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Locke Lord and Troutman Pepper will become Troutman Pepper Locke on January 1, 2025.
This outline reviews the SEC’s interpretations that relate to the integration of private and public offerings and the challenges they present for the capital formation process. The outline also describes current policies of the SEC staff that affect so-called “PIPE” offerings and “private equity lines.”
Read MoreThe 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.
Read MoreThe 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.
Read MoreThe Securities and Exchange Commission on August 26, 2020 adopted changes to the definition of accredited investor intended to modernize the exempt offering process. It also made related changes to the definition of qualified institutional buyer.
Read MoreRecently, the U.S. District Court in the Southern District of New York held in Kirschner v. J.P. Morgan[1] that a syndicated term loan was not a “security” under several state securities (or Blue Sky) laws. While the ruling did...
Read MorePicking 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
Read MoreIn 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.
Read MoreThe 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.
Read MoreThe 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.
Read MoreOn 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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