on small entities. Accordingly, 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 final amendments generally 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
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.\505\ For investment companies,
we believe that Rule 6-11 and 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 final amendments or to establish different
compliance or reporting requirements for such entities.
---------------------------------------------------------------------------

    \505\ 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.
Commission staff also found that out of 12 Forms 1-A originally
filed in 2019 that disclosed acquisitions subject to Rule 8-04 or
Rule 8-06, 9 appeared to comply with Article 11 requirements.
---------------------------------------------------------------------------

    Finally, with respect to using performance rather than design
standards, Regulation S-X and the final 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 final 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 allows
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.

VII. Statutory Authority

    The amendments contained in this release are being adopted 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 Amendments

    For the reasons set out in the preamble, the Commission amends
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. Amend Sec.  210.1-02 by revising paragraph (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 paragraph (w)(1)(i), (ii), or (iii) of this section;
however if the registrant is a registered investment company or a
business development company, the tested subsidiary 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) must 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) must use amounts determined under IFRS-IASB.
    (i) Investment test. (A) For acquisitions, other than those
described in paragraph (w)(1)(i)(B) of this section, and dispositions
this test is met when 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.
    (1) For acquisitions, the ``investments in'' the tested subsidiary
is the consideration transferred, adjusted to exclude the registrant's
and its other 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. It must 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, it
must include all contingent consideration, except contingent
consideration for which the likelihood of payment is remote.
    (2) For dispositions, the ``investments in'' the tested subsidiary
is the fair value of the consideration, including contingent
consideration, for the disposed subsidiary when comparing to the
aggregate worldwide market value of the registrant's voting and non-
voting common equity, 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.
    (3) When determining the aggregate worldwide market value of the
registrant's voting and non-voting common equity, use the average of
such aggregate worldwide market value calculated daily for the last
five trading days of the registrant's most recently completed month
ending prior to the earlier of the registrant's announcement date or
agreement date of the acquisition or disposition.
    (B) For a combination between entities or businesses under common
control, this test is 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) In all other cases, this test is met when the registrant's and
its other subsidiaries' investments in and advances to the tested
subsidiary exceed 10 percent of the total assets of the registrant and
its subsidiaries consolidated as of the end of the most recently
completed fiscal year.
    (ii) Asset test. This test is met when the registrant's and its
other subsidiaries' proportionate share of the tested subsidiary's
consolidated total assets (after intercompany eliminations) 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) This test is met when:
    (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 before income taxes (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 from
continuing operations (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
paragraph (w)(1)(iii)(A)(2) does not apply if either the registrant and
its subsidiaries consolidated or the tested subsidiary

