The staff of the SEC Division of Corporation Finance has provided relief this winter to facilitate mergers and acquisitions and related transactions through a series of new or revised Compliance and Disclosure Interpretations (C&DIs). See our earlier post here. On February 11, 2026, CorpFin issued several additional C&DIs that provide important interpretive guidance related to “going private” transactions and mini tender offers.
1. CorpFin Provides Path for an Issuer (or an Affiliate) to Make a Tender Offer for an Issuer’s Shares without Triggering the “Going Private” Rule
Background
Exchange Act Rule 13e-3 imposes substantial procedural and disclosure obligations on “Rule 13e-3 Transactions.” For a transaction to constitute a Rule 13e-3 Transaction it must satisfy two components. First, the transaction (or series of transactions) must involve (i) the purchase of any equity security of the issuer by the issuer or an affiliate, (ii) a tender offer for any equity security of the issuer by the issuer or an affiliate, or (iii) a proxy solicitation subject to Regulation 14A or a consent subject to Regulation 14C related to any equity security of the issuer in an M&A transaction of an issuer. Second, the transaction (or series of transactions) must have “a reasonable likelihood or a purpose of” (i) causing any class of the issuer’s equity securities to become eligible for deregistration under Section 12(g) of the Exchange Act (or to suspend the issuer’s reporting obligations under Section 15(d) of the Exchange Act), or (ii) causing the delisting of any class of the issuer’s equity securities from a national securities exchange (such as NYSE or Nasdaq). In summary, a Rule 13e-3 Transaction entails (i) the acquisition of the issuer’s equity securities by the issuer an affiliate, (ii) with the purpose or effect of terminating the issuer’s public reporting and/or stock exchange listing.
A buyer or offeror in a transaction subject to Rule 13e-3 must file a Schedule 13e-3 with the SEC, which is subject to SEC review and is more burdensome that a typical tender offer or proxy statement. The Schedule 13e-3 includes, among other things, a full “background of the merger” section, disclosure as to whether the subject company believes the transaction is fair to unaffiliated security holders, and disclosure of reports, opinions and appraisals as to the fairness of the transaction received in connection with the transaction. Complying with Rule 13e-3 adds substantial time and expense to the M&A process.
What is the “problem” CorpFin seeks to address?
Many transactions which satisfy the first component of a Rule 13e-3 Transaction (an acquisition of an issuer’s shares by an affiliate) do not necessarily satisfy the second component (causing the issuer to become eligible to deregister under the Exchange Act or causing the issuer to delist from NYSE or Nasdaq). For example, if an affiliate seeks to acquire 100% of a listed public company’s outstanding shares in a tender offer, consummation of the tender offer would clearly satisfy both components of the Rule 13e-3 Transaction test, as the issuer would deregister under the Exchange Act and delist from the stock exchange following closing. There are other contexts, however, in which an affiliate may seek to acquire less than 100% of a listed public company’s outstanding shares in a tender offer. In many of these transactions the affiliate offeror may not intend to cause the issuer to become eligible to deregister under the Exchange Act or to delist. Given the broad scope of Rule 13e-3 (i.e. transactions with “a reasonable likelihood or a purpose of” causing the ability to deregister, or delisting) affiliate offerors may feel compelled to comply with the requirements of Rule 13e-3 if they believe it is possible that the tender offer may satisfy the second component of a Rule 13e-3 Transaction, even if the affiliate does not in fact intend to delist or deregister the company. This imposes a significant burden on offerors.
What did CorpFin do?
New C&DI 112.04 establishes a clear method for an issuer or an affiliate of an issuer to make a tender offer for the issuer’s shares without triggering the application of Rule 13e-3. The C&DI says that if an issuer or an affiliate of an issuer makes a tender offer for the issuer’s shares, and includes a nonwaivable condition in the tender offer that the offer will not have any of the effects described in Rule 13e-3(a)(3)(ii) (i.e. that the tender offer will not result in causing the issuer to be able to deregister under the Exchange Act or to delist from a national securities exchange), the tender offer will not constitute a Rule 13e-3 Transaction.
CorpFin said that if the offeror in the tender offer includes a condition to the offer that it “would not purchase an amount of subject equity securities that would have a reasonable likelihood or purpose” of causing the issuer to be eligible to deregister under the Exchange Act or to delist from a national securities exchange, the requirements under Rule 13e-3 would generally not apply to such transaction. The C&DI specifically refers to the acquisition of a quantity of equity securities that would permit the issuer to deregister under Exchange Act Rules 12g-4 (which would allow deregistration if fewer than 300 record holders remain outstanding) or 12h-6 (which would allow deregistration if fewer than 300 record holders or fewer than 300 US record holders remain outstanding), or would permit the issuer to suspend its reporting obligations under Exchange Act Rule 12h-3 (which would allow deregistration if fewer than 300 record holders remain outstanding), in each case subject to satisfaction of additional requirements.
How do public companies benefit?
