SEC Rulemaking: Guide to Newly Effective Eligibility Criteria to Replace Credit Ratings in Public Offerings

On July 26, 2011, the U.S. Securities and Exchange Commission adopted new rules to phase-out and eventually eliminate credit ratings from the transaction eligibility requirements of Forms S-3 and F-3, the short forms that eligible issuers can use to register securities under the Securities Act of 1933 (the “Securities Act”). These forms enable eligible issuers to rapidly access the public capital markets in the United States. The SEC also adopted corresponding amendments to modify other SEC rules that reference credit ratings. The new rules were adopted in light of Section 939A of the Dodd-Frank Act (“Dodd-Frank”), requiring the SEC to amend its regulations to “remove any reference to or requirement of reliance on credit ratings and to substitute in such regulations such standard of credit-worthiness.” Following is background and a guide to the new short-form eligibility criteria for transactions.

Attached as Appendix A are a precise redline showing those portions of the eligibility criteria and related rules marked to show changes.

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