[PDF] Final rule: Facilitating Capital Formation and Expanding Investment

View - Download Final rule: Facilitating Capital Formation and Expanding Investment

Previous PDF

Next PDF

Conformed to Federal Register Version

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 227, 229, 230, 239, 240, 249, 270,

and 274
[Release Nos. 33-10884; 34-90300; IC-34082; File No. S7-05-20] RIN

3235-AM27

Facilitating Capital Formation and Expanding Investment Opportunities by Improving

Access to Capital in Private Markets

AGENCY:

Securities and Exchange Commission.

ACTION: Final rule.

SUMMARY: We are adopting amendments to facilitate capital formation and increase opportunities for investors by expanding access to capital for small and medium-sized businesses and entrepreneurs across the United States. Specifically, the amendments simplify, harmonize, and improve certain aspects of the exempt offering framework to promote capital formation while preserving or enhancing important investor protections.

The amendments also seek to

close gaps and reduce complexities in the exempt offering framework that may impede access to investment opportunities for investors and access to capital for businesses and entrepreneurs DATES: General: This final rule is effective on March 15, 2021. Exceptions: 1. Revised 17 CFR 227.100(b)(7) (amendatory instruction 2), previously effective until Sept. 1, 2021, at 85 FR 27132, May 7, 2020, is now effective from January 14, 2021, to

March 1, 2023.

2. Newly redesignated and revised 17 CFR 227.201(aa) (amendatory instruction 4) remains

effective from

January 14, 2021, until September 1, 2021.

3. 17 CFR 227.201(bb) (amendatory instruction 5) and 17 CFR 227.301(e) (amendatory

instr uction

10) are effective from January 14, 2021, to March 1, 2023.

2 4. Amendments to 17 CFR 227.303(g) (amendatory instruction 11) and 17 CFR 227.304(e)

(amendatory instruction 12) are effective from January 14, 2021, and remain effective until

September 1, 2021

5. The amendments to the introductory paragraph in the Optional Question and Answer Format for an Offering Statement of Form C (referenced in § 239.900) are applicable from January 14, 2021
to March 1, 2023 FOR FURTHER INFORMATION CONTACT: Anthony Barone or John Byrne, Special Counsel, Office of Small Business Policy, or Steven G. Hearne, Senior Special Counsel, Office of Rulemaking, at (202) 551 -3460, Division of Corporation Finance; Jennifer Songer, Branch Chief, or Lawrence Pace, Senior Counsel, at (202) 551 -6999, Investment Adviser Regulation Office, Division of Investment Management; U.S. Securities and Exchange Commission, 100 F

Street NE, Washington, DC 20549.

SUPPLEMENTARY INFORMATION: We are adopting amendments to:

Commission Reference CFR Citation

(17 CFR) Regulation Crowdfunding Rules 100 through 504 §§ 227.100 through 227.504

Rule 100 § 227.100

Rule 201 § 227.201

Rule 203 § 227.203

Rule 204 § 227.204

Rule 206 § 227.206

Rule 301 § 227.301

Rule 303 § 227.303

Rule 304 § 227.304

Rule 503 § 227.503

§ 227.504

Securities Act of 1933 (Securities

Act) 1

Rule 147 § 230.147

Rule 147A § 230.147A

Rule 148 § 230.148

1

15 U.S.C. 77a et seq.

3

Rule 152 § 230.152

Rule 155 § 230.155

Rule 241 § 230.241

Regulation A Rules 251 through 263 §§ 230.251 through 230.263

Rule 251 § 230.251

Rule 255 § 230.255

Rule 259 § 230.259

Rule 262 § 230.262

Regulation D Rules 500 through 508 §§ 230.500 through 230.508

Rule 500 § 230.500

Rule 502 § 230.502

Rule 504 § 230.504

Rule 506 § 230.506

Regulation S-K Items 10 through 1305 §§ 229.10 through 229.1305

Item 601 § 229.601

Form S-6 § 239.16

Form N-14 § 239.23

Form 1-A § 239.90

Form C § 239.900

Securities Exchange Act of 1934

(Exchange Act) 2

Rule 12g-6 § 240.12g-6

Rule 12g5-1 § 240.12g5-1

Form 20-F § 249.220f

Form 8-K § 249.308

Investment Company Act of 1940

(Investment Company Act) 3

Rule 3a-9 § 270.3a-9

Form N-8B-2 § 274.12

Securities Act and Investment

Company Act

Form N-1A §§ 239.15A and 274.11A

Form N-2 §§ 239.14 and 274.11a-1

Form N-3 §§ 239.17a and 274.11b

Form N-4 §§ 239.17b and 274.11c

Form N-5 §§ 239.24 and 274.5

Form N-6 §§ 239.17c and 274.11d

Table of Contents

I. INTRODUCTION AND BACKGROUND

II. DISCUSSION OF FINAL AMENDMENTS

2

15 U.S.C. 78a et seq.

3

15 U.S.C. 80a-1 et seq.

4 A. Integration

1. Integration Principles and Application (Rule 152(a) General Principle and Introductory

Language to Rule 152)

2.

