently completed fiscal year; or
    (ii) Income test. The absolute value of the combined investment
income from dividends, interest, and other income, the net realized
gains and losses on investments, and the net change in unrealized gains
and losses on investments from the tested subsidiary, for the most
recently completed fiscal year exceeds:
    (A) 80 percent of the absolute value of the change in net assets
resulting from operations of the registrant and its subsidiaries
consolidated for the most recently completed fiscal year; or
    (B) 10 percent of the absolute value of the change in net assets
resulting from operations of the registrant and its

subsidiaries consolidated for the most recently completed fiscal year
and the investment test condition (paragraph (4)(i) of the definition
of significant subsidiary in this section) exceeds 5 percent. However,
if the registrant and its subsidiaries consolidated has an
insignificant change in net assets resulting from operations for its
most recently completed fiscal year, compute the test using the average
of the absolute value of such amounts for the registrant and its
subsidiaries consolidated for each of its last five fiscal years.
* * * * *

PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

0
22. The authority citation for part 239 continues to read, in part, as
follows:

    Authority: 15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3,
77sss, 78c, 78l, 78m,78n, 78o(d), 78o-7 note, 78u-5, 78w(a), 78ll,
78mm, 80a-2(a), 80a-3, 80a-8, 80a-9, 80a-10, 80a-13, 80a-24, 80a-26,
80a-29, 80a-30, and 80a-37; and sec. 107, Pub. L. 112-106, 126 Stat.
312, unless otherwise noted.
* * * * *
0
23. Form N-14 (referenced in Sec.  239.23) is amended to revise Item 14
to read as follows:

    Note: The text of Form N-14 does not, and this amendment will
not, appear in the Code of Federal Regulations.

Form N-14

* * * * *

Item 14. Financial Statements

    The Statement of Additional Information shall contain the financial
statements, including the schedules thereto, and supplemental financial
information of the acquiring company and the company to be acquired
required by Regulation S-X [17 CFR 210] for the periods specified in
Article 3 and Rule 6-11 of Regulation S-X, except:
    1. If the company to be acquired is an investment company or would
be an investment company but for the exclusions provided by sections
3(c)(1) or 3(c)(7) of the 1940 Act [15 U.S.C. 80a-3(c)(1) and (c)(7)]
(a ``private fund''), the financial statements need only be filed for
the most recent fiscal year and the most recent interim period;
    2. if the company to be acquired is a private fund, then such
company may provide the financial statements, including the schedules
thereto, described in Rule 3-18 of Regulation S-X that comply with U.S.
Generally Accepted Accounting Principles and only Article 12 of
Regulation S-X;
    3. the financial statements required by Regulation S-X for any
subsidiary that is not a majority-owned subsidiary may be omitted from
Part B and included in Part C; and
    4. the table showing the current fees and pro forma fees, if
different, required by Rule 6-11 of Regulation S-X (which is required
by Item 3 of this Form).

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934

0
24. The authority citation for part 240 continues to read, in part, as
follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f,
78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4,
78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20,
80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 7201 et seq.; and
8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350;
Pub. L. 111-203, 939A, 124 Stat. 1887 (2010); and secs. 503 and 602,
Pub. L. 112-106, 126 Stat. 326 (2012), unless otherwise noted.
* * * * *
0
25. Amend Sec.  240.12b-2 by revising the definition of ``Significant
subsidiary'' to read as follows:

Sec.  240.12b-2   Definitions.

