First, some information about fees themselves. For registration statements, the fees are typically calculated by multiplying the total value of the securities being registered by the SEC’s filing rate. For 1934 Act filings, the fees can be computed by multiplying the value of the transaction by the fee rate. In addition, some forms also have a required flat fee with is then added to these calculated values. For more specific information on how to calculate filing fees, see this previous blog post.

The SEC requires only one fee be paid per one transaction. Fee offsets can occur when part of that fee is paid through a different, previous filing. A registrant that previously overpaid or filed an amendment caused the fee amount to change to a lower amount may result in a fee offset. Fee offsets can also be due to another company covering a portion or all of a filing fee. When an offset is involved in a fee calculation, the offset payment information must be included in the submission’s form data. Filers must include the CIK of the payer, the type of the EDGAR form involved in the offset, the SEC filing number, and the date of the fee’s originating filing.

Let’s examine an example of calculating a fee where a fee offset is involved. This example comes from the EDGAR Filer Manual, volume II, section 4.7. We’ll break down a single equities transaction between two hypothetical companies, Company A and Company B. In order to purchase the outstanding three million shares of Company B, Company A will issue two million shares of its common stock. Company A shares trade on the New York Stock Exchange at $23 per share. Company B shares trade at $7.50 per share on NASDAQ. Company B will need to pay a filing fee of $2,070 when it files its preliminary proxy material describing Company A’s proposed acquisition. This comes from multiplying the total number of shares to be acquired by Company A (3,000,000) by the market price of Company B’s stock ($7.50 per share). Then multiply this amount (22,500,000) by the filing fee rate ($92 per million dollars, or 0.000092). This gets you Company B’s filing fee ($2,070, as said above) for their preliminary proxy material (Form PREM14A).

Company A then files its Form S-4 registration statement to register the securities that it intends to issue as part of this transaction. Given that the basis for calculating Company A’s fee is the same as above because of the 1933 and 1934 Acts, this fee is also $2,070. Company A must include the Offset Payment information in the EDGAR form data as part of the filing (which is Company B’s CIK, the form it filed, the date of their filing, etc.). This ensures only one fee is paid per transaction.

In this example, the fee Company A calculated for its filing was completely offset by Company B’s fee but that may not always be the case. Rule 457(p) of Regulation C allows a company to offset a fee already paid with respect to securities that remain unsold after an offering is completed, terminated, or withdrawn. The portion of the filing fee associated with the unsold securities can be applied to the filing fee of a subsequent registration statement (or registration statements) provided it is filed within five years of the initial filing’s date. And, again, if there is money left over, that sum can be applied to another later filing provided that it is filed within five years of the previous filing, and so on.

The SEC provides a number of tools to help with fees. The Filing Fee Branch has a wealth of information on the subject. In addition, when a test filing is performed and a filing fee is expected,
the EDGAR System will check whether the funds are available. This can be used to double check whether the fee offsets are specified correctly. It also reduces the chances of an acceptance delay when the eventual live filing is performed.

Always keep in mind that GoFiler can help take your fee offsets into account when calculating fees and help populate the Offset Payment fields with the appropriate information.