did not have material revenue in each of the two most recently
completed fiscal years.
    (B) When determining the income component in paragraph
(w)(1)(iii)(A)(1) of this section:
    (1) If a net loss from continuing operations before income taxes
(after intercompany eliminations) 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
before income taxes (after intercompany eliminations) 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 in this paragraph
(w)(1)(iii)(B)(2) if the revenue component in paragraph
(w)(1)(iii)(A)(2) of this section does not apply and the absolute value
of the registrant's and its subsidiaries' consolidated income or loss
from continuing operations before income taxes (after intercompany
eliminations) 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 must not be aggregated with entities
reporting income where the test involves combined entities, as in the
case of determining whether summarized financial data must be presented
or whether the aggregate impact specified in Sec. Sec.  210.3-
05(b)(2)(iv) and 210.3-14(b)(2)(i)(C) is met, 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 sum of 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
(except, for purposes of Sec.  210.6-11, the absolute value of the
change in net assets resulting from operations of 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 absolute value of the change in net assets
resulting from operations of the registrant and its subsidiaries
consolidated is at least 10 percent lower than the average of the
absolute value of such amounts for each of its last five fiscal years,
then the registrant may compute both conditions of the income 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 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) must 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
section 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
must 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
will 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 section does 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 registering an offering of
securities to the security holders of the business to be acquired, then
the financial statements specified in Sec. Sec.  210.3-01 and 210.3-02
must 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 must 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 must be
filed for the periods specified in this paragraph (b)(2) or such
shorter period as the business has been in existence. Determine the
periods for which such financial statements are to be filed 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 must 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 must 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 for
any condition, the registrant must provide the disclosure specified in
paragraphs (b)(2)(iv)(A) and (B) of this section, however in
determining the aggregate impact of the investment test condition also
include the aggregate impact calculated in accordance with Sec.  210.3-
14(b)(2)(ii) of any acquired or to be acquired real estate operations
specified in Sec.  210.3-14(b)(2)(i)(C). In determining whether the
income test condition (i.e. both the revenue component and the income
or loss from continuing operations component) exceeds 50 percent, the
businesses specified in this paragraph (b)(2)(iv) reporting losses must
be aggregated separately from those reporting income. If either group
exceeds 50 percent, paragraphs (b)(2)(iv)(A) and (B) of this section
will apply to all of the businesses specified in this paragraph
(b)(2)(iv) and will not be limited to either the businesses with losses
or those with income.
    (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 and real estate operations, 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 or real
estate operation for which financial statements are not yet required
based on paragraph (b)(4)(i) of this section or Sec.  210.3-
14(b)(3)(i).
    (3) The determination must be made using Sec.  210.11-01(b)(3) and
(4).
    (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 must file those financial statements and any
pro forma information specified by Sec. Sec.  210.11-01 through 210.11-
03 (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
specified in paragraph (b)(2)(ii) of this section 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
at least nine months. Separate financial statements of the acquired
business specified in paragraph (b)(2)(iii) of this section 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. Financial
statements of an acquired or to be acquired foreign business (as
defined in Sec.  210.1-02(l)) meeting the requirements of Item 17 of
Form 20-F (Sec.  249.220f of this chapter) will satisfy this section.
Such financial statements may be reconciled to U.S. Generally Accepted
Accounting Principles (U.S. GAAP) or International Financial Reporting
Standards as issued by the International Accounting Standards Board
(IFRS-IASB) if the registrant is a foreign private issuer that prepares
its financial statements in accordance with IFRS-IASB. This
reconciliation must generally follow the form and content requirements
in Item 17(c) of Form 20-F; however, accommodations in Item 17(c)(2) of
Form 20-F that would be inconsistent with IFRS-IASB may not be applied,
and IFRS 1, First-time Adoption of International Financial Reporting
Standards, may be applied.
    (d) Financial statements of an acquired or to be acquired business
that would be a foreign private issuer if it were a registrant.
Financial statements of an acquired or to be acquired business that 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. Sec.  230.405
and 240.3b-4 of this chapter) if it were a registrant may be prepared
in accordance with IFRS-IASB without reconciliation to U.S. GAAP or, if
the registrant is a foreign private issuer that prepares its financial
statements in accordance with IFRS-IASB, may be prepared according to a
comprehensive basis of accounting principles other than U.S. GAAP or
IFRS-IASB and must be reconciled to IFRS-IASB or to U.S. GAAP. This
reconciliation must generally follow the form and content requirements
in Item 17(c) of Form 20-F; however, accommodations in Item 17(c)(2) of
Form 20-F that would be inconsistent with IFRS-IASB may not be applied,
and IFRS 1, First-time Adoption of International Financial Reporting
Standards, may be applied.
    (e) Financial statements for net assets that constitute a business.
For an acquisition of net assets that constitutes a business (e.g., an
acquired or to be acquired product line), the financial statements
prepared and audited in accordance with Regulation S-X may be
abbreviated financial statements prepared in accordance with paragraph
(e)(2) of this section if the business meets all of the qualifying
conditions in paragraph (e)(1) of this section.
    (1) Qualifying conditions. (i) The total assets and total revenues
(both after intercompany eliminations) of the acquired or to be
acquired business constitute 20 percent or less of such corresponding
amounts of the seller and its subsidiaries consolidated as of and for
the most recently completed fiscal year.
    (ii) Separate financial statements for the business have not
previously been prepared;
    (iii) The acquired business was not a separate entity, subsidiary,
operating segment (as defined in U.S. GAAP or

IFRS-IASB, as applicable) or division during the periods for which the
acquired business financial statements would be required; and
    (iv) The seller has not maintained the distinct and separate
accounts necessary to present financial statements that, absent this
paragraph (e), would satisfy the requirements of this section and it is
impracticable to prepare such financial statements.
    (2) Presentation requirements. (i) The balance sheet may be a
statement of assets acquired and liabilities assumed;
    (ii) The statement of comprehensive income must include expenses
incurred by or on behalf of the acquired business during the pre-
acquisition financial statement periods to be presented including, but
not limited to, costs of sales or services, selling, distribution,
marketing, general and administrative, depreciation and amortization,
and research and development, but may otherwise omit corporate overhead
expense, interest expense for debt that will not be assumed by the
registrant or its subsidiaries consolidated, and income tax expense.
The title of the statement of comprehensive income must be
appropriately modified to indicate it omits certain expenses; and
    (iii) The notes to the financial statements must include:
    (A) A description of the type of omitted expenses and the reason(s)
why they are excluded from the financial statements.
    (B) An explanation of the impracticability of preparing financial
statements that include the omitted expenses.
    (C) 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.
    (D) 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) Disclosures about oil and gas producing
activities must be provided for each full year of operations presented
for an acquired or to be acquired business that includes significant
oil- and gas-producing activities (as defined in the FASB ASC Master
Glossary). The financial statements may present 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 as unaudited supplemental
information. 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. The method of computation must be disclosed in a footnote.
    (2) The financial statements prepared and audited in accordance
with Regulation S-X may consist of only statements of revenues and
expenses that exclude expenses not comparable to the proposed future
operations such as depreciation, depletion and amortization, corporate
overhead, income taxes, and interest for debt that will not be assumed
by the registrant or its subsidiaries consolidated 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 qualifying conditions specified in paragraph (e)(1) of
this section are met.
    (3) If the financial statements are presented in accordance with
paragraph (f)(2) of this section, the disclosures specified in
paragraph (e)(2)(iii) of this section must be provided.

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 will
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 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 Sec.
210.8-01(e).
    (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 will satisfy a filing requirement of financial
statements for one year of that time period only if the conditions
described in paragraph (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. Amend Sec.  210.3-09 by revising paragraph (a) to read as follows:

Sec.  210.3-09  Separate financial statements of subsidiaries not
consolidated and 50 percent or less owned persons.

