What Is A Continuing Disclosure Agreement

Governments or public bodies (issuers) that issue obligations are generally required to meet specific standards of continuous disclosure set out in continuity agreements (CDAs, also referred to as „prosecution certificates“ or „additional information“). Issuers close CDAs at the time of bond issuance to allow their insurers to comply with the Securities and Exchange Commission`s (SEC) Rule 15c2-12. [1] This rule, which is mentioned in the Securities Exchange Act of 1934, (i) insurers must set certain obligations to obtain, verify and disseminate official statements made by issuers of most primary offerings of communal securities, (ii) insurers in order to receive the CDA from the issuer and other persons required, to provide ongoing disclosure of listed events and annual financial information, and (iii) brokers to have access to this permanent disclosure in order to make recommendations regarding municipal securities on the secondary market. The amendments contain many undefined concepts and raise many practical questions of implementation. The following guidelines are general in nature; There are likely to be many questions when issuers implement the amendments. We recommend that issuers contact the obligation or advertising advisor for any questions regarding the implementation of the amendments. They may also instruct a third party to collect and submit other advertising elements in order to disseminate the information provided by the issuer/debtor in accordance with the requirements for the sustainability of the advertising agreement. The SEC`s „Municipalities Continuing Disclosure Cooperation“ (MCDC) initiative in 2014, as well as other recent regulatory actions by the Federal Government, underscored the importance of maintaining a reliable system of adequate continuous disclosure management. Failure to comply with the CDA may affect the issuer`s access to public capital markets in a timely manner, as insurers must have a reasonable basis to ensure that the issuer meets its CDA obligations. Please refer to the GFOA Best Practice entitled „Policies and Procedures After Exposure After Exposure.“ Government bonds are generally exempt from registration and advertising obligations under the Federal Securities Acts of 1933 and 1934. Exemptions apply to both state and municipal government bonds and „private activity bonds“ issued by public authorities to non-profit and for-profit enterprises, where the obligations meet the requirements of the Internal Income Code for the exclusion of interest from federal income tax. The usual reason given for these exceptions is that the involvement of the government or local government unit places these securities in an environment more accessible to the public and regulated than traditional corporate securities.