April 11, 2021

Volume XI, Number 101

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April 09, 2021

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April 08, 2021

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SEC Approves Amendments to Harmonize and Simplify Offering Exemptions

On November 2, the Securities and Exchange Commission voted to adopt a set of amendments (the Amendments) to “harmonize, simplify and improve the multilayer and overly complex exempt offering framework” to “promote capital formation and expand investment opportunities while preserving or improving important investor protections,” according to the SEC’s press release announcing the Amendments. As highlighted in the press release, the Amendments, among other things:

  • establish a new integration framework that clarifies, in one rule, the ability of issuers to move from relying on one exemption to another and ultimately to a registered offering, including four non-exclusive safe harbors from integration;

  • increase the offering limits for Regulation A (raising the maximum offering limit under Tier 2 from $50 million to $75 million and the maximum limit for secondary sales under Tier 2 from $15 million to $22.5 million), Regulation Crowdfunding (raising the offering limit from $1.07 million to $5 million) and Rule 504 offerings (raising the maximum offering limit from $5 million to $10 million) and revise certain related individual investment limits;

  • set clear and consistent rules governing certain offering communications between investors and issuers, providing greater certainty to issuers and protection to investors, including permitting certain “test-the-waters” and “demo day” activities without violating the prohibition on general solicitation and permitting an issuer to “test-the-waters” (1) prior to determining which exemption it will use for the sale of securities and (2) under Regulation Crowdfunding prior to filing an offering document with the SEC; and

  • harmonize certain disclosure and eligibility requirements and bad actor disqualification events applicable to different forms of exempt offerings.

The Amendments are based upon amendments the SEC proposed in March, which were previously discussed in the March 6, 2020 edition of Corporate & Financial Weekly Digest, with certain modifications in response to commenters’ feedback. The SEC approved the Amendments on November 2, and we plan to cover the Amendments in greater detail in an upcoming client advisory.

The Amendments become effective 60 days after publication in the Federal Register, except for the extension of temporary Regulation Crowdfunding provisions that will be effective upon publication in the Federal Register.

The full text of the Amendments is available here, and the press release and fact sheet are available here.

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©2021 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 311
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About this Author

Mark Reyes Securities Lawyer Katten Muchin law firm Chicago office
Partner

Mark J. Reyes concentrates his practice in corporate and securities matters, including representing issuers and investors in public offerings and private placements of equity and debt securities and advising clients in complex corporate transactions such as mergers, acquisitions, private investments in public equity (PIPEs), private equity investments and joint ventures. He also counsels public companies on securities law compliance, disclosures and corporate governance matters.

Shown below is a...

312-902-5612
Mark D. Wood, corporate securities lawyer Katten Muchin Chicago Law firm
Partner

Mark D. Wood is head of Katten's Securities practice and concentrates in corporate and securities law. Mark represents public companies, issuers and investment banks in initial public offerings (IPOs) and other public offerings, private investment in public equity (PIPE) transactions, debt securities and other securities matters.

Mark also represents clients in complex corporate transactions, including tender offers, mergers, acquisitions, dispositions, going-private transactions, private equity investments, joint ventures and...

312-902-5493
Associate

Alyse Sagalchik concentrates her practice on corporate matters, with an emphasis on mergers and acquisitions, joint ventures, private equity and securities transactions. Alyse also advises companies on a broad range of general corporate, federal securities laws and corporate governance matters, including Securities Exchange Act of 1934 reporting and disclosure matters. She has represented strategic and financial buyers and sellers in M&A transactions ranging in value from $10 million to more than $15 billion and spanning a wide variety of industries, including health...

312.902.5426
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