    (a) If any of the conditions set forth in Sec.  210.1-02(w),
substituting 20 percent for 10 percent in the tests used therein to
determine a significant subsidiary, are met for a majority-owned
subsidiary not consolidated by the registrant or by a subsidiary of the
registrant, separate financial statements of such subsidiary must be
filed. Similarly, if either the first or third condition set forth in
Sec.  210.1-02(w)(1), substituting 20 percent for 10 percent, is met by
a 50 percent or less owned person accounted for by the equity method
either by the registrant or a subsidiary of the registrant, separate
financial statements of such 50 percent or less owned person must be
filed.
* * * * *

0
6. 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 real estate operation 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 must 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
section 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 will 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 will 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 section does 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 registering an offering of
securities to the security holders of the real estate operation to be
acquired, then the financial statements specified in paragraph (c) of
this section and the supplemental information specified in paragraph
(f) of this section must 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 must 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 Form 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 must 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 must be determined using the investment test 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 must 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) of this section, exceeds
50 percent, the registrant must provide the disclosures specified in
paragraphs (b)(2)(i)(C)(1) and (b)(2)(i)(C)(2) of this section. If
there are also businesses acquired or to be acquired as described in
Sec.  210.3-05(b)(2)(iv), the requirements in Sec.  210.3-05(b)(2)(iv)
will apply instead.
    (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 ``investments in'' the tested
real estate operation.
    (iii) The determination must be made using Sec.  210.11-01(b)(3)
and (4).
    (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 paragraph (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 must file those financial
statements and any pro forma information specified by Sec. Sec.
210.11-01 through 210.11-03 (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 real estate
operation specified in paragraph (b)(2)(i)(B) of this section 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 at least nine months.
    (c) Presentation of the financial statements. (1) The financial
statements prepared and audited in accordance with Regulation S-X 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 must 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 a foreign real estate operation.
Financial statements of an acquired or to be acquired foreign business
(as defined in Sec.  210.1-02(l)) that is a real estate operation,
specified in paragraph (c) of this section and meeting the requirements
of Item 17 of Form 20-F (Sec.  249.220f of this chapter), will satisfy
this section. Such financial statements may be reconciled to U.S.
Generally Accepted Accounting Principles (U.S. GAAP) or International
Financial Reporting Standards as issued by the International Accounting
Standards Board (IFRS-IASB) if the registrant is a foreign private
issuer that prepares its financial statements in accordance with

IFRS-IASB. This reconciliation must generally follow the form and
content requirements in Item 17(c) of Form 20-F; however,
accommodations in Item 17(c)(2) of Form 20-F that would be inconsistent
with IFRS-IASB may not be applied, and IFRS 1, First-time Adoption of
International Financial Reporting Standards, may be applied.
    (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. Financial statements of an acquired or to be acquired real
estate operation that 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. Sec.  230.405 and 240.3b-4 of this chapter) if it were a
registrant, may be prepared in accordance with IFRS-IASB without
reconciliation to U.S. GAAP or, if the registrant is a foreign private
issuer that prepares its financial statements in accordance with IFRS-
IASB, may be prepared according to a comprehensive basis of accounting
principles other than U.S. GAAP or IFRS-IASB and must be reconciled to
IFRS-IASB or to U.S. GAAP. This reconciliation must generally follow
the form and content requirements in Item 17(c) of Form 20-F; however,
accommodations in Item 17(c)(2) of Form 20-F that would be inconsistent
with IFRS-IASB may not be applied, and IFRS 1, First-time Adoption of
International Financial Reporting Standards, may be applied.
    (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) of this section, 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 1 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
7. Amend Sec.  210.3-18(d) by removing the text ``Sec. Sec.  210.6-01
to 210.6-10'' and adding in its place ``Sec. Sec.  210.6-01 through
210.6-11''.

Sec.  210.5-01  [Amended]

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

Sec.  210.6-01  [Amended]

0
9. Amend Sec.  210.6-01 by removing the text ``210.6-01 to 210.6-10''
everywhere it appears and adding in its place ``210.6-01 through 210.6-
11''.

Sec.  210.6-02  [Amended]

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

Sec.  210.6-03  [Amended]

0
11. Amend Sec.  210.6-03 by removing the text ``Sec. Sec.  210.6-01 to
210.6-10'' in the introductory text and paragraph (a) and adding in its
place ``Sec. Sec.  210.6-01 through 210.6-11''.

