SEC Reg AB II Final Rule: New and Expanded CMBS Disclosure and Registration Requirement Final Rule Shelf-Eligibility Requirements ABS issuers will be subject to new shelf-eligibility requirements. In order for an offering to be eligible, it must meet the following requirements as part of registration: • A certification signed by the Chief Executive Officer of the depositor concerning the disclosures and structure of the securitization (the language was modified from the proposed rule in light of concern from commentators, including CREFC, and several of CREFC’s suggestions to make the certification more applicable to the CMBS market were adopted); • An asset review provision that is included in the underlying transaction agreement; • A repurchase request dispute review provision that is included in the underlying transaction agreement; and • A provision in the underlying transaction agreement providing for investor communication requests in ongoing distribution reports. The SEC is also requiring a three-day waiting period after the filing of the original prospectus before the first sale of the securities in the offering can occur (CREFC advocated for a five-day waiting period). Next Steps: CREFC Establishes Working Groups to Ensure Standardized Approach to Implementation In order to ensure a standardized industry approach to implementation of the new disclosure and reporting requirements, especially CRE Finance World Autumn 2014 10 with regard to deal document language and transaction party responsibilities, CREFC has created two working groups. Schedule AL Working Group Schedule AL will be used for both the offering disclosure as well as ongoing disclosures. While many of CREFC’s recommendations regarding asset-level data points were adopted, the new Schedule AL does not map exactly to the CREFC IRP or Annex A. This working group, led by Kathleen Olin of CWCapital and Leslie Hayton of Wells Fargo and comprised of master and special servicers and other market participants, will conduct a line by line comparison of the SEC’s required asset-level data points to the CREFC IRP and Annex A to determine which fields are new or similar, and how to report such information going forward in the most efficient and useful manner. Shelf-Eligibility Working Group This working group, led by Mike Gambro of Cadwalader, Wickersham & Taft and Kevin Blaugh of Sidley, is comprised of issuers and counsel and will create industry standardized language addressing the new and expanded disclosure requirements for shelf-eligibility. The creation and adoption of industry best practices ensuring the appropriate, consistent and seamless implementation of Reg AB II is a priority initiative for CREFC.
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