Complying with the requirements of a Rule 13e-3 Transaction adds time and expense to consummation of a tender offer. New C&DI 112.04 provides a straightforward, unambiguous process for issuers and affiliates making a tender offer for an issuer’s shares who are not seeking to take the issuer private to structure the tender offer in a way to avoid engaging in a Rule 13e-3 Transaction.
2. CorpFin Clarifies Exception Under Rule 13e-3 in Share for Share Transactions
What is the “problem” CorpFin seeks to address?
Rule 13e-3 includes an exception where a transaction will not constitute a “Rule 13e-3 Transaction” if target shareholders receive only equity securities as consideration, so long as (i) the equity securities received have the same substantive rights as the target equity securities (which is deemed satisfied if the target shareholders receive common shares), (ii) the equity securities received are registered under Section 12 of the Exchange Act (or the acquiror is subject to public reporting obligations under Section 15(d) of the Exchange Act), and (iii) if the target shares were listed on a national securities exchange, the shares received as consideration will also be listed on a national securities exchange. This exception, Rule 13e-3(g)(2), differentiates between transactions in which an acquiror seeks to take a target private, and transactions in which an acquiror offers target shareholders equity in another public company. The Rule 13e-3(g)(2) exception specifies that the equity security to be offered to target shareholders “is either listed on a national securities exchange or authorized to be quoted in an inter-dealer quotation system of a registered national securities association.”
But what happens in the circumstance where the acquiror will have an Exchange Act registration and listing on a national securities exchange when the business combination closes, but not when the transaction is announced? The precise wording of the Rule 13e-3(g)(2) exemption provides that the equity security offered to target shareholders “is” listed on an exchange, suggesting that the equity security would have to be already publicly traded and listed at the time of the 13e-3 transaction. Yet in certain business combinations an acquiror goes public as part of the deal, using an S-4 or F-4 as their initial Securities Act registration statement, and lists on a stock exchange concurrently with closing. Does the exception under Rule 13e-3(g)(2) apply on these facts?
What did CorpFin do?
New C&DI 112.03 says yes. Transactions may rely on the Rule 13e-3(g)(2) exception so long as registration of the acquiror’s shares under Section 12 of the Exchange Act and listing of the acquiror’s shares on a national securities exchange at the closing of the business combination are express conditions to the transaction, such conditions are disclosed to the target shareholders, and all other conditions of the exception under Rule 13e-3(g)(2) are satisfied.
How do public companies benefit?
This C&DI addresses a potential ambiguity in the application of Rule 13e-3(g)(2) and provides certainty to deal parties. And it makes sense when considering the purpose of Rule 13e-3. Target shareholders in a stock deal care about holding listed, public company shares after the closing of the transaction. Whether or not the acquiror shares are listed prior to closing should not matter for purposes of the investment decision they make.
3. CorpFin Protects Companies from the Inadvertent Failure to Timely Publish Their Position on a Third-Party Mini-Tender Offer
What is the “problem” CorpFin seeks to address?
Third-party bidders sometimes seek to accumulate a stake in a public company by making a so-called mini-tender offer. In a mini-tender offer, the offeror must hold less than 5% of the target’s shares following consummation of the tender offer. Mini-tender offers do not need to comply with Regulation 14D of the Exchange Act. As a result, the offeror does not need to file the offer documentation with the SEC as a Schedule TO and is not required to distribute the offer documentation to the target.
This can create a problem for the target under Exchange Act Rule 14e-2. Even though Regulation 14D does not apply to mini-tender offers, Regulation 14E does apply. Rule 14e-2 requires a target, within 10 business days of launch of the tender offer, to disclose to its shareholders whether it recommends acceptance or rejection of the offer, remains neutral to the offer, or is unable to take a position with respect to the offer. Publication of the target’s position on the tender offer serves an important function because it provides the target’s public shareholders with the target board’s view of the tender offer.
What happens if the target fails to publish the Rule 14e-2 disclosure within 10 business days of the tender offer’s launch because it did not know a bidder had launched a mini-tender offer? Has the target violated the publication requirement under Rule 14e-2?
What did CorpFin do?
New C&DI 163.02 says no. CorpFin clarified that if the target did not know a bidder had launched a mini-tender offer, the SEC will not object to the target’s failure to publish the required disclosure under Rule 14e-2 within 10 business days of the launch of the tender offer, so long as the target publishes the required disclosure as soon as possible after it becomes aware of the mini-tender offer.
How do public companies benefit?
This C&DI protects public companies from an inadvertent foot fault. The target may not know a bidder has launched a mini-tender because no filing is made on EDGAR and the bidder may not distribute the offer documentation to the target. If a target fails to respond to a pending tender offer because it is unaware of the pending tender offer, the target’s failure to meet the 10 business day deadline arises simply because the target did not know it was “on the clock” to provide the disclosure. It doesn’t seem fair to penalize a public company for failing to comply with an obligation it didn’t know it had.
