SEC Division of Corporation Finance Issues C&DI Clarifying Exemptions for Non-GAAP Information in Forecasts for M&A Transactions
On October 17, the staff of the Securities and Exchange Commission’s Division of Corporation Finance issued guidance related to the scope of Regulation G’s exemption for disclosure of non-generally accepted accounting principles (GAAP) information.
Item 10(e)(5) of Regulation S-K and Rule 101(a)(3) of Regulation G provide that a non-GAAP financial measure does not include financial measures required to be disclosed by GAAP, SEC rules, or a system of regulation of a government or governmental authority or self-regulatory organization that is applicable to the registrant. C&DI 101.01 specifies that financial measures provided to a financial advisor would be excluded from the definition of non-GAAP financial measures, and therefore would not be subject to Item 10(e) of Regulation S-K or Regulation G, if and to the extent the following conditions are satisfied:
- The financial measures are included in forecasts provided to a financial advisor for the purpose of rendering an opinion that is materially related to the business combination transaction; and
- The forecasts are being disclosed in order to comply with Item 1015 of Regulation M-A or requirements under state or foreign law with respect to the disclosure of a financial advisor’s analyses or substantive work.
The full text of the C&DI is available here.