Topic: 1933 Act Offerings

SEC Proposes Changes to Equity Compensation Rules for Public and Private Companies

The Securities and Exchange Commission, on November 24, 2020, proposed changes to the rules and forms that are used for compensatory securities offerings by both private and public companies. If adopted, the changes should give added flexibility to companies using equity as part of their compensation programs for employees, directors and consultants. At the same time, but in a separate release, the SEC proposed to extend eligibility under these rules and forms to participants in the so-called “gig economy” for five years.

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SEC Adopts Significant Changes in Regulation of Exempt Offerings (UPDATED)

The Securities and Exchange Commission on November 2, 2020, by a 3 to 2 vote, adopted significant changes to the rules governing capital raising through private offerings and other offerings exempt from registration under the Securities Act of 1933. (See the adopting release here.) These changes are designed “to harmonize, simplify, and improve … the exempt offering framework” and “to promote capital formation and expand investment opportunities while preserving and improving important investor protections,” and include reducing the friction between different offerings under integration principles. The new rules are effective 60 days after publication in the Federal Register.

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SEC Provides Temporary Relief to Permit Expedited Crowdfunding Offerings in a Time of COVID-19

Picking up on suggestions from its Small Business Capital Formation Advisory ‎Committee, the SEC has adopted a temporary rule to permit small businesses eligible to do a ‎Regulation Crowdfunding offering that have been operating for at least six months to have ‎access to capital through August more quickly by streamlining some of the crowdfunding ‎exemption requirements as follows‎

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NYSE Gives Temporary Relief to Listed Companies for Private Placements with Insiders

In times of economic distress, insiders can sometimes be the only source of capital for a company ‎with urgent liquidity needs. Applying lessons learned in the 2008-2009 financial crisis to the ‎current COVID-19 market disruptions, the NYSE temporarily relaxed its shareholder approval ‎rules on April 6, 2020, effective immediately and extending through June 30, 2020.‎

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Delaware Supreme Court Upholds Federal Forum Selection Provisions

The Delaware Supreme Court, on March 18, 2020, in Salzberg v. Sciabacucchi, reversed the decision of the Court of Chancery and upheld the validity of a forum selection provision in the certificate of incorporation of a Delaware corporation requiring claims under the Securities Act of 1933 to be brought in federal courts.

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SEC Proposes Sweeping Changes for Exempt Offerings

The Securities and Exchange Commission on March 5, 2020 proposed sweeping changes ‎to the rules governing capital raising through private offerings and other offerings exempt from ‎registration under the Securities Act. If adopted, these amendments, along with the previously ‎proposed expanded definition of “accredited investor,” will be the most significant changes in ‎the regulation of exempt offerings in many years, expanding opportunities for capital raising ‎without registration. ‎

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SEC Proposes to Broaden and Update Accredited Investor Definition

On December 18, 2019, the Securities and Exchange Commission, on a 3 to 2 vote, proposed ‎amendments to the definition of “accredited investor” in order to update that definition and ‎expand the investors that would qualify as accredited investors able to participate in private ‎offerings.‎ ‎ The definition of “accredited investor” is important principally for determining who ‎can invest in private offerings under Rule 506(b) without limitation as to number and without ‎any information required as a condition of the exemption and as to who is eligible to invest in an ‎offering with general solicitation under Rule 506(c).‎

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