All information in this COVID-19 Response Resource issue is effective as of May 26, 2020.
On March 4, 2020, the Securities and Exchange Commission (SEC) announced new proposed rules aimed at improving the ability of private businesses to raise money. The SEC stated that the “proposed amendments are intended to reduce potential friction points to make the capital raising process more effective and efficient to meet evolving market needs.” This is an exciting and timely development as new, recovering and growing businesses will seek to increase capital for their operations and to rebuild the economy. The new rules primarily seek to:
- Increase the amount of money that can be raised via Regulation A, Regulation CF and Regulation 504 offerings, each of which allow issuers to sell securities to non-accredited investors;
- Increase the flexibility of issuers to move between different types of offerings as they raise funds and eventually register their securities;
- Simplify the rules surrounding offering communications to investors including general solicitation; and
- Streamline disclosure and investor eligibility requirements to make such requirements more consistent between offering types
The full proposal can be viewed here.
As we enter the final week to submit public comments to the SEC to adopt these proposed rules, Parsons Behle & Latimer (Parsons) encourages those interested in increasing the ability of businesses to raise funds to use the SEC’s internet comment form to submit comments or send an email with your comments to rule-comments@sec.gov with “File Number S7-05-20” in the subject line. While we anticipate the SEC is likely to adopt these rules, the securities attorneys at Parsons will continue to closely monitor these developments and advocate for the continued simplification and bolstering of these valuable capital formation strategies. Plan on a more detailed and comprehensive look from Parsons as these rules go into effect in the near future.
To discuss this or related issues, contact Adam Ott by calling (801) 536-6910 or send an email to aott@parsonsbehle.com or Shane Hanna by calling (801) 536-6947 or send an email to shanna@parsonsbehle.com.
