The SEC proposal updates and simplifies the rules and regulations applicable to takeover transactions and security holder communications. The AIMR Committee strongly supports the objectives of the Proposal because they promote disclosure and a level playing field among market participants and they reduce the regulatory complexity associated with business combinations, while generally maintaining adequate investor protections.
Adequate disclosure gives investors the ability to make informed investment decisions.
This is especially important in transactions involving business combinations because such transactions may have a profound effect on an investor's existing investment. The AIMR Committee does suggest, however, modifications to certain of the proposed rules, as discussed below. The Securities Exchange Act of 1934 permits a company to suspend its reporting to the SEC if the number of its record holders falls below 300. The AIMR Committee is concerned about the amount of information that is provided to an issuer's bondholders. Additionally, this rule can impair the liquidity of the debt securities subject to it, because such securities are more difficult to price and trade without public information.