Tag: Rule 701

SEC proposes a temporary trial to allow offerings of compensatory equity to certain gig workers

The term-end crunch continues! Yesterday, the SEC voted, without an open meeting, to issue two separate proposals to amend Rule 701 and Form S-8, both “substantially informed by public comment” received in response to the SEC’s July 2018 Concept Release on Compensatory Security Offerings and Sales. First, the SEC is proposing new amendments, on a temporary five-year trial basis, that would allow a company to provide equity compensation to a slice of “gig” workers—specifically only “platform workers” who provide services through the company’s technology-based platform—subject to percentage limits (no more than 15% of annual compensation), dollar limits (no more than $75,000 in three years) and other conditions. The proposal is structured as temporary to allow the SEC an opportunity to assess whether issuances are being made for legitimate compensatory purposes and not for capital-raising purposes, whether the issuances benefit companies, platform workers and other investors in the “gig economy,” and whether there are any unintended consequences. To help with that assessment, looking toward an evaluation of whether to make the rule permanent, the SEC will require participating companies to furnish certain information to the SEC at six-month intervals. Second, the SEC is also proposing amendments to Rule 701 and Form S-8 designed to modernize the framework for compensatory securities offerings in light of the significant evolution in compensatory offerings and composition of the workforce since the SEC last substantively amended those regulations. Both proposals will be open for public comment for 60 days.
Happy Thanksgiving!

Cooley Alert: SEC Amends Rule 701(e) and Issues Concept Release Regarding Rule 701 and Form S-8

Here’s some mighty fine reading: Cooley Alert: SEC Amends Rule 701(e) and Issues Concept Release Regarding Rule 701 and Form S-8.

SEC votes to amend Rule 701(e) and to issue concept release regarding Rule 701 and Form S-8

Just under the wire to satisfy a Congressional mandate, the SEC today voted unanimously to adopt an amendment to Rule 701(e) to raise the threshold that triggers the requirement for delivery of additional disclosure to investors.  The Commissioners also voted to issue a concept release soliciting comment on potential revisions to modernize Rule 701 and Form S-8, as Chair Jay Clayton observed, in light of “developments and innovations in labor markets and compensation practices.” The amendment to Rule 701(e) will become effective immediately on publication in the Federal Register.  Companies that “have commenced an offering in the current 12-month period will be able to apply the new $10 million disclosure threshold immediately upon effectiveness of the amendment.” Here is the press release, here are the final rules, and here is the concept release.

New Act takes a few small steps to encourage capital formation

While the Economic Growth, Regulatory Relief, and Consumer Protection Act, which was just signed into law, is focused primarily on providing regulatory relief to banks under Dodd-Frank, there are a few provisions of more general interest in Title V, “Encouraging Capital Formation.”

Highlights of the 2017 PLI Securities Regulation Institute

Summarized below are some of the highlights of the 2017 PLI Securities Regulation Institute panel discussions with the SEC staff (Michele Anderson, Wesley Bricker, Karen Garnett, William Hinman, Mark Kronforst, Shelley Parratt, Ted Yu), as well as a number of  former staffers and other commentators. Topics included the Congressional and SEC agendas, fresh insights into the shareholder proposal guidance, as well as expectations regarding cybersecurity, conflict minerals, pay ratio disclosure, waivers and many other topics.

Corp Fin posts new CDI regarding safeguards for electronic delivery of information under Rule 701

Yesterday, Corp Fin posted a new CDI 271.25 regarding permissible safeguards for protection of Rule 701(e) disclosures that are furnished electronically. You may recall that Rule 701—which provides an exemption from registration under the Securities Act for offers and sales to employees, directors and consultants under compensatory benefit plans and contracts—requires companies to deliver to the employee/investor a copy of the applicable benefit plan or contract, and, if the company sells, in any consecutive 12-month period, securities with a value in excess of $5 million, the company must deliver, a reasonable period of time before the date of sale, specified other information, including financial statements and information about the risks associated with the investment, much of which is likely to contain confidential or sensitive material. 

SEC Advisory Committee recommends changes to Rule 701

On Wednesday of last week, at the final meeting of the SEC Advisory Committee on Small and Emerging Companies (soon to morph into the Small Business Capital Formation Advisory Committee), the Committee heard a presentation on Rule 701, the exemption from registration typically relied on by private companies for equity compensation issued to employees, directors and consultants under compensatory benefit plans or contracts. At the conclusion of the presentation, the Committee resolved, as one of its final actions, to advise the SEC to adopt the presentation’s recommendations for changes to the Rule.

It’s baaaack — the Financial CHOICE Act of 2017

by Cydney Posner A draft of the Financial CHOICE Act of 2017 (fka version 2.0), a bill to create hope and opportunity for investors, consumers, and entrepreneurs — a masterpiece of acronyming — has just been released (and weighs in at 593 pages).   The bill, sponsored by Jeb Hensarling, Chair […]

Corp Fin issues new and revised CDIs on Rule 701 and Rule 144(d)

by Cydney Posner More new and revised CDIs from Corp Fin today.  This time, the CDIs address Rule 701 and the Rule 144(d) holding period.

Corp Fin issues new CDIs providing guidance on Rule 701 primarily in the merger context

by Cydney Posner Corp Fin has just issued some new CDIs providing guidance on Rule 701, with all but one of the CDIs addressing the application of Rule 701 in the context of merger transactions.  The new CDIs are summarized below: