Under the Securities Act, guarantees of securities are considered to be securities themselves. Therefore, all offerings of securities, as well as the guarantees of such securities, must either be registered with the SEC or be exempt from registration. A registrant must provide separate financial statements of each subsidiary issuer or guarantor of debt securities registered or being registered unless certain criteria are met (discussed below). Obtaining such separate financial statements could be expensive and difficult. Therefore, in the context of an initial registration statement related to guaranteed debt securities, a company must carefully evaluate the reporting requirements in Regulation S-X, Rules 3-10 and 13-01. Rule 3-10 contains certain exceptions under which a registrant may provide more limited financial information in lieu of full financial statements. If the registrant qualifies for one of these exceptions, it may be eligible to provide, in MD&A or a footnote to the financial statements of the parent company that issued or guaranteed the security, either of the following types of alternative disclosures in lieu of separate financial statements:
- Summarized financial information about the parent, issuer(s), and guarantor(s) as well as nonfinancial disclosures.
- Nonfinancial disclosures only.