Subject: File No. S7-20-15
From: Steven Crawford

November 20, 2015

Rule 3-05 tests should be based upon the most current interim balance sheet that has been issued. The current rule requires registrants to base their 3-05 tests off the balance sheet from the preceding year end. If there are significant changes between the preceding year end and a transaction subject to rule 3-05 testing, then those changes would have been captured in interim financial statements for quarterly periodic filings. For example, a Company IPO's during Q1 2015, files it's form 10K for the prior year just subsequent to the IPO, then files its quarterly periodic 10-Q's for the first and second quarters, then enters into a transaction subject to 3-05 testing. The results of the 3-05 testing indicate significance based on the balance sheet for the prior year end, yet the transaction agreement may not be considered a material contract or material event given the effect of the IPO. Further, basing the 3-05 significance tests off the most recent balance sheet may result in a determination that the transaction is not significant. The difference in the results of significance tests is time, effort and money needed to accomplish the requirements of 3-05 financial information. In addition, the requirement to go back to the prior year end, though the intention is to capture significant changes since the last year end (accomplished already through 10-Q) may be inconsistent with other reporting requirements, take the form 13G for instance, 13G filers are not required to base their tests off the prior year end, instead they use current information. The inverse of the above could also be beneficial to investors: If a company's balance sheet degraded since the prior year end then a transaction measured against that prior year end may not result in triggering significance, yet basing the 3-05 tests off the most current interim information may result in significance being triggered, and this is where I would think investors would want to be sure that resources are being wisely allocated to such a transaction. In short, an update to base the 3-05 tests off the most current interim period may make sense.