0
12. 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
described in Sec. Sec.  210.3-01 and 210.3-02, or Sec.  210.3-18, as
applicable, including the schedules specified in Sec. Sec.  210.12-01
through 210.12-29 (Article 12), prepared and audited in accordance with
Regulation S-X (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 must 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 or Sec.  210.3-
18, a fund acquisition has occurred; or
    (ii) After the date of the most recent balance sheet filed pursuant
to Sec.  210.3-01 or Sec.  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 Sec.  230.485(a)(2) of this chapter (Rule
485(a)(2) under the Securities Act), 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. Among the facts and circumstances which should be considered
in evaluating whether a fund acquisition has occurred or will occur are
whether it will result in the acquisition by the registrant of all or
substantially all of the portfolio investments held by another fund.
    (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 will be
treated under this section as if they are a single acquisition. For
purposes of this section, funds will 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 section does 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) of this section must 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 must
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 Form 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 must be filed. Whether such
financial statements

and supplemental information are to be filed must be determined using
the conditions specified in the definition of significant subsidiary in
Sec.  210.1-02(w)(2)(i) and (w)(2)(ii)(B) as follows:
    (i) If none of the conditions set forth in Sec.  210.1-02(w)(2)(i)
and (w)(2)(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 (w)(2)(ii)(B), substituting 20 percent for 10 percent each place it
appears therein, are satisfied, the financial statements of the
acquired fund must be filed. If the acquired fund is subject to Sec.
210.3-18, then the financial statements for the periods described
therein must be filed. For all other acquired funds, the financial
statements for the most recent fiscal year and the most recent interim
period must be filed. The registrant must 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 (w)(2)(ii)(B), substituting 50
percent for 10 percent each place it appears therein, the registrant
must provide financial statements for any fund acquired or to be
acquired for which financial statements are not yet required by
paragraph (b)(2)(i) of this section. If any of the acquired funds are
subject to Sec.  210.3-18, then the financial statements for the
periods described therein must be filed. For any other acquired funds,
the financial statements for the most recent fiscal year and the most
recent interim period must be filed. The registrant must also provide
the supplemental financial information in paragraph (d) of this section
for such funds.
    (3) The determination must 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 and the
supplemental information specified in paragraph (d) of this section
need only to be filed once and not included in any subsequent filing or
shareholder report.
    (c) Acquisitions involving private funds or private accounts. If
the fund acquired or 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 may comply with U.S. Generally
Accepted Accounting Principles and only Article 12. In situations of
any private account managed by an investment adviser provide the
schedules specified in Article 12 for the assets acquired or to be
acquired.
    (d) Supplemental financial information. (1) Supplemental financial
information must 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 accounting
policies of the acquired fund when compared to the registrant.
    (2) With respect to any fund acquisition, registered investment
companies and business development companies must provide the
supplemental financial information required in this section in lieu of
any pro forma financial information required by Sec. Sec.  210.11-01
through 210.11-03.

0
13. Revise Sec.  210.8-01 to read as follows:

Sec.  210.8-01   General requirements for Article 8.

    Sections 210.8-01 through 210.8-08 (Article 8) shall be applicable
to financial statements filed for smaller reporting companies. These
sections are not applicable to financial statements prepared for the
purposes of Item 17 or Item 18 of Form 20-F.
    (a) Financial statements of a smaller reporting company, as defined
by Sec.  229.10(f)(1) of this chapter, its predecessors or any
businesses to which the smaller reporting company is a successor shall
be prepared in accordance with generally accepted accounting principles
in the United States.
    (b) Smaller reporting companies electing to prepare their financial
statements with the form and content required in Article 8 need not
apply the other form and content requirements in Regulation S-X with
the exception of the following:
    (1) The report and qualifications of the independent accountant
shall comply with the requirements of Sec. Sec.  210.2-01 through
210.2-07 (Article 2); and
    (2) The description of accounting policies shall comply with Sec.
210.4-08(n); and
    (3) Smaller reporting companies engaged in oil and gas producing
activities shall follow the financial accounting and reporting
standards specified in Sec.  210.4-10 with respect to such activities.
    (c) Financial statements for a subsidiary of a smaller reporting
company that issues securities guaranteed by the smaller reporting
company or guarantees securities issued by the smaller reporting
company must be presented as required by Sec.  210.3-10, except that
the periods presented are those required by Sec.  210.8-02.
    (d) Financial statements for a smaller reporting company's
affiliates whose securities constitute a substantial portion of the
collateral for any class of securities registered or being registered
must be presented as required by Sec.  210.3-16, except that the
periods presented are those required by Sec.  210.8-02.
    (e) The Commission, where consistent with the protection of
investors, may permit the omission of one or more of the financial
statements or the substitution of appropriate statements of comparable
character. The Commission by informal written notice may require the
filing of other financial statements where necessary or appropriate.
    (f) Section 210.3-06 applies to the preparation of financial
statements of smaller reporting companies.

Sec.  210.8-03  [Amended]

0
14. Remove and reserve Sec.  210.8-03(b)(4).

0
15. 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
16. Revise Sec.  210.8-05 to read as follows:

Sec.  210.8-05   Pro forma financial information.

    (a) Pro forma financial information must be disclosed when any of
the conditions in Sec.  210.11-01 exist.
    (b) The preparation, presentation, and disclosure of pro forma
financial information must 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
17. 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
18. Amend Sec.  210.11-01 by:
0
a. Revising paragraphs (a) introductory text and (a)(1) and (2);
0
b. Removing and reserving (a)(5);
0
c. Revising paragraphs (a)(6) and (8), (b), and (c).
    The revisions read as follows:

Sec.  210.11-01   Presentation requirements.

