In early 2026, the US Securities and Exchange Commission (the "SEC") released new and updated Compliance and Disclosure Interpretations (“CDIs”) that address business combinations, tender offers and shareholder meetings and solicitations. The SEC's guidance provides flexibility and clarity to those structuring and executing M&A transactions. A brief summary of the most noteworthy changes follows.
1. Registration of Shares Following Lock-ups
The staff of the SEC (the "Staff") has previously taken the position that if agreements to vote in favor of a business combination or to tender into a third party exchange offer ("lock-ups") are signed, those agreements could be deemed a sale contract for securities, and as such the shares to be offered in the transaction could subsequently be registered on Form S-4 (or Form F-4) only if certain conditions were met.1
In recently revised CDIs 139.29 and 139.30, the SEC has provided another way for the shares offered in business combinations and third party exchange offers to be registered following the execution of lock-ups. Registration will now be permitted if (i) the accredited investors who executed lock-ups prior to the registration statement filing are only offered and sold the securities using an exemption from registration and (ii) the registered securities are only offered and sold to shareholders of the target who did not sign lock-ups prior to the filing of the registration statement.
Key Takeaway: The SEC recognizes the legitimate business reasons for obtaining lock-ups early in a transaction and has provided additional flexibility to register the offer and sale of shares in various types of business combinations after lock-ups are executed.
2. Cross Border Tender Offers
Several exemptions from US tender offer regulatory requirements are available for cross border tender offers that meet certain conditions based on, among other things, the level of US ownership in the target. For cross border tender offers that qualify for "Tier I" relief2, existing rules allow the offeror to purchase target shares outside of the tender if, among other things, the offering documents given to the US holders prominently disclose the possibility of, or intent to make, such purchases.
In new CDI 166.02, the SEC has expanded this exemption to purchases of target shares by an offeror after the public announcement of the tender offer, but before the tender offer is launched and offering documents are distributed. The new CDI indicates that, when distributed, the offering documents should disclose that purchases outside of the tender offer have already occurred and may continue during the offer. Similar relief applies to certain existing exceptions for purchases outside of a "Tier II" cross border tender offer.3
In addition, in cross border tender offers that are eligible for Tier II relief, an offeror, its affiliates and affiliates of the offeror's financial advisor may purchase target shares outside of the tender offer under certain conditions. One of these conditions is that purchases by an affiliate of an offeror's financial advisor cannot be made to facilitate the tender offer.
New CDI 166.03 provides that this condition only applies when the affiliate of the offeror's financial advisor is acting on its own behalf, rather than acting as an agent of the offeror. The CDI states that any purchases as an agent of the offeror are subject to the other existing conditions, including the requirement that the tender offer price be increased to match any greater price paid outside of the tender offer.
Key Takeaway: The ability to make purchases outside of a cross border tender offer is often a significant concern for offerors. The SEC has provided additional flexibility for offerors to make purchases of target shares outside of a tender offer that qualifies for Tier I or Tier II relief.
3. Timing of Broker Searches
Rule 14a-13 of the SEC's proxy rules generally require that, for shareholder meetings, "broker searches" to determine the number of proxies and other proxy materials needed by record holders to forward to beneficial holders be conducted at least 20 business days prior to the record date for such meeting. Companies have often found that the broker search process does not require this lengthy time period, and the requirement can cause delay in the meeting schedule.
In new CDI 133.02, the SEC acknowledges that technological advancements have made the broker search process more efficient. Therefore, the Staff will not object if a broker search is conducted less than 20 business days before the record date, provided the company reasonably believes that its proxy materials will be timely and otherwise complies with Rule 14a-13.
Key Takeaway: The timing of the broker search process in connection with shareholder meetings can be streamlined and will no longer delay shareholder approval of business combinations and other transactions.
4. No More Voluntary Notices of Exempt Solicitation
Under Rule 14a-6(g)(1), a Notice of Exempt Solicitation must be filed by any person engaged in an exempt solicitation under Rule14a-2(b)(1)4 who owns over $5 million of the subject securities.
In revised CDI 126.06, the SEC indicates that the purpose of this rule is to provide public notice of exempt solicitations by large shareholders. However, the Staff notes, the majority of Notices of Exempt Solicitation filed are voluntary filings by smaller shareholders that appear to be aimed primarily at generating publicity. Since this is not the intended purpose of these filings, the Staff will now object to voluntary Notice of Exempt Solicitation submissions.
Key Takeaway: Smaller shareholders will no longer be able to use voluntary Notices of Exempt Solicitation filings to express their voting intentions or voice grievances, and will have to find other, potentially more costly and more time consuming methods to express their views.
5. Executive Compensation Disclosure in Spin-Offs
Previous SEC guidance on the executive compensation disclosure required in a spin-off transaction and in the spun-off entity's subsequent filings focused on whether the spin-off should be treated like an IPO of a new issuer.
Newly revised CDI 217.01 provides clarity on this topic. The Staff indicated that historical executive compensation disclosure may not always be required. The determination of whether this disclosure is needed should focus on whether the spun-off entity operated as a standalone business prior to the spin-off and whether there was continuity of management. If the spun-off entity consists of portions of different parts of the parent's business, or has new management who will become executive officers after the spin-off, executive compensation disclosure for pre-spin-off periods would not be required. The spun-off entity will only need to report compensation awarded to, earned by, or paid to the spun-off entity's named executive officers in connection with and following the spin-off.
Key Takeaway: The SEC has clarified that, unless the spin-off entity has operated as a standalone business with executives who are continuing to serve as such after the spin-off, which is often not the case, then historical executive compensation disclosure will not be required.
1 A Form S-4 (or Form F-4) may be used to register shares if (i) the lock-ups are signed only by accredited investors and qualified institutional buyers and they collectively own less than 100% of the subject securities, (ii) the exchange offer will be made to all holders and (iii) all holders are offered the same amount and form of consideration.
2 For "Tier I" relief, among other things, US shareholders cannot hold more than 10% of the target's shares, and the target must qualify as a "foreign private issuer."
3 For "Tier II" relief, among other things, US shareholders cannot hold more than 40% of the target's shares, and the target must qualify as a "foreign private issuer."
4 Rule 14a-2(b)(1) exempts a solicitation from certain proxy rules, including the requirement to file a proxy statement, if the soliciting person is not seeking proxy authority and does not have a substantial interest in the subject matter of the solicitation.
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