* * * * *
    Significant subsidiary. The term significant subsidiary means a
subsidiary, including its subsidiaries, which meets any of the
conditions in the following paragraphs (1), (2), or (3) of this
definition; however, if the subsidiary is a registered investment
company or a business development company, it meets any of the
conditions in paragraph (4) of this definition instead of any of the
conditions in paragraphs (1), (2), or (3) of this definition. A
registrant that files its financial statements in accordance with or
provides a reconciliation to U.S. Generally Accepted Accounting
Principles (U.S. GAAP) shall use amounts determined under U.S. GAAP A
foreign private issuer that files its financial statements in
accordance with International Financial Reporting Standards as issued
by the International Accounting Standards Board (IFRS-IASB) shall use
amounts determined under IFRS-IASB.
    (1) Investment test. (i) The registrant's and its other
subsidiaries' investments in and advances to the tested subsidiary
exceed 10 percent of the aggregate worldwide market value of the
registrant's voting and non-voting common equity, or if the registrant
has no such aggregate worldwide market value, the total assets of the
registrant and its subsidiaries consolidated as of the end of the most
recently completed fiscal year. Aggregate worldwide market value of the
registrant's voting and non-voting common equity shall be determined as
of the last business day of the registrant's most recently completed
fiscal year, which for acquisitions and dispositions shall be at or
prior to the date of acquisition or disposition;
    (ii) For a combination between entities or businesses under common
control, this test shall be met when either the net book value of the
tested subsidiary exceeds 10 percent of the registrant's and its
subsidiaries' consolidated total assets or the number of common shares
exchanged or to be exchanged by the registrant exceeds 10 percent of
its total common shares outstanding at the date the combination is
initiated;
    (iii) For all other acquisitions, the ``investment in'' the tested
subsidiary shall include the fair value of contingent consideration if
required to be recognized at fair value at the acquisition date;
however if recognition at fair value is not required, include all
contingent consideration, except sales-based milestones and royalties,
unless the likelihood of payment is remote. The ``investment in'' the
tested subsidiary also excludes the registrant's and its subsidiaries'
proportionate interest in the carrying value of assets transferred by
the registrant and its subsidiaries consolidated to the tested
subsidiary that will remain with the combined entity after the
acquisition; and
    (iv) For dispositions, the ``investment in'' the tested subsidiary
shall equal the fair value of the consideration, which shall include
contingent consideration, for the disposed subsidiary when comparing to
the aggregate worldwide market value of the registrant or, when the
registrant has no such aggregate worldwide market value, the carrying
value of the disposed subsidiary when comparing to total assets of the
registrant. For a real estate operation as defined in Sec.  210.3-
14(a)(2), when the investment test is based on the total assets of the
registrant and its subsidiaries consolidated, include any debt secured
by the real properties that is assumed by the buyer in the ``investment
in'' the tested real estate operation.
    (2) Asset test. The registrant's and its other subsidiaries'
proportionate share of the total assets (after intercompany
eliminations) of the tested subsidiary exceeds 10 percent of such total
assets of the registrant and its subsidiaries consolidated as of the
end of the most recently completed fiscal year.

    (3) Income test. (i)(A) The absolute value of the registrant's and
its other subsidiaries' equity in the tested subsidiary's consolidated
income or loss from continuing operations (after intercompany
eliminations) attributable to the controlling interests exceeds 10
percent of the absolute value of such income or loss of the registrant
and its subsidiaries consolidated for the most recently completed
fiscal year; and
    (B) The registrant's and its other subsidiaries' proportionate
share of the tested subsidiary's consolidated total revenue (after
intercompany eliminations) exceeds 10 percent of such total revenue of
the registrant and its subsidiaries consolidated for the most recently
completed fiscal year. This component does not apply if either the
registrant and its subsidiaries consolidated or the tested subsidiary
does not have recurring annual revenue.
    (ii) When determining the income component in paragraph (3)(i)(A)
of the definition of significant subsidiary in this section:
    (A) If a net loss from continuing operations attributable to the
controlling interest has been incurred by either the registrant and its
subsidiaries consolidated or the tested subsidiary, but not both,
exclude the equity in the income or loss from continuing operations of
the tested subsidiary attributable to the controlling interest from
such income or loss of the registrant and its subsidiaries consolidated
for purposes of the computation; and
    (B) Compute the test using the average described herein if the
revenue component in paragraph (3)(i)(B) of the definition of
significant subsidiary in this section does not apply and the absolute
value of the registrant's and its consolidated subsidiaries' income or
loss from continuing operations attributable to the controlling
interests for the most recent fiscal year is at least 10 percent lower
than the average of the absolute value of such amounts for each of its
last five fiscal years.
    (4) For a registrant that is a registered investment company or a
business development company, the term significant subsidiary means a
subsidiary, including its subsidiaries, which meets any of the
following conditions using amounts determined under U.S. GAAP and, if
applicable, section 2(a)(41) of the Investment Company Act of 1940 (15
U.S.C. 80a-2(a)(41)):
    (i) Investment test. The value of the registrant's and its other
subsidiaries' investments in and advances to the tested subsidiary
exceed 10 percent of the value of the total investments of the
registrant and its subsidiaries consolidated as of the end of the most
recently completed fiscal year; or
    (ii) Income test. The absolute value of the combined investment
income from dividends, interest, and other income, the net realized
gains and losses on investments, and the net change in unrealized gains
and losses on investments from the tested subsidiary, for the most
recently completed fiscal year exceeds:
    (A) 80 percent of the absolute value of the change in net assets
resulting from operations of the registrant and its subsidiaries
consolidated for the most recently completed fiscal year; or
    (B) 10 percent of the absolute value of the change in net assets
resulting from operations of the registrant and its subsidiaries
consolidated for the most recently completed fiscal year and the
Investment Test condition (paragraph (4)(i) of the definition of
significant subsidiary in this section) exceeds 5 percent. However, if
the registrant and its subsidiaries consolidated has an insignificant
change in net assets resulting from operations for its most recently
completed fiscal year, compute the test using the average of the
absolute value of such amounts for the registrant and its subsidiaries
consolidated for each of its last five fiscal years.
* * * * *