    (a) Pro forma financial information must 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 this section, 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;
* * * * *
    (6) Pro forma financial information required by Sec.  229.914 of
this chapter is required to be provided in connection with a roll-up
transaction as defined in Sec.  229.901(c) of this chapter;
* * * * *
    (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 will 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) (i.e., the investment test condition), substituting 20
percent for 10 percent, as modified by the guidance in Sec.  210.3-
14(b)(2)(ii).
    (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 must be made, except as noted in paragraph
(b)(4) of this section for the continuous offerings described therein,
by using:
    (i) For amounts derived from financial statements, the registrant's
most recent annual consolidated financial statements required to be
filed at or prior to the date of acquisition or disposition and the
business's pre-acquisition or pre-disposition financial statements for
the same fiscal year as the registrant or, if the fiscal years differ,
the business's most recent fiscal year that would be required if the
business had the same filer status as the registrant, however the
determination may be made using:
    (A) The financial statements for the business described in Sec.
210.3-05(e) or (f) if the business meets the conditions for presenting
those financial statements.
    (B) Pro forma amounts 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 and only include Transaction Accounting Adjustments (see Sec.
210.11-02(a)(6)(i)), provided that:
    (1) 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. Sec.  210.11-01 through 210.11-02 for any such acquired or
disposed business. The tests may not be made by ``annualizing'' data;
and
    (2) If a registrant has used pro forma amounts to determine
significance of an acquisition or disposition, it must continue to use
pro forma amounts to determine significance of acquisitions and
dispositions through the filing date of its next annual report on Form
10-K (Sec.  249.310 of this chapter) or Form 20-F (Sec.  249.220f of
this chapter); or
    (C) 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 date of 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).
    (ii) If the business is a related business (see Sec.  210.3-
05(a)(3)), combined pre-acquisition financial statements of the group
of related businesses for the fiscal year specified in paragraph
(b)(3)(i) of this section.
    (4) 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, the income
test condition does not apply, and the determination must be made for
the investment test condition, when it is based on the total assets of
the registrant and its subsidiaries consolidated, and the asset test
condition, if applicable, using the following for the registrant:
    (i) During the distribution period, total assets as of the date of
acquisition or disposition plus the proceeds (net of commissions) in
good faith expected to be raised in the registered offering over the
next 12 months, except that for acquisitions total assets must exclude
the acquired business; and
    (ii) After the distribution period ends and until the next Form 10-
K is filed, total assets as of the date of acquisition or disposition,
except that for acquisitions total assets must exclude the acquired
business; and
    (iii) After that next Form 10-K is filed, the guidance in paragraph
(b)(3).
    (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.  210.3-05(b)(2)(iv) or Sec.  210.3-
14(b)(2)(i)(C).
* * * * *

0
19. Revise Sec.  210.11-02 to read as follows:

Sec.  210.11-02   Preparation requirements.

    (a) Form and content. (1) Pro forma financial information must
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 in
this paragraph (a)(1).
    (2) The pro forma financial information must 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 must be used for purposes of this test. Notwithstanding
these tests, de minimis amounts need not be shown separately.
    (4) Pro forma statements will 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 must
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 must include, and be limited to, the
following pro forma adjustments, except as noted in paragraph (a)(7) of
this section:
    (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), qualification date (for offering
statements under 17 CFR 230.251 through 230.263 (Regulation A)), 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.
Such adjustments must be made whether or not the pro forma balance
sheet is presented pursuant to paragraph (c)(1) of this section. 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) Autonomous Entity Adjustments. Adjustments that depict the
registrant as an autonomous entity if the condition in Sec.  210.11-
01(a)(7) is met. Autonomous Entity Adjustments must be presented in a
separate column from Transaction Accounting Adjustments.
    (7) Management's Adjustments depicting synergies and dis-synergies
of the acquisitions and dispositions for which pro forma effect is
being given may, in the registrant's discretion, be presented if in its
management's opinion, such adjustments would enhance an understanding
of the pro forma effects of the transaction and the following
conditions are met:
    (i) Basis for Management's Adjustments. (A) There is a reasonable
basis for each such adjustment.
    (B) The adjustments are limited to the effect of such synergies and
dis-synergies on the historical financial statements that form the
basis for the pro forma statement of comprehensive income as if the
synergies and dis-synergies existed as of the beginning of the fiscal
year presented. If such adjustments reduce expenses, the reduction must
not exceed the amount of the related expense historically incurred
during the pro forma period presented.
    (C) The pro forma financial information reflects all Management's
Adjustments that are, in the opinion of management, necessary to a fair
statement of the pro forma financial information presented and a
statement to that effect is disclosed. When synergies are presented,
any related dis-synergies must also be presented.
    (ii) Form of presentation. (A) If presented, Management's
Adjustments must be presented in the explanatory notes to the pro forma
financial information in the form of reconciliations of pro forma net
income from continuing operations attributable to the controlling
interest and the related pro forma earnings per share data specified in
paragraph (a)(9) of this section to such amounts after giving effect to
Management's Adjustments.
    (B) Management's Adjustments included or incorporated by reference
into a registration statement, proxy statement, Regulation A offering
statement, or Form 8-K should be as of the most recent practicable date
prior to the effective date, mail date, qualification date, or filing
date as applicable, which may require that they be updated if
previously provided in a Form 8-K that is appropriately incorporated by
reference.
    (C) If Management's Adjustments will change the number of shares or
potential common shares, reflect the change within Management's
Adjustments 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.
    (D) The explanatory notes must also include disclosure of the basis
for and material limitations of each Management's Adjustment, including
any material assumptions or uncertainties of such adjustment, an
explanation of the method of the calculation of the adjustment, if
material, and the estimated time frame for achieving the synergies and
dis-synergies of such adjustment.
    Instruction 1 to paragraph (a)(7): Any forward-looking information
supplied is expressly covered by the safe harbor rules under Sec. Sec.
230.175 and 240.3b-6 of this chapter.
    (8) All pro forma adjustments should be referenced to notes that
clearly explain the assumptions involved.
    (9)(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 must be presented on the face of the pro forma condensed
statement of comprehensive income and only give effect to Transaction
Accounting Adjustments and Autonomous Entity Adjustments.

