What is the SEC 305B2 form?

SEC Form 305B2 is an electronic filing with the Security and Exchange Commission (SEC) which allows for the deferred appointment of a trustee by a bond issuer under the Trust Deeds Act 1939. This includes when registering a radius offer bonds or other debt securities.

Key points to remember

  • SEC 305B2 form is used by a company wishing to register a pending offering of fixed income securities with the SEC.
  • Pre-registration allows for the deferred issuance of securities by the issuer, where they may be offered for sale up to two years after initial registration.
  • This filing falls under the auspices of the Trust Indenture Act of 1939, which prohibits bond issues worth more than $5 million from being offered without registration.

Understanding Form 305B2

A trustee must be appointed when a bond company (the registrant) files a shelf recording for the offer and sale of debt securities. Pre-registration is a method for companies to register securities without having to issue them immediately.

Instead, the securities can be issued at any time within a two-year period, allowing a company to adjust the timing of sales to take advantage of more favorable market conditions, should they arise.

If the registrant does not immediately appoint a trustee, the registrant will submit Form SEC 305B2 with SEC Form T-1 register debt securities. Investment banks serve as trustees.

Registration of securities under the Trust Deeds Act

A trust deed is an agreement in a bond contract between a bond issuer and a fiduciary that represents the interests of the bondholder by outlining the rules and responsibilities that each party must follow. It can also indicate where the bond’s income stream comes from.

The Trust Indenture Act of 1939 (the “Act”) is a federal law that prohibits bond issues worth more than $5 million from being offered for sale without a formal written agreement (a indenture), signed by both the bond issuer and the bondholder, which fully discloses the details of the bond issuance. The law also requires that a trustee be appointed for all bond issues so that the rights of bondholders are not compromised.

When an issuer is considering an offering of debt securities, it files SEC Form T-1 as an attachment to the registration statement. The T-1 form contains basic personal information about the proposed trustee, as well as their relationship to the debt issuer and underwriters, such as whether the transmitter or any subscriber holds securities of the trustee and whether the trustee holds securities of the issuer or an underwriter.

If the offering is part of a pre-registration, section 305(b)(2) of the Act allows the issuer to appoint the trustee on a deferred basis. If the issuer chooses this option, the SEC Form T-1 is effective 10 calendar days after filing.

At the top of this form is a box to check whether this is also a request to the SEC to determine a trustee’s eligibility under Section 305(b)(2). If the registrant checks this box, the SEC 305B2 form must also be filed separately electronically.

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