On March 4, 2020, the SEC proposed rule amendments that would “harmonize, simplify, and improve the exempt offering framework to promote capital formation and expand investment opportunities.” The proposals seek to rationalize what has become a very complex system of rules governing what types of offerings are/are not exempt from registration and in what circumstances, and how companies can navigate the private offering process to avoid later problems, including when seeking to go public. They would also open up private offerings to more investors, in response to complaints that too many investors have been frozen out of some very profitable offerings.
According to the SEC’s announcement, the proposals would, among other things:
- Help issuers to move from one exemption to another, and ultimately to a registered offering, providing more certainty.
- Increase the offering limits for Regulation A, Regulation Crowdfunding, and Rule 504 offerings, and revise certain individual investment limits.
- Set clear and consistent rules governing offering communications between investors and issuers.
The proposals are subject to a 60-day public comment period.
If you have any questions, please contact Gunster securities law and corporate governance practice leader Bob Lamm.