    (ii) The number of shares used in the calculation of the pro forma
per share amounts must 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.
    (10) 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.
    (11) The accompanying explanatory notes must 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 Autonomous Entity Adjustment, a description of the
adjustment (including the material uncertainties), the material
assumptions, the calculation of the adjustment, and additional
qualitative information about the Autonomous Entity Adjustments, if
any, necessary to give a fair and balanced presentation of the pro
forma financial information.
    (12) A registrant must 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 pro forma financial information, or summaries of such
information, elsewhere in a filing that excludes material transactions
for which pro forma effect is required to be given.
    (iii) Present the pro forma amounts in paragraph (a)(7) of this
section elsewhere in a filing without also presenting with equal or
greater prominence the amounts specified in paragraph (a)(7) of this
section to which they are required to be reconciled and a cross-
reference to that reconciliation.
    (iv) 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.
    (b) Implementation guidance--(1) Historical statement of
comprehensive income. The historical statement of comprehensive income
used in the pro forma financial information must 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 must be disclosed in a note.
    (3) Business dispositions. Transaction Accounting Adjustments
giving effect to the disposition of a business must not decrease
historically incurred compensation expense for employees who were not,
or will not be, transferred or terminated as of the disposition date.
    (4) Multiple transactions. (i) When consummation of more than one
transaction has occurred, or is probable, the pro forma financial
information must 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 must 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 must be
filed unless the transaction is already reflected in such balance
sheet.
    (2)(i) Pro forma condensed statements of comprehensive income must
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 must 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 must 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 must 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 must 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 must 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 must 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 1 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
20. 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 ``rule'' and ``generally accepted
accounting principles'' and adding in their places ``section'' and
``U.S. GAAP or IFRS-IASB,'' respectively.

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

0
21. 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
22. 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 paragraph (1), (2), or (3) of this definition; however,
if the registrant is a registered investment company or a business
development company, the tested subsidiary meets any of the conditions
in paragraph (4) of this definition instead of any of the conditions in
paragraph (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) must 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) must use amounts
determined under IFRS-IASB.
    (1) Investment test. (i) For acquisitions, other than those
described in paragraph (1)(ii) of this definition, and dispositions
this test is met when 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.
    (A) For acquisitions, the ``investments in'' the tested subsidiary
is the consideration transferred, adjusted to exclude 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. It must 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, it
must include all contingent consideration, except contingent
consideration for which the likelihood of payment is remote.
    (B) For dispositions, the ``investments in'' the tested subsidiary
is the fair value of the consideration, including contingent
consideration, for the disposed subsidiary when comparing to the
aggregate worldwide market value of the registrant's voting and non-
voting common equity, 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.
    (C) When determining the aggregate worldwide market value of the
registrant's voting and non-voting common equity, use the average of
such aggregate worldwide market value calculated daily for the last
five trading days of the registrant's most recently completed month
ending prior to the earlier of the registrant's announcement date or
agreement date of the acquisition or disposition.
    (ii) For a combination between entities or businesses under common
control, this test is 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) In all other cases, this test is met when the registrant's
and its other subsidiaries' investments in and advances to the tested
subsidiary exceed 10 percent of the total assets of the registrant and
its subsidiaries consolidated as of the end of the most recently
completed fiscal year.
    (2) Asset test. This test is met when the registrant's and its
other subsidiaries' proportionate share of the tested subsidiary's
consolidated total assets (after intercompany eliminations) 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) This test is met when:
    (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 before income taxes (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 from
continuing operations (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 paragraph (3)(i)(B) does not apply if either the registrant and
its subsidiaries consolidated or the tested subsidiary did not have
material revenue in each of the two most recently completed fiscal
years.
    (ii) When determining the income component in paragraph (3)(i)(A)
of this definition:
    (A) If a net loss from continuing operations before income taxes
(after intercompany eliminations) 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
before income taxes (after intercompany eliminations) 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;
    (B) Compute the test using the average described in this paragraph
(3)(ii)(B) if the revenue component in paragraph (3)(i)(B) in this
definition does not apply and the absolute value of the registrant's
and its subsidiaries' consolidated income or loss from continuing
operations before income taxes (after intercompany eliminations)
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
    (C) Entities reporting losses must not be aggregated with entities
reporting income where the test involves combined entities, as in the
case of determining whether summarized financial data must be presented
or whether the aggregate impact specified in Sec. Sec.  210.3-
05(b)(2)(iv) and 210.3-14(b)(2)(i)(C) of this chapter is met, except
when determining whether related businesses meet this test for purposes
of Sec. Sec.  210.3-05 and 210.8-04 of this chapter.
    (4) Registered investment company or business development company.
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 sum of 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
(except, for purposes of Sec.  210.6-11 of this chapter, the absolute
value of the change in net assets resulting from operations of 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 (4)(i) of this definition) condition exceeds
5 percent. However, if the absolute value of the change in net assets
resulting from operations of the registrant and its subsidiaries
consolidated is at least 10 percent lower than the average of the
absolute value of such amounts for each of its last five fiscal years,
then the registrant may compute both conditions of the income 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
23. 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
24. Form S-11 (referenced in Sec.  239.18) is amended by revising Item
9 to read as follows:

