October 17, 2021

Volume XI, Number 290

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October 15, 2021

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October 14, 2021

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SEC Proposes Amendments to Rules 147 and 504

On October 30, the Securities and Exchange Commission proposed amendments to modernize: (1) Rule 147, promulgated under the Securities Act of 1933 (Securities Act) as a safe harbor exempting intrastate offerings from federal registration under the Securities Act, to further facilitate intrastate offerings and capital formation in light of recently-adopted crowdfunding provisions under state securities laws; and (2) Rule 504 of Regulation D under the Securities Act, which permits companies that are not SEC reporting companies to sell securities to an unlimited number of persons without regard to wealth or sophistication (and, if certain conditions are met, to engage in general solicitation and issue freely tradable securities), to increase the amount of securities that may be sold pursuant to the rule.

The proposed amendment to Rule 147 would permit an issuer to raise capital from in-state investors without federal registration of its offers and sales. It would eliminate restrictions on offers, though the rule would still require that sales be made only to residents of the issuer’s state or territory. The proposed amendment would also redefine “intrastate offering” and ease some of the issuer eligibility requirements to make the rule available to more issuers seeking intrastate financing, including by eliminating any requirement related to an issuer’s state of incorporation or organization and instead focusing only on an issuer’s “principal place of business.” The proposed amendment would limit the availability of the exemption to offerings that are either (1) registered in the state in which all of the purchasers reside or (2) conducted under a state-law exemption from registration that caps the amount of securities an issuer may sell to $5 million in a 12-month period and imposes an investment limitation on investors.

The proposed amendment to Rule 504 would increase the dollar amount of securities permitted to be sold under the rule in any 12-month period from $1 million to $5 million. Such increase could give state securities regulators additional flexibility in implementing coordinated review programs to facilitate regional offerings. The proposed amendment would also disqualify certain bad actors from participation in Rule 504 offerings, allowing for greater consistency across Regulation D.

Comments on the amendments to Rule 147 and Rule 504 are due within 60 days following the publication of the proposed rule in the Federal Register.

Read the press release here.

©2021 Katten Muchin Rosenman LLPNational Law Review, Volume V, Number 310
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About this Author

Jonathan D. Weiner, securities, transactional lawyer, Katten Muchin Law firm
Associate

Jonathan Weiner concentrates his practice in securities, transactional and general corporate matters. He has represented investors and issuers in public and private financings (including private investments in public equity), tender offers, recapitalizations and going private transactions, as well as targets and acquirers in mergers and acquisitions. He also advises clients on a day-to-day basis regarding corporate governance, securities law compliance, disclosure and other general corporate matters. Jonathan has counseled a wide array of businesses, ranging from...

212-940-6349
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
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