U.S. investors may want to buy shares from foreign private issuers, or those issuers may want to issue new securities that U.S. investors could buy. In the 20th century, these types of transactions were complicated. They often led issuers to exclude U.S. investors because they wanted to avoid enforcement of U.S. securities laws.
In 2000, the SEC adopted some cross-border exemptions to encourage U.S. investor participation in these transactions. SEC Form CB is tied to these exemptions. This form acts as a notification to the SEC that an offeror or issuer is relying on applicable cross-border exemptions in connection with a tender offer, exchange offer, rights offering, or business combination involving a foreign private issuer. It goes along with disclosure materials from the issuer’s home jurisdiction.
Form CB is not a traditional registration statement. As such, it is most applicable to:
- Foreign private issuers
- Investors and acquirers in cross-border transactions
- Investment banks
- Compliance or corporate transaction teams
- Legal counsel for these parties
Stakeholders preparing this form must understand its requirements along with the rules governing cross-border exemptions, including timing and U.S. holder thresholds.
What is SEC Form CB?
The Tender Offer/Rights Offering Notification Form is referred to as SEC Form CB. This SEC form’s acronym refers to its use in cross-border transactions. The form provides notice to the SEC that one party, such as an investor or foreign private issuer, is utilizing cross-border exemptions to make a tender offer, exchange offer, rights offering or business combination. The filer must clarify how the transaction qualifies for the applicable cross-border exemption and identify the regulatory provisions from which relief is being sought.
Form CB does not determine exemption eligibility. Issuers or offerors must perform their own assessment of eligibility and submit as part of the form.
When Is Form CB Required?
The SEC requires Form CB when parties rely on certain cross-border exemptions that require notice filings with the Commission. The form derives from the following rules:
- Securities Act Rule 801 for rights offerings
- Securities Act Rule 802 for exchange offers and business combinations
- Exchange Act Rule 13e-4(h)(8)
- Exchange Act Rule 14d-1(c)
- Exchange Act Rule 14e-2(d)
Not all transactions necessitate the filing. Factors affecting necessity include:
- Transaction type
- Status of issuer
- Level of U.S. ownership
- Type of exemption
- Existing U.S. shareholders
- Tender offer or registration requirements for the transaction
Cross-border analysis is highly fact-specific, emphasizing the importance of seeking legal counsel to confirm eligibility.
Transactions Commonly Associated With Form CB
Cross-border transactions that commonly trigger Form CB requirements include the following.
Tender offers
Bidders may need to submit the form if they want to purchase securities in a cross-border transaction that involves U.S. holders.
Exchange offers
Issuers may be able to rely on SEC Rule 802 to exempt them from registering an exchange of securities with U.S. holders, depending on the percentage.
Rights offerings
Issuers may utilize SEC Rule 801 and Form CB to exempt them from registering new securities available to existing U.S. holders, depending on percentage of U.S. ownership.
Business combinations
Business combinations, such as mergers, amalgamations, arrangements, or reorganizations, may require participation from security holders. In these cases, Rule 802 governs eligibility for exemption from registration or tender offer requirements.
U.S. Holder Thresholds and Cross-Border Exemptions
Eligibility for cross-border exemptions depends on the percentage of target securities that are held by U.S. shareholders. For purposes of the cross-border rules, determining U.S. holder status can involve specific SEC definitions and ownership-analysis procedures. The exemptions are divided into two tiers:
- Tier I: U.S. ownership is limited, typically 10% or less of the target securities
- Tier II: Targeted relief for transactions with up to 40% U.S. ownership, but exemptions are more limited
Calculating U.S. ownership requires analysis of record holders, nominee inquiries, look-through procedures, timing analysis, while meeting standards of reasonable inquiry. Form CB is commonly associated with Rule 801, Rule 802, and Tier I cross-border exemptions, which generally apply when U.S. holders own 10% or less of the relevant securities.
Form CB Filing Requirements
To complete the form, filers must provide this information:
- Subject company and its home jurisdiction
- Type of transaction
- Information about the filer
- Rule or exemption the filer relies upon
- Disclosure documents required by the home jurisdiction
The disclosure documents are generally attached to the form. The form and related disclosures must be submitted in English or accompanied by an English translation, depending on the document and requirements of the rule. Disclosure materials may include:
- Offer documentation
- Circulars
- Notices
- Rights offering materials
- Amendments
- Transaction records
The U.S. materials should align with documents from the home jurisdiction. Material updates or supplemental disclosure documents may require amended Form CB filings.
Timing Requirements for Form CB
The deadline for filing is promptly after the publishing of relevant disclosure documents in the home jurisdiction, such as circulars or offerings materials. Generally, Form CB must be furnished to the SEC no later than the first business day after the relevant disclosure materials are published or otherwise disseminated in the issuer's home jurisdiction.
Timing is important because cross-border transactions often involve parallel filings, announcements or investor communications in multiple jurisdictions. Late or inconsistent filings may create compliance risk, delay transaction execution, or require additional regulatory review. Teams should coordinate the following:
- Counsel in the local jurisdiction
- U.S. securities counsel
- Filing agents
- Translation advisors and resources, where applicable
- Investor communications
If amendments or supplemental materials are sent to shareholders, the filer may need to submit Form CB amendments.
Managing Form CB With Confidence Across Borders
SEC Form CB is an important filing for foreign private issuers that want to make rights or exchange offerings to U.S. shareholders, or U.S. investors who want to make tender offers or other business combinations to those issuers. This form notifies the SEC of these planned transactions when they are eligible for cross-border exemptions, while providing related home jurisdiction disclosure materials.
Compliance with Form CB requires accurate exemption analysis, U.S. holder calculations, alignment in disclosure materials and timely filing. To achieve these goals, entities need secure collaboration, disciplined document control and reliable filing workflows. That way, legal, finance and deal teams can execute the plan with confidence.