    Note: The text of Form S-11 does not, and this amendment will
not, appear in the Code of Federal Regulations.

FORM S-11

* * * * *

Item 9. Selected Financial Data

    File the information required by Item 301 of Regulation S-K (Sec.
229.301 of this chapter).

0
25. Form N-14 (referenced in Sec.  239.23) is amended by revising 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 must 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, unless
it is an investment company subject to Sec.  210.3-18 in which case the
financial statements for the periods described therein must be filed;
    2. if the company to be acquired is a private fund, then the
required financial statements may 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).
* * * * *

0
26. Amend Part F/S of Form 1-A (referenced in Sec.  239.90) by revising
paragraph (b)(7)(iv) to read as follows:

    Note: The text of Form 1-A does not, and this amendment will
not, appear in the Code of Federal Regulations.

FORM 1-A

REGULATION A OFFERING STATEMENT UNDER THE SECURITIES ACT OF 1933

GENERAL INSTRUCTIONS

* * * * *

Part F/S

* * * * *
    (b) Financial Statements for Tier 1 Offerings * * *
    (7) * * *
    (iv) Pro Forma Financial Statements. File pro forma financial
information as described in Rule 8-05 of Regulation S-X.
* * * * *

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

0
27. 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 Pub. L. 112-106,
sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise noted.
* * * * *

0
28. 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 paragraph (1), (2), or (3) of this definition; however,
if the registrant is a registered investment company or a business
development company, the tested subsidiary meets any of the conditions
in paragraph (4) of this definition instead of any of the conditions in
paragraph (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) must 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) must use amounts
determined under IFRS-IASB.
    (1) Investment test. (i) For acquisitions, other than those
described in paragraph (1)(ii) of this definition, and dispositions
this test is met when 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.
    (A) For acquisitions, the ``investments in'' the tested subsidiary
is the consideration transferred, adjusted to exclude 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. It must 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, it
must include all contingent consideration, except contingent
consideration for which the likelihood of payment is remote.
    (B) For dispositions, the ``investments in'' the tested subsidiary
is the fair value of the consideration, including contingent
consideration, for the disposed subsidiary when comparing to the
aggregate worldwide market value of the registrant's voting and non-
voting common equity, 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.
    (C) When determining the aggregate worldwide market value of the
registrant's voting and non-voting common equity, use the average of
such aggregate worldwide market value calculated daily for the last
five trading days of the registrant's most recently completed month
ending prior to the earlier of the registrant's announcement date or
agreement date of the acquisition or disposition.
    (ii) For a combination between entities or businesses under common
control, this test is 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) In all other cases, this test is met when the registrant's
and its other subsidiaries' investments in and advances to the tested
subsidiary exceed 10 percent of the total assets of the registrant and
its subsidiaries consolidated as of the end of the most recently
completed fiscal year.
    (2) Asset test. This test is met when the registrant's and its
other subsidiaries' proportionate share of the tested subsidiary's
consolidated total assets (after intercompany eliminations) 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) This test is met when:
    (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 before income taxes (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 from
continuing operations (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
paragraph (3)(i)(B) does not apply if either the registrant and its
subsidiaries consolidated or the tested subsidiary did not have
material revenue in each of the two most recently completed fiscal
years.
    (ii) When determining the income component in paragraph (3)(i)(A)
of this definition:
    (A) If a net loss from continuing operations before income taxes
(after intercompany eliminations) 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
before income taxes (after intercompany eliminations) 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;
    (B) Compute the test using the average described in this paragraph
(3)(ii)(B) if the revenue component in paragraph (3)(i)(B) in this
definition does not apply and the absolute value of the registrant's
and its subsidiaries' consolidated income or loss from continuing
operations before income taxes (after intercompany eliminations)
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
    (C) Entities reporting losses must not be aggregated with entities
reporting income where the test involves combined entities, as in the
case of determining whether summarized financial data must be presented
or whether the aggregate impact specified in Sec. Sec.  210.3-
05(b)(2)(iv) and 210.3-14(b)(2)(i)(C) of this chapter is met, except
when determining whether related businesses meet this test for purposes
of Sec. Sec.  210.3-05 and 210.8-04 of this chapter.
    (4) Registered investment company or business development company.
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 sum of 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
(except, for purposes of Sec.  210.6-11 of this chapter, the absolute
value of the change in net assets resulting from operations of 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 (4)(i) of this definition) condition exceeds
5 percent. However, if the absolute value of the change in net assets
resulting from operations of the registrant and its subsidiaries
consolidated is at least 10 percent lower than the average of the
absolute value of such amounts for each of its last five fiscal years,
then the registrant may compute both conditions of the income 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 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