Sec.  240.14a-101   [Amended]

0
26. Amend Sec.  240.14a-101, Item 14(d)(5) by removing the phrase
``Rule 3-05 and Article 11 of Regulation S-X'' and adding in its place
``Rules 3-05, 6-11, and Article 11 of Regulation S-X''.

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

0
27. The authority citation for part 249 continues to read, in part, as
follows:

    Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; 12 U.S.C.
5461 et seq.; 18 U.S.C. 1350; Sec. 953(b), Pub. L. 111-203, 124
Stat. 1904; Sec. 102(a)(3), Pub. L. 112-106, 126 Stat. 309 (2012);
Sec. 107, Pub. L. 112-106, 126 Stat. 313 (2012), and Sec. 72001,
Pub. L. 114-94, 129 Stat. 1312 (2015), unless otherwise noted.
* * * * *
0
28. Form 8-K (referenced in Sec.  249.308) is amended by revising the
introductory text to Item 2.01, Instruction 4 to Item 2.01, and Item
9.01.
    The revisions to read as follows:

    Note: The text of Form 8-K does not, and this amendment will
not, appear in the Code of Federal Regulations.

Form 8-K

* * * * *

Item 2.01 Completion of Acquisition or Disposition of Assets

    If the registrant or any of its subsidiaries consolidated has
completed the acquisition or disposition of a significant amount of
assets, otherwise than in the ordinary course of business, or the
acquisition or disposition of a significant amount of assets that
constitute a real estate operation as defined in Sec.  210.3-14(a)(2)
disclose the following information:
* * * * *
    Instructions. * * *
    4. An acquisition or disposition shall be deemed to involve a
significant amount of assets:
    (i) If the registrant's and its other subsidiaries' equity in the
net book value of such assets or the amount paid or received for the
assets upon such acquisition or disposition exceeded 10% of the total
assets of the registrant and its consolidated subsidiaries;
    (ii) If it involved a business (see 17 CFR 210.11-01(d)) that is
significant (see 17 CFR 210.11-01(b)); or
    (iii) In the case of a business development company, if the amount
paid for such assets exceeded 10% of the value of the total investments
of the registrant and its consolidated subsidiaries.
    The aggregate impact of acquired businesses are not required to be
reported pursuant to this Item 2.01 unless they are related businesses
(see 17 CFR 210.3-05(a)(3)), related real estate operations (see 17 CFR
210.3-14(a)(3)), or related funds (see 17 CFR 210.6-11(a)(3)), and are
significant in the aggregate.
    5. Attention is directed to the requirements in Item 9.01
(Financial Statements and Exhibits) with respect to the filing of:
    (i) Financial statements of businesses or funds acquired;
* * * * *