Integration Safe Harbors

3. Commencement, Termination, and Completion of Offerings (Rules 152(c) and 152(d)) 4. Conforming Amendments to Securities Act Exemptions B. General Solicitation and Offering Communications 1. Exemption from General Solicitation for "Demo Days" and Similar Events 2.

Solicitations of Interest

3. Other Regulation Crowdfunding Offering Communications

C. Rule 506(c) Verification Requirements

1.

Proposed Amendments

2.

Comments

3.

Final Amendments

D. Harmonization of Disclosure Requirements

1.

Rule 502(b) of Regulation D

2. Proposed Amendments to Simplify Compliance with Regulation A 3.

Confidential Information Standard

E. Offering and Investment Limits

1.

Regulation A

2.

Rule 504

3.

Regulation Crowdfunding

F. Regulation Crowdfunding and Regulation A Eligibility 1.

Regulation Crowdfunding Eligible Issuers

2.

Regulation Crowdfunding Eligible Securities

3. Regulation A Eligibility Restrictions for Delinquent Exchange Act Filers G.

Bad Actor Disqualification Provisions

1.

Proposed Amendments

2.

Comments

3.

Final Amendments

III. OTHER MATTERS

IV. ECONOMIC ANALYSIS

A.

Broad Economic Considerations

B.

Baseline

C.

Economic Effects of the Final Amendments

5 1. Integration

2.

General Solicitation and Offering Communications

3.

Rule 506(c) Verification Requirements

4.

Disclosure Requirements

5.

Offering and Investment Limits

6. Eligibility Requirements in Regulation Crowdfunding and Regulation A 7.

Bad Actor Disqualification Provisions

V. PAPERWORK REDUCTION ACT

VI. FINAL REGULATORY FLEXIBILITY ANALYSIS

VII. STATUTORY AUTHORITY

I. INTRODUCTION AND BACKGROUND

On March 4, 2020, the Securities and Exchange Commission (the "SEC" or "Commission") proposed amendments to simplify, harmonize, and improve certain aspects of the exempt offering framework to promote capital formation while preserving or enhancing important investor protections. 4 Specifically, the Commission proposed amendments that (1) address the ability of issuers to move from one exemption to another, (2) set clear and consistent rules governing offering communications between investors and issuers, (3) address potential gaps and inconsistencies in our rules relating to offering and investment limits, and (4) h armonize certain disclosure requirements and bad actor disqualification provisions.

The Securities Act requires that every offer

5 and sale of securities be registered with the

Commission, unless an exemption

from registration is available.

The Securities Act, however,

also contains a number of exemptions from its registration requirements and authorizes the 4

See Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in

Private Markets, Release No. 33-10763 (Mar. 4, 2020) [85 FR 17956 (Mar. 31, 2020)] ("Proposing Release").

5

See 15 U.S.C. 77b(a)(3) (noting that an offer includes every attempt to dispose of a security or interest in a

security, for value; or any solicitation of an offer to buy a security or interest in a security).

6 Commission to adopt additional exemptions. Section 3 of the Securities Act generally provides

exemptions that are based on characteristics of the securities themselves. 6

Section 4 of the

Securities Act identifies transactions that are exempt from the registration requirements. 7 In addition, Section

28 of the Securities Act authorizes the Commission to exempt other persons,

securities, or transactions to the extent nece ssary or appropriate in the public interest and consistent with the protection of investors. 8 The current exempt offering framework is complex and made up of differing , exemption -specific requirements and conditions. The scope of the exempt offering framework has evolved over time through Commission rules and legislative changes, including most recently through the Jumpstart Our Business Startups Act of 2012 ("JOBS Act"), 9 the Fixing America's Surface Transportation Act of 2015 10 and the Economic

Growth,

Regulatory Relief, and Consumer Protection Act of 2018 11

On June 18, 2019, the

Commission issued a concept release that solicited public comment on possible ways to simplify, harmonize, and improve the exempt offering framework under the Securities Act to promote capital formation and expand investment opportunities while maintaining appropriate investor 6

See 15 U.S.C. 77c. However, some Section 3 exempted securities are identified based on the transaction in

which they are offered or sold. For example, Section

3(b)(1) of the Securities Act authorizes the Commission to

exempt certain issues of securities where the aggregate amount offered does not exceed $5 million. 15 U.S.C.

77c(b)(1).

7

See 15 U.S.C. 77d.

8

15 U.S.C. 77z-3.

9

Pub. L. No. 112-106, 126 Stat. 306 (2012). The JOBS Act, among other things: (1) Directed the Commission to

revise Rule 506 to eliminate the prohibition against general solicitation or general advertising for offers and

sales of securities to accredited investors (See Section 201(a)(1)); (2) Added Section 4(a)(6) [15 U.S.C.

77d(a)(6)] and Section 4A [15 U.S.C. 77d

-1(b)] to the Securities Act and directed the Commission to issue rules

to permit certain crowdfunding offerings (See Section 302); and (3) Directed the Commission to expand

Regulation A (See Section 401).

10

Pub. L. No. 114-94, 129 Stat. 1312 (2015).

