Securities and Exchange Commission Approves New Rules for Reporting and Capital-Raising for Smaller Public Companies
On May 23, 2007, the U.S. Securities and Exchange Commission ("SEC") proposed a series of measures to modernize and improve its capital raising and reporting requirements for smaller public companies. The SEC's proposals address recommendations made by its Advisory Committee on Smaller Public Companies in its final report (click here for final report). The proposed measure confirms the SEC's commitment to minimizing the regulatory burden imposed upon smaller public companies. The text of the proposed regulations and interpretive guidance are not yet available.
In summary, the proposals are as follows:
- Implementation of a new system of securities regulation for smaller public companies that will allow a larger number of smaller public companies to benefit from the current scaled reporting system.
- Reduce eligibility requirements of certain securities offering registration forms (S-3, F-3) to allow companies with a public float of less than $75M to benefit from the use of the shelf registration.
- Add a new exemption from 1933 Securities Act ("Securities Act") registration requirements for sales of securities to a newly defined "qualified purchaser" and allow limited advertising.
- Reduce the holding period for Securities Act Rules 144 and 145 for restricted securities.
- Add new exemptions for compensatory employee stock options from 1934 Exchange Act ("Exchange Act") registration requirements.
- Provide for the electronic filing of Form D by companies undertaking private offerings.
Read on to the subsections below to learn more about recent rule changes:
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