Effective February 27, 2019, SEC Rule 15c2-12 imposed new continuing disclosure requirements on bond issuers, including schools. A school will only need to comply with the new requirements when:
Consequently, unless your school has a new bond issue on the horizon, your continuing disclosure responsibilities remain the same, even after February 26. Those responsibilities include:
For schools issuing bonds after February 26, 2019, the new continuing disclosure requirements add two additional material events that must be monitored and reported to EMMA:
In plain English, a financial obligation is generally any kind of debt or financing arrangement, including:
Once subject to the new continuing disclosure requirements, any time a
school enters into a new financing arrangement, a school
official or the school’s disclosure agent (typically a financial advisor) likely will need to file an EMMA material event notice within 10 business days. Such a school also may need to file a material event notice with EMMA if it experiences “financial difficulties” and, due to those financial difficulties, there is a default, acceleration, termination, modification of terms, or similar event related to a financial obligation.
For a school issuing bonds after February 26, 2019, the new continuing disclosure requirements may substantially increase its material event filings. Accordingly, it is critical that your school designate an official who will be responsible for continuing disclosure filings or who will coordinate with the school’s disclosure agent. For schools planning a future bond issue, the school official responsible for continuing disclosure should create an inventory of all outstanding financial obligations and update that inventory immediately after the school enters into a new financing arrangement. The updated inventory should be the school official’s cue to make sure that a material event notice is filed with EMMA. If your school uses a disclosure agent and that agent is not involved in a financing transaction handled by Thrun Law Firm, we will inform the disclosure agent about the new financing shortly before the transaction closes. We believe this process will assist our clients in complying with the new disclosure requirements.