0
29. 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
30. 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 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 will 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 percent 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)). 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; or
    (iii) in the case of a business development company, if the amount
paid for such assets exceeded 10 percent 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 and 210.3-14), or Rules 8-04 or 8-06 of Regulation S-X (17 CFR
210.8-04 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 must 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, file 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 must 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 do 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, Rule 6-11, Rule 8-04, and Rule 8-06 of
Regulation S-X (17 CFR 210.3-05, 210.3-14, 210.6-11, 210.8-04, and
210.8-06), 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, Rule
6-11, Rule 8-04, and Rule 8-06 of Regulation S-X (17 CFR 210.3-05,
210.3-14, 210.6-11, 210.8-04, and 210.8-06), 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 not been filed:
    (a) Offerings or sales of securities upon the conversion of
outstanding convertible securities or upon the exercise of outstanding
warrants or rights;
    (b) dividend or interest reinvestment plans;
    (c) employee benefit plans;
    (d) transactions involving secondary offerings; or
    (e) sales of securities pursuant to Rule 144 (17 CFR 230.144).
* * * * *

0
31. Form 10-K (referenced in Sec.  249.310) is amended by revising Item
8.(a) of PART II to read as follows:

    Note: The text of Form 10-K does not, and this amendment will
not, appear in the Code of Federal Regulations.

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

GENERAL INSTRUCTIONS

* * * * *

PART II. * * *

Item 8. Financial Statements and Supplementary Data

    (a) File financial statements meeting the requirements of
Regulation S-X (Sec.  210 of this chapter), except Sec.  210.3-05,
Sec.  210.3-14, Sec.  210.6-11, Sec.  210.8-04, Sec.  210.8-05, Sec.
210.8-06 and Article 11 thereof, and the supplementary financial
information required by Item 302 of Regulation S-K (Sec.  229.302 of
this chapter). Financial statements of the registrant and its
subsidiaries consolidated (as required by Rule 14a-3(b)) must be filed
under this item. Other financial statements and schedules required
under Regulation S-X may be filed as ``Financial Statement Schedules''
pursuant to Item 15, Exhibits, Financial Statement Schedules, and
Reports on Form 8-K, of this form.
* * * * *

PART 270--RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940

0
32. The general authority citation for part 270 continues to read as
follows:

    Authority: 15 U.S.C. 80a-1 et seq., 80a-34(d), 80a-37, 80a-39,
and Pub. L. 111-203, sec. 939A, 124 Stat. 1376 (2010), unless
otherwise noted.
* * * * *

0
33. Amend Sec.  270.8b-2 by revising paragraph (k) to read as follows:

Sec.  270.8b-2  Definitions.

* * * * *
    (k) Significant subsidiary. The term ``significant subsidiary''
means a subsidiary, including its subsidiaries, which meets any of the
following conditions, using amounts determined under U.S. Generally
Accepted Accounting Principles and, if applicable, section 2(a)(41) of
the Act:
    (1) 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
    (2) Income test. The absolute value of the sum of 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:
    (i) 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
    (ii) 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 (k)(1) of this section) condition exceeds 5
percent. However, if the absolute value of the change in net assets
resulting from operations of the registrant and its subsidiaries
consolidated is at least 10 percent lower than the average of the
absolute value of such amounts for each of its last five fiscal years,
then the registrant may compute both conditions of the income 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 274--FORMS PRESCRIBED UNDER THE INVESTMENT COMPANY ACT OF 1940

0
34. The general authority citation for part 274 continues to read as
follows:

    Authority:  15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78l, 78m,
78n, 78o(d), 80a-8, 80a-24, 80a-26, 80a-29, and Pub. L. 111-203,
sec. 939A, 124 Stat. 1376 (2010), unless otherwise noted.
* * * * *

0
35. Amend Form N-2 (referenced in Sec. Sec.  239.14 and 274.11a-1) as
follows:
0
a. Revise Item 8.6, paragraph (a) to Instruction 1 by removing the
phrase ``Sections 210.6-01 through 210.6-10 of Regulation S-X [17 CFR
210.6-01 through 210.6-10]'' and adding in its place ``Article 6 of
Regulation S-X [17 CFR 210.6-01 et seq.]''.
0
b. Revise Item 24, paragraph (a) to Instruction 1 by removing the
phrase ``Sections 210.6-01 through 210.6-10 of Regulation S-X [17 CFR
210.6-01 through 210.6-10]'' and adding in its place ``Article 6 of
Regulation S-X [17 CFR 210.6-01 et seq.]''.

    Note:  The text of Form N-2 does not, and this amendment will
not, appear in the Code of Federal Regulations.

    By the Commission.

    Dated: May 20, 2020.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2020-11479 Filed 8-28-20; 8:45 am]
BILLING CODE 8011-01-P