Item 9.01 Financial Statements and Exhibits

    List below the financial statements, pro forma financial
information and exhibits, if any, filed as a part of this report.
    (a) Financial statements of businesses or funds acquired.
    (1) For any business acquisition or fund acquisition required to be
described in answer to Item 2.01 of this form, file financial
statements and any applicable supplemental information, of the business
acquired specified in Rules 3-05 or 3-14 of Regulation S-X (17 CFR
210.3-05(b) and 210.3-14), or Rules 8-04 or 8-06 of Regulation S-X (17
CFR 210.8-04(b) and 210.8-06) for smaller

reporting companies, or of the fund acquired specified in Rule 6-11 of
Regulation S-X (17 CFR 210.6-11).
    (2) The financial statements shall be prepared pursuant to
Regulation S-X except that supporting schedules need not be filed
unless required by Rule 6-11 of Regulation S-X (17 CFR 210.6-11). A
manually signed accountant's report should be provided pursuant to Rule
2-02 of Regulation S-X (17 CFR 210.2-02).
    (3) Financial statements required by this item may be filed with
the initial report, or by amendment not later than 71 calendar days
after the date that the initial report on Form 8-K must be filed. If
the financial statements are not included in the initial report, the
registrant should so indicate in the Form 8-K report and state when the
required financial statements will be filed. The registrant may, at its
option, include unaudited financial statements in the initial report on
Form 8-K.
    (b) Pro forma financial information.
    (1) For any transaction required to be described in answer to Item
2.01 of this form, furnish any pro forma financial information that
would be required pursuant to Article 11 of Regulation S-X (17 CFR 210)
or Rule 8-05 of Regulation S-X (17 CFR 210.8-05) for smaller reporting
companies unless it involves the acquisition of a fund subject to Rule
6-11 of Regulation S-X (17 CFR 210.6-11).
    (2) The provisions of paragraph (a)(3) of this Item 9.01 shall also
apply to pro forma financial information relative to the acquired
business.
    (c) Shell company transactions. The provisions of paragraph (a)(3)
and (b)(2) of this Item shall not apply to the financial statements or
pro forma financial information required to be filed under this Item
with regard to any transaction required to be described in answer to
Item 2.01 of this Form by a registrant that was a shell company, other
than a business combination related shell company, as those terms are
defined in Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2),
immediately before that transaction. Accordingly, with regard to any
transaction required to be described in answer to Item 2.01 of this
Form by a registrant that was a shell company, other than a business
combination related shell company, immediately before that transaction,
the financial statements and pro forma financial information required
by this Item must be filed in the initial report. Notwithstanding
General Instruction B.3. to Form 8-K, if any financial statement or any
financial information required to be filed in the initial report by
this Item 9.01(c) is previously reported, as that term is defined in
Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2), the registrant
may identify the filing in which that disclosure is included instead of
including that disclosure in the initial report.
    (d) Exhibits. * * *

Instruction

    During the period after a registrant has reported an acquisition
pursuant to Item 2.01 of this form, until the date on which the
financial statements specified by this Item 9.01 must be filed, the
registrant will be deemed current for purposes of its reporting
obligations under Section 13(a) or 15(d) of the Exchange Act (15 U.S.C.
78m or 78o(d)). With respect to filings under the Securities Act,
however, registration statements will not be declared effective and
post-effective amendments to registration statements will not be
declared effective unless financial statements meeting the requirements
of Rule 3-05, Rule 3-14, and Rule 6-11 of Regulation S-X (17 CFR 210.3-
05, 210.3-14, and 210.6-11), as applicable, are provided. In addition,
offerings should not be made pursuant to effective registration
statements, or pursuant to Rule 506 of Regulation D (17 CFR 230.506)
where any purchasers are not accredited investors under Rule 501(a) of
that Regulation, until the audited financial statements required by
Rule 3-05, Rule 3-14, and Rule 6-11 of Regulation S-X (17 CFR 210.3-05,
210.3-14, and 210.6-11), as applicable, are filed; provided, however,
that the following offerings or sales of securities may proceed
notwithstanding that financial statements of the acquired business have