11

Pub. L. No. 115-174, 132 Stat. 1296 (2018).

7 protections.

12 While commenters on the Concept Release expressed many perspectives on what changes would best serve the interests of emerging companies raising capital, a consistent theme in many comments was that many elements of the current structure work effectively and a major restructuring is not needed. 13

Building

on the comments received in response to the Concept Release and other comments and recommendations received from the SEC Small Business Capital Formation Advisory Committee, the SEC Investor Advisory Committee, the annual Government-Business Forums on Small Business Capital Formation (each a "Small Business Forum"), and other market participants, the Commission proposed a set of amendments that would generally retain the current exempt offering structure and reduce potential friction points. The proposed amendments were intended to facilitate capital formation while preserving and in some cases enhancing investor protections. The proposed amendments were further intended to address gaps and complexities in the exempt offering framework and help provide viable alternatives to the dominant capital raising tools. We received many comment letters on the Proposing Release expressing a range of v iews. 14 We also received comments and recommendations on the Proposing Release from the 12

See Concept Release on Harmonization of Securities Offering Exemptions, Release No. 33-10649 (June 18,

2019) [84 FR 30460 (June 26, 2019)] ("Concept Release").

13

See, e.g., Letter from AngelList Advisors, LLC dated Sept. 25, 2019; Letter from CrowdCheck, Inc. dated Oct.

30, 2019; and Letter from Crowdfund Capital Advisors dated Sept. 24, 2019, in response to the Concept

Release, available at https://www.sec.gov/comments/s7-08-19/s70819.htm. See also Recommendation of the

SEC Small Business Capital Formation Advisory Committee regarding the exemptive offering framework (Dec.

13, 2019), available at https://www.sec.gov/spotlight/sbcfac/recommendation-harmonization-general-

principles.pdf ("2019 Small Business Advisory Committee Recommendation on the Exemptive Offering

Framework"); and Report of the 2019 SEC Government-Business Forum on Small Business Capital Formation

(Dec. 2019), available at https://www.sec.gov/files/small-business-forum-report-2019.pdf ("2019 Forum

Report").

14

Unless otherwise indicated, comments cited in this release are to comment letters received in response to the

Proposing Release, which are available at https://www.sec.gov/comments/s7-05-20/s70520.htm.

8 SEC Small Business Capital Formation Advisory Committee

15 and the 2020 Small Business

Forum.

16 After considering the public comments received and the other comments and recommendations, we are adopting the amendments substantially as proposed but with certain modifications in response to commenters' feedback.

We believe that the final rules will facilitate

the use of the exempt offering framework, particularly by smaller issuers. 17

We acknowledge

concerns about and recommendations relating to transparency and investor protections in the private securities marketplace 18 We further acknowledge concerns that by encouraging exempt offerings, these amendments could reduce incentives for issuers to conduct registered public offerings. However, we estimate , as discussed further in Section IV (Economic Analysis) below, that while these amendments may encourage more exempt offerings, these offerings will have only a marginal impact on the number of registered offerings. 19

Commenters' views on different

aspects of the proposed amendments, as well as their effects, are discussed topically below. 15 See Letter from SEC Small Business Capital Formation Advisory Committee dated May 28, 2020 ("SEC

SBCFAC Letter").

16 See Final Report of the 2020 SEC Government-Business Forum on Small Business Capital Formation (June

2020), available at https://www.sec.gov/files/2020-oasb-forum-report-final_0.pdf ("2020 Forum Report").

17

We are mindful of concerns expressed in the Recommendation of the SEC Small Business Capital Formation

quotesdbs_dbs31.pdfusesText_37

[PDF] La formation en ligne

[PDF] Interpeller le gouvernement et négocier

[PDF] PASS BIEN-ETRE EN CHAMPAGNE-ARDENNE PASSEPORT PARCOURS ANIMATION SPORT SANTE. Document expérimental

[PDF] INTRODUCTION. En quoi le cannabis rend-il dépendant? Le cannabis : En quoi le cannabis rend-il dépendant? BESSON Victor MATTA Xavier

[PDF] Hospitalisation à domicile et prise en charge en oncologie

[PDF] Rapport d auto-évaluation du Réseau Rural Martinique

[PDF] Partie abordée. Centre d intérêt 3. Comment ont évolués les systèmes de chauffage au cours du temps? L évolution des objets techniques SEQUENCE N 1

[PDF] Appel à projets Tourisme 2014

[PDF] Les compétences au Canada : Premiers résultats du Programme pour l évaluation internationale des compétences des adultes (PEICA)

[PDF] La iatrogénie médicamenteuse. Damien LANNOY - biopharma.univ-lille2.fr - EPU pharmaciens hospitaliers

[PDF] Régulateurs de chauffage RVL 400 : pour une évolution durable de vos infrastructures.

[PDF] Bien-vieillir La Cnamts et la Cnav lancent le Plan National Proximité Autonomie

[PDF] Explications concernant la déclaration d admission

[PDF] Groupement Hospitalier de Territoire de la Haute-Saône FORUM FHF

[PDF] La prévention des incendies domestiques