Rule 3-13 Requests for Waivers – Yes, the SEC Really Means It!


By: George M. Wilson, SEC Institute

Last December we blogged about the SEC actively encouraging companies to consider requesting waivers of certain financial reporting requirements using an historically little mentioned provision of Regulation S-X. Rule 3-13 says:


  • 210.3-13   Filing of other financial statements in certain cases.

The Commission may, upon the informal written request of the registrant, and where consistent with the protection of investors, permit the omission of one or more of the financial statements herein required or the filing in substitution therefor of appropriate statements of comparable character. The Commission may also by informal written notice require the filing of other financial statements in addition to, or in substitution for, the statements herein required in any case where such statements are necessary or appropriate for an adequate presentation of the financial condition of any person whose financial statements are required, or whose statements are otherwise necessary for the protection of investors.

The SEC Chairman and the Director of the Division of Corporation Finance have mentioned this “waiver process” in several public forums, and there is a substantial amount of “buzz” about this change in approach by the staff in the community of registrants.


This report from Orrick is one example. Another is this “To the Point” update from EY.


The staff has described what they consider a preferred process for requesting these waivers, and they are responding to these requests in a very timely fashion, frequently within a week or ten days. To facilitate this process the staff put the following language at the very beginning of the introductory material in the CorpFin Financial Reporting Manual:

  • (The Division of Corporation Finance) Acts on behalf of the Commission to grant relief under Rule 3-13 of Regulation S-X. The staff has authority, where consistent with investor protection, to permit registrants to omit, or substitute for, required financial statements. Requests for this relief should be submitted by email. Call (202) 551-3111 and ask for the appropriate person listed below to discuss questions about potential relief:

Rule 3-05 – Patrick Gilmore

Article 11 – Todd Hardiman

Rules 3-09 and 4-08(g) – Christy Adams

Rules 3-10 and 3-16 – Tricia Armelin

Rule 3-14 – Jessica Barberich


To the above guidance we would add the advice to involve your auditors in this process as they may have helpful advice along the way and their opinion may be relevant to the SEC.


So, what are some typical situations where we should stop and consider whether or not to approach the staff about such a waiver request? Here are a few examples.


Significance tests – When applying the three significant subsidiary tests, in particular the income test, if an acquirer has very small income this part of the test could be met for an acquisition that may not really be “significant”. If one of the three parts of this test seems out of the norm then there may be other, more appropriate, considerations in making a determination whether separate financial statements are useful. This would be a great time to consider a Rule 3-13 request.

Pre-and post-acquisition periods for S-X rule 3.05 – When appropriate it may be best to use an analysis that is less mechanical and focuses on trend issues that are meaningful and which help assess how an acquisition may impact on post-acquisition results.

Predecessor/Successor issues – In some cases stub periods may not be as relevant or reliable carve out F/S may not be possible to build. For example, it may be that abbreviated financial statements may provide the information that investors need in this type of situation.

IFRS financial statements may be acceptable for some acquisitions and equity method investees – if a company could be a foreign private issuer the staff may accept IFRS financial statements.

Mechanical compliance with a rule sometimes is not the best way to provide investors with the information they need. It is a good thing to know that there are alternatives. So, when you think you are in this situation, go